At Your Service: Hosted Exchange 2007

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The last Microsoft Exchange Server cover story for Messaging News featured then-code-named Exchange 12 and appeared in our March/April 2006 issue. The article offered speculation from analysts, a discussion on planned functionality and tips on migration. The product was launched officially in December 2006. Today, Microsoft Exchange Server 2007 market share represents just over half of all organizations, this according to Ferris Research. As stated by Microsoft, “Microsoft Exchange Server 2007 is the industry’s leading server for email, calendaring and unified messaging. In addition, Exchange Server 2007 is a central component of Microsoft’s vision for unified communications, enabling people to work together better by taking the complexity out of communications.”

David Ferris and his colleagues at Ferris Research recently conducted and published a comprehensive survey: Email Products: Market Shares, Versions Deployed, Migrations, and Software Cost. The study reveals many interesting facts and estimations. The report offers insight into 917 organizations representing all sizes and industries to determine email systems being used. The report finds that as of 2008, Exchange has about 65 percent of market share across all organizations. Almost all organizations with up to 49 employees are on Exchange 2007. Of Exchange seats in organizations with over 10,000 employees, more than 40 percent remain on Exchange 2003. Of Exchange-using organizations with up to 500 employees, about 5 percent are on Exchange 2003. The report reveals that Exchange 5.5 has nearly disappeared entirely.

The Outsourcing Option

Clearly Exchange has market penetration. But those currently on Exchange do have options, namely on-premise, completely hosted, or something in between. “The benefits of outsourcing a piece of the Microsoft Exchange environment, such as continuity, is a common one heard when discussing outsourcing,” notes Krishnan Thazhathekalam, program manager of Microsoft Exchange Hosted Continuity at Microsoft Corporation. “There is no upfront hardware or software to purchase. Nor network changes that need to happen. It is definitely cheaper to buy the service. Without the capital expense (CAPEX) costs it allows an organization to move to an operational expense (OPEX). You are just buying what you need, and paying monthly as you go.”

Why the ever growing offering of services for Exchange? “Email related solutions are increasingly difficult to configure and maintain,” explains Alberto Sandoval, product marketing manager of Mailtrust, a Rackspace company. “Purchasing the hardware is expensive and time-consuming, and hiring the right people with the necessary expertise can be even more challenging.” Sandoval points out that email is a mission-critical application for most companies, but it is not a core competency for most. Therefore, minimizing costs of doing business outside core-focus increases profitability. ”Plus, maintenance is expensive,” adds Sandoval.

Outsourcing Exchange Server 2007 is especially attractive to the small-to-mid-sized business (SMB). According to Jackie Funk, director of marketing communications and channel programs for Apptix, a provider of on-demand business communications services for SMBs, most SMB customers usually have one of two profiles. 1) Companies currently using a POP account or 2) Companies that have already made the hosted decision and want to switch to a new hosted provider, or have formed a new business. “For customers that have been on a POP, they want a business-class solution with features like shared calendaring, free/busy schedule, and access to mobile messaging. They may also want archiving and advanced anti-spam/anti-virus. These are features that a POP provider cannot offer,” states Funk. For those organizations that are evaluating or making the decision to move to hosted Exchange, Funk observes that they are typically operating in an IT-less or IT-constrained environment. “Even if they have the resources,” notes Funk, “they may not want to dedicate any to in-house email. The benefit of a hosted service is that it gives organizations the ability to outsource the management, maintenance and support of their email services to an expert. Yet still maintain control, without the need for day-to-day maintenance.”

The most common driver for a customer to want hosted Exchange is having experienced enterprise-class solutions in the past. ”Often an entrepreneur comes from a larger organization, and they want that same level of quality of service at the small business that they had at a previous company,” believes Funk. “With a hosted model, a SMB can have the enterprise-class solution that they could not afford to set up themselves, if brought on-premise.” The majority of Apptix customers are on a month-to-month subscription service, which allows them to avoid any large upfront capital investment.

A Menu Approach

Exchange Hosted Continuity is one of four distinct services in the Microsoft Exchange Hosted Services (EHS) portfolio. The service provides a security-enhanced and intuitive Web interface through which users can access their previous 30 days of email, as well as compose and send new messages in real time during a primary mail system outage. “Exchange Hosted Continuity is deployed over the Internet, which helps minimize up-front capital investment, and allows IT resources to focus on value-producing initiatives, and mitigate messaging risks before they reach the corporate network,” says Thazhathekalam. Customers of the hosted continuity service are not just enterprise. “We have customers that buy 50 seats from us and others that buy 5,000 and others with 50,000 seats. We have many types of customers. All have their own reasons for choosing a service.”

Not Just for SMBs

Thazhathekalam notes that scale is very important to an enterprise. “The problem this size company has with doing everything on-premise is the outlay of capital expense. Also, flexibility; services have unlimited scale, and are not limited by the architecture,” says Thazhathekalam. He goes on to say that for large companies, it is difficult to predict how much email it might have in the coming year. “Capacity planning can be a burden. With the hosted environment, that is not of concern. If you do not purchase enough, then it can scale easily, especially with mergers and acquisitions where a large number of seats might need to be added.”

