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The Business Case for Migrating from IBM to theSharePoint Platform: The Cost AdvantagesJULY 2011Visit www.piquesolutions.com to learn more about our market research and consulting services.st795 Folsom Street, 1 Floor San Francisco, CA 94107 Tel.: 415.685.3392 Fax: 415.373.3892
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESContentsExecutive Summary . 1Framework Approach and Research Methodology . 2Research Methodology . 2Business Case Summary . 3Strategic Benefits – Improving Collaboration Ranks #1 . 3Economic Benefits – Tangible ROI by Reducing Cost of Ownership . 4Business Benefits – Dramatic Improvement in Adoption . 7Conclusion and Key Takeaways . 8Appendix – Framework & Cost/Value Drivers . 9 2011 Pique Solutions. All rights reserved.Microsoft and SharePoint are trademarks of the Microsoft group of companies.All other trademarks are property of their respective owners. 2011 Pique Solutions. All rights reserved.
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESExecutive SummaryA recent study by Pique Solutions in April 2011 highlighted a propensity among IBM customers to migrate from IBM collaboration tools to the Microsoft SharePoint 2010 platform. Among many technical andbusiness reasons cited in the research, and benefits realized by companies who have migratedcollaboration workloads from IBM to SharePoint, Total Cost of Ownership (TCO) was a primary driver forthe migration. In addition, the improved productivity of end users was cited as the leading benefit realizedafter the migration to SharePoint.This paper presents the results of a related study that drives deeper,from a primary research perspective, into the cost of ownership andrelated business elements, and presents a business case for themigration of collaboration workloads from IBM to SharePoint.Key findings from the research include: An impressive 317% average return on investment in themigration from IBM to SharePoint based on cost savingsrelated to acquisition, implementation, administration andbusiness usage of collaboration tools.Faster time to market/value for SharePoint, with an averageimprovement of 20% in terms of collaboration solutiondeployment time.A 50% average increase in user adoption and activeutilization by business users.This business case is based on a series of in-depth interviews anddetailed cost, value and business-metric data collected in May 2011from companies who had completed migrations of several IBMcollaboration workloads to SharePoint. In most cases, the datacollected for workloads migrated represent the initial stages of anongoing migration strategy.“We did an internaljustification for our CIO tomigrate from IBM toSharePoint. We knew it wasgoing to lower our total costof ownership andmanageability and projectedin the course of the nextthree years we were going tosave 2.3 million dollars.Overall, we find it 30% lesscostly on an ‘all up’ basis torun and support SharePointas compared to IBM.”A common theme from the interviews was that migrating toDirector, IT ServicesSharePoint improved the end user experience and usability ofcollaboration tools which in turn boosted adoption. In the words ofElectronics Manufacturerone of the interviewees, an analyst for a U.S. Federal GovernmentAgency, “We’ve migrated our entire intranet – includingcollaboration, enterprise search and single sign-on – from IBM to SharePoint. We have seen our activeusage and adoption of our collaboration solution go up by 55% after migration.”Key Study Takeaways Though research participants ranged in size from under 1,000 to over 100,000 employees, there wascommonality in migration benefits for licensing, implementation, administration and business usageThe major cost savings areas were a reduction in costs by bringing development in-house,administration and development resource savings, and licensing /maintenance savingsKey drivers for migration included ease of use, better collaboration capabilities, user adoption, andintegration with Microsoft infrastructure and desktop productivity toolsKey business benefits included improved user adoption, faster time to value, better applicationperformance and far better enterprise search capabilities based on tagging and metadata 2011 Pique Solutions. All rights reserved.1
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESFramework Approach and Research MethodologyPique Solutions research and analysis was designed to identify and quantify the costs and benefitsassociated with the migration of collaboration workloads from IBM to SharePoint. In terms of the businesscase framework, the approach taken provides a way to structure and present the value of SharePoint in amanner that communicates the strategic, economic, and business benefits based on actual usage of thecollaboration solutions: Strategic: Highlights the strategic drivers of the collaboration solution and the overall benefitswith respect to organizational business objectives. Economic: Demonstrates the quantitative business case for migration from IBM to SharePointusing a 3-year TCO/ROI model based on tangible cost savings and business value. Measuring thereturn helps companies in the judicious use of “scarce” financial resources relative to otherpotential business