Does it make sense for SMBs to make the switch from Lotus Domino Enterprise to Lotus Domino Collaboration Express?

I’m told that IBM frowns on companies switching/downgrading their licenses from Lotus Domino Enterprise to a “lesser” license. I don’t really know if that is true, but it is perfectly understandable that IBM would prefer that a client continues its Software Subscription and Support with an Enterprise-level product versus purchasing a product targeted to SMBs. Therefore, it comes to no surprise that there is no “downgrade” path from a IBM Lotus Domino Enterprise license to a license such as IBM Lotus Domino Collaboration Express. Your only choice is to purchase the Domino Collab Licenses in full, outright if you decide to make the switch.

Until 2011, the line between Lotus Domino Enterprise Server and Lotus Domino Collaboration Express was very clear. With the former you got many advanced features such as Clustering and Directory Assistance that were not supported by the latter license. So, for organizations that needed more reliable uptime, integration with a foreign directory such as LDAP, and/or wanted to place a condensed replica of their Domino Directory on the laptops of their Notes users (among other many enterprise level features), the obvious choice was to go with the Enterprise version. However, this year, all but one restriction imposed upon the Collaboration Express license has been lifted and that is the size of the company that is allowed to use that license instead of the Enterprise one.

This one restriction is that IBM only allows companies with fewer than 1000 employees to opt for a Collaboration Express license. If you have more than 1000 employees then the only choice is for the Enterprise Server. With all of the other licensing restrictions lifted this means that there are a huge number, of what IBM deems to be SMBs, faced with a new choice: Do I make the switch from IBM Lotus Domino Enterprise to IBM Lotus Domino Collaboration Express?

Besides the recent lifting of the licensing restrictions for Collab Express, it is also important to note the two big advantages to this license compared with the Enterprise one. The first being that there is no additional licensing cost for installing and running Domino servers. Collaboration Express is purely based on the number of users (aka Client Access Licenses or CALs) using the Lotus Notes or iNotes client whereas Enterprise is a combination of both user (CAL) and server (PVU) licensing. So, with Collaboration Express you can run as many servers as you want without restriction, even if you purchase just one CAL.

The second advantage is that for Collab Express you do not need to calculate the number of Processor Value Units (PVUs) for each server you are installing since, as already stated above, there’s no need to worry about server licensing. I don’t think it is necessary to go into detail in this posting about how PVUs are calculated and how IBM determines the PVU value for the variety of processor types that exist in the market today (if you need more information please check out this link: Processor Value Unit [PVU] licensing for Distributed Software). Suffice it to say that PVU calculation is a fairly complex task. In fact, it is complex enough where IBM has felt the need to provide a PVU calculator on its website to aid users and resellers in figuring out how much server licensing will be for their physical and virtual server machines. In short, avoiding the need to calculate PVUs is a huge benefit to Collab Express licensing.

For companies under 100 users the choice is quite clear actually, especially if you plan to be using the software for at least another 2 or 3 years and you plan to continue purchasing IBM Lotus’ Software Subscription and Support during that time. In this case, switching from Enterprise to Collaboration Express makes the most sense. Although there is the initial sting of paying full price for the Collab Express licenses, if you compare the cost with the annual subscription for the Enterprise user and server licenses, you might actually break even or save money on or after the first year.

We recently landed the opportunity to renew the software for a company with 10 employees. They were planning on renewing their user and server licenses for Enterprise server. The total renewal cost turned out to be more expensive than purchasing 10 new Collaboration Express licenses outright. The next time this company is up for renewal their total cost outlay will be less than one fourth what they had been paying annually before for basically the exact same license.

This may initially appear to be a losing proposition for IBM since their renewal revenue stream could be drastically reduced by lower licensing costs. However, I believe that this may actually be a boon for IBM. It is a great opportunity for IBM to encourage new SMBs to Lotus Notes and Domino or even existing ones to choose to do one or more of the following:

1. Move/Migrate to IBM Lotus Notes and Domino given the recently available enterprise level features that do not exist in competing products at similar price points;

2. Stay put on the IBM Lotus Notes and Domino platform by switching from Enterprise to Collaboration Express when they might have decided to move away to a competing platform because of the much higher annual Enterprise level licensing

3. Stay put on the IBM Lotus Domino Collaboration Express platform because of all of the newly introduced enterprise level features now available at no additional cost

4. Reinstate/Upgrade an older version to the latest version of IBM Lotus Notes Domino to take advantage of all of these new features

Of course, the ability to switch will not be suitable for all SMB Enterprise level licensed companies. We researched having a 250 user company switch from Enterprise to Collaboration Express, but the switch did not make sense financially in this case, at least not over the short team Purchasing 250 Collab Express CALs outright was much more costly than renewing 250 Enterprise CALs even along with the Server PVU renewals, so it made a lot more sense for the company to stay where they were for now.

