Intermedia: The Case for Hosted Exchange – Part 3

Intermedia commissioned a new white paper from industry research firm Osterman Research in order to provide additional tools to the marketplace regarding hosted Exchange. The below is part of a series of excerpts from the white paper, “The Case for Hosted Exchange” – available on Intermedia’s web site. Click here to read previous excerpt from “The Case for Hosted Exchange”. 

Benefits for IT


Why should your organization consider migrating to hosted Exchange? There are a number of important reasons to consider doing so that are focused on direct costs, opportunity costs, security and other benefits, as discussed below.


Many decision makers believe that an internally managed Exchange deployment is less expensive to deploy and operate than hosted Exchange. While in some cases that perception is accurate, very often it is not. Osterman Research’s cost models have demonstrated that an on- premise, 100-seat Exchange deployment costs nearly $40 per seat per month over a three-year system lifetime, while a 1,000-seat deployment costs just over $24 per seat per months. Given that hosted Exchange offerings are priced substantially less than this? The direct cost savings from using hosted Exchange are substantial. It is also important to note that leading providers of hosted Exchange include the licensing costs as part of their service, further reducing the cost of hosted compared to on-premise Exchange.


Further, a hosted Exchange deployment provides more predictable costs than on-premise deployments because the cost per seat is fixed over the lifetime of the contract with the hosting provider. This predictability of costs manifests itself in two important ways:

  • Unforeseen problems can create additional costs for an on-premise deployment, including natural disasters, power outages, moves to new facilities and other events that can add to the cost of managing on-premise Exchange in a somewhat unpredictable manner.
  • An organization that continually adds users will at some point, reach the maximum number of users that its infrastructure will support and will then have to add servers and other infrastructure to support new users. This creates a step function in the total cost of ownership for an Exchange environment can delve up the cost of Exchange management dramatically.


Among the more important issues that any organization should consider is that of the opportunity cost of IT staff members or, in smaller organizations, individuals who are charged with maintaining on-premise systems. Most decision makers understand that finding and retaining qualified IT staff is not particularly easy. As a result, in-house IT staff members should be used in a manner that allows them to provide maximum benefit to their employer, while also giving them a satisfying work experience that will motivate them not to go elsewhere. Using hosted Exchange frees IT staff members from the requirement to constantly monitor the servers to ensure continuous uptime, freeing them for work that is not only more interesting to them, but also more compelling for the business.

With hosted Exchange, IT staff can be deployed on projects that offer more competitive value to the organization and can also result in greater IT job satisfaction. For example, if an IT staff member can manage a massaging capability very well he or she provides some level of value to the organization. However, lf the same staff member spent ‘the same amount of time implementing new CRM capabilities that could convert a higher proportion of prospects into customers, it is very likely that much greater value could be realized from the same level of effort.


Although Exchange is an easy system for users to employ, it is not a simple system to manage internally. It requires expertise in a number of areas, particulars? When deploying a new version of the system, it requires expertise in each of the several server roles that comprise the Exchange platform, and it requires expertise in various other technologies that are integral to the Exchange ecosystem. The cost to develop this expertise can be high and, for smaller organizations, often prohibitive. In contrast, the use of a hosted Exchange provider can offer access to well-trained technical support staff that are available on a 24×7 basis that can typically resolve problems quickly and with minimum expertise from their customers.

The service aspect of hosted Exchange should not be overlooked when considering a provider of the service. Because few companies operate on an 8-to-5, Monday through Friday schedule, it is just as critical to have access to Exchange expertise at 11:00pm on a Saturday night as It is during normal business hours. This allows users to have their issues resolved in a timely manner without the cost and burden of maintaining in-house staff to manage a help desk, etc. In short, a specialist will virtually always offer better service and support when resolving Exchange- related problems.


One of the more compelling benefits of hosted Exchange is the fact that a third party is managing the entire backend infrastructure, thereby minimizing the impact of major and minor services outages and the ensuing loss of email that can impede any business. For example, a hurricane or tornado can knock on-premise systems out for days or even weeks while less serious problems like power outages or storms can bring down massaging capabilities for hours or even a few days. While these events can also impact providers of hosted Exchange services, leading providers will back up their customers’ email, allowing uninterrupted receipt of email for customers until they can come back online. This is something that a non-technical staff member or senior executive can do.

