The Battle of Business Hosted vs. Cloud vs. On-Premise

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1 The Battle of Business Hosted vs. Cloud vs. On-Premise

2 The Battle of Business Hosted, Cloud and Everything In-between Microsoft Exchange has been at the heart of enterprise communications since The calendaring and mail server, developed by Microsoft, has grown into the most robust platform of its kind. It is the engine that drives communications around the world. The benefits of cloud and hosted environments are well documented. As technology has evolved, the proposition of migrating in house infrastructure off-premise has become an increasingly tempting one. However, with software vendors like Microsoft now developing their platforms with a cloud first approach, the reality is that cloud is now becoming more of an inevitability than an option. With several different flavours of hosting models on offer, and a bewildering number of service providers, it can be difficult for SMBs to know where to start. is not only the cornerstone of your communications infrastructure, it is a potential treasure trove of business-sensitive information; and it is therefore vital that you conduct due diligence before any data leaves your premises. During the course of this whitepaper we will explore the primary benefits of Hosted Exchange, comparing it to the alternative options available to businesses today, and outline some of the capabilities an organisation should look for in a Hosted Exchange provider. Hosted Exchange Agility and innovation. These are two of the most crucial factors to any SMB s success. The capacity to rapidly respond to a changing market, combined with an ability to innovate on demand. In today s economic climate, agility and innovation can spell the difference between success and failure. However, these two factors require something that we all want more of and never seem to have enough of money. Whether it comes in the form of time, manpower or skills, every decision that SMBs make, must be weighed against the bottom line. As a business leader, the burning question should always be, How do I do more with less? Microsoft Exchange has become ingrained in business culture. For most, it is the foundation for all digital communications, regardless of business size or industry. But for SMBs, it can often feel like IT, and infrastructure in particular, is working against the business, rather than for it. Hosted Exchange is nothing new; Cobweb has been doing it for the best part of 20 years. But as the Exchange platform has advanced, along with the speed and bandwidth of the Internet, it has become an increasingly viable option for many businesses. SMBs can now fully outsource their once costly in house infrastructure and expect a higher quality of service, with additional features, at a lower cost. This leaves organisations able to focus on business, rather than focusing on business enablement technology. 2

3 statistics Microsoft Exchange dominates enterprise messaging, with a 57% share of the market 122 s sent and received by an average business user every day 112.5bn business s sent globally every day 2.6bn Worldwide Users 4.4bn Worldwide Accounts Click to view In retrospect, one can see this as inevitable; every previous emerging operating platform has faced criticism from proponents of the previous platform, only to have that criticism diminish as the problems are addressed and the new platform s advantages become so obvious and widely accepted that everyone adopts it as the obvious choice Bernard Golden, named by Wired as one of the 10 most influential people in cloud computing and author of Virtualisation for Dummies 3

4 Cloud (Office 365) vs. Hosted vs. On-Premise Oliver Moazzezi is Cobweb s Technical Architect, a Microsoft Most Valuable Professional (MVP) and an expert on the Exchange platform, both on and off-premise. Below, Moazzezi outlines the different Exchange options available to businesses today. Office 365 Microsoft s 365 stack is a constantly evolving entity with sometimes-daily changes. You will find that new features are constantly added to the service whether you decide to opt in or not. However the commitment by Microsoft to the platform is a sign that they are here to stay. It was recently announced some 30% or more of all Exchange mailboxes are now in the cloud, whether that s on Office 365 or with other cloud providers. You will likely move to Office 365 due to the cost savings it will provide your business. This is first and foremost the main driver, whilst access to the latest wave of technology will be a close second. However, you have to be prepared to ensure your business fits in this model. Any business with processes around data sovereignty as well as backup and recovery may find these two factors blocking a move to Office 365. Hosted Cloud hosters, or Managed Service Providers (MSPs) as they are traditionally known, have been hosting Exchange for years. Some are delivered in an enterprise model, whilst others have ridden the technological entrepreneurial wave and provided a multi-tenant hosted version of Exchange before Microsoft had even considered Office 365. A hosting model is just as effective as it s always been, but will likely be utilised in a different way than it was two or three years ago. You will move to a hoster if you have special needs, where you are pushing the boundaries of what you can successfully deliver on-premise with both your infrastructure and the talent of your IT team. You may have data residency concerns and need your data hosted in a unique location or country under certain laws. Or you may find the additional integration MSPs can provide, that isn t part of the Microsoft stack, is beneficial to your business. Above all, a hoster will be able to bring a broader spectrum of colour to the table, when in some ways the consumption of Office 365 is entirely black and white. On-Premise Microsoft Exchange Server has been the gold standard for enterprise for over a decade. The quality in the product is, for the most part, second to none and so it remains a safe bet for on-premise deployments. Would you be making a mistake by keeping your on-premise? The answer to that is a maybe. You may choose to stay on-premise for the following reasons: You are worried where your data is held; You are worried about the fast pace of updates to the cloud; You feel a move to the cloud will happen, but not in this infrastructure refresh cycle, as the business isn t ready for the change. For most, it will become increasingly hard to justify staying on-premise due to cost. You will no doubt be operating under a CapEx model, where a typical outsourced model moves to a friendlier OpEx one. However, even in a like for like transactional comparison, onpremise is likely to come out as the more expensive option. 4

