Cisco vs. Microsoft: Cost Components Require Deep DiveCisco vs. Microsoft: Cost Components Require Deep Dive

There is no shortage of commentary on the battle between Cisco and Microsoft when it comes to Unified Communications. But the technology is only part of the story. Cost is equally as important in the decision process.

Though many complex issues (technology, partners, licensing structures, integration, etc.) emerge in the Cisco vs. Microsoft debate, the technology debate essentially boils down to each vendor's strengths: Cisco's strengths are in real-time apps, including voice and video, as well as the contact center; Microsoft's are in messaging and collaboration. The most important applications (along with the expertise of the decision makers) for each enterprise dictate which vendor to use--or so goes the conventional wisdom.

But costs also influence vendor selection--and not always accurately.

I have spoken with many IT leaders who selected Microsoft, regardless of technology priorities, because they perceive significant cost advantage over Cisco. Indeed, the value perception is strong with Microsoft, and it absolutely offers enticing capital and licensing costs for those with existing enterprise licenses to add unified communications as well as IP telephony. But in many cases, they find that the overhead to manage a Microsoft rollout is more extensive than they anticipated.

Nemertes' most recent annual UC Cost Data research, which provides real-world data from nearly 200 companies, offers some further insight about true costs. For capital data, we evaluated all equipment and licensing and divided the total costs by the number of end units (ie, handsets, audio bridges, etc.). Among all rollout sizes for IP telephony, Cisco's capital cost per end unit is highest at $552. Microsoft's is $455. (ShoreTel's is lowest overall at $300.)

Using the same methodology, Cisco also is more costly than Microsoft when it comes to initial implementation--$93 per end unit vs. $85 per end unit. (ShoreTel also is lowest at $69).

So, isolating the one-time costs, Microsoft is, indeed, less expensive than Cisco. But the more important costs are the ongoing operational costs because those reflect what companies can expect to pay moving forward. Microsoft's operational cost is $805 per end unit, compared to Cisco's $478 (Avaya is lowest overall at $174 per end unit).

Although those who select Cisco likely will pay more than Microsoft in one-time costs, they will pay less over time on operational costs, which in our research include equipment maintenance, internal staffing, managed services, and training/certification.

Evaluating IP telephony costs is more art than science, though. The figures depend on several factors that vary from enterprise to enterprise. For example, the experience of the internal IT staff substantially affects operational costs, as does the extent of interoperability requirements, and the size of the rollout.

If an organization is staffed with Cisco experts who have run the vendor's voice, data, and video networks at other companies, Cisco likely will be less expensive than Microsoft to operate. Likewise, as IT staffs rack up more expertise running Microsoft voice and collaboration apps, the costs to operate that system will be closer to the costs of other vendors.

The bottom line: IT leaders must devote more time and resources toward evaluating their strengths and weaknesses, and then evaluate those as part of a cost assessment. Don't be tempted to simply select the lowest upfront costs. Also, talking to peers from other companies that have experience with each vendor helps to uncover true operational costs.