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A growing number of organizations are choosing hosted applications over in-house deployments. The hosted paradigm allows organizations to shed the capital expenditures associated with traditional hardware and licensing. A remote service provider licenses and installs the application instead. The organization pays a recurring subscription fee to the provider who transfers the application via the Internet, for example.
Pros and cons of hosted Exchange Server
One benefit of hosted Exchange is that all associated overhead -- servers, software, configuration, monitoring, maintenance, upgrades, backups and disaster planning -- shift to the service provider. "Typically, all that is left for the client to do is provision users and create distribution lists, address lists and the like," said Andy Grogan, SearchExchange.com contributor and head of IT for Hounslow Homes in the U.K.
Hosted providers may also offer bundles of related services like malware protection, compliance and archiving, and mobile device access as well as other value-added services that complement email.
There are also tangible business benefits. The capital expenditures and periodic technology refresh cycles associated with a major application deployment can be eliminated and replaced with a recurring subscription fee. This is an immediate cost benefit that shifts Exchange over to an operating expense, which is easier to budget. The subscription varies with the number of mailbox users, so it's also easier to track the real operating cost of your email.
There is also added flexibility because the Exchange organization is not committed to the capital investment of hardware and software. "Instead of buying something and investing in it, if something comes along that's better suited to you, you have a lot more flexibility to change because you didn't spend all that money upfront," said Laurie McCabe, partner with the SMB Group, based in Northborough, Mass.
There is rarely -- if ever -- competitive differentiation for your organization in owning your own email system, added McCabe. "You're better off investing in technology that's going to help you make money, make your customers happy and make your workers more productive."
There are, however, some potential disadvantages to hosted Exchange, the biggest of which revolves around trust.
For example, a subscriber must trust the provider to maintain an acceptable amount of uptime and availability, while keeping mail and user data secure (especially on shared platforms). The provider is also responsible for maintaining adequate levels of performance.
Diligence in evaluating potential hosted Exchange providers from the start is a necessary, but often overlooked step. An organization must ensure that the provider's service level agreement (SLA) is sufficient. The provider should also be responsive -- by phone or email -- and have a proven track record of success with that service level. Subscribers should request references of similar-sized customers to make one-to-one comparisons. This is why SLA's are such an important contract, and should be reviewed by legal counsel and regulatory officers within the business. If the provider cannot meet your regulatory needs, find another provider.
There are also less-tangible issues that can disrupt email service. A hosted Exchange provider may be bought out by another company, for example, resulting in serious service or support disruptions. In some cases, a provider may even go out of business with little to no if any warning -- making a once sound SLA worthless.
How hosted Exchange can work for you
Email performance is an important consideration in a hosted environment. Considering the availability of powerful modern servers and high-bandwidth WAN connectivity, most organizations should expect no significant difference in email performance between in-house and cloud deployments. But experts point out that inefficiencies with the provider's infrastructure and WAN can cause problems for the subscriber.
Grogan notes that a provider with a shared (multitenant) infrastructure may demonstrate the most noticeable performance difference. "It is likely that you will take a performance hit if [the provider’s] usage profile is significantly different than yours," he said.
If you're a larger Exchange organization that can negotiate a dedicated server from the provider, chances are that the limiting performance factor will be the WAN pipe between provider and subscriber. A large number of users accessing email simultaneously may run into a WAN bottleneck, rather than a server-side performance problem, for instance. It's important to consider WAN bandwidth requirements and ensure adequate performance before migrating to a service provider.
WAN connectivity and uptime are also critical. Any disruptions to the WAN can impair the availability of applications like hosted Exchange -- even if the actual provider is online and available.
"If you don’t have a good, redundant network, you're going to have problems," said Lee Benjamin, advisor with ExchangeGuy Consulting. "Many organizations don’t think about [the need for] a secondary connection to the Internet from their primary location."
Implementing a backup WAN provider -- complete with different cabling to the premises -- is the best way to deal with potential network connectivity troubles. Be sure to have a strong SLA that clearly defines response times, closure times and financial reparation in the event of disruptions. The SLA's terms, as well as the WAN service cost, should reflect the realistic needs of your business. Ongoing network monitoring can help you determine if you're receiving adequate WAN performance.
Migrating to hosted Exchange
The actual process of migrating from an in-house application to a hosted one varies according to the size of your business (number of users), as well as the provider and its recommendations. The provider will usually supply some guidance and best practices to explain how to migrate mailbox data, maintain the SMTP domain, maintain ActiveSync devices and move Active Directory.
In most cases, the transition to a hosted provider doesn’t happen overnight. It often starts with a select number of user mailboxes, then moves to a period of coexistence. Take this time to evaluate the provider, test its support, refine features and so on.
After initial bugs are worked out, migrate users systematically -- by group or department -- until the move is complete and in-house Exchange servers can be taken offline. Remember that migrating large mailboxes can be slow over a WAN; allow enough time to complete each step in the move.
Don’t forget you’re still responsible for the security and regulatory compliance of email and other business data the provider houses. Mailbox encryption is a good start, but it's often not enough. For some businesses, the regulatory considerations may be so stringent that hosted Exchange is not a suitable avenue. Businesses must understand the storage requirements for their data and discuss those needs with the provider. The right provider can usually accommodate them in the SLA.