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Marty ParkerUniComm Consulting [email protected]
Microsoft Lync TCO
BVAL200
E. Brent KellyKelCor Inc.
An Independent Analysis to Support Your Planning
• Review the TCO of Microsoft Lync • Discuss how this information may inform
decisions
Objectives
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Who we are; what we do• Why a TCO study?• Approach to the study• TCO components• TCO comparisons• What this means for you
Agenda
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• KelCor Inc. and UniComm Consulting• Analyst and independent consultants
• www.kelcor.com• www.unicommconsulting.com
• Many client requests for comparisons• Authored Enterprise Connect RFP Reports in 2011, 2012, 2013
Who we are
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Who we are; what we do• Why a TCO study?• Approach to the study• TCO components• TCO comparisons• What this means for you
Agenda
© M Parker UniComm Consulting & EB Kelly KelCor 2014
Sample RFPs for 2000 employee company• 20 vendor responses across 3 options: cloud, on-premises IP-PBX, “UC overlay”
What we found:• Cloud solutions were 2X on-premises TCO • Overlay solutions were .5X on-premises TCO
TCO Report Highlights from Enterprise Connect 2012-13
Internet
MPLS VPNs
PSTN
HQ – 1750 Stations
RO #1 - 200 Stations
RO #2 – 50 Stations
Home OfficeWorkers
Customers &Field Workers
Mobile Workers
MPLS WAN
SIP Trunk
Internet
Cell/PSTN
LEGEND
Networ
k #1
Net
wor
k #2
Net
wor
k #1
Netw
ork #1
Netw
ork #2
Networ
k #2
Option 1: On-Premise IP Tel and UC
InternetMPLS VPNs
PSTN
HQ – 1750 Stations
RO #1 - 200 Stations
RO #2 – 50 Stations
Home OfficeWorkers
Customers &Field Workers
Mobile Workers
MPLS WAN
SIP Trunk
Internet
Cell/PSTN
LEGEND
Networ
k #1
Net
wor
k #2
Net
wor
k #1
Netw
ork #1
Netw
ork #2
Networ
k #2
Cloud IP Tel & UC Provider
Option 2: Cloud-based IP Telephony and UC
© M Parker UniComm Consulting & EB Kelly KelCor 2014
TCO Comparisons from Enterprise Connect 2012
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Normalized Versus Original Bid TCO Comparison for All Solutions over 5-years
Original Bid Normalized
Source: © KelCor , Inc. ; Stein Technology Consulting Group; Unicomm Consulting, LLC
Microsoft Responsesin 2012
© M Parker UniComm Consulting & EB Kelly KelCor 2014
Changing industry landscape• UC capabilities added to IP PBXs, collaboration software,
business applications• Need to compare premises vs. cloud solutions• Divergent sources, surveys and opinions
Done at Microsoft’s request
Why a Lync TCO study?
And, independently – for unbiased results…
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Who we are; what we do• Why a TCO study?• Approach to the study• TCO components• TCO comparisons• What this means for you
Agenda
© M Parker UniComm Consulting & EB Kelly KelCor 2014
Different users require different workloads• Defining the workloads is key to a proper TCO analysis• Usually 5 to 7 user categories define the workloads for an enterprise
The Importance of Profiles
ManufacturingExecutive Highly Mobile Collaborative Worker Support Worker Task Worker Total
Percent by Category 3% 20% 30% 17% 30% 100%IM/Presence 100% 100% 100% 100% 100%Federation 100% 100% 100% 100% 0%Deskphone 100% 15% 50% 70% 15%Softphone 100% 100% 100% 50% 30%Executive Video Unit 50% 0% 0% 0% 0%Mobile Smartphone Client 100% 100% 100% 50% 30%Mobile Tablet Client 100% 100% 100% 50% 30%Conferencing Hosts 50% 100% 100% 10% 10%
Phone TypeMulti-L, Speak,
Touch Multi-L, Speak Multi-L, Speak 2-Line or Multi-Line Single-Line
Profile example for Manufacturing
© M Parker UniComm Consulting & EB Kelly KelCor 2014
Used standard sizes and workloads• 500; 5,000; 50,000 – Three orders of magnitude• Modular workloads:
• IM/Presence plus increments for: conferencing; enterprise voice; contact center; video room systems
• Usage Profiles define requirements by user categories
Configured systems and licensing• Used vendors’ tools with vendor and VAR validation• Considered both premises and cloud options• Calculated or estimated installation and operational costs
Applied discounts based on company size
TCO Analysis Assumptions
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Who we are; what we do• Why a TCO study?• Approach to the study• TCO components• TCO comparisons• What this means for you
Agenda
© M Parker UniComm Consulting & EB Kelly KelCor 2014
TCO components One time costs
Total server software
Total software CALs
Total hardware
Total contact center
Total videoconferencing hardware
Total implementation costs
Grand total one time costs
Recurringsystem costs
Hosted
Solutions
Initial purchase costs
Licensing
RecurringOperatingCosts
Essential for Comparison ofPremises vs. Hosted!
