Hosted Exchange Versus In House Exchange

[ChicknShack]

Reader's Digest version. We're a 1 Exchange server / 100 user shop. We have a fairly small support staff maintaining the internal infrastructure so our time is fairly limited and highly valued.

Upper management is under the impression that hosted email (specifically Exchange) and possibly Sharepoint could save our organization time, labor resources, and money.

I see advantages and disadvantages in a hosted solution. What has been you guy's experience with hosted Exchange? Has anyone "been there, done that, and want to go back?" I'm interested in hearing the good with the bad.

Thanks.

 

[scorp508]

What do you consider a disadvantage? Let's start there. For a 100 user shop it is hard to run things an enterprise level Exchange system for an economic price.

 

[sryan2k1]

How much time goes into the Exchange system now? Besides adding/removing users, and scheduled updates/patches, you should basically never need to touch the system.

 

[cscheib]

With hosted Exchange, depending on your provider, activities like patching are (or at least may be) totally out of your control. They may choose your most productive working hours to do these activities.

Also, uptime is out of your control - if something goes down, you have little chance of escalating it, and there's nothing you can do yourself to fix anything.

I have 1and1 shared hosting (1 account, goes to my iPhone), and I haven't been too pleased with it. My mail server has been offline for 1+ days on at least 3 occasions. Webmail (OWA) is broken, and they're not at all interested in troubleshooting it, because "it works fine on their end, it must be my computer" (I've tried it from multiple computers, on multiple interweb connections.)

 

[scorp508]

Originally posted by cscheib:
With hosted Exchange, depending on your provider, activities like patching are (or at least may be) totally out of your control. They may choose your most productive working hours to do these activities.

A good hosting environment will know the slowest time of the week for their servers and most likely choose that time. It'll be a clustered environment so your downtime should be limited to cluster failover. Exchange 2003 should be <5 minutes and Exchange 2007 PS1 less <2 minutes.

Also, uptime is out of your control - if something goes down, you have little chance of escalating it, and there's nothing you can do yourself to fix anything.

This is why you should get a financially backed SLA. If they're down they pay you.

 

[scorp508]

Originally posted by sryan2k1:
How much time goes into the Exchange system now? Besides adding/removing users, and scheduled updates/patches, you should basically never need to touch the system.

Depending on the size of the system you may be surprised. It typically isn't Exchange itself that freaks out, but all the end user related issues they seem to create on their own.

 

[socoj2]

Depending on the documents you guys use it might not be feasible to farm out Sharepoint.

 

[ChicknShack]

Originally posted by scorp508:
What do you consider a disadvantage? Let's start there. For a 100 user shop it is hard to run things an enterprise level Exchange system for an economic price.

- A backhoe dig could mean the difference between being able to send internal mail and not.

- Paying for compute resources (per GB mailboxes) when the current virtual infrastructure housing Exchange is under utilized.

- Budgeting for outsourcing Exchange when the majority of our mail related support time is spent on the client/Outlook end.

- Labor wise, the efforts put into administering a hosted environment isn't going to be all that different than administering an in house server.

- Users are still going to call the internal help desk for support.

Those are just a couple off the top of my head.

 

[chris]

At my last job we came to the opposite conclusion of your management. My previous employer ran with a hosted exchange from Analysts International. They were a very good provider and the supported us very well with our exchange system. No complaints about service here. The complaints were about money. The monthly on the service was about $2500 for a 500 users system with 150mb mailboxes. After an acquisition last summer we needed to scale to 1000 users and we wanted to increase mailbox capacity too. The quote came back at $3500 a month for 250mb mailboxes.

We figured we could do it inhouse at the same level of service for a "hard" cost of $850 a month and payback in about a year. For "soft" costs, patching and backups were about the only thing we weren't doing on the hosted system. We still had to do all the user requests for contacts, DLs and new accounts ourselves. Most of the trouble tickets were on the outlook end which we had to do.

Naturally the company folded before we could go ahead with this project.

 

[scorp508]

Originally posted by ChicknShack:
- A backhoe dig could mean the difference between being able to send internal mail and not.