5 To be more responsive, we need to evolve. We need to flatten the information flow so that we can work better together and serve customers better, using a network of highly informed and highly connected people Jeff Teper, Corporate Vice President of Office Service and Servers group, Microsoft Cobweb Solutions is a provider of Exchange across all three deployment models Hosted, Office 365 and Hybrid. On top of this, we provide consultancy services for a range of on-premise deployments across the public and private sectors. Because we provide all three services, we are able to remain neutral across the spectrum of Exchange platforms on offer. In short, we want what is right for our customers. Hosted Exchange offers a range of benefits not available with Office 365, just as Office 365 has features not generally available through Hosted Exchange. Many of the features and advantages are interchangeable. The focus of this whitepaper is on the benefits of Hosted Exchange specifically; however, if you read this whitepaper and feel that your business may be better suited to a different deployment model, we have additional resources available to help you understand all of the options available. 5

6 Breaking it down: The benefits of Hosted Exchange SMBs and the Cloud 70% of SMBs want to know exactly where their data is located 30% want it kept in their country Only 20% believe that data is less secure in the cloud than it is on premise 60% don t have resources to implement new technologies and applications Source: Microsoft 6

7 World-class expertise and bespoke customisation One of the key differentiators between Office 365 and Hosted Exchange is the level of customisation offered. Office 365 is designed to be an all-in-one solution; but as we all know, allin-one is rarely right for everyone. Make no mistake - Office 365 is a highly capable suite. It offers Microsoft s best of breed applications and services in one neat, welloiled package. The biggest downside, however, is that it is offered on Microsoft s terms, rather than yours. If, for example, data residency is an issue for your business, Office 365 may not be appropriate for you. Hosted Exchange allows users to create bespoke environments, suited to match the needs of the business; and, most importantly, on terms defined by the business, rather than the vendor. A wider range of integration with third party platforms and services is also possible. Support is another key issue. The vast majority of businesses with fewer than 100 users will have one IT person on site two at the most. While this is sufficient manpower to keep the lights on, the sad reality is that a SMB is not likely to have the in-house talent required to keep on top of increasingly short technology lifecycles. Every business has its own area of expertise. A Hosted Exchange provider lives, eats and breathes enterprise communications, and so is much better suited to managing your infrastructure. This frees up the internal resources that you do have available, to focus on projects that drive your business forward, rather than simply maintaining the status quo. Impact on resources Traditional Hosted 10% 25% 86% 66% 14% 27% IT time spent on IT strategy IT time spent keeping the lights on IT budget focused on new initatives Source: IDC 7

8 Security and compliance Security for SMBs Cybercrime costs UK business 21bn a year IP theft and industrial espionage are the primary causes of financial loss SMBs are one of the easiest targets for criminals due to lack of resources Source: Cabinet Office According to the Cloud Industry Forum s (CIF) UK Cloud Adoption Snapshot for 2016, 70% of organisations still have concerns about data security in the cloud, while 61% see data privacy as an inhibitor. However, the vast majority (99%) have never experienced a breach of security when using a cloud service. The myth that cloud and hosted environments are inherently less secure than on-premise, is one that is finally being dispelled. This falsehood has largely been perpetuated by human nature the cloud inherently feels less secure, because your data is stored on servers that you don t own or control. You become a backseat driver. But it s important to note that there is a clear difference between control and security. The reality is that the platform has become largely irrelevant. Attacks on enterprise infrastructure are, by their very nature, opportunistic. Wrongdoers will attack the weakest link in a chain, regardless of where that link is hosted. Malicious attacks are increasing in both velocity and sophistication. Alert Logic s Cloud Security Report 2014 found that attacks increased across all incident types, in both on-premise and cloud provider environments. Once again, the resources available to a small business mean that any on-premise deployment will likely be running at a bare minimum. The vast majority of SMBs are running one or two servers in the back of the office often not even in a dedicated room. This could be referred to as a Tier 1 data centre. There is a single, nonredundant distribution path serving the IT equipment. By outsourcing your infrastructure, you are taking a vital component of your business and moving it to an ISO27001 certified, Tier3+ data centre. This means that redundancy is built into the site infrastructure, that the IT equipment is dual-powered and that there are multiple independent distribution paths. A broom closet or a Tier 3+ data centre with a dedicated team of specialists working around the clock. Which sounds like the more secure option to you? 8

