Hosted Exchange: What is It and How Can It Benefit Your Business?

As a mission-critical part of your business, email simply has to work, be fast and always be accessible from the road or home.

For most small business owners, email is their lifeblood. In fact, in a Gartner and Symantec study, it was determined that up to 75% of a company’s intellectual property resides in its email and other messaging applications.

As a mission-critical part of your business, email simply has to work, be fast and always be accessible from the road or home. Today, this means being able to access your email and calendar directly from your cell phone, BlackBerry or other mobile device, so you’re never out of touch with your business.

But as critical as email is to most companies, it is important to remember that managing your email infrastructure (i.e., mail servers) is not usually directly related to the products or services you sell. To be successful, you have to focus on growing your bottom line, not on making sure your email is working, which can be both time consuming and expensive.

The good news is that a variety of hosted services are available for small businesses – services that were once only reserved for the biggest corporations. Hosted services, also known as Software as a Service or SaaS, are software applications that you access through the Internet. Hosting vendors store the information on their own servers and manage the entire system for you, helping to drastically reduce the time and energy you spend on keeping your email up and running. Less than a decade old, has helped redefine the way software is delivered to the end user, and technology giants like Google and Microsoft are also jumping on the SaaS bandwagon.

Primed for enormous growth and widespread adoption, Gartner Consulting predicts that SaaS is growing from just 5 percent of software revenues in 2005 to nearly a third of all software revenues by the end of the decade. Eighty-four percent of small and mid-size companies and 69% of large companies are willing to consider, currently reviewing or already using SaaS solutions. A big part of this growth is a result of the increase in broadband Internet access – just about every business (and most tech-savvy consumers) now has high-speed Internet access. But another key factor is that SaaS vendors are making better, simpler and more affordable software that doesn’t require a technical degree from MIT to setup or use.

When it comes to managing email, more and more businesses are turning to SaaS solutions for help. For example, many organizations are opting to deploy Hosted Exchange 2007, a cost-effective alternative to managing an in-house email server. However, not everyone has realized the benefits of a SaaS email solution, and it’s proving to be an expensive lesson.

Lee’s Enterprise: Emailing the Old Way

Tom Molnar is general manager of Lee’s Enterprise, a family-owned aerospace manufacturing business located in Chatsworth, California. The company manufactures precision-quality parts for the aerospace industry. Lee’s customers convert their parts into larger assemblies, which are ultimately sold to aerospace giants, like Boeing. Lee’s Enterprise has been around for more than 25 years, and their computer system reflects that.

The company’s PCs were purchased as needed. As one died, a new one was purchased. Tom would get the newest PC, and the PC shuffle would begin. This led to a very mixed environment of old and new PCs, each with different versions of software and different operating systems. As far as email went, they used a POP3-type email account (like the type you might get from Yahoo or Hotmail) offered by an Internet service provider. The email was free, but it did not allow Tom to synchronize his email on his office PC. So after he answered and deleted emails from his home computer, he’d come into the office and see the same set of emails in his inbox on his work PC