If your company is considering making the switch please don’t hesitate to reach out to us. We can help you figure out whether it makes sense for you too.

Posted in Lotus Collaboration Express, Lotus Domino Collaboration Express, Lotus Domino Enterprise Server, Lotus Domino server, Lotus Domino Support, Lotus Domino Upgrade, Lotus Software Licensing
4 comments on “Does it make sense for SMBs to make the switch from Lotus Domino Enterprise to Lotus Domino Collaboration Express?
  1. James Kennedy says:

    Express terms seem to be a moving target. Are you sure IBM won’t change them again?

  2. Omega says:

    I don’t get it.
    We are in the situation with 100 Users and it seems that that it takes at least 4 Years to make sense.
    Could you please post some numbers on your calculation?
    How many PVUs did you calculate ?

    Thanks.

  3. rgesteland says:

    @James,

    When you say that Express is a moving target what do you mean exactly? This most recent licensing change has not affected current licensed users in any way. In fact, it has only improved their ability to take full advantage of the capabilities of Domino. Could you be more specific about what you mean by moving target? Thanks!

  4. rgesteland says:

    @Omega,

    Every customer situation is different and, like you said, a lot is based on the number of PVUs that you are currently licensed for with Domino Enterprise Server (PVUs). So, each case has to be weighed carefully considering future expansion needs as well (such as adding additional Domino servers in the near future).

    Lets take a generic 100 user Domino Enterprise case at MSRP with 2 dual-core clustered Domino servers (280 PVUs).
    100 Domino Enterprise CALs Renewals ($42.75/each): $4,275.00
    280 PVUs Domino Enterprise Server Renewal ($12.40/each): $3,472.00
    Total Domino Enterprise Renewal 1 Year: $7,747.00
    Total Domino Enterprise Renewal 2 Years: $15,494.00
    Total Domino Enterprise Renewal 3 Years: $22,971.00

    100 Domino Collaboration Express New ($160.00/each): $16,000.00
    Domino Collaboration Express 1 Year: $16,000.00

    100 Domino Collaboration Express Renewal ($41.50/each): $4,150.00
    Domino Collaboration Express 2 Years: $20,150.00
    Domino Collaboration Express 3 Years: $24,300.00

    In the above case you would not break even until moving into the fourth year. This of course assumes that you won’t be needing any additional PVUs for additional servers within the 3+ years. If you wanted to add a Notes Traveler server, a BES Express Server, or a Mobile Connect Server within those 3 years, then you would need to purchase additional new Domino Enterprise PVUs for that server which would tilt the savings greatly in favor of Domino Collab Express.

    However, currently there is a promotion by IBM where you can receive 15% off the entire software licensing cost for newly purchased Lotus Software licenses if you finance the purchase through IBM Global Financing (http://www-01.ibm.com/software/lotus/offer/pricing.html) and you exceed the minimum of $5000.00. This should apply to your case, so your total licensing cost would then become:
    100 Domino Collaboration Express New ($160.00/each): $16,000.00
    Domino Collaboration Express 1 Year with 15% savings: $13,600.00

    100 Domino Collaboration Express Renewal ($41.50/each): $4,150.00
    Domino Collaboration Express 2 Years with 15% savings: $13,600 + $3,527.50 = $17,127.50
    Domino Collaboration Express 3 Years with 15% savings: $20,655.00

    In the above case with the 15% off IBM promotion you would actually be better off with Domino Collab Express by the third year ($20,655.00 vs. $22,971.00 [Enterprise]).

    In another example where you had 2 quad core clustered Domino servers then your 2 year renewal fee for Domino Enterprise Server would be $22,188.00. So you would be better off with Domino Collab Express by the second year because that would only be $20,150.00 (before counting in any potential promotional savings).

    So here are the numbers you asked for. I hope this was helpful. If you’d like to talk directly with us about this please don’t hesitate to contact us (sales@www.caicorp.com or 888-614-2197).

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