Managed Messaging

As we have said for some time now, not all “clouds” are created equal. An interesting report was released today from Azaleos Corporation, a provider of managed email, collaboration and unified communications and Osterman Research that studied the TCO of public cloud vs. private cloud when it comes to deployments of messaging and collaboration systems.

The study looked at the total cost of ownership (TCO) when implementing enterprise configurations of the Microsoft Unified Communications stack of applications—Exchange, SharePoint and Lync—on premises, using a public cloud, such as Office 365, and using a private cloud model where “servers and software are all dedicated per customer and located in a secure third party data center, but the infrastructure is managed remotely by a service provider for a fee per user per month.”

The interesting approach of evaluating cloud vs. cloud led research analyst Michael Osterman to find “the private cloud model of delivering and managing enterprise grade services using the Microsoft stack is less expensive than the public cloud because of two primary factors. First, the base price for public cloud provider services is higher than the fully amortized price of the hardware. Next, when deploying an enterprise scale system, some of the additional features like adding voice functions to Lync or extra bandwidth in an Exchange environment are much more expensive in the public cloud than in a private cloud scenario.”

While prudently acknowledging that “developing cost models for offerings as complex as those discussed in this white paper requires some level of interpretation and judgment” and that “some readers may disagree with aspects of the cost model we have developed,” the general finding held the private cloud TCO was cheaper by 26% once enterprise grade capabilities were factored in. The public vs. private comparisons did take into account the recently announced price reductions of Office 365.

One key myth that Osterman points out is that the cloud is not just for smaller organizations. Writes Osterman, “Contrary to the beliefs of many decision makers, the cloud is not just for small organizations. Although Microsoft says that 90%+ of Office 365 deployments are with companies under 50 seats, and even though only about 5% of the total market today is using the cloud for Exchange, our findings clearly demonstrate that cloud-based offerings – whether public or private—are less expensive than on-premise solutions even in large organization deployments.”

Of course the primary myth the paper tackles is that public clouds are cheaper than private. “While there’s a general perception within the IT industry that public cloud services are always the cheapest alternatives, this study pokes a number of holes in that argument,” observes Scott Gode, vice president of product management and marketing for Azaleos. “Osterman Research’s findings clearly demonstrate that for medium to large sized organizations the public cloud is still not ready to compete with private cloud alternatives in terms of cost of ownership. When you factor in the added functionality and security benefits, the advantages provided by private cloud deployments of Exchange, SharePoint and Lync are very compelling.”

The paper, “Cloud vs. Cloud: Comparing the TCO of Office 365 and Private Clouds” was made available today and can be downloaded through Azaleos.  It’s a thought-provoking read.