…. For Very Large Enterprises

Possibly the total “physical” impact of Google Apps.  :)

With the price of Google Apps being just $50/mailbox/year, the face value of Google Apps is affordable enough, but it turns out that the value can be much bigger. Enterprises evaluating the cost of Google Apps should be aware of a new report by Forrester. The report titled “The Total Economic Impact Of Google Apps: A Cross-Industry Survey And Analysis“ finds that large enterprises can achieve a staggering risk-adjusted ROI of 329% and a break-even point of 1.4 months. Yes, if  this report is to be believed then in a matter of 6 weeks a large enterprise will be able to recoup all of its investment and presumably continue on to saving huge sums of money by using Google’s cloud-based communication and collaboration suite.

We should be quick here and mention that Forrester assumes a model company of 18,000 employees. Thus, the study applies to large enterprises.

Findings

The main findings of the report are as follows:

• Risk-adjusted ROI of 329%. This means that for every dollar that large companies invest in Google Apps, more than three times as much is recuperated.
• Net Present Value (NPV) of $10.1 million assuming an initial investment of $428 thousand in services such as change management, testing, piloting, and initial support.
• Payback (break-even) period of 1.4 months, one of the shocking numbers in this new study.
• End user productivity gains were 3 times larger than IT cost savings. End users claim to have achieved efficiency gains not only in Gmail, but overall productivity improvements from using other components of Google Apps, such as Google Docs and Calendar.
• Augmenting or replacing an existing email solution is recognized as the driver behind the corporate decision. Yes, even though collaboration is great, in-house email and its management is still the pain-point of many IT departments.
• End-users who were using Gmail for personal email transitioned to Google Apps for Business more smoothly. This is a rather obvious conclusion and it highlights a selling point that Google has had for a while. Google Apps in almost the exact functionality is available for personal use and for free for educational institutions and it is now easier for those users to accept Google Apps as a business tool.
• Reduction in maintenance costs for a prior messaging platform is touted as a key benefit. The Google Apps pricing strategy of  fixed monthly billing for Google Apps also reduces the strain on cash flow.

All in all this new study  means that Google and its Google Apps resellers have additional marketing tools at their disposal. IT directors who are resistant to cloud-based email and collaboration cannot ignore this study and will have to do more in order to justify the need to stay with an in-house solution.

This latest report is an update of a previous study by Forrester from 2010, which claimed a risk-adjusted ROI of 307% and a break-even point of 7 months.

Caveats & Methodology

There are a few caveats about how the study was constructed, which we should mention:

• The study itself was commissioned by Google. While not evidence of bias in an of itself, it would be great to see an independent study, perhaps one that compared Google Apps with Microsoft Office 365.
• Customer names were provided by Google. Could there be selection bias here?

While more details about the methodology can be found in the document itself, we found a few points interesting:

• Forrester interviewed 5 “stake-holder” organizations who are currently using Google Apps around the world.
• The analysts surveyed 200 “IT and end user respondents” representing different organizations from over 20 different industries that had migrated to Google Apps. The prior study from 2010 included more than 600 IT and end users.

For your convenience, we’re linking to the two studies.

• Measuring The Total Economic Impact Of Google Apps, 2012
• Measuring The Total Economic Impact Of Google Apps, 2010

What is your take?

What is your opinion on this study? Do you find the data credible? We’d love to hear your opinion especially for employees of large companies that have moved to Google Apps.

Does your organization use additional Google Apps products such as Google Apps Vault and how would you assess their value?

Hovanes (15 Posts)

Hovanes "Hovik" Manucharyan is CEO of Linkgard. Seasoned executive and consultant with more than a decade of experience in product development, information systems management, and security in various settings, including: Fortune 500 companies, state government, large multinational corporations, and small private firms.