investments. Business: Measures the tangible improvements in important metrics for collaboration solutionadoption, active usage, productivity and time to value. These benefits may not explicitly map totangible dollar savings or return on investment (ROI), but they are often important measures ofcollaboration solution effectiveness.This business case is organized along the adoption and usage lifecycle of collaboration tools by customers,as illustrated in Figure 1. The cost and value drivers for the design and execution of the primary researchphase of the project are included in Appendix A.Figure 1: Collaboration Deployment LifecycleMigration/ LicensingCollaborationSolutionImplementation &DevelopmentManagement &AdministrationBusiness Use ofCollaboration ToolsResearch MethodologyWith the business case framework and drivers identified, Pique Solutions designed an in-depth, multiphase data collection and interview process comprised of ten complete customer data collections whichincluded initial and follow up interviews with participants using 70 unique quantitative data elementsalong with a provision for qualitative descriptions of the responses. The roles of the interviewees includedCIOs, IT Directors, IT Service Managers, and Architects.The data elements collected included the workloads migrated, the deployment scope in terms of numbersof users and servers, the costs involved in the migration and the quantitative accounting of the postmigration benefits. Based on the quantitative data and relative savings figures, a three year investmentand savings model was constructed calculating the investment in the migration initiative(s) as comparedto the cost savings and value calculations based on owning, implementing and managing SharePoint vis-àvis IBM. The migration investment and savings figures used in the calculations were directly from theprimary research, based on actual usage of both platforms. 2011 Pique Solutions. All rights reserved.2
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESBusiness Case SummaryThe research conducted by Pique Solutions demonstrates a very strong case, from a cost and valueperspective, for the migration from IBM collaboration workloads to SharePoint. While legacy migrationscan be fairly costly and in some cases risky initiatives, the demonstrated benefits from the migration toSharePoint make it very compelling for companies of all sizes.Strategic Benefits – Improving Collaboration Ranks #1A macro-level element of the business case sought to understand the strategic benefits of migrating fromIBM to SharePoint and shed some light on the linkage to broader elements of the IT and businessstrategies. In the data collection exercise, a list of 12 strategic benefits was presented to respondents andthey were asked to stack rank the top three benefits.The synthesized results for the top three strategic benefits are listed inTable 1. ‘Improved collaboration among employees and functionalteams’ was the leading strategic driver for the migration from IBM toSharePoint. Companies interviewed mentioned that SharePoint bothincreased user adoption and made it easier to collaborate with thefamiliar tools they use on a day-to-day basis. The second rankedstrategic benefit was the ‘standardization of the technologyinfrastructure’. Many of the companies with legacy IBM deploymentshad several different products installed including Lotus Notes formessaging, Lotus Quickr for collaboration, FileNet for documentmanagement, and WebSphere for portal infrastructure. A strategy ofmigrating to SharePoint enabled them to transition over time to a singleplatform that serves multiple workloads. In several cases, it also enabledcompanies to migrate towards a single collaboration vendor inMicrosoft.“Collaboration isimpossible if users can’teasily use the tools meantto facilitate it. This wasthe main reason wemigrated from IBM toSharePoint.”CIORetailerTable 1: Strategic Benefits of Migrating to SharePoint (Top Three based on Stack Ranking)RankStrategic Driver1Improved collaboration among employees and functional teams2Standardization of technology infrastructure3Better integration with internal or external systems/applicationsFinally, the companies interviewed cited ‘better integration with internal or external systems andapplications’ as the third most important benefit. This included integration with communication services,databases, directory services, web infrastructure and configuration and management tools. According to aLead Architect for a Hospital Information Services Provider to the US military, “Our previous IBMdeployment required WebSphere and MQ Series servers and expertise internally and for each of thedozens of partners we connected to. With the integration of SharePoint and Exchange, we were able toreplace the portal and messaging infrastructure reducing software costs and enabling our Exchangeadministrators to administer SharePoint. This ultimately led to a resource reduction savings of 20%.” 2011 Pique Solutions. All rights reserved.3