Further, in the event that a customer’s facilities are made unavailable for any length of time, employees can still access their hosted Exchange accounts from anywhere using a Web browser a mobile device or a copy of Outlook or Entourage on their home computer.


One of the chief benefits of hosted Exchange is the speed with which email services can be deployed. For example, deploying hosted Exchange apically requires little more than the modification of an MX record and possibly a change in the configuration of local email clients. Adding new users to an existing hosted Exchange deployment normally requires just some simple modifications in a Web-based administration tool. This makes it easy to add or eliminate small numbers of users or even entire business operations, which   is particularly important when integrating merged or acquired companies into an Exchange infrastructure.


A hosted Exchange capability allows organizations to be more flexible in the way that they deploy email to their employees. For example, a company may opt to manage Exchange in- house for its corporate headquarters, but provide hosted Exchange to each of its field offices that do not have an in-house IT staff. This allows the organization to provide highly available messaging services that provide a consistent user experience across the entire organization, but at much lower cost than if the IT staff was used to manage the satellite offices.


Migrating from one version of Exchange to another is just that – a migration, not an upgrade. Because Exchange does not allow an in-place upgrade to a new version, the cost of migration can be very high and even prohibitive for smaller organizations. Using a hosted Exchange provider, on the other hand, minimizes or even eliminates the cost of migration, since some providers will migrate their customers to a new version at no charge, Not only does this minimize the IT pain and the time required to migrate, not to mention the potential for downtime in the system, but it also dramatically reduces the overall cost of Exchange management over the long term.


Another important benefit of hosted Exchange is that much of the network traffic that would normally take place with an on-premise deployment of Exchange is transferred to the hosting provider. For example, a hosted Exchange provider that also offers anti-virus and anti-spam filtering will eliminate 75% or more of the email that would normally come into the network as scam, only to be quarantined and eventually discarded by end users. This saves significantly on both bandwidth and storage, costs that are growing exponentially and unpredictably in smaller organizations.


Virtually all leading hosted Exchange providers operate very secure physical facilities that include video surveillance capabilities, multiple employee access points using multi-factor authentication, tracking and monitoring tools and other capabilities that protect their customers’ data from being compromised. In most cases the security provided by hosted Exchange providers exceeds the security that their customers could afford to deploy.

Measures, such as SAS 70 audits or WebTrust certification, can provide an extra level of assurance for customers. SAS 70 Type II, for example, is a set of professional auditing standards that assesses the internal controls that a provider uses, as well as the auditor’s opinion on the effectiveness of these controls.


The use of hosted Exchange allows an organization to focus more on its core business processes rather than devoting resources to managing its Exchange infrastructure. While many IT decision makers believe that managing massaging capabilities is part of their core competency that is really not the case in most organizations. Letting a hosted Exchange provider manage key messaging capabilities is most often a better use of IT staff members’ time, as discussed above.


Many organizations will want to maintain at least some part of their Exchange infrastructure In- house. The use of a hosted Exchange provider allows this sort of hybrid solution. For example a corporate headquarters with thousands of users could have Exchange deployed in-house, while remote offices that do not have dedicated IT staff or specialized Exchange expertise could use a hosted solution. This permits all users in the company to have the same experience with Outlook or Entourage and with their mobile devices, while at the same time driving down the cost and complexity of managing Exchange, Another variant of the hybrid approach can be to offer hosted Exchange for some users and a less feature-rich email offering for other users whose needs are not as sophisticated. For example, an organization could deploy hosted Exchange for office workers while deploying an email-only, non-Exchange solution for workers behind retail counter or on a factory floor.

You can download white paper “The Case for Hosted Exchange” from our site.

About The Intermedia Team

Intermedia's Office in the Cloud™ delivers essential IT services for SMBs and the partners who serve them — including hosted Exchange, Hosted PBX, SecuriSync file sync and share, security, mobility and more.