With the growth of outsourcing options and reliability, large enterprises now are turning to hosted services. “We are seeing larger and larger customers become more comfortable with the idea of hosted email,” affirms Sandoval. “Enterprise customers are often more concerned about the transition process than the actual hosting of Exchange. Business continuity is critical. Even businesses that have been successful in hosting their own email in the past are making the migration.”

But does opting to outsource remove the need for IT? All agreed emphatically that it did not. “Email was taking a disproportionate amount of resources. Existing staff were working long hours, driving to the office on weekends to fix problems, and dealing every day with upset users,” reports Sandoval. He contends that switching to a professional vendor allows the workload of IT staff to get back to what it should be. It also has the effect of aligning IT time usage with actual business priorities—letting IT make the business more successful in their particular field and gaining competitive advantage.

Funk agrees and adds that in the really small size organizations the entrepreneur and the IT person might be the one in the same. “When you get to the 50-100 range, then there is almost always an IT person on staff that is also managing databases or applications that support the business. But they do not want to be the 24-hour support desk for email. It is a big pull on their time.”

Thazhathekalam observes that as a company size grows, there might still be one or two IT people on staff and that they tend to be very stretched. “My experience has been that if you can convince them that the service can meet their requirements, they are usually very open to a hosted solution. Even a larger institution is still running with limited IT resources. If you look at continuity for example, in most cases they are not able to pay attention because there are higher priority projects on their plate.” Thazhathekalam describes how he has visited with IT departments that understand how important continuity is, yet with the list of projects already determined, they will not begin to implement for two or three years. “Whether it is an SMB or a large enterprise, they can start small and do a trial. In many cases the solution can be deployed and up and running in less than a day. No huge initial outlay is needed, and the organization can measure ROI and go from there.”

Selecting A Hosted Service

Once the decision to outsource Exchange 2007 is reached the next step is to select the solution. “Transparency, reliability, a proven business, and excellent support are the key drivers in the selection process,” states Sandoval. “Because the underlying product is the same at the surface, differentiators end up feeling a bit less tangible. But the question of how a vendor will communicate in the event of an issue is amazingly important. Does the vendor have processes and systems in place to communicate, if and when an issue occurs? Have they ever proven that they use these systems? Do they communicate frequently about current developments that are non-urgent?

To Google Hosted Exchange brings up a lot of look-alikes, acknowledges Funk. “Organizations need to get educated and to dig deeper—talk with advisors, and analysts.” She also suggests a thorough review of company track record and viability. A vendor should have longevity in the business and have plans to stay. Funk also recommends that the vendor should focus on hosted Exchange and best of breed services. “There are providers that offer Web hosting or other things that are not specific to business communications. You want to be sure you have breadth and depth of services with robust archiving for example. Ask questions to find out how is data secured and what is the downtime? We guarantee 4-nines uptime. Others may say they do, but if you look at their infrastructure, it is pretty hard to believe. We have redundancy in all areas of the business. Lastly, ask to speak to satisfied customers.”

One of the single most important questions to ask a mail hosting company is what will happen to the data if an organization should cancel the service, advises a Rackspace whitepaper entitled, Should You Outsource Your Email? Although not a common practice, there have been reports of hosting contracts stipulating that data becomes the hosting company’s property. This means that should the hosting contract be canceled, the hosting company is free to delete the data. They are under no obligation to provide any future access to the data. It is essential to confirm ownership of data, and that the hosting company will assist in migrating the data to internal servers, or to another hosting company’s servers should the need arise.

Support levels are extremely important, stresses Thazhathekalam. “To have a solid service, an admin must be able to talk to someone knowing that a response can be expected in a fixed amount of time.” Additionally, understanding the granularity of control is also important, he says, citing user provisioning as an example. “In my experience, especially with large enterprises, organizations are not so worried about security. What is top of mind is how much control do admin have, and how much support is available when things go wrong? Can you really scale? Another important question is training. What level is available? How comprehensive is the documentation. Especially for continuity, where the admin is most interested in knowing what needs to be done, in the event of a crisis or unplanned downtime. Those are the questions we get most often.”

Outsourcing Exchange Server

At the core of outsourcing is trust. “Reliability can be difficult to communicate,” says Sandoval. “It often has to be inferred through questions like: Does this vendor have deep experience with large numbers of servers, customers, and complex high-availability network setups in a non-homogeneous environment?”

Of all of the components that make up a company’s infrastructure, perhaps none makes more sense to outsource than the email solution. With Microsoft itself now offering services, are long-time vendors concerned? “No. Microsoft is aiding the category through education,” says Funk. “The potential market, in particular for the SMB, is vast. There is plenty of room for all of us to compete. We are happy to see the number of hosted Exchange seats over the next couple of years is projected to continue to rise exponentially. Besides, by outsourcing Microsoft Exchange Server 2007 customers can focus their resources on their businesses, not their infrastructure.”