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Exchange Hosting vs. Staying Internal: Pros and Cons

Welcome to server room hell

Welcome to server room hell. Photo via: Sharenator.com

The rise of cloud computing, also known as “software as a service” and “hosted applications,” has greatly expanded the range of solutions that IT departments have for their companies’ needs. This is especially true for email. In the past, companies had no choice but to host their own Exchange environment. Now there are Exchange hosting options that allow more flexibility and even cost savings depending on a company’s particular needs. So the question is, should you host your own Exchange environment internally or go with a hosted option for your email needs?

Costs

There are a lot of costs associated with hosting an internal Exchange environment. These include:

*Hardware: Depending on server layout and roles, an Exchange 2010 environment could feature one server or anywhere from three to five. If a business has multiple offices, that number increases exponentially. There is no hardware cost associated with hosting.

*Maintenance and backup: Each server requires maintenance, repairs and upgrades over time. Skilled staff or consultants will need to be hired to handle these responsibilities. There are also costs involved in normal backup procedures. Again, hosting eliminates these costs.

*Licensing: Operating systems and programs require license fees for use. Applications like Exchange that require one license per user can become especially expensive. Hosting has no license fees, just service fees which usually cost less than Microsoft licensing.

*Environment: Servers have to live someplace, and that place has to be cool and has to have adequate power. The cost of air conditioning and power increase with each server that’s added, a cost not present with hosting.

Scalability

Another consideration when evaluating hosted options for Exchange versus an internal Exchange environment is scalability. Paying for something unnecessary in the interest of “future-proofing” has long been a nuisance IT administrators have had to deal with, purchasing overpowered servers and more licenses to couch against future growth. While buying more server than you need is a good practice from a capacity planning standpoint, it leads to inefficiency as companies essentially pay for something they really don’t need until capacity is reached.

In an Exchange hosting model, pricing is usually done a la carte, with companies paying a flat fee for service and then a certain regular per-user charge. This is a very efficient model, leading to businesses pay for exactly what they need right now and that’s it. Another user joins tomorrow? Sign them up and start paying for them tomorrow. This is a major benefit of hosted environments, especially in tough economic times.

Considerations for Staying Internal

Seeing just the cost and scalability benefits, many might wonder why companies would ever choose to host their own Microsoft Exchange environment instead of going with a hosted solution. One reason might simply be comfort, as these businesses may not like their data being hosted and actually “owned” by someone else. There may be legal issues as well, where a company might be legally bound to host, control and save all communications. Tax considerations could also be considered, since servers can be capitalized and depreciated while a service cannot. Finally, simple corporate inertia is a factor, as many companies take a certain course of action “because we’ve always done it that way.”

Switching a company’s Microsoft Exchange environment from internal to cloud hosting offers a variety of benefits. It’s cheaper and more scalable, but it’s not the perfect option for companies who want to retain ownership and control of data. These factors must be considered carefully when deciding whether to host your own Exchange environment or choose a hosted Exchange solution.

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