This is one of those "Look at history" events. How many times does it truly happen? Yes, it is what it is... but you can plan for it with ISP connections at different sides of the building. Other technologies like corporate IM can get you by during an outage like that.

- Paying for compute resources (per GB mailboxes) when the current virtual infrastructure housing Exchange is under utilized.

A fair point. Remember only Exchange 2007 SP1 and higher are supported under VM and only under Microsoft approved hypervisors. Sure it'll run if it is a a supported or not hypervisor, but when you make that call to restore a critical DB due to corruption its best to know they won't ask you to reproduce it on physical hardware.

- Budgeting for outsourcing Exchange when the majority of our mail related support time is spent on the client/Outlook end.

A fair point to present to managment. Be prepared to back it up with historical data.

- Labor wise, the efforts put into administering a hosted environment isn't going to be all that different than administering an in house server.

Really? What about your onsite backups/restores, server upgrades, server patching, server monitoring, etc...?

- Users are still going to call the internal help desk for support.

Yep, and like you said if it is mostly client support it shouldn't matter too much.


There are positives and negatives, you just need to find what makes the most sense for your own org.

 

[Hairy Gunt]

I was very impressed by the Rackspace host exchange service. They use NetApp for the filesystem backend, so file recovery is painless.

Cost was $15 per user per month IIRC. Standard mailbox size was 500MB.

 

[rob3r]

Microsoft is offering hosted Exchange now, $10 per user per month w/ 1 GB of storage per mailbox. The storage can be moved around in the organization, so if you have 10 heavy email users and 10 light email users, you could give the 10 heavy users an extra 800 MB a piece and only give the light users 200.

The main problem I've seen with hosted email is that users tend to use email as a file storage/delivery system, and switching to hosted email will kill your connection if that is the case. User training on actually using the shared drive would be a good thing if that is the case in your organization -- --

 

[chris]

Originally posted by rob3r:
The main problem I've seen with hosted email is that users tend to use email as a file storage/delivery system, and switching to hosted email will kill your connection if that is the case. User training on actually using the shared drive would be a good thing if that is the case in your organization -- --

Ha... thats been the case at every exchange organization I've ever been at. Training is an on going issue, but they don't really change their behavior until the run out their quota.

 

[ronelson]

This is why you should get a financially backed SLA. If they're down they pay you.

As a 100 user shop, I doubt the SLA will provide too much incentive. Plus, even if they give you back your monthly fee, it does not even out with no access for days on end.

but you can plan for it with ISP connections at different sides of the building

I think he meant that a backhoe dig at THEIR site or on THEIR ISP could affect him, when his site and ISP are just fine.

Ha... thats been the case at every exchange organization I've ever been at. Training is an on going issue, but they don't really change their behavior until the run out their quota.

I have always wondered if there was a way to set a "quota" on the number of items in the inbox. But, since I have never been an exchange administrator, I have never found out. The size of emails is only partially an issue; the size of headers for an inbox with 12,000 emails is a much larger concern.

 

[Ubiquity]

We're a ~30 employee biotech and have been using Intermedia for our hosted Exchanged. I've been considering bringing Exchange in-house after we go through a round of infrastructure upgrades (new domain servers, SAN, VM servers, etc.).

One of the annoying things about hosted Exchange is that your users now have both email and domain password to remember and there isn't an easy way to set the password policy for the hosted Exchange accounts.

Also, with only a T1 you run into performance issues when people start forwarding huge PDFs around instead of using the file server. Sigh.

 

[chris]

Originally posted by ronelson:
I have always wondered if there was a way to set a "quota" on the number of items in the inbox. But, since I have never been an exchange administrator, I have never found out. The size of emails is only partially an issue; the size of headers for an inbox with 12,000 emails is a much larger concern.

I've never seen that be a problem before, but I could see how that might be. Interesting...

 

[scorp508]

Originally posted by ronelson:
I have always wondered if there was a way to set a "quota" on the number of items in the inbox. But, since I have never been an exchange administrator, I have never found out. The size of emails is only partially an issue; the size of headers for an inbox with 12,000 emails is a much larger concern.