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESEconomic Benefits – Tangible ROI by Reducing Cost of OwnershipAn important aspect of the overall business case involved the quantification of the economic and businessbenefits of the migration to SharePoint, as evidenced by customers and partners who had migrated fromIBM. The composite profile used for the analysis, based on all of the companies interviewed in the study,is provided in Table 2.Table 2: Composite Profile for Business Case (Post-Migration)Average Company Size (Users)15,464Average Size of Migrated Workloads (Users)4,957Average Size of Collaboration Admin Staff3.8 FTEsAverage Size of SharePoint Dev Staff18.1 FTEsAverage # Number of ActiveDevelopment Projects8Average Migration Time6 monthsIt is important to note in the composite profile that the data collected represents completed migrations ofan initial set of workloads as part of ongoing, longer term migration strategies. Companies are largelyphasing the migrations over the course of several years, starting with those that yield the fastest andhighest returns. The initial migrated workloads most often included content management, teamcollaboration, portal, and/or line of business applications.Based on the composite profile, an analysis of the return on investment of the SharePoint migration wasperformed by calculating the net present value of the investments and tangible benefits achieved, onaverage, by the interview participants. Specifically, the investments in acquiring, deploying and managingSharePoint were compared to the costs of going forward with the existing IBM collaboration solution(s).The summary ROI analysis is presented in Table 3 demonstrating a 317% ROI.Table 3: ROI Summary. USD (United States Dollar)/Exchange Rate 1.SharePoint Migration from IBM: ROI & Net Present Value (Three Year Analysis)Total SharePoint Cost Savings/Value (PV*) 2,305,629Total Migration Investment (PV*) 555,040Total Net Present Value (NPV*) 1,750,589Return on Investment for SharePoint Migration 317%*Present Value calculations are based on a discount rate of 6%“Overall, we find it 30% less costly on an ‘all up’ basis to run and supportSharePoint as compared to IBM.”Director, IT ServicesElectronics Manufacturer 2011 Pique Solutions. All rights reserved.4
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESFigure 2 provides a breakdown of the undiscounted three year benefits by category based on themigration from IBM to SharePoint. While there were significant savings in each of the four categories, themajority of the savings (66%) stemmed from the implementation of collaboration solutions on top ofSharePoint vis-à-vis the existing IBM solution. It should be noted that, by and large, companies weremigrating away from IBM to SharePoint to reduce the need for expensive and time consumingcustomization and integration on top of tools like LotusNotes, LotusDomino and WebSphere, byleveraging the capabilities that come “out of the box” with SharePoint.Figure 2: SharePoint Benefits & Savings by CategoryBenefits of Migrating from IBM to SharePoint 2.6 million three year total (undiscounted) 130,534, 5% 291,875, 11%IBM licensing and support savings 461,506, 18%Implementation & development savingsManagement & administration savingsBusiness user savings 1,715,493, 66%A description of the savings in each category is as follows: IBM licensing and support savings – The 292k three year savings includes 107.9k in average “onetime” savings related to eliminated or avoided costs for licensingIBM collaboration software for the workloads migrated toSharePoint and an additional 57.7k in annual savings associatedwith non-renewal of annual maintenance and support“In the past, we relied moreagreements. In several cases, a major upgrade or license renewalon IBM to help us withfor the IBM collaboration solution in place was a catalyst for themigration to SharePoint.development and Implementation and development savings – The 1.7m inaverage three year savings for implementation includes 120k ininitial deployment savings associated with avoided costs based onthe capabilities that were provided “out of the box” withSharePoint, ISV applications leveraged and savings on integrationefforts as compared to the effort and cost that would have beenrequired to build it out with the existing IBM collaborationsolution. The bulk of the savings over the three year period isbased on the ability to bring significant portions of thecollaboration development in-house versus using IBM or IBMpartner resources for development. On average, companies wereable to increase utilization of in house development resources by27%, which, based on 18.1 FTEs post-migration equates to asubstantial savings of over 1.5m over the course of three years. 2011 Pique Solutions. All rights reserved.administration. That is a bigpart of the hard dollar costsavings that we realized, notusing IBM services fordevelopment andadministration but ratherbring it in-house.”Director, Architecture & EngineeringInsurance Services5