9 The most seriously affected businesses are from sectors not traditionally viewed as targets of cyberattacks. And, although the government continues to focus on protecting the Critical National Infrastructure, companies in IP-rich industries are at a particular risk from cyber crime. Cabinet Office: The True Cost of Cyber-Crime SLA and availability According to The Radicati Group s Corporate IT Survey Messaging & Collaboration, , companies with on-premise solutions experience an average of 30 to 60 minutes of unscheduled downtime and an additional 36 to 90 minutes of planned downtime per month. That s up to 30 hours downtime per year. Gartner places this figure closer to 42 hours. Studies suggest that the average cost of downtime is $7,900 per minute. While this figure is easy to dismiss due to the fact that large corporations massively skew the average, the relative impact on an SMB remains just as high. Revenue, lost employee productivity, cost of IT Recovery, customer loyalty, damage to reputation; all factors to consider when calculating the true cost of downtime and even for a small business, they add up quickly. For a 10m turnover company, studies suggest that the average cost of downtime is somewhere in the region of 10,000 per day. By comparison, Hosted Exchange providers regularly guarantee 99.9% uptime. This translates to 8.76 hours per year. For a modest sized company, the difference between the two SLAs could cover the annual costs of Hosted Exchange twice over. Data residency Data residency, also known as data sovereignty, has become an increasingly pressing issue for many business leaders. The Edward Snowden scandal rewrote the rulebook on cloud security. It became apparent that the scope of data being collected and scrutinised by foreign and domestic intelligence agencies was much wider than anyone had ever anticipated. In the wake of the revelations, the business community quickly cottoned on to the reality that cloud-based data would be subject to laws of the country in which the data was stored. A significant proportion of technology vendors are based in the United States, and this has invariably led to mistrust of cloud suppliers, as data is subject to intrusive laws such as the Patriot Act. To combat this anxiety in the business community, a growing number of US cloud providers are now opening data centres within European borders; a region that has historically taken a more pro-business stance on data protection. These solution providers are also attempting to increase the amount of data residency control offered to customers. Office 365, for example, now offers businesses a greater degree of control, allowing them to 9

10 choose from regional data centres. Microsoft has European data centres in both Amsterdam and Dublin. While this is a huge step forward in the quest for greater control of data in the cloud, it doesn t fully address the needs of businesses that require total sovereignty. Even with these additional measures in place, the reality is that it is difficult for businesses to have total peace of mind as data may still cross borders. Microsoft is transparent about this fact in its Office 365 Q&A: Why would Microsoft move my data to a different region from my own? The requirements of providing the services may mean that some data is moved to or accessed by Microsoft personnel or subcontractors outside the primary storage region. Will Microsoft give notice when customer data is transferred to a new country? No. A Hosted Exchange provider with UK-based data centres and UK-based support gives a business complete peace of mind that its data will never leave UK borders, whether it is in motion or at rest. Of course, no organisation wants to open itself up to the possibility of unwarranted scrutinisation by an unknown third party; but for some, it is a worthwhile compromise given the price and performance benefits that cloud offers. With the right partner, Hosted Exchange can offer the best of both worlds - the flexibility and price benefits of cloud, combined with the assurance that data will always reside in the UK. Impact on the internal network Top three sources of spam by region USA 18.81% South Korea 12.95% China 21.93% 10

11 There is no consensus on just how much spam is out there, but experts all agree that it makes up the vast majority of . Commtouch s Internet Threats Trend Report found that an average of 97.4 billion spam s and 973 million malware s are sent worldwide each day. For an average company, anywhere between 60-95% of inbound is spam. No matter how advanced and robust an onpremise solution, it still must react to spam after it has entered the internal network. This invariably places increased demands on both storage and bandwidth. Once your servers receive an , each message must be analysed by your antivirus and antispam software, assuming that you have both, before ultimately being forwarded on to end-users. The mere act of filtering places a huge burden on your servers. Hosted Exchange not only removes this burden from your network, but also guarantees that malicious s are kept outside of the organisation s firewall. As our company grows, so do the number of accounts required and with that comes the problem of spam. Cobweb s Microsoft Hosted Exchange service provided us with the level of protection we wanted. In my view, management and all that comes with it is something best outsourced and dealt with by a dedicated and experienced IT partner all3media TCO & cash flow Cobweb s Hosted Exchange service has reduced our costs over the long-term, freed up our resources and helped us to increase our productivity Eben Upton, CEO, Raspberry Pi. 11