One time costs
Total server software
Total software CALs
Total hardware
Total contact center
Total videoconferencing hardware
Total implementation costs
Grand total one time costs
5-year total of annual support costs
Server software maintenance / support
Total CAL maintenance / support
Total hardware support
Total videoconferencing maintenance / support
Total contact center annual support
Grand total support costs
Subtotal before support costs
One time costs
Total server software
Total software CALs
Total hardware
Total contact center
Total videoconferencing hardware
Total implementation costs
Grand total one time costs
5-year total of annual support costs
Server software maintenance / support
Total CAL maintenance / support
Total hardware support
Total videoconferencing maintenance / support
Total contact center annual support
Grand total support costs
Subtotal before operating costs
Operating costs
Total rack space costs
Total personnel costs
Total power costs
Total annual bandwidth cost
Total SIP trunking cost
Total operating costs © M Parker UniComm Consulting & EB Kelly KelCor 2014
Discounts• Analysis uses Microsoft SA or Microsoft EAS (subscription) for on-
Premises TCO• EAS: Microsoft software licensing as an OPEX model, including support
(SA)• Standard and Enterprise CALs and SA (support) included in master EAS agreement• Lync ‘Plus’ CAL and SA for Enterprise Voice is charged at annual recurring EAS rate
• Representative IP-PBX solution is discounted progressively by enterprise size
Servers• Configured using vendors’ configuration and pricing tools for on-
premises TCO
Operating Costs• Allocated per 1000 employees, per year
• System Operation: $214,000/1000 employees per year*
• Help Desk: Lync: $50,000/1000 employees; IP-PBX: $62,500/1000 employees.
Major assumptions
*Aberdeen Research, January 2012© M Parker UniComm Consulting & EB Kelly KelCor 2014
One time costs Premise Percent Percent
MS Lync
Total server software $ 109,595 2.3%
Total software CALs $ 1,559,754 32.0%
Total hardware $ 511,579 10.5%
Total contact center - -
Total videoconferencing hardware - -
Total implementation costs $ 327,139 6.7%
Grand total one time costs $ 2,508,067 51.5%
Server software maintenance / support $ 147,648 3.0%
Total CAL maintenance / support (EAS) $ 2,101,335 43.2%
Total hardware support $ 109,957 2.3%
Total videoconferencing maintenance / support - 0%
Total contact center annual support - 0%
Grand total annual support costs
$ 2,358,941 48.5%
Subtotal before operating costs
$ 4,867,008 100.0%
Total rack space costs $ 28,125
Total personnel costs $ 6,600,000
Total power costs $ 21,771
Total annual bandwidth cost $ 472,016
Total SIP trunking cost $ 388,125
Total operating costs $ 7,510,037
Grand total$
12,377,045
Lync on-premises CAL/SA list prices less discount
Example:5 year TCO5,000 usersOn-PremisesNo contact centerNo group videoNo EAS licensing
One time costs Premise Percent Percent
MS Lync
Total server software $ 109,595 2.3% 0.9%
Total software CALs $ 1,559,754 32.0% 12.6%
Total hardware $ 511,579 10.5% 4.1%
Total contact center - - 0%
Total videoconferencing hardware - - 0%
Total implementation costs $ 327,139 6.7% 2.6%
Grand total one time costs $ 2,508,067 51.5% 20.3%
5-year total of annual support costs
Server software maintenance / support $ 147,648 3.0% 1.2%
Total CAL maintenance / support (EAS) $ 2,101,335 43.2% 17.0%
Total hardware support $ 109,957 2.3% 0.9%
Total videoconferencing maintenance / support - 0% 0%
Total contact center annual support - 0% 0%
Grand total annual support costs
$ 2,358,941 48.5% 19.1%
Subtotal before operating costs
$ 4,867,008 100.0% 39.3%
Operating costs
Total rack space costs $ 28,125 0.2%
Total personnel costs $ 6,600,000 53.3%
Total power costs $ 21,771 0.2%
Total annual bandwidth cost $ 472,016 3.8%
Total SIP trunking cost $ 388,125 3.1%
Total operating costs $ 7,510,037 60.7%
Grand total$
12,377,045100.0%
One time costs Premise Percent
MS Lync
Total server software $ 109,595 2.3%
Total software CALs $ 1,559,754 32.0%
Total hardware $ 511,579 10.5%
Total contact center - -
Total videoconferencing hardware - -