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGES Management and administration savings – The 462k in management and administration savings isbased on interviewee data showing that, on average, there was a31% cost reduction in administration activities upon migrationfrom IBM to SharePoint. This was due in part to less specialized“In migrating from theresources required to do administration for SharePoint and theWebSphere Portalability to leverage resources already performing administrationactivities for related server applications such as Exchange and SQLenvironment to SharePoint,Server. Based on an average of 3.8FTEs dedicated to SharePointwe were able to re-assignadministration after migration, this equated 92k in savings inyear 1 and 185k in each of years 2 and 3.four collaboration admin stafffrom low-value, back office Business user savings – The 131k in business user related savingswas associated with the tangible cost savings and value createdactivities to high-value,for business users based on the migration from IBM to SharePoint.partner facing roles.”An average of 16k of this total was associated with savings in enduser training costs due to the fact that SharePoint required little toLead Architectno training because the interface was familiar to most businessHospital Information Service Providerusers. The other major component of the business user savingsto US Militarywas an average savings of 115k over three years associated withthe value created in delivering SharePoint collaborationcapabilities and content to end users more quickly than with the existing IBM solution.The migration investment of 602k in Figure 3 includes the three year licensing and support costs forworkloads migrated to SharePoint as well as the migration implementation and training costs based onthe aggregate data provided from the research participants. As illustrated in Figure 3, SharePoint licensingwas the leading element of the investment in the migration from IBM following by annual support (foryears 2 and 3) and migration implementation costs. Migration implementation costs include both internaland third party investments in migration planning, installation, configuration and integration ofSharePoint for the IBM workloads replaced. It should be noted that several of the companies interviewedwere already on enterprise licensing agreements with Microsoft such that the licensing costs to adoptSharePoint represented a modest incremental investment.Figure 3: IBM to SharePoint Migration InvestmentSharePoint Migration Investment 602k three year total (undiscounted) 15,500 8,286 17,250 19,900SharePoint LicensingAnnual Software Maintenance/SupportMigration Implementation costs 212,500 163,286IT Staff TrainingEnd User TrainingOther 3rd party software products (migration tools, etc) 165,400 2011 Pique Solutions. All rights reserved.Other Microsoft software products6
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESBusiness Benefits – Dramatic Improvement in AdoptionIn addition to the tangible cost savings, several key business metrics for collaboration solutions were alsoimpacted in the migration from IBM to SharePoint. Based on the average responses from the companiesinterviewed, Figure 4 presents the impact on business metrics measured in the study.Figure 4: Business Metric Improvement after MigrationBusiness Metric Improvements after Migrating from IBMto ent in Timeto ValueIncrease in UserAdoptionImproved Delegation of Increase in BusinessAdministration EffortUser Productivity Collaboration solution implementation time (Time to Value) improved by an average of 20% basedin part on the easier and faster integration with other infrastructural components such as ActiveDirectory, Exchange, MS Office and better developer productivity (which also increase by 26%). User adoption increased by an average of 50% after migratingfrom IBM collaboration tools to SharePoint. This was basedon the ease of use and familiarity with other Microsoftproducts in use on the desktop including Microsoft Office.End user adoption was also an extremely important driverand catalyst for the migration, and from a cost of ownershipperspective, actually reduces the cost per user as comparedto former IBM solutions that had limited adoption. Related to both improved implementation time and useradoption, companies were able to achieve a 25% gain fromdistributing administration effort and activities to thebusiness units themselves enabling them to manage the dayto day aspects of managing sites/sub-sites and providing localaccess controls. According to companies interviewed, thiswas a net new capability as this was something that was noteasily delegated to non-technical administrators with the IBMcollaboration tools.“We’ve seen an 80% increasein active user adoption basedon our migration toSharePoint. The familiarity ofthe interface and the richnessof information available drivethis increased usage.”Manager, IT ServicesFinancial Services (Hedge Fund)Finally, companies interviewed achieved, on average, an 18% improvement in end user businessproductivity based on the time savings in using SharePoint for collaboration and contentmanagement. While not explicitly included in the ROI calculations, this was cited as an importantarea of improvement with SharePoint as compared to IBM. 2011 Pique Solutions. All rights reserved.7
