The popular perception may be that everything related to email and collaboration is moving to the cloud, but the folks at Novell contend that once the initial wave of migrations to platforms such as Microsoft Office 365 is over, the lion’s share of these applications will still be running on premise.
Microsoft claims to be on track to generate $1 billion in Office 365 revenue, but Kari Woolf, solutions marketing manager for Novell, says this is still a relatively small fraction of the overall email market. Beyond the fact that most organizations will find it challenging to reengineer workflow processes that are tightly coupled to their email systems, Woolf says that recent Gartner estimates put the cost of moving 12,500 users from an on-premise system to a cloud system at $1,043,000 in personnel costs alone.
Add in security and compliance concerns along with annual per user licensing fees, and Woolf says the cloud doesn’t look all that financially attractive to a lot of enterprise IT organizations. In addition, Woolf notes that while the cloud pushes responsibility for updating to the environment to the cloud provider, it also means that the provider, rather than the IT organization, decides when to apply those updates.
As a result, Gartner estimates that only about 10 percent of corporate email is expected to be running in the cloud by 2014. By 2017, Gartner says that number will then rise to about a third of the overall market. But Woolf says a huge percentage of that is going to be former Microsoft Exchange customers that have finally balked at the total cost of managing the Microsoft email platform on premise, which Woolf says is more difficult than Novell Groupwise.
Woolf says Novell has nothing against folks that want to run email systems in the cloud, it’s just that once you get past some of the surface level arguments, it just doesn’t make a lot of sense once all the total costs start to add up.
That may not be what every business executive wants to hear, but it wouldn’t be the first time that IT had to make an unpopular financial argument in the face of a popular craze.