12 As stated in the introduction, when justifying an infrastructure refresh, it always comes down to the bottom line. Each and every one of the benefits stated above ultimately has an impact on Total Cost of Ownership (TCO). Using hypothetical figures, assume that an organisation has allocated a budget of 10,000 to refresh the current infrastructure. A significant proportion of this budget would be laid out as capital expenditure (CapEx) across both hardware and licenses. The rest would be attributed to operating expenditure (OpEx) maintenance costs etc. Assuming that the lifecycle of the technology is five years, the TCO would be 2,000 per year. Stretch the lifespan of your hardware out a couple more years, and the TCO comes down. Hosted Exchange takes the CapEx model out of the equation. So assume that you have 40 users, and are paying 3.59 a month per user, costing a total cost of 1,723 per year. Back of the envelope arithmetic suggests that shortly after the five year lifecycle period is up, the hosted model begins to cost more than the on-premise solution. This is simply not the case. It is based on the flawed assumption that servers will run and operate by themselves, that uptime will be 100%, that security threats will be non-existent, that components won t fail and if they do, that IT expertise will be free. While many of these factors are tangible, the reality is that, almost always, TCO of services is higher than anticipated. All of the benefits that are baked into a hosted solution are covered by the per user price that you are paying. This not only has a dramatic effect on cash flow, but for the vast majority of organisations, will have a positive effect on the bottom line. This really is the crux of the argument for hosted and cloud deployments. You are not simply outsourcing the physical servers or the Exchange platform; you are outsourcing all of the financial implications that come with them. Installing, deploying, securing, operating, upgrading, maintaining it all adds up. What to look for in a Hosted Exchange provider If you ve decided that the hosted model suits your business needs, it is vital that you choose a partner that can not only manage the transition, but has the resources and the technical capabilities to support your business well into the future.? Here are the top seven questions that you should ask any prospective partner: 1. How many users do you currently support? 2. What support capabilities do you have, both during and after migration? 3. What additional services/extended functionality do you offer other than Exchange? 4. Do you have Microsoft certified technicians on staff? 5. Which Microsoft competencies do you hold and how are they relevant to my business? 6. Are your data centres located in the UK? 7. Are your data centres ISO27001 certified? 12

13 Conclusion Question: What is the one thing that most people say when they go to buy a piece of consumer technology? Answer: I just want it to work. Whether it s a phone, a television, or a microwave, we want products and solutions that are both reliable and robust. In much the same vein, enterprise communications should not be complicated, regardless of how complex the technology is. Hosted Exchange provides an enterprise-class solution at an SMB price. Choose the right provider and you will have a robust and scaleable solution that meets or surpasses the functionality of most on-premise deployments. Most importantly though, it releases your organisation from the shackles of on-premise infrastructure, allowing your employees to focus on what is really important driving business growth. Agility and innovation are critical to business growth and by choosing to refresh your on-premise infrastructure, you may needlessly be weighing yourself down. In a period of such rapid change, this can be a dangerous move. About Cobweb Solutions Over the past 20 years, Cobweb s customerfirst philosophy has seen us grow into Europe s largest independent provider of Hosted Exchange. We are one of only a handful of Microsoft partners to be certified a Microsoft Cloud Solution Provider (CSP), enabling us to offer customers the full Office 365 suite, combined with our own award-winning support and service platform. Cobweb has attained seven gold and two silver Microsoft competencies, including Cloud Productivity, Small and Midmarket Cloud, Communications, Messaging, Midmarket Solutions, Hosting and OEM. With UK-based Tier 3+ UK data centres, we are one of Europe s only ISO certified hosted service providers, providing customers with 24/7 physical security. Whether you are looking to migrate your current communications infrastructure to a hosted environment, to the cloud, or looking for a more bespoke hybrid environment, Cobweb can almost certainly help. 13

14 We ve been a cloud company since the cloud began. Our hosted solutions have liberated businesses of all kinds. Removing the restrictions of on-premise IT so we can provide the best communication tools and services. Affordably and maintenance-free. About Cobweb Solutions Ltd Cobweb is a cloud solutions provider and Europe s largest independent hosted exchange provider. Founded in 1996, the company draws on in- depth expertise and decades of experience, empowering organisations of all sizes to grow into flexible, agile businesses through best-of-breed cloud technologies. A member of the Cloud Industry Forum and a holder of numerous Microsoft accolades including being a Microsoft UK Partner of the Year Finalist 2015, 9 Microsoft Partner Competencies (including 5 Gold) and being appointed into the elite new group of Microsoft Cloud Solutions Partners. The company prides itself on liberating its customers through technology, offering expert technical help and advice 24 hours a day, 365 days per year. Based in London and Dubai, with a centralised hub in Fareham, Hampshire, Cobweb is a British company with a global outlook. London, United Kingdom One Canada Square Canary Wharf Level 42 London, UK E14 5AB sales@cobweb.com