January 12, 2009, 11:36 AM — A new Forrester report reveals how much cheaper Web-based e-mail such as Google's Gmail is in comparison to traditional e-mail installed on-premise for businesses with up to 15,000 users. But analysts warn that most enterprises won't be making a wholesale switch to Web-based messaging for years to come. Instead, they might pursue a hybrid model where they move some e-mail services to the cloud and keep some on-premise.
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For typical information workers, Forrester estimates that it costs a company $25.18 per user per month for an on-premise e-mail system, including the hardware, labor and other costs associated with managing e-mail in-house. Alternatively, for companies using Google's fully Web-based Gmail, it costs a mere $8.47. Microsoft Exchange Online, Microsoft's version of a fully cloud-based e-mail, isn't quite as cheap as Gmail but rings in at $20.32 per user per month.
The research was based on a survey of 53 enterprise-sized companies in both Europe and North America.
According to Ted Schadler, a Forrester analyst, many companies underestimate the cost of their on-premise e-mail, which should include staffing, maintenance, storage, archiving, mobile access and financing. All of those costs are typically included when you get the per user per month price with cloud-based e-mail.
"The market for cloud-based e-mail will just keep getting bigger as a result," he says. "There is greater transparency in what it will cost because it's pay as you go."
But many enterprises aren't likely to go all the way just yet. In fact, most (56 percent) plan to use a hybrid of on-premise and external e-mail services. According to Schadler, under this model, a company might manage servers that host people's mailboxes, but outsource archiving and filtering to a third-party provider. Only 19 percent of respondents said they plan to move to a hosted or managed e-mail provider in full.
Even if enterprises underestimate the price of managing e-mail on-premise, the issue of cost is at the forefront of enterprise IT professionals as they consider a new model for messaging delivery. About 42 percent said there will be an "evolution or change" because "e-mail is getting too expensive." Another 31 percent would change due to consolidation or changing products.
One reason to consider switching? Schadler says getting e-mail off your plate allows IT to worry about more business critical projects.
"Having your staff keep up with these email upgrades is very labor intensive," he says. "Why would you want to deal with it if you don't have to? Maybe your staff could worry about improving website analytics, or implementing social software."
Schadler expects the vendor landscape to continue to mature in the coming year, in part because of enterprises' need to save money, but also due to Microsoft launching online Exchange a couple months ago, which in many ways validated the fully online e-mail delivery model.