Hosted Exchange vs. In-house Exchange
By Josh Bouk
Many companies in the mid-market are examining the costs and benefits associated with hosting their own Microsoft Exchange implementation and comparing them to the costs and benefits of outsourcing. This article provides some hard numbers to better evaluate this decision.
The Company
For the purpose of this article, we will use a ficticious company called ASDF, Inc. This is a 350-person healthcare company spread across three locations. Of the 350 employees, 250 of them require Microsoft Exchange accounts.
The In-House Hosting Option
To host Exchange internally, ASDF will need hardware, software, implementation services, backup capabilities, archiving capabilities, training and a support and maintenance team. The chart below estimates these costs over a three-year period:
| Item | Unit Cost | Quantity |
Total Cost |
|---|---|---|---|
| Server (Cluster - Dual Core) | $14,700 |
1 |
$14,700 |
| Cluster Pack Software | $140 |
1 |
$140 |
| Annual 24x7 Service Agreement, 4 hr on-site | $1,200 |
3 |
$3,600 |
| Backup software | $35,000 |
1 |
$35,000 |
| Backup software implementation | $14,000 |
1 |
$14,000 |
| Staff Training for backup software | $3,000 |
2 |
$6,000 |
| Windows 2003 Exchange Cluster Edition | $3,500 |
1 |
$3,500 |
| Windows 2003 Exchange CAL's | $75 |
250 |
$18,750 |
| Exchange installation and migration | $8,000 |
1 |
$8,000 |
| Outlook licenses | $150 |
250 |
$37,500 |
| Exchage Training for Staff | $3,000 |
2 |
$6,000 |
| Archiving Software | $22,000 |
1 |
$22,000 |
| Archive Server | $9,000 |
1 |
$9,000 |
| Windows 2003 License | $700 |
1 |
$700 |
| Annual 24x7 Service Agreement, 4-hr on-site | $600 |
3 |
$1,800 |
| Archive Implementation | $3,000 |
1 |
$3,000 |
| Staff training for archive | $3,000 |
2 |
$6,000 |
| .5 FTE for maintenance, account mgmt and support issues | $40,000 |
3 |
$120,000 |
| Total In-House Expenses (3 yr) | $309,690 |
The Outsourced Exchange Hosting Costs
ASDF, Inc., being a company that believes in due dilligence, then came to Pervasive Solutions to evaluate outsourcing their Microsoft Exchange hosting, maintenance and support.
At Pervasive Solutions, they found several key differences between the In-House and Outsourced options:
- Support. Pervasive offered 24x7 support standard. ASDF's internal evaluations only allowed for support during normal business hours.
- Security. Pervasive offered email encryption as a standard feature - allowing ASDF to better protect patient data being sent to other medical facilities or directly to patients. Their in-house solution didn't account for email encryption.
- Uptime. The in-house team couldn't guarantee a specific uptime percentage. Pervasive guaranteed 99.99%.
But the biggest difference was the total cost. As shown above, if the company implemented Exchange in-house, they would spend over $300,000 - much of which would come as capital expenses during year 1. However, the cost for Pervasive Solutions' Secure Hosted Exchange for the same three years amounted to less than $200,000 - a savings of over $100,000! In addition, Pervasive's service fees would be paid on a monthly basis, avoiding the capital budget altogether and becoming just a typical line item in the standard annual IT budget.
Conclusion
While there are no absolutes about these types of decisions, generally speaking, there are real, quantifiable benefits to outsourcing your Exchange hosting. ASDF is a ficticious company, but these numbers came from a real-world case study conducted by a Pervasive client prior to signing up for our service. If you would like to investigate these options further, please give us a call. We will be happy to explore the issue with you and help you make the best decision for your organization.