Mail Options: Exchange vs. Office 365

mailWith Microsofts’ SBS Server (aka Small Business Server) being discontinued at the end of 2013, many small businesses are left with the choice of either moving to the full version of Microsoft Exchange or moving to Office 365.

There are a number of considerations before making a decision on moving your mail to the cloud.

The below scenarios are based on indicative models which estimate Microsoft licensing, server support/maintenance/monitoring and back-up costs and some hardware costs where appropriate.   These scenarios are simplistic and not meant to be advice for your business. It is assumed that the cost of adding or changing users are the same for both Exchange and O365.

For more background on SBS and questions you need to consider to understand below scenarios, see previous article Questions to Consider in Replacing Small Business Server (SBS).

Scenarios for Office 365 – Cost Models run over 48 months

Office 365 includes shared calendars, 50 GB storage/mailbox, mailbox access from multiple devices, spam filtering, full Office Desktop (Word, Excel, PowerPoint) per user and more. E-mail attachments can be upto 25 MB. You also get upto 1 TB of storage on Microsoft’s OneDrive. There is also some basic document sharing and other cool features that you might use. Downside for folks in Australia, is you may experience some lag in using Office 365 since the servers are located in Singapore. (The version of Office 365 in my scenarios can sync with your on-site Active Directory.)

  • If you are a start up company with no existing hardware/server assets, Office 365 is perhaps the easiest, risk free decision you can make as there are no upfront costs and you can access your mail and Office documents from anywhere.
  • If you have already invested in Servers and have one or more existing applications on your servers that help run your business, Office 365 seems more cost effective to around 25 to 30 mailboxes. Note, I use term “mailboxes” as this is how Office 365 is charged.    So if you have 10 users with 5 mailboxes each, that is 50, not 10.
  • If you prefer to spread your costs out over time as an operational expense, Office 365 is for you. Microsoft Exchange has a large upfront licensing cost and you carry more risk in possible support charges.
  • If your current server cannot add Exchange as a Virtual Server and you need to purchase a new server, this increases the upfront costs needed for on-premise version of Exchange.

Office 365 is where Microsoft is investing, so you can be assured that more bells and whistles will be added to make this scenario better value over time. If you do not have a fast internet connection and most of your users are in one office, Exchange (on-premise) will give you much better performance.

Scenarios for Exchange – Cost Models run over 48 months

Many are used to having Exchange on-premise and the older versions of Exchange are fast and reliable, when configured and maintained properly. The newer versions of Exchange take more resources and can be slow if you don’t have enough CPU power assigned to it or if your storage is greater than 100GB on one of the four storage areas.

For this reason, we usually put a big beefy server (host) and configure two virtual exchange servers.   The “danger zone” for second server is between 50 to 75 users.   You will almost always need second exchange after 75 users.

We do full back-ups locally, off-site and regular monitoring.  We also do monthly checks of server, perform security patches and other preventative maintenance. All of this is factored into below scenarios.

  • This scenario assumes you already have a server and you have capacity to add two virtual servers – AD and Exchange. Note that AD is needed regardless if you use Exchange or Office 365.
  • For businesses that need all their desktops to be licensed with Office, the break even is approximately 50 users based on  one exchange server. This assumes you need to purchase 50 office desktop licenses. So anything above 50 users in this example should consider Exchange.
  • If you already paid for Office Desktop (std or premium) licenses, then the break-even is around 35 users based on one Exchange server.
  • If Exchange forces you to buy a new physical server (host), the break-even changes to around 75 users with two exchange servers (lower if you do not need second exchange server)

Scenarios for cloud and on-premise “hybrid” solution

Many will fall into a third category, either due to existing hardware investments, the type of workforce you have or the need to keep your data secure and/or isolated. This scenario assumes you have critical data that you want to keep total control over, some of which are in executive teams’ mailboxes. Usually, its the back office, administrative and/or executive support teams that have Exchange.

  • Get Exchange for all users with Critical or Sensitive data, usually at head office. Use Office 365 for the remote or branch office workforce.
  • It is often cheaper to give Office 365 mailboxes to a small branch office, especially if adding them to Exchange will force you to upgrade your server or add new servers to maintain.
  • The hybrid scenario is unique to Microsoft and allows you to transition to cloud over time, allowing you to fully capitalise your assets before retiring them.

Assumptions above include Exchange Server and User CAL licenses and maintenance/support  charges for on-site Exchange versus Office 365 at $16 per mailbox. Many other factors were not considered.

In addition to electricity (for on-site Exchange) and possible increase to internet charges (for Office 365), the scenarios change if you need Remote Desktop Services (aka Terminal Services), SharePoint (for Intranet or Document Management), Lync (Instant Messaging/Virtual Meetings) or SQL (database) for your business.

Contact us at Empower IT Solutions for an analysis of your situation.