Cloud vs. Cloud: Private Cloud Collaboration More Affordable than Office 365

Azaleos^® Corporation, the global managed Exchange, managed SharePoint and managed Lync services company, recently announced the release of an independent report by Osterman Research that compares the cost of ownership for private cloud and public cloud deployments of messaging and collaboration systems.

According to the report entitled “Cloud vs. Cloud: Comparing the TCO of Office 365 and Private Clouds”, the cost differences associated with implementing the various components of the Microsoft UC stack can vary substantially based on the delivery model used.

“In a nutshell, we found that 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,” said Michael Osterman, president of Osterman Research, Inc. “First, the base price for public cloud provider services is higher than the fully amortized price of the hardware, software and other infrastructure elements used in a private cloud deployment,” explained Osterman. “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,” he concluded.

Cost Analysis Model

The report compares the total cost of ownership for the Microsoft UC stack using private cloud, public cloud and on-premise deployment models over a 36-month lifecycle. The analysis focused on a base of 5,000 enterprise users. It compares a “Basic Configuration” (the infrastructure and services required to support basic functionality for each element of the Microsoft stack) and an “Enterprise Configuration” of capabilities. In addition, the calculations presented in the report reflect the pricing of Office 365 in the first quarter of 2012, including the reductions of approximately 20 percent announced in mid-March 2012.

Click through for results from an Osterman Research report that compares the cost of ownership for private cloud and public cloud deployments of messaging and collaboration systems.

When comparing both approaches for implementing enterprise configurations of the Microsoft Unified Communications stack of applications — Exchange, SharePoint and Lync — the research found that private cloud services were on average 20 percent cheaper than Office 365 (even after factoring in the recent March 2012 price reductions), and one percent cheaper than on-premise deployments. For basic configurations, however, public cloud services were 21 percent cheaper than private cloud services and 36 percent cheaper than their on-premise cousins.

For Exchange, private cloud savings (26 percent) come from the relatively low cost of the Exchange client access license ($67, or $1.86 per month over three years) compared to the public cloud Exchange Online price of $4.00 per month (E1 plan) and $8 per month (E2 plan).

SharePoint is the exception to the rule in the study with the private cloud weighing in 9 percent more expensive than Office365. However the main factor driving up the private cloud costs is a secondary DR site. If this is excluded from the calculations then the private cloud drops to 15 percent less than the public cloud.

Adding Lync Voice to a public cloud service costs an additional $28.04 per month per seat compared to $3.00 per seat per month for private cloud and on-premise delivery. These costs make a full Lync private cloud deployment 39 percent less expensive than a public cloud version. The large cost difference is due to the fact that to achieve Lync Enterprise Voice functionality within the Office 365 environment, Microsoft requires an upgrade to both the full E4 version of Office 365 as well as an on-premise Lync server deployment. The additional cost in the private cloud is simply the amortized Plus client access license to add voice capabilities.