There is not and don't expect to see one. -- --

In Exchange 2003 the # of items per folder before it started to become a performance issue was somewhere between 3,500 - 5,000. When Exchange 2007 first came out the number remained at 5,000, but the Exchange team recently increased this guidance to 20,000 for Exchange 2007 SP1.

This is items per single folder, it is not cumulative of a folder tree. You can have 3,000 in your Inbox and 1,000 in a subfolder, and 1,200 in aonther subfolder without issue. This is if you have >5,000 items in a single folder. Mostly dormant folders aren't a big deal, but when common folders like Inbox, Sent Items, Calendar, etc... start to get huge then you're dealing with performance issues much more often.

This isn't just a performance issue for the user with a high # of items per folder, it affects everyone on the server. When that user starts generating views or searches the Exchange server has to sift through a ton of junk and all other requests on the box are halted until it is complete. So the user searching may think it is normal since well... they're doing a search ...., but other users on the box will start slamming their mouse and bashing the keyboard wondering why Outlook just froze up.

 

[scorp508]

Originally posted by ronelson:
As a 100 user shop, I doubt the SLA will provide too much incentive. Plus, even if they give you back your monthly fee, it does not even out with no access for days on end.

Days on end? Come on, can any hoster worth a grain of salt afford to do this? If I had any days on end hoster do that to me then they wouldn't be my hoster the next day.

I think he meant that a backhoe dig at THEIR site or on THEIR ISP could affect him, when his site and ISP are just fine.

Then it is even more silly. -- -- A hoster should already accounted for this.

 

[cscheib]

Originally posted by scorp508:

Originally posted by ronelson:
As a 100 user shop, I doubt the SLA will provide too much incentive. Plus, even if they give you back your monthly fee, it does not even out with no access for days on end.

Days on end? Come on, can any hoster worth a grain of salt afford to do this? If I had any days on end hoster do that to me then they wouldn't be my hoster the next day.

I think he meant that a backhoe dig at THEIR site or on THEIR ISP could affect him, when his site and ISP are just fine.

Then it is even more silly. -- -- A hoster should already accounted for this.

When you factor in moving hundreds of mailboxes, are you really going to move hosting every time you get an outage of multiple days? It's not exactly a quick process, especially after you factor in reconfiguring hundreds of clients to access your new provider.

Also, you never know what will happen with an ISP's connection. They may claim to have redundancy, but in reality a slight router misconfiguration could nullify this.

Basically, the point I tried to make is when you take all of these factors out of your own hands, there are no guarantees. Especially with 100 users. 100 users is relatively small in the scheme of things to a hosting provider.

If YOUR ISP screws up, you can call them and make something happen. If your hosting provider's ISP screws up, you have very little recourse.

 

[scorp508]

If your hosting provider's ISP screws up then I would nearly guarantee you they have a financially backed SLA with them that would in turn cover the cost of your financially backed SLA with your hosting provider.

Is hosted Exchange perfect, no. Does it work for a lot of people, yes. I run an Exchange org on a daily basis and I wouldn't want to see it sucked out from under me and sent up into the cloud, but I can appreciate the benefits hosting providers offer many people.

If your cost of internal mail being down for X amount of time costs your business more than it is worth then I wouldn't even bother considering it. Then again, I would question why internal email runs the business. Why aren't other things like collaborative software (Sharepoint/Sourceforge), IM, application sharing, etc.. already handling a lot of what email may be doing today?

 

[RGrizzzz]

Originally posted by rob3r:
Microsoft is offering hosted Exchange now, $10 per user per month w/ 1 GB of storage per mailbox. The storage can be moved around in the organization, so if you have 10 heavy email users and 10 light email users, you could give the 10 heavy users an extra 800 MB a piece and only give the light users 200.

The main problem I've seen with hosted email is that users tend to use email as a file storage/delivery system, and switching to hosted email will kill your connection if that is the case. User training on actually using the shared drive would be a good thing if that is the case in your organization -- --

That's why you pair it with SharePoint, and if you can, set a limit for attachment size. $10/month seems pretty cheap.

