A TCO Example: Microsoft Exchange
After the recent post on total cost of ownership (TCO), the Savvy CIO decided to use Microsoft Exchange–a common small business solution–as a TCO example.
This example uses Microsoft Small Business Server 2008, the current Exchange offering for small businesses. All values are conservative price estimates from online hardware vendors or taken from Microsoft’s website. Hourly IT costs can vary widely amongst internal IT and consultants, from $50 to $150 per hour. Estimates here are based on $50 per hour.The “Sales Pitch” Cost of Exchange: $4,844
Server Hardware: $1,000
Small Business Server 2008, 5 Client Access Licenses (CALs): $1,089
15 Additional CALs: $1,115
20 Outlook Licenses: $1,600
TCO Estimate of Exchange (4 year lifespan): $51,870
Initial Cost: $10,110
Hardware and Licenses: $4,844
Server & Exchange Configuration (8 hrs): $1,200
Spam Filter: $700
Spam Filter Configuration (3 hrs): $450
Outlook Configuration (.5 hr per user): $1,500
Backup Configuration (3 hrs): $450
Ongoing Cost: $870 per month
Online Data Backup: $20
Server Maintenance/Downtime (4 hrs): $200
Patches/Upgrades (2 hrs): $100
Exchange Administration (5 hrs): $250
Spam Filter Administration (5 hrs): $250
Energy Cost: $50
This TCO doesn’t even account for many expenses:
- User and admin training
- Productivity lost during unplanned downtime (Exchange average is 4 hours per month)
- Additional storage
- Part replacement
- Disaster recovery & emergency backup
The Savvy CIO is not sure why Exchange is common among small businesses with such a high TCO.
A TCO of $50,000+ doesn’t mean technology isn’t worth it. Exchange may still pay for itself in time and embarrassment saved and in reduced administrative staff. But knowing the TCO allows comparisons that help make wise decisions, the first of which is the outsourcing question:
Can you subscribe to a collaboration platform for less than $12,750 a year?
In full disclosure, the Savvy CIO’s firm is a provider of Zimbra, exactly this kind of hosted collaboration platform. There are also other alternatives that offer a much lower TCO to a small business than purchasing Exchange.
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