SAAS E-Mail from Google, Microsoft Proves Cost Effective for Up to 15K Seats

Long relegated as a parlor trick for small businesses, hosted or SAAS (software as a service) e-mail systems from Google, Microsoft, Yahoo Zimbra, Cisco PostPath and others have become more viable in the low-end of large enterprises.

SAAS or cloud-based e-mail systems are cost effective for companies or divisions up to 15,000 users, determined Forrester Research analyst Ted Schadler, who surveyed IT professionals at 53 North American and European enterprises to find out where they run their e-mail and other messaging and collaboration services.

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Schadler found that while cloud-based email has historically appealed to small businesses, the costs and hassles of managing on-premise e-mail combined with the growing capabilities of Google, Microsoft and others means that SAAS providers' sweet spot is growing to customers with up to 15,000 mailboxes. Schadler added:

For example, the cost per user, per month for cloud shops of 25,000 users was $23.05 per user, per month, while the on-premise cost for the same amount of users was $22.52. However, Schadler found that nothing beats Google on price.
As has been widely documented, Google set the stage for low-cost e-mail and archiving in the cloud with the launch of Google Apps Premier Edition for $50 per user, per year, or $4.17 per user, per month). Factoring in costs for staffing and message archiving and Schadler puts the total at $8.47 per use, per month.

Schadler said he believes Google can make money at this price, while properly servicing bigger customers like Genentech and Avago Technologies. Google made a believer out of Serena Software, which is moving its employees to Gmail, and possibly additional Google Apps.