THREE YEAR TCO COMPARISON HOSTED EXCHANGE

THREE YEAR TCO COMPARISON HOSTED EXCHANGE

1 MARCH 2012 This whitepaper compares the three year total cost of ownership of a high availability Microsoft Exchange 2010 mailbox between an Australian specialist-provider hosted model and the traditional on-premise installation model. The analysis is presented in a realistic Australian context, in Australian dollars, and is applicable to corporate or government organizations with high levels of governance requirement and security classification. The analysis is performed for three theoretical but representative organizations of 100, 1,000 and 5,000 users.

EMAIL IS A CRITICAL ELEMENT OF MODERN BUSINESS Global IT analysts consistently rate email today as the top or near-top IT application in terms of business criticality. Organizations who get email wrong will suffer competitively in terms of timeliness of information, leakage of data, loss of worker coordination and increased cost of working. Email is also of major concern from an audit and risk perspective because failure can not only compromise corporate integrity but also business continuity itself. A modern organization must have an email system which is fundamentally resilient, secure, reliable, 24/7 supportable and easy to use. An enterprise-grade email system is one that increasingly considers the email platform as the centrepiece of a broad messaging and collaboration capability, converging many types of communication and productivity needs across the entire organization. Designing, implementing and operating enterprise-grade email in today s internet environment is a specialist technical field. WHAT IS MICROSOFT EXCHANGE? Microsoft Exchange is a world leading enterprise-grade email system used by over three hundred million business workers. It was originally introduced in June 1996 and has been upgraded several times since to include additional and enhanced features. The current version at the time of writing is Exchange 2010. It meets an email system s fundamental needs, and adds Microsoft Office familiarity and a number of other productivity features such as the following: intranet/extranet integration workflow automation Blackberry and other mobile device integration mobile fleet management capability legally-compliant archiving and query solutions high end filtering, border protection smart message routing based on presence Fax, SMS and Social Media integration CRM and other platform integration voice access to email server voice to/from text forensic logging ON-PREMISE DEPLOYMENT On-premise deployment refers to the model whereby the user organisation buys the infrastructure, facilities, licences and skills and takes upon itself the responsibility of managing the email platform on premise. Consultant s may be involved in the design and

implementation phase, but the user organisation essentially runs the platform itself using a mixture of capital and operating expense. Such a deployment at high level involves an element of management oversight, and risks and costs sometimes volatile, that an organisation may not want to invest in a non-corebusiness activity such as a utility service. HOSTED DEPLOYMENT An alternative methodology to on-premise deployment is the use of a hosted service. In this model, a specialist third-party provider is responsible to own, operate and manage all aspects of the service, usually for a flat monthly per user fee. Emantra is such a specialist third-party provider based in Australia. Hosted Exchange (as provided by Emantra) uses exactly the same software as would be deployed on-premise: it contains all native enterprise functionality and is not an abridged version as offered by some offshore services. It runs on very-high-availability servers in top tier data centres. It can be delivered as a multi-tenant service, where different customers share the same hardware and instance of the licence but have complete logical discretion of their own data, or as a dedicated instance running on physical or virtual hardware. The essence of the service is that it is fully managed and paid for by the month based on usage. All aspects of infrastructure ownership and secure housing, 24/7 operation, monitoring, maintenance and support, patching, reporting and daily remote back-up are provided by the service provider. The service is delivered to an agreed SLA which specifies minimal downtime tolerance. Financial penalties apply against the service provider if guaranteed uptime is not achieved. THREE YEAR COST COMPARISON The analysis compares the Three Year Total Cost of Ownership of Hosted Exchange versus On-Premise Exchange. The data used was derived from a range of real-life scenarios drawn from enterprise clients of Emantra and other industry case studies, and was validated against supplier cost lists and independent reports published by global IT analysts. Three typical scenarios were studied: organizations of 100, 1,000 and 5,000 users. The organizations were assumed to have levels of risk and security requirements compatible with Australian public company governance or Australian government security classification at the ISM-defined Protected level. The costing comparisons are shown in detail for each scenario in Appendices A, B and C. Conclusions are shown in the table below:

there are organizations in the United States of over 100,000 users in size which have successfully and economically migrated to Hosted Exchange. OTHER FINANCIAL BENEFITS There are other financial benefits of Hosted Exchange which are more difficult to model, and are typically not indicated in the table above: Predictability of cost and scalability The best hosting providers will quote an all-up unit cost whereby future bills will only vary by user number or some other reported and manageable parameter. Thus future costs are more visible and easier to budget. If properly designed in the first place, the hosting provider s infrastructure should scale for things like processors, RAM, storage, bandwidth etc in a manner which does not bother the customer either in a service disruption or in a billing sense. This can eliminate the significant cost risk of On-Premise deployments which may be affected by scale limitations or office moves etc. Opex not capex Hosted services involve minimal capital outlay on the part of the customer. There may be a fee for migration for example, or for dedicated instance set-up, but capital, licencing and infrastructure costs are amortised monthly. Thus the risk of stranded capital or the need and time for a capital budget approval process can be alleviated. Burstability Because of their own buying volumes, a good hosting provider will be able to pass on the savings of burstability which means that as long as a defined minimum of a resource, say storage or bandwidth, is used most of the time, it won t cost any more to burst beyond that for short periods. This means the customer does not have to buy resources to always allow for their short-term peak need. Switch on switch off The ability to almost instantly switch on and switch off services, users, features etc for project work, test and development sites, staging, machinery of government changes etc is also of great value. Again, the customer pays only for what is used. Reduced opportunity costs The use of Hosted Exchange can also realize opportunity cost benefits where for example, back-of-house technical labour can be reassigned to higher level or more customer-facing duties, or where valuable office space can be released from the need to house internal servers.