In-Depth

Hosting Exchange in the Cloud

Tired of hosting e-mail in-house but don't want to use Office 365? Hosting providers offer an alternative.

• By Doug Barney
• 08/05/2012

E-mail ranks up there as one of the most mission-critical components of an enterprise's IT infrastructure. Running Microsoft Exchange Server, the most widely used e-mail platform, can be a huge pain in the budget. Cloud providers claim they have a better way. They say they can get rid of your Windows Server and licenses that support Exchange Server and let you toss out related security software and appliances.

Some analysts agree, pegging savings by those who move to hosted Exchange services at around 50 percent. Shops are making the move in droves. Though Microsoft has notched its share of high-profile Office 365 wins with the likes of Campbell Soup and GlaxoSmithKline plc, third parties have been in the Exchange hosting game longer and as a group have a broader, deeper set of offerings. Many who have made the move have no regrets.

Success Story
Larkin Technology Group Inc. in Kansas City, Mo., moved to the USA.NET Inc. hosted Exchange service back in October 2006. "In the years since we pulled the plug on our own Exchange Server, we've seen the size of the default mailbox grow by more than 1,500 percent," says Dennis R. Barr, Larkin manager of information technology. "I have nothing but positive things to say about our experience with USA.NET. It's been a real improvement over running our own e-mail system."

The economics were good from the start. "The switch was made because we were using an old version of Exchange Server on an out-of-date physical server. The cost of upgrading the physical and software components was a capital expense, while the cost of monthly service from USA.NET was an operational expense," Barr explains.

While the initial savings were welcome, the ongoing picture is what's really bright. "We saved money in the long run because we got a better system, with more features and greater capacity in our mailboxes," Barr says. "To have achieved that with an in-house upgrade would've been more costly, not to mention the additional management and administration headaches."

That was particularly noticeable for Barr, a single-person IT department. "I was able to focus on more immediately valuable functions, rather than trying to be an Exchange admin in addition to all the other things I was doing," he says.

End users saw an improvement, too. They had larger mailboxes so Personal Folder files became an option, not a requirement.

The migration took one long day of software installation and configuration. "Since then, any technical issues have been handled expeditiously by people trained to deal with that sort of thing, rather than my having to learn the intricacies and peculiarities of Exchange Server," Barr says.

Priced to Compete
Bob Collins, an MCSE and IT consultant, is another hosted Exchange fan. Collins handles IT for a country club with 50 employees. Like Barr, Collins doesn't have a big staff -- he does it all himself. Cloud e-mail was just the ticket.

The good news for Collins was that only eight members of the administrative staff needed e-mail. "The cost of a server, the software and then my time to install and configure made no sense against the GoDaddy pricing of $12 per month per user," Collins explains. "The ROI for self-hosted was going to be about seven years, and with GoDaddy doing backup and maintaining the latest version, the price was hard to beat."

Collins says the move was pretty easy and took two days.

The GoDaddy cloud does all the heavy lifting. Even so, the golf club felt some internal pain before it made a much-needed network upgrade. "Our router took a beating with the constant traffic, and the PCs felt some sluggishness with Outlook," Collins says. "Recently the site was upgraded to a fiber link with 10MB speed -- prior to that it was a single, although flaky, T1 -- and that has addressed many of the issues. One workstation is running Windows 7 64-bit, and it suffered terribly with failures to be able to read or download attached PDFs. Last I heard there was no further problem with the new fiber link."

New Opportunity
Solution providers, meanwhile, report growing Exchange hosting businesses. "We're seeing increased acceptance of cloud-based solutions in our customer base of small and midsize businesses," says Walt Wilson, executive vice president of TerraCloud Inc. "Interestingly, there still remains significant caution about fully migrating desktop or server infrastructure pieces to the cloud. But ‘point cloud solutions' are easier to understand and easier to tip the risk-versus-cost-avoidance equation in the cloud direction. Cloud Exchange falls into this category. Gaining the full enterprise benefits of Exchange without the care and feeding of an on-premises solution is very attractive. A well-implemented cloud Exchange solution is painless, non-disruptive, and brings clear cost and operational benefits."