Many individuals rely on a free service like Gmail, Yahoo or Hotmail to host their email and while these free services work well for individuals, many corporations do not wish to rely on a free service for their vital communications. Many of these companies choose to host their own email server, whether it is by using Exchange, Apple Mail, or another third-party solution. Within the last few years the idea of a managed and hosted email service has come to become less of a pipe dream and more of a reality.

If you work in a corporate environment the word “Exchange” may be familiar to you. Exchange is one of the top internal email servers on the market today. It’s owned and maintained by Microsoft.

There are many things to consider when looking for an email solution. The first is almost always price. What product can I choose to accomplish what I need for the best price. Many people stick with free, but companies have policies in place that preclude them from using a free service for corporate email. This may be due to regulatory requirements, like Sarbanes-Oxley and the requirement for archival of email or it could just be a corporate policy that requires that communications be internal.

Once one lays out all of the requirements for their email they have to begin looking at what options are available, that meet the specific requirements. How does one choose a hosted email solution depends upon needs. Assuming that a company already runs an Active Directory domain, the basic requirements of an Exchange server are a 64-bit server with 4GB of RAM, 1.2GB of storage for the server, and Windows Server 2008 R2. With these specs you are looking at a $4000 server, plus $1299 for the copy of Exchange Server. Therefore, a minimum of $5299 for the hardware and software. This does not include purchasing a copy of Outlook to allow employees to connect to the Exchange Server. Microsoft Outlook, on it’s own, is $139.99 per copy, at retail. Let us assume you have 50 users, you are looking at a cost of $6,999.50 just for Outlook.

Is Hosted Email the Answer

Let us not forget about the Exchange Client Access Licenses as well. These run approximately $88 each. Therefore, for 50 users, that is another $4,400. Just to get started with an Exchange Server a company must shell out $16,698.50. This does not include the personnel to keep the server up and running.

Contrast this the cost of Microsoft’s hosted Exchange Server solution. Prices start at $10 per user, per month, or $120 per user, per year. For 50 users this could be as little as $6,000 per year for 50 employees. A significant savings over the $16,698.50 which is just to get everybody up and running.

The real question becomes at what point does it make more sense to host your own Exchange server over having somebody else host the server. Does it start at 100 users, 200 users, 500 users? At 500 users, just at the $10 rate, comes out to $60,000 per year. Less than the cost of hiring one Exchange server administrator.

There are many business factors that come into play when it comes to an email solution. Do you want each user to have access to a copy of Microsoft Office? If you were going to be choosing to run one version of Office and Exchange and not upgrade for 10 years, then it may be to your benefit to put down the expense of setting up your own server and maintaining it. However, if you want to have your users be able to use the latest version of Office it may cost a bit more.

The real key to the optimal solution comes from the types of users you have. If you have power users who could truly benefit from a full copy of Microsoft Office on their personal desktop computer it may work best to get a Microsoft Select license to keep all of your users up to date. Combine this with an Exchange server that is hosted and maintained internally, you could provide the optimal solution for you users.

Conversely, if you have a bunch of novice users who do not need all of the advanced functions of Word, Excel and PowerPoint, then potentially a solution with Office 365 and a hosted Exchange server may be the best fit for your company. I did not lay out every single possible solution, I did not take into account the option of a Microsoft Select Agreement, nor the Academic discounts offered. Any, or all, of these can affect the total cost of a solution.

Ultimately, it comes down to what works best for your environment, you users, and where you want to dedicated resources. If you do not mind having a dedicated person to manage your Exchange server then go with that. If you find yourself not wanting to deal with the hardware, software, and power costs, not to mention bandwidth, your best solution may be to hand that responsibility off to a third-party Exchange host. Unfortunately, there is no one size fits all answer. Unless, that is, you don’t have any real policies, you just need a bunch of storage, and you don’t want to pay much (if anything) then Gmail works quite well.

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