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESA Better CollaborationExperience for an Insurers’Employees and AgentsAs part of a long term collaborationplatform migration, a large insurancecompany migrated from IBM to SharePointto drive higher adoption, provide acommon user experience, betterintegration with desktop productivity toolsall while reducing the need for externalresources to help with customization.Industry: InsuranceCompany Size: 25,000 employeesRole of Participant: Director, Architectureand Engineering GroupWorkloads Migrated: Collaboration,Portal, Content Management (5,450 usersfor initial/completed migrations)IT Infrastructure: Fairly heterogeneousserver environment (65% windows server)Migration (SharePoint) Investment: 750k in SharePoint licensing (mix ofSuite and Standalone CALs), 200kmigration implementation; 75k inrd3 party software; 3.5k in ITtrainingIBM to SharePoint Migration Benefits:Conclusion and Key TakeawaysPique Solutions detailed research with companies who have migratedcollaboration workloads from IBM to SharePoint demonstrates importantstrategic, economic, and business advantages as a result of the migration. Inmany cases, the data represents the results from the initial phases of anongoing, longer term migration strategy. As identified in previous PiqueSolutions survey research, Total Cost of Ownership (TCO) is a major factorfor many organizations considering migration of their collaborationplatform.Based on the tangible cost savings and the lower cost profile of SharePointvis-à-vis IBM, an impressive 317% return on investment can be achieved, onaverage, in the migration from IBM to SharePoint. This is based on costsavings related to acquisition, implementation, administration and businessusage of collaboration tools. A significant portion of the savings wasachieved by bringing development activities in-house versus using IBM orIBM partner resources.Time to market (value) was another key benefit realized by the companiesin the study. They were able to improve deployment and delivery time by20% upon migrating from IBM to SharePoint. SharePoint also enabled ashift and delegation in administration activities to the business units andbusiness users, which also facilitate faster time to value.Lastly, our study showed that companies were able to increase active useradoption by 50% due to the ease of deployment, ease of use andintegration with other Microsoft desktop productivity tools. While notexplicitly calculated in this analysis, this further brings down the averagecost per user in the economies of scale in rolling collaboration out toenterprise levels.Next steps 150k in “out of the box”deployment and integration savings 25% increase in use of in-houseresources for development; 20%improvement in developerproductivity 15% improvement in deploymenttime ( 250k/year in value to thebusiness)Review additional research by Pique Solutions about the benefits ofmigrating to SharePoint; link“Utilization was the key driver for our organization. Thewhole point of migrating from IBM to SharePoint was toget people actually using the collaboration solution and notjust something we have sitting here that IT uses.” 30% increase in administratorproductivity; 20% transfer of admineffort to Business UnitsIT Director, InfrastructureInsurance 25% increase in end user adoption 2011 Pique Solutions. All rights reserved.8
THE BUSINESS CASE FOR MIGRATING FROM IBM TO THE SHAREPOINT PLATFORM: THE COST ADVANTAGESAppendix – Framework & Cost/Value DriversFigure 3: A Deployment Lifecycle Framework/Drivers Used in the Business ementation &Development SharePoint LicensingCosts SharePoint “Out of theBox” capability savings Migration tools cost Other software costs ISV application relatedsavings Migrationimplementation costs Integration-relatedsavings IT and end user stafftraining Mobile user Ramp up time tobenefits after migration In-house development Licensing savings frommigration from existingcollaboration tool (IBM) Developer productivity Ongoing maintenance/support savings existingcollaboration tool (IBM)enablement savingssavingsManagement &AdministrationBusiness Use ofCollaborationTools SharePointadministrationefficiency savings Time to Marketrelated business userbenefits Distribution ofadministration effortto business unitimprovements Collaboration solutionadoptionimprovement Other managementand administrationsavingsimprovements Collaboration solutiontime to market/valuesavings Business user trainingcost reduction Business userproductivityimprovements Other business usersavings Other implementation &development savingsStrategic BenefitsAlso included in the business case framework were strategic business value drivers realized based on themigration to, and usage of, SharePoint for collaboration workloads. The following list of strategic driverswas included in the framework and corresponding research: Improved collaboration among employees and functional teamsBetter informed decision makingReduction in riskImproved customer or partner relationships or satisfactionBetter overall business agility (time to market)Standardization of technology infrastructureImproved competitive positioningBetter predictability of costsAccess to skilled resourcesRemote/Extended workforce enablementBetter integration with internal or external systems/applicationsEnablement of cloud adoption 2011 Pique Solutions. All rights reserved.9
SharePoint make it very compelling for companies of all sizes. Strategic Benefits - Improving Collaboration Ranks #1 A macro-level element of the business case sought to understand the strategic benefits of migrating from IBM to SharePoint and shed some light on the linkage to broader elements of the IT and business strategies.