Total implementation costs $ 327,139 6.7%
Grand total one time costs $ 2,508,067 51.5%
5-year total of annual support costs
Server software maintenance / support $ 147,648 3.0%
Total CAL maintenance / support (EAS) $ 2,101,335 43.2%
Total hardware support $ 109,957 2.3%
Total videoconferencing maintenance / support - 0%
Total contact center annual support - 0%
Grand total annual support costs
$ 2,358,941 48.5%
Subtotal before operating costs
$ 4,867,008 100.0%
Operating costs
Total rack space costs $ 28,125
Total personnel costs $ 6,600,000
Total power costs $ 21,771
Total annual bandwidth cost $ 472,016
Total SIP trunking cost $ 388,125
Total operating costs $ 7,510,037
Grand total$
12,377,045
One time costs On-Premises Percent
MS Lync
Total server software $ 109,595 2.3%
Total software CALs $ 1,559,754 32.0%
Total hardware $ 511,579 10.5%
Total contact center - -
Total videoconferencing hardware - -
Total implementation costs $ 327,139 6.7%
Grand total one time costs $ 2,508,067 51.5%
5-year total of annual support costs
Server software maintenance / support $ 147,648 3.0%
Total CAL maintenance / support (EAS) $ 2,101,335 43.2%
Total hardware support $ 109,957 2.3%
Total videoconferencing maintenance / support - 0%
Total contact center annual support - 0%
Grand total annual support costs
$ 2,358,941 48.5%
Subtotal before operating costs
$ 4,867,008 100.0%
#1
#2
Licenses and license
maintenance are 80% of system TCO
#1
#2
#3
IT personnel costs are more than 50% of complete TCO
© M Parker UniComm Consulting & EB Kelly KelCor 2014
Lync on-premises with EAS (Subscription)
Example:5 year TCO5,000 usersOn-PremisesNo contact centerNo group videoEAS licensing
One time costs On-Premises Percent Percent
MS Lync
Total server software - 0.0% 0.0%
Total software CALs - 0.0% 0.0%
Total hardware $ 511,579 24.7% 5.3%
Total contact center - - 0.0%
Total videoconferencing hardware - - 0.0%
Total implementation costs $357,547 17.3% 3.7%
Grand total one time costs $ 869,126 42.0% 9.1%
5-year total of annual support costs
Server software maintenance / support $ 243,953 11.4% 2.5%
Total CAL maintenance / support (EAS) $855,600 41.3% 8.9%
Total hardware support $ 109,957 5.3% 1.1%
Total videoconferencing maintenance / support - 0.0% 0.0%
Total contact center annual support - 0.0% 0.0%
Grand total annual support costs
$ 1,200,510 58.0% 12.5%
Subtotal before operating costs
$ 2,069,636 100.0% 21.6%
Operating costs
Total rack space costs $ 28,125 0.3%
Total personnel costs $ 6,600,000 68.9%
Total power costs $ 21,771 0.2%
Total annual bandwidth cost $ 472,016 4.9%
Total SIP trunking cost $ 388,125 4.1%
Total operating costs $ 7,510,037 78.4%
Grand total $ 9,579,673 100.0%
#1
IT personnel costs are now ~69%
of complete TCO
EAS licensing reduced 5-year system TCO by ~$2.8 million
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Who we are; what we do• Why a TCO study?• Our approach to the study• TCO components• TCO comparisons• What this means for you
Agenda
© M Parker UniComm Consulting & EB Kelly KelCor 2014
TCO Case: Conferencing & Enterprise Voice w/EAS5,000 usersIM/P2P; conferencing; enterprise voice; Microsoft EASNo contact center; no group video
On-Premises vs. IP-PBX: Lync 15% favorable
On-Premises vs. Cloud: Lync On-Prem 26% favorable to Lync Cloud
© M Parker UniComm Consulting & EB Kelly KelCor 2014
TCO Case: IM & Conferencing Only w/EAS5,000 UsersIM/P2P; Conferencing; Microsoft EAS
Lync On-Premises vs. IP-PBX: Lync 20% favorable
Lync On-Premises vs. O365 Cloud: Lync on-Prem 103% unfavorable
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• A heat map gives a quick visual of the percent of cloud TCOadvantage or disadvantage compared to on-premise TCO
On-Premises vs. Cloud Comparison – without including operating costs
Lync Cloud vs. Lync On-Premises Without Operating Costs
Core UC with Enterprise Telephony, EAS Licensing. No Contact Center or Video
EV & Conferencing 108% 225% 340% 393% 401% 539% 604%
Conferencing Only -61% -27% 26% 98% 74% 247% 419%
Employees 500 1,000 2,500 5,000 10,000
25,000
50,000
In this heat map, no operating costs are included;
the cloud solution appears to be a poor choice.
