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University of Nebraska drops Lotus Notes for Microsoft - the bigger issue I see here...

Category IBM/Lotus Microsoft Google
So the big story in cloud e-mail that broke yesterday is that the University of Nebraska decided to leave their on-site Notes e-mail system and move to Microsoft's online offering after Microsoft sweetened the pot by adding $250,000 to the deal:

Microsoft Pays Customer $250,000 To Adopt Office 365 (InformationWeek)
Exclusive: Redmond gives University of Nebraska six-figure incentive package to ditch IBM system and reject Google Apps.

Microsoft Gave Customer $250,000 To Choose Office 365 Over Google Apps (Business Insider)

This is another casualty in the education market where an institution has decided to drop Notes and move to the cloud, and the choices came down to Microsoft or Google.  Depending on which side you're on, there are various reactions that seem to bubble forth from this particular move.

The obvious one that made this reportable is that Microsoft paid a Notes client to migrate.  While this may sound like bribery or buying a client, it's not as if someone pushed a briefcase across the table and said "switch now, and this is yours."

And one other big reason--the university will receive $250,000 in givebacks from Microsoft to underwrite the switch under a little-known program Redmond calls Business Incentive Funds.

"That funding will pay for some consulting and licenses to convert a large percentage of our users from Lotus Notes to Office 365," UNL officials said in a Q&A about the email migration that was posted on the university's website. "We will also use that funding to pay for a Microsoft Premier Support agreement covering email and Microsoft Office applications for the entire university."  (InformationWeek)

The way I read this, it appears to be a case where a number of services and licenses were included at no cost to the university, and the value of those services reflect $250K that would normally be paid by the buyer.  Think of it as "and if you call now, we'll throw in an additional widget at no extra cost!"  It's just that this one had a few extra zeroes at the end, and it was used to move a company away from something in which we have a vested interest.

The larger issue in my view is this:

With Office 365 now formally launched, it's likely Microsoft will continue to be aggressive when it comes to negotiating contracts for new government, educational, and commercial accounts. Last year, New York City officials said the vendor offered significantly lower prices than Google on a bid for the city's cloud computing contract. The upshot for customers: As Google and Microsoft battle each other for the cloud, there may be no better time to buy. (InformationWeek)

Microsoft has long been rumored to offer huge discounts and paybacks like this to get early adopters for new products, and to beat back Google in enterprise and government contracts, but this is a rare instance in which a customer actually admitted it.

It also highlights what a hard uphill battle Google faces if it seriously wants to take Microsoft on in the enterprise. (Business Insider)

In both these articles, there is no mention of LotusLive being a viable alternative.

Before you rush off and blame technology media for bias, consider the Gartner research article published on June 10 titled Cloud E-Mail Decision-Making Criteria for Educational Organizations by Matt Cain.  The lead of that article:

Educational organizations sometimes struggle to choose between Google and Microsoft for e-mail and collaboration services. We present six evaluation criteria that can be used by personnel making the decision, or by executives charged with reviewing vendor decisions.

The word "Lotus" is not found anywhere in that piece.  It's as if LotusLive is not even an option.

I'm aware that the educational market has its challenges for a vendor, one issue being that "free" has become the baseline cost for how much they want to spend to get students on e-mail.  Still, IBM has gone from a dominant position in the educational market to one of being considered the "legacy" or "aging" infrastructure that needs to be replaced with a Microsoft or Google offering.  

I'm aware that IBM knows they have to do more in terms of making LotusLive more visible in the market, and that's good.  From my perspective, that problem looms large in determining whether LotusLive becomes a market player or an also-ran...

Comments

Gravatar Image1 - As a Husker alum, it pains me to see this happened. But with the direction of IBM/Notes, did it really surprise anyone?

When you take your clients for granted, they'll slip away!

Emoticon

Gravatar Image2 - Where does IBM crow and yell? I don't think they do.

Gravatar Image3 - If you have to PAY someone to use your product,is it really a sale? or a Purchase? So, MS$ BOUGHT a sale to get into the press, not a bad idea. A bad product, you bet, but in Universities they don't look at IRR or ROI, just what is being GIVEN!

IBM, still sucking at marketing! They crow and yell we have a marketing campaign but needs to be on par with MS$ which it is not or maybe never will be.

My Uncle used to say (he is retired now) that he could out sell any 10 IBM sales reps, their product being better never matters!!!

Gravatar Image4 - I'm wondering why you think IBM had a 'dominant' position in the education market?

Gravatar Image5 - @4 - Much like the often-quoted 120+ million seats (or however many it got up to) number, I had always heard and assumed that Lotus had a very strong presence in the university and government markets. Now that cloud computing has become the direction of choice, both of those markets are choosing MS or Google solutions in a very large number of cases.


Gravatar Image6 - IBM offers incentives when you buy their products, too. At my last job we purchased new IBM Bladecenter hardware and an IBM SAN and got free licensing for Tivoli Storage Manager and IBM Director. Should I have been outraged that they were trying to buy my business?

In my current position we bought a bunch of new HP gear and HP offered the VAR a discount that the VAR passed through to us. We also purchased a lot of VMWare licensing and VMWare offered the VAR funds to cover on site training for us.

Everyone does this. Buy X and get Y for free. Whether it's steak knives, bamboo wind chimes, software, hardware or training, companies offer incentives.

You apparently understand this. Some people have such an irrational and unfounded loathing of Microsoft that they are easily distracted, though.

Gravatar Image7 - I think I'm going to give IBM a pass on this one, it appears to be a very low margin(profit) deal. Microsoft and Google are playing head(count) games with Office 365 and Google Apps. What happens when the end of the contract? Do you think these customers are going to want to pay full price? Knowing they got the sweet deal before.

Maybe IBM has taken a page from Apples playbook with LotusLive, half the head count and double the profitability. Just a thought!



Gravatar Image8 - The University of Nebraska has been a long long time Notes customer. Back in the day they chose to support a lot of client on POP3 via Lotus Notes, which hurt. But losing an large scale environment that garners press hurts.

Yes, academic environments are looking at 365 and Google. Mainly when K-12 (elementary) can get most of it for free for students and teachers. Why invest in a payment? They get isolated chat, email, SkyDrive and more with the 365 Campus offering.

The only reason I know how deep this goes is sitting through vendor proposals on the school district technology committee.

Gravatar Image9 - "What happens when the end of the contract? Do you think these customers are going to want to pay full price?"

Quite likely they will. People have this idea that cloud email is a matter of switching it on. Or switching it of and picking another vendor. It doesn't work that way. Any organization of substance will have to integrate existing systems (such as a personel or student management systems) into cloud email. Staff may need to be trained. Email may have to be integrated into other systems. End-users will be getting used to the new choice. Essential collaboration data now will exist in this external dependency.

You can't just pack up and leave once you're in.

Gravatar Image10 - Maybe coverage of LotusLive will improve when it becomes something more than a very late me-too offering.

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