A Microsoft Horror Story: Newspaper Chain Is Switching 8,500 Employees To Google Apps


One isolated case doesn’t make a trend, but Microsoft should be worried about cases like the McClatchy newspaper chain.

A loyal Microsoft shop today, McClatchy is shifting its 8,500 employees over to Google Apps.

Worse yet, McClatchy cites bad customer reviews of Microsoft’s existing cloud offering — the Business Productivity Online Suite (BPOS) — as a major reason why it’s going to Google.

First some background: both Microsoft and Google like to brag about competitive wins for their cloud offerings. So far, this is mostly a war of words — Microsoft makes billions from business software, and Google doesn’t even pass $1 billion for all of its non-advertising products combined. Microsoft continues to use its installed base and preexisting software contracts to move customers over to its cloud offerings — often before Google has a chance to compete. Even studies by Google resellers show a pattern of occasional test deployments, with a few big wins in very cost-sensitive markets like education.

We’ve said it before: how about some real proof that companies are switching from Microsoft to Google?

So Google pointed to Terry Geiger, director of corporate IT for McClatchy. Here’s what he had to say:

  • McClatchy is a Microsoft shop today. The company, which is spread among 30 newspapers in different locations, not only uses Exchange for email (common), but also SharePoint for collaboration (rarer) and Communications Server (now called Lync) for instant messaging and presence (quite rare). Some branches do use other email systems, like old systems based on Sendmail. Windows and Office are common throughout the company, as is the case in most businesses.
  • Consolidation is driving IT changes. Newspapers are hurting, and McClatchy has had big staff reductions in the last few years. Geiger explains that IT no longer had the staff to deal with email outages and maintenance. The company is also trying to consolidate multiple incompatible systems onto a single system across the whole chain, which makes the cloud a natural choice.
  • So why not go with Microsoft’s cloud solution? Geiger says they were considering Office 365, but they talked to other IT departments in newspapers and local businesses. “To a person, everybody was very dissatisfied with BPOS [Microsoft’s current cloud offering]. They were very unhappy with the level of service. There were frequent outages, unexplained outages, and some indifference from Microsoft.” The Microsoft reps who talked to them about Office 365 “wanted to talk about the functions and the concept what they were doing, but were not as concerned with the day to day uptime or liability.”
  • They’re going to reduce their Office spend, too. Previously, the chain would buy periodic upgrades of Office as a normal part of their IT spend — usually when employees got a new PC. This will end: Office upgrades will have to be justified on a case-by-case basis, and the company eventually hopes to move off Office to Google Docs completely, although that might not be possible for all users.
  • The change will save McClatchy $1 million over five years. That’s not including any savings in IT staff, as the IT department is already very lean. Another way of putting it — Google Apps will cost about 2/3ds of what McClatchy would have spent on the equivalent Microsoft software licenses.
  • Any good news for Microsoft? A little. Some employees — particularly executive assistants — pushed back about losing Outlook, which has more sophisticated calendaring than Gmail. McClatchy is taking Google at its word on certain points, like that Google Talk IM will be as secure as Microsoft Lync, and that Google will work with McClatchy in cases of subpoenaed information, instead of just turning records over from its data centres directly to authorities. (This is a big deal in the newspaper industry because of First Amendment issues.) So there is an element of uncertainty in the change. 

But overall, this isn’t the case of a small business switching from some legacy email system to Gmail while maintaining a huge Microsoft contract for Office and other products. This is a big company that seems anxious to move all its employees away from Microsoft products completely.

One story doesn’t make a trend — there were cases of businesses moving off Microsoft to Linux and OpenOffice in the last decade, too, but Microsoft continued to grow its sales every year. And Microsoft can point to some case studies where customers chose Microsoft’s cloud services after testing Google’s.

But still. Microsoft is the incumbent, and the Business Division that contains Office and these other products is a $20 billion a year cash cow.

So even ONE story like this should be enough to make Steve Ballmer and company sweat.


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