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Choosing the best hosted Exchange deployment for your organization

Resistance to hosting an Exchange deployment is fading. Organizations need to research the best deployment options for the business.

Until Exchange 2010 arrived, many organizations viewed hosted or cloud-based Exchange deployments with skepticism. They had concerns about the security, stability and scalability of hosted options in comparison with on-premises infrastructures. There were serious doubts about whether moving mail infrastructures to an outside service provider would ultimately prove less costly than an existing Exchange deployment. Intermedia, Rackspace and others offered a number of plans for hosting Exchange, but uneasiness remained.

Resistance is softening. Over the past two years, Microsoft Office 365 has rapidly matured as both a mail platform and an enterprise solution. Office 365 offers much closer integration between applications such as SharePoint, Lync, Office and Exchange, with federation between on-premises Exchange 2010 and Exchange 2013.

Many IT professionals previously unsure about hosting are re-evaluating it, especially in light of Office 365 rolling out WAVE 15 products as the back end. WAVE 15 includes Exchange, Lync, SharePoint and Office 2013, which are much more tightly integrated than their predecessors. For example, in Exchange 2013, you can now use compliance searches that return data from both Lync IM conversations and relevant document references in SharePoint that meet the search criteria.

Microsoft Office 365's integrated platform is complemented by the company's "Better Together" strategy. This ostensibly means better integration in Microsoft's suite of products with Exchange, Lync, SharePoint and Office. Other third-party hosting providers are struggling to offer the same level of integration and a consistent cost model.

On-premises vs. off-premises Exchange Server

Broadly speaking, Exchange 2010 and Exchange 2013 can be deployed in the following configurations:

  • On-premises. Organizations host all of their Exchange Servers and provide related technical support in-house, including disaster recovery.
  • In the cloud. Organizations avoid the overhead of managing an Exchange environment, which reduces the resources required to administer and support the platform.
  • Hybrid. A mix of on-premises Exchange and cloud; this configuration provides control in certain areas of the mail infrastructure but outsources other areas, which splits risk and cost. Hybrids can enhance performance of the overall mail infrastructure.

Larger organizations achieve fully cloud-based infrastructures in a step transition via a hybrid model, in which some mailboxes reside in a locally maintained Exchange environment while other mailboxes live off-premises. The authentication is usually handled using federation between the two environments. Mailboxes then gradually move until the local infrastructure can be decommissioned.

While large organizations are shying away from having their entire email or applications infrastructures run at a cloud-based provider, some are adopting hybrid models. In this scenario, some parts of the company are placed on Office 365 and use Exchange, Lync and SharePoint. This approach is popular in situations where employees are based in offices with limited connectivity or where implementing a company phone system is not cost-effective. Instead, larger organizations may use Lync.

Depending on the amount of mail data being transferred, smaller organizations (those with fewer than 50 users) can usually avoid the complexities of hybrid existence and move straight to a hosted platform using full migrations outside office hours.

Exchange pricing options for on-premises vs. the cloud

When evaluating Exchange deployment options, organizations should consider several driving factors in a migration, including cost. An organization needs to understand its existing on-premises costs for email before comparing them with a hosted alternative. Otherwise, it's difficult to make a sound business case for making the change.

It can be difficult to determine how much an on-premises infrastructure costs. A good rule of thumb is to derive cost per user over a given period of time, typically five years.

When building an on-premises cost model, consider these factors:

  • Annual hardware expenditures, including ancillary hardware, load balancers, email message hygiene and maintenance costs.
  • Data center costs, such as power and cooling. This is an environment-based cost, not a per-user one.
  • Annual licensing costs for Exchange, including third-party tools and associated maintenance costs.
  • Annual cost of backup and disaster recovery efforts.
  • Annual storage costs per user.
  • Annual staff costs.

These factors shouldn't be used as an exhaustive framework to construct a baseline; each organization has to adjust for its own requirements.

Once you've determined your baseline, compare the costs of hosting Exchange with your on-premises model. Consider these costs over the entire time period you anticipate being in a contract with a hosting provider.

A business may consider cloud-based email services for reasons other than cost. It may lack the in-house resources to properly support Exchange, or it may want to free technical resources for other projects. A company may view Exchange as increasingly complex and more demanding on personnel without providing the corresponding return on investment.

Most critically, moving from on-premises to off-premises Exchange should be considered only after careful study of the business case.

This is part one of a two-part series about choosing the best Exchange deployment for your organization. Read part two here.

About the author:
Andy Grogan is a multiple recipient of the Microsoft Exchange MVP award (2009-2013). He is based in the U.K. and has worked in the IT industry for the last 16 years, primarily with Microsoft, HP and IBM technologies. His main passion is Exchange Server, but he also specializes in Active Directory, SQL Server, storage solutions, technology strategy and technical leadership in large-scale enterprises. He currently works for a large county council in Surrey as its technical delivery manager and supports 15,000 customers on more than 240 sites. Visit Andy's website,

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