© M Parker UniComm Consulting & EB Kelly KelCor 2014
On-Premises vs. Cloud Comparison – including operating costs
Lync Cloud vs. Lync On-Premises With Operating Costs
Core UC with Enterprise Telephony, EAS Licensing. No Contact Center or Video
EV & Conferencing -1% 19% 27% 34% 26% 33% 36%
Conferencing Only -72% -62% -56% -51% -54% -50% -48%
Employees 500 1,000 2,500 5,000 10,000
25,000
50,000
When operating costs are included, Lync cloud-based solutions are favorable for conferencing across the board
and equivalent to on-premises for small enterprises
• A heat map gives a quick visual of the percent of cloud TCOadvantage or disadvantage compared to on-premise TCO
© M Parker UniComm Consulting & EB Kelly KelCor 2014
TCO Case: Conferencing, EV, Contact Center w/EAS5,000 users
IM/P2P; conferencing; enterprise voice; Microsoft EAS Contact center (Interactive Intelligence)No group video
On-Premises vs. IP-PBX: Lync 11% favorable
On-Premises vs. Cloud: Lync On-Prem 31% favorable to Lync Cloud
© M Parker UniComm Consulting & EB Kelly KelCor 2014
TCO Case: Conf., EV, CC, Video Rooms w/EAS5,000 Users
IM/P2P; Conferencing; Enterprise VoiceContact Center (Interactive Intelligence)With Group Video RoomsMicrosoft EAS
On-Premises vs. IP-PBX: Lync 15% favorable
On-Premises vs. Cloud: Lync On-Prem 25% favorable to Lync Cloud
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Who we are; what we do• Why a TCO study?• Our approach to the study• TCO components• TCO comparisons• What this means for you
Agenda
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Prepare usage profiles*
• Be on the best licensing plan!!!!• Modular approaches, UC applications favor
Lync**
• Hybrid or blended solutions may be optimal• Take control of operational costs• Lync: Office communications, not IP-PBX• Think of Lync as an application platform*
What this means for you
* See Top UC Applications – Now and Future
** See Lync Business Cases: What’s Hot – What’s Not© M Parker UniComm Consulting & EB Kelly KelCor
2014
IM / PresenceP2P V&V
On-Premises or O365
On-Premises or Hosted
Consider a Modular Approach Over Time
Conferencing
Mobility
Ap
p
Ap
p
Ap
p
IPTel
Ap
p
IPTel
Microsoft Outlook
Microsoft Office© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Office 365 – Optimal for:• IM/Presence • Conferencing• Simple client-based apps
• Premises or Dedicated Hosted – Optimal for:• Enterprise Voice• Contact Center• CEBP and server-based apps
A Hybrid Approach May Be Best
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• If you are not moving to Enterprise Voice soon• A cloud-based Lync conferencing and IM solution has the lowest TCO
• If you are moving to Enterprise Voice• A cloud-based Lync solution that includes enterprise voice shows a
higher TCO than an on-premises solution
A Perspective for Cloud
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• Getting a handle on operating costs is difficult• Survey data from analyst firms show widely varying operating costs
• Analyst firm A: $ 214 per user per year for ongoing operational costs• Analyst firm B: $ 714 to $1,912 per user for first year VoIP or IPT & UC operational
costs* * Reports note that UC&C increases the scope of services provided, thus initial integration costs
• Sanity check against required staff roles• Operating staff or infrastructure outsourcing usually reflects:
• Ratio of staff to number of software server instances (whether on discrete or virtual machines)• The number of servers driven by workloads; Lync and IP-PBX server counts are roughly
equivalent• Plus staff positions for network and QoS management and on-going system
architect/manager• Smaller enterprises see higher cost per user, based on system
configurations
Take Control of Operating Costs - 1
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• On-Premises or Cloud• Measure existing costs for a viable baseline• Automate and instrument system management• Use self-service and self-care options• Track help desk usage; use UC tools• Integrate simply with desktop/device support
• Promote user self-sufficiency • Evolve your organization for UC