 

[The ToOTaLL]

If you're looking at an idea for hard costs in the licensing realm:

$28 per Windows Server Standard CAL (if you don't already have an infrastructure in place)
$64 per Exchange 2007 Standard CAL, which covers:
- OWA/MAPI users
$33 per Exchange 2007 Enterprise CAL, which covers:
- Unified Messaging
(and yes, to do unified messaging you need a Standard AND Enterprise CAL per user)
$700 for Exchange 2007 Standard (you only need Enterprise if you absolutely need more than 5 databases across 5 storage groups)

Factor about another $3000-6000 for a decent Exchange 2007 server (I like a PowerEdge 2950 with RAID10 over 4x 300GB 15K SAS data, 2x 73GB SAS 15K boot, 32GB RAM). Nice thing about such a beefy machine is that if you go with 2008 Server you can do HyperV and setup a BES and Sharepoint VM.

Easiest way to do it, is to plug these rough numbers into a spread sheet, pick your period of amortization (1 or 3 years is pretty normal) to figure out your monthly cost of the hardware/software licenses, and then show management a side by side comparison of what they would need to pay in infrastructure investment versus the monthly hosting costs.

From there, it all depends on your CIO and if they'd rather keep costs low, or make a one-time investment and get it out of the way.

Oh, and don't forget about backup, spam filtering, Blackberry & BES Enterprise, and the uptime concerns that everyone else has mentioned when you bring it in house....

 

[duffbeer703]

My understanding based on conversations with Microsoft was that outsourcing Exchange hosting doesn't eliminate your need for Exchange CALs.

Typically, when they put the deal together, they'll pitch SA for the Microsoft Core CAL, so you'll get a bundled Server CAL, SCCM CAL, Sharepoint CAL, and Exchange CAL.

The upside is that it may be cheaper. The downside is that you'll have no idea what your software costs anymore.

Originally posted by The ToOTaLL:
If you're looking at an idea for hard costs in the licensing realm:

$28 per Windows Server Standard CAL (if you don't already have an infrastructure in place)
$64 per Exchange 2007 Standard CAL, which covers:
- OWA/MAPI users
$33 per Exchange 2007 Enterprise CAL, which covers:
- Unified Messaging
(and yes, to do unified messaging you need a Standard AND Enterprise CAL per user)
$700 for Exchange 2007 Standard (you only need Enterprise if you absolutely need more than 5 databases across 5 storage groups)

Factor about another $3000-6000 for a decent Exchange 2007 server (I like a PowerEdge 2950 with RAID10 over 4x 300GB 15K SAS data, 2x 73GB SAS 15K boot, 32GB RAM). Nice thing about such a beefy machine is that if you go with 2008 Server you can do HyperV and setup a BES and Sharepoint VM.

Easiest way to do it, is to plug these rough numbers into a spread sheet, pick your period of amortization (1 or 3 years is pretty normal) to figure out your monthly cost of the hardware/software licenses, and then show management a side by side comparison of what they would need to pay in infrastructure investment versus the monthly hosting costs.

From there, it all depends on your CIO and if they'd rather keep costs low, or make a one-time investment and get it out of the way.

Oh, and don't forget about backup, spam filtering, Blackberry & BES Enterprise, and the uptime concerns that everyone else has mentioned when you bring it in house....

 

[The ToOTaLL]

Originally posted by duffbeer703:
My understanding based on conversations with Microsoft was that outsourcing Exchange hosting doesn't eliminate your need for Exchange CALs.

Typically, when they put the deal together, they'll pitch SA for the Microsoft Core CAL, so you'll get a bundled Server CAL, SCCM CAL, Sharepoint CAL, and Exchange CAL.

The upside is that it may be cheaper. The downside is that you'll have no idea what your software costs anymore.

Typical Microsoft. That goes back to a comment I made just a few days ago that Licensing is such a grey area at Microsoft, given the fact that if you ask 5 different licensing team members the same question, most of the time you'll get 5 different answers. Whoever told you that you that the end user needs Exchange CAL when using Exchange hosting is wrong.

