Quote: "In a real-word situation, the comparisons would be more complicated. A business with, say, 1,000 employees might want 750 Productivity Online bundle licenses, 100 diskless licenses for read-only access to Exchange and SharePoint, 300 CRM Online licenses and 850 Exchange Hosted Archive licenses."

Ah, but that's an if. For a Company with 1000 employees, they probably have invested in an Enterprise Agreement. Which means, they are most likely covered. The fact that volume of employee's would offer significant savings through Microsoft's licensing services, the Company would see it long ago to do so. Ultimately, this makes them eligible for Microsoft's Hosted services.

How does bandwidth come into play here? With 200 or say 1000 users going out the same pipe, how does this affect performance? How does raising BW increase operation costs?

I think these solutions are missing the point about cloud computing. They are all or nothing to the web, but fail to mention any hybrid functionality provided by synchronized inhouse and hosted solutions.

Joe you've constantly said the holy grail is synchronization, but none of these services hint it. Is it lacking or just not mentioned?

As a side question, is corporate America moving its employees back home to stay with their family. If so these hosted services look great. You save on gas, traffic hours and take better care of the kids. Otherwise it looks a lot like just another cut into the IT department instead of leveraging it as an advantage.

Gerardo,

The most costly part of an organization is IT, it does not contribute back revenue to the Company, its main purpose is to provide a solution. What happens here is you have to pay for hardware, people and maintenance of the hardware in addition to continued investment in ensuring that it keeps running, whether its finding new people or buying new hardware. Hosted solutions such as Microsoft's Online Services takes care of most of that investment, the only thing you pay for is the licensing and the client machines and the Domain Controller.

@Andre,

"The most costly part of an organization is IT, it does not contribute back revenue to the Company"

Oh boy are you mistaken. There is a difference between the bean counters not correlating revenue to IT spending and IT not contributing back to revenue. If you have any doubt about that take the servers, switches, VoIP, computers, instant messaging, file shares etc, out and put everyone back on snail mail and typewriters. See how long that company lasts.

My main concern here is that the decision is apparently being taken on a single variable "cost" and that is measured in time spent, hardware used and manpower. These are easily measured variables, but there are other costs and benefits which are not so easily measured and thus not integrated in the "cost". A simple one and one which you didn't address with your reply: bandwidth. Another, more common one, is security and the concern of having important information off premises.

There is also the synchronization issue and local cloud computing. Why does it have to be all or nothing still remains an unanswered question.

@Gerado

Quote "A simple one and one which you didn't address with your reply: bandwidth. Another, more common one, is security and the concern of having important information off premises."
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You expect a reply? Its Andre Da Co$ta, he doesnt like debate, that highlights the flaws. Unless he has it in his PR sheet, he cant answer. Thats why all the questions that have been put to him he wont answer. Thats why he wont engage in sensible debate like Jess did. He cant, because IMO either he doesnt understand or has been told not to respond.
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We have alot to thank Andre for, I was reading a few of his old posts where he was trying a sympathy angle and saying his country was poor. Then I went over to his "blog" and saw him proudly displaying a picture of 3 PC's running Windows 7 (that were his) so it appears in a country of poverty Andre is doing very well, thank you very much.
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Unwittingly Andre supports the open source and alternatives cause very well. Hes pedigree Microsoft and he makes our message alot easier to put out.

"I think these solutions are missing the point about cloud computing. They are all or nothing to the web, but fail to mention any hybrid functionality provided by synchronized inhouse and hosted solutions."

This is a good point. The term Joe used, and the one I think Google is using, is "Software as a Service." The term Microsoft is using is "Software Plus Services." There are occasions when a hosted solution is the best choice, and other occasions (you mentioned security) when on premise is better. As far as I'm aware, the angle Microsoft is going for is that companies should be able to go for a combination of the two. Google is aiming to get everything in the cloud, but the Microsoft option allows some areas to stay on the ground, but still integrate well with the relevant cloud services. The Microsoft position is not, as Gerardo put it, "all or nothing."

I'm also going to avoid the question about bandwidth, because I don't know the answer. I imagine companies would need a strong connection to get good performance, but how much that will increase costs is something I can't even make an educated guess at.

As for IT costs, it varies based on how good the IT infrastructure is. There are some graphs by Gartner showing average cost and return of IT based on the structure. Those with a basic infrastructure have a really high IT cost and really low return on investment, but it doesn't take much improvement for the costs to be low enough and the return high enough that IT starts earning more than it costs. I think Andre could do with reviewing the material Microsoft provides on Infrastructure Optimisation!

@Jess Meats, let me clarify that I'm not putting it as an "all or nothing". I'm just inferring this from:

"Something else: "A key question for both Google and Microsoft is migration," said Directions on Microsoft analyst Rob Helm. "How does an organization get its existing e-mail into the hosted system. Here Microsoft might have an edge, as it has plenty of partners who are familiar with Exchange on-premises and can work to get customers moved over. I don't know if Google can match that."

I understood from Rob Helm (at Microsoft) that clients need help moving over. Not sync to, but move over from Exchange on-premises. So if you're not on-premises anymore then you must be off-premises thus online. In his words "A key question ... is migration." I understand then that the off-premises system overrides the on-premises. Is there another possible interpretation of his words?

@Gerardo
The piece of your comment that I quoted didn't seem, when I read it, to be referring to the point Rob Helm was making. I apologise if I misunderstood.

There are likely to be companies interested in moving entirely to the hosted solutions, in which case Helm's quote is entirely relevant, regardless of which provider you're talking about. Migration cost and support is a factor to consider.

What he was quoted here as saying didn't mention the possibility of a hybrid, but the article doesn't say what question he was asked to give that quote. If he was asked a question about moving over entirely to a hosted service, naturally he would give an answer about moving over entirely. It doesn't mean that there aren't other possible solutions. You're right that, in this instance, he was talking about shifting from on-premise to off-premise. That doesn't change the fact that Microsoft's position is to offer companies a choice between on, off or some combination of the two.

The next question would be how easy is it to switch between cloud providers?

It is not much use saving 10% this year if you are paying yearly and you are even more locked in than when you were hosting yourself. I am sure there are a few hacks to migrate from Exchange to am IMAP server, the problem is that MS would not let you do that in the cloud, but you are free to do what you like if you host it internally. Once you are locked into any provider, your data is essentially held to ransom. AFAIK Google is fairly good in this respect, they support standard ways to extract mail etc.

We can only have proper competition when consumers are free to switch providers at a fairly low cost. If I find Ford cars to be too expensive, I do not have to change my entire business to go with BMW. It should be like that in IT as well.

@JessMeats: regarding bandwidth

I'm posting this from my company-provided laptop attached to a typical corporate network. Our cabling is per TIA/EAI 568 Commercial Building Wiring Standard. The speed is 100 million bits per second (mbs) Ethernet from my desk to the switch in the wiring closet. At the wiring closet, I am aggregated with other users on a gigabit (one billion bits per second) fiber connection to the server room. The servers are clustered blades. Each server is connected to two switches (switch and NIC fault tolerant) via gigabit connections.

For comparison, a leased OC3, providing 155 mbs -- a little better than what I have from my desktop to the wiring closet -- runs about $5500 per month. Provisioning gigabit speed -- what I share between the wiring closet and the server room -- to "the cloud" is prohibitively expensive. The concern with the cost of bandwidth to the services provider is very real.

If I work from home or in a small branch office and already have high speed Internet, for example, cable or DSL, I likely have sufficient bandwidth to use a cloud provider. That may be a very attractive solution. If I have a bunch of employees in a building and they are all heavy office application users, the cost to provide sufficient bandwidth to maintain employee productivity rapidly exceeds the cost of in-house IT.

@Karl, thanks for that info. Based on it and taking Verizon and AT&T DSL pricing (ATT $25.00 for 1.5 Mb or Verizon $20.00 for 1 Mb without phone service) we can use a ballpark value of 1.5 Mbps and do the math for 100 users on your OC3. Those 155 mbps on the OC3 are equivalent to 100 working ("comfortably") from home on a 1.5 Mbps DSL line. I believe there is a little disadvantage here as your OC3 is surely symmetrical and those DSL plans are generally not.

So on the high end you're paying $55.00 per user on the low end $20.00 per user. Using Joe's 1000 employee example we can see that monthly internet costs estimates go from $20,000 to $55,000. In Joe's words the software service: "Cost would be $30,190 per month, or $362,280 annually."

Connection expense adds 66% to the service cost using the low end price and 166% on the high end price. Even with huge discounts I'm doubtful you'll drop it below your OC3 cost for 1000 users.

Now Microsoft's ads used to advertise a really cool admin who would administer all these servers and accounts without standing up. All with a click. All he needed was his Windows 2003 Server in the datacenter.

Now for 20 grand a month I'm sure you could pay this great admin's wage, the electricity, buy servers, racks and cabling, pay the air conditioning and even the security guard. Heck you could even hire a programmer to do some nice mobile application and a designer to touch up the intranet. Oh and don't forget the biometrics and bullet proof glass doors and walls.

Andre's position sounds less of a saving the more I think about it.

We can only have proper competition when consumers are free to switch providers at a fairly low cost. If I find Ford cars to be too expensive, I do not have to change my entire business to go with BMW. It should be like that in IT as well.

It looks like Computing in the Microsoft Cloud will be just as complex as computing locally with MS.

The most costly part of an organization is IT, it does not contribute back revenue to the Company, its main purpose is to provide a solution. What happens here is you have to pay for hardware, people and maintenance of the hardware in addition to continued investment in ensuring that it keeps running, whether its finding new people or buying new hardware. Hosted solutions such as Microsoft's Online Services takes care of most of that investment, the only thing you pay for is the licensing and the client machines and the Domain Controller.