• Converge with Desktop/Device Support organization• Evolve to UC as a software app on IT networks & servers (or in cloud)
Take Control of Operating Costs - 2
© M Parker UniComm Consulting & EB Kelly KelCor 2014
Organizing for UC*
* Gartner Research ID Number G00158462 Aug. 2008
• Only native UC solution for Office™• Business communications is a blend
• Text and documents are the leading modality (E-Mail, Presence, IM, social, shared workspaces, document sharing, pictures, video streaming)
• Real-time voice and video serve particular purposes• Varies by processes and by demographic groups
• UC usage profiles guide optimal mix
Lync: Designed for Office Communications
© M Parker UniComm Consulting & EB Kelly KelCor 2014
• New UC value from optimizing processes*
• Change how business works• Go faster; use less; be different• Match trends for user expectations
• Lync leads in this category• Growing base of apps packages and sample code• Client and server APIs and SDKs• Part of the suite, e.g. AD, IIS, et al. • Large developer Partner community
Lync: A UC Applications Platform
* See Lync Business Cases: What’s Hot – What’s Not © M Parker UniComm Consulting & EB Kelly KelCor 2014
• Lync TCO comparisons will vary widely by required workloads
• Lync TCO is competitive with leading IP PBX TCO• Operational costs demand attention for best TCO• Cloud offerings have an attractive TCO for some
workloads• Consider modular and hybrid approaches to TCO
Recap and Summary
© M Parker UniComm Consulting & EB Kelly KelCor 2014
Total Cost of Ownership for Lync 2013
Marty ParkerUniComm Consulting [email protected]
E. Brent KellyKelCor Inc.
Monday, February 17th
Exhibit Hall Hours 6:00pm – 8:00pm
6:00pm – 8:00pm Welcome Reception
Tuesday, February 18th
Exhibit Hall Hours 8:00am – 9:00am (Breakfast), 10:30am – 5:00pm
8:00am – 9:00am Breakfast (Exhibit Hall) 9:00am –10:30am General Session10:30am – 5:00pm Expo Hall Hours11:00am – 12:15pm Sessions & Hands-on Labs12:15pm – 2:00pm Lunch2:00pm – 5:00pm Sessions & Hands-on Labs5:00pm – 7:00pm Ask the Experts
Wednesday, February 19th
Exhibit Hall Hours 10:30am – 4:30pm
7:30am – 8:30am Breakfast8:30am – 11:30am Sessions & Hands-on Labs10:30am – 4:30pm Expo Hall Hours11:30am – 1:00pm Lunch1:00pm – 5:45pm Sessions & Hands-on Labs6:30pm – 9:30pm Attendee Party
Thursday, February 20th
Exhibit Hall Hours 9:00am – 12:00pm
8:00am – 9:00am Breakfast9:00am – 12:00pm Expo Hall Hours9:00am – 12:15pm Sessions & Hands-on Labs12:15pm – 1:30pm Lunch and Departures
Ask the ExpertsLocation: Meal Hall located on Level 1 in Pinyon Ballroom 4-8 Tuesday, February 18
TABLE TOPICS:Best Practices, Business Value, Clients & Mobility, Lync Meetings and Video, Lync Online, Networking, Platform, Server & Manageability, Voice, Lync Feedback Sessions
Meet face-to-face with the foremost experts in the Lync field and ask them the questions that have you stumped.
Location: Breakout rooms located on Level 1 5:00pm-7:00pm
GROUPS INCLUDE:Manageability – Pinyon 2Meetings & Web Experiences – Bluethorn 4-6Mobility – Bluethorn 7-9Presence & Chat – Pinyon 1Voice & Video – Bluethorn 1-3
Come participate in targeted Feedback Sessions to hear about the high-priority feature asks and help us improve the next release!
Lync Feedback
These sessions are meant to be informational, providing an understanding of the workload and conversational, to discuss your user scenarios and desired improvements.
Birds of a FeatherBirds of a Feather flock together! Join daily breakfast discussions of relevant topics by sitting in the separately designated areas of the Meal Hall. Seating will be sorted in a different way for each Birds of a Feather breakfast:Wednesday, February 19:Where are you from? Asia/Pacific, Eastern & Central Europe, Latin America, Middle East & Africa, US (West, Central & East) and Canada, Western Europe
Thursday, February 20:What is your interest?Best Practices, Business Value, Clients & Mobility, Lync Meetings and Video, Lync Online, Networking, Platform, Server & Manageability, Voice
#LyncConf14
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© 2014 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.