For example in a typical hosted Exchange environment, the reseller doesn't have to pay for the Exchange server software, but does pays MS a monthly license on behalf of the customer. A typical Exchange 2007 reseller that sells an Exchange mailbox with MAPI or RPC access has to pay about $4.00 an Exchange license plus another $4.50 for a Windows authenticating user CAL, so you're at $8.50 a user just to Microsoft, and not counting any off your infrastructure costs.

A good way they avoid paying for hundreds of monthly Windows CALs is by having a per processor license, which runs about $225 a month and covers an unlimited number of users, so if you can at least 50 users to authenticate then you've broken even. Most of the big hosting companies like Intermedia do it like this to bring their cost down significantly to just the Exchange CAL.

I work for an IT Consulting firm (who is also a MS Gold Partner) and we do a lot of licensing for companies that offer Exchange, Sharepoint, & CRM hosting, plus reseller SQL and hosted domain services. Our sales manager has done a fantastic job of working to understanding Microsoft's licensing and break it down for us to understand when we go out and bring in new business. You really have to drill down into their SPLA (Software Providers License Agreement - link)
and more importantly their SPUR (Software Providers Use Rights - link) to not only understand how they work but how to resell them without A) getting bit in the ass by Microsoft when you don't sell the correct monthly license and B) getting bit in the ass by the customer when you don't charge enough to cover your costs.

 

[scorp508]

Originally posted by The ToOTaLL:
$700 for Exchange 2007 Standard (you only need Enterprise if you absolutely need more than 5 databases across 5 storage groups)

You're forgetting other things like ActiveSync policies. Standard only allows for some of the more generic policies while Enterprise gives you much more control. Then the AV/AS options in Enterprise are also greater and updated more frequently.

 

[The ToOTaLL]

Originally posted by scorp508:

Originally posted by The ToOTaLL:
$700 for Exchange 2007 Standard (you only need Enterprise if you absolutely need more than 5 databases across 5 storage groups)

You're forgetting other things like ActiveSync policies. Standard only allows for some of the more generic policies while Enterprise gives you much more control. Then the AV/AS options in Enterprise are also greater and updated more frequently.

You're thinking Enterprise CAL versus Standard CAL - not Standard Edition versus Enterprise edition:

http://www.microsoft.com/excha...uation/editions.mspx

If you're a small organization, you can still get away with the lower end version of the Server software while getting the Standard + Enterprise CALs for the product.

I guess the question I have for the OP would be how much time do you have to devote to managing your Exchange infrastructure now that you would have to still devote if you used hosted Exchange? I know that most hosted Exchange environments have fancy control panels to manage accounts, but they are typically more cumbersome than simply adding an AD user and creating a mailbox. If you have a support staff on hand, then this traditionally is a really easy thing to do, and in my experience I've only seen shops that have one of those "knows enough to be dangerous" types in either HR, accounting, etc use hosted Exchange, since they can log in to a control panel, add a user, and setup a mailbox, versus hiring out to an IT consulting firm or bringing someone in house to manage their IT.

Unless you have a botched Exchange setup or don't have adequate hardware - things which would create a lot of work - then I wouldn't imagine there should be a lot of problems, because a good Exchange setup typically runs with minor tweaks and little management needed.

 

[RGrizzzz]

Originally posted by The ToOTaLL:
... Nice thing about such a beefy machine is that if you go with 2008 Server you can do HyperV and setup a BES and Sharepoint VM.

But you still have to worry about having it available externally, which I assume a hosted solution does for you.

 

[duffbeer703]

Originally posted by The ToOTaLL:
Typical Microsoft. That goes back to a comment I made just a few days ago that Licensing is such a grey area at Microsoft, given the fact that if you ask 5 different licensing team members the same question, most of the time you'll get 5 different answers. Whoever told you that you that the end user needs Exchange CAL when using Exchange hosting is wrong.

For example in a typical hosted Exchange environment, the reseller doesn't have to pay for the Exchange server software, but does pays MS a monthly license on behalf of the customer. A typical Exchange 2007 reseller that sells an Exchange mailbox with MAPI or RPC access has to pay about $4.00 an Exchange license plus another $4.50 for a Windows authenticating user CAL, so you're at $8.50 a user just to Microsoft, and not counting any off your infrastructure costs.

A good way they avoid paying for hundreds of monthly Windows CALs is by having a per processor license, which runs about $225 a month and covers an unlimited number of users, so if you can at least 50 users to authenticate then you've broken even. Most of the big hosting companies like Intermedia do it like this to bring their cost down significantly to just the Exchange CAL.

I work for an IT Consulting firm (who is also a MS Gold Partner) and we do a lot of licensing for companies that offer Exchange, Sharepoint, & CRM hosting, plus reseller SQL and hosted domain services. Our sales manager has done a fantastic job of working to understanding Microsoft's licensing and break it down for us to understand when we go out and bring in new business. You really have to drill down into their SPLA (Software Providers License Agreement - link)
and more importantly their SPUR (Software Providers Use Rights - link) to not only understand how they work but how to resell them without A) getting bit in the ass by Microsoft when you don't sell the correct monthly license and B) getting bit in the ass by the customer when you don't charge enough to cover your costs.

Thank you very much for your post... I heard that info directly from some senior Microsoft people.

Microsoft's licensing carnival is beyond outrageous. They employ smart people all over the place, but nobody can keep a straight story. That should tell them something.

Do you know if the licensing picture that you described also applies to hosted Exchange from Microsoft?

 

[scottman]

We've been hosted exchange for a couple of years and I'll never go back. Sure there are costs, but everyone else has laid out the internal costs too, and it more than offsets nicely...

We'll be evaluating MS hosted exchange in the 3rd qtr as our current agreement comes up for renewal.

 

[sroylance]

Originally posted by chris:

Originally posted by rob3r:
The main problem I've seen with hosted email is that users tend to use email as a file storage/delivery system, and switching to hosted email will kill your connection if that is the case. User training on actually using the shared drive would be a good thing if that is the case in your organization -- --

Ha... thats been the case at every exchange organization I've ever been at. Training is an on going issue, but they don't really change their behavior until the run out their quota.

I encounter this attitude a lot in IT and it frustrates me. If people are more productive when they keep collaborative docs in exchange (which is one of Microsoft's better and easier to use products), why do we need to retrain them to do otherwise? Especially when the alternative that MS and IT are encouraging is sharepoint, which is one of MS's worst and hardest to use products.

My own organization is way too dependent on direct control of exchange servers to migrate to hosted exchange, but I think generally it's a great idea. If it lets us expose the costs back to the business units, it forces them to make the decision about cost vs benefit (mailbox size vs productivity gains by having your files where they're easy to access), as opposed to just fighting with a huge amorphous IT cost center sink, and IT staff who're stuck in the middle.

 

[ronelson]

I encounter this attitude a lot in IT and it frustrates me. If people are more productive when they keep collaborative docs in exchange (which is one of Microsoft's better and easier to use products), why do we need to retrain them to do otherwise? Especially when the alternative that MS and IT are encouraging is sharepoint, which is one of MS's worst and hardest to use products.

Because storing one copy - whether it is on a network share, sharepoint, wiki, or something else entirely - is faaaaaaaaaar more efficient than using an email program as a data store? There are countless other problems with storing data in outlook unrelated to bandwidth concerns, too - auto-archiving, mailbox/pst size, searching, multiple revisions, etc.

Email != data store

 

[telecommando]

Who says you have to stick with exchange?
I've been looking heavily at using Google enterprise services.
email, docs, chat, ad integration and more for 50$ a user a year.
But I have a 30% mac shop so we have been looking to move as far away from exchange as possible. If you've ever used Entourage you understand why.

 

[scorp508]

Originally posted by telecommando:
If you've ever used Entourage you understand why.

That story changes with the new EWS enabled Entourage. Give it a shot if you're running Exchange SP1, I think you'll like it. -- --

 

[K0DE]

I think it comes down to the SLA they will provide you and if you can deal with it. Just remember you're more or less at their mercy once you switch over. If they constantly fail their SLA they need to move you back or pay for a 3rd party to do so. They should be comfortable signing something to that effect, or you shouldn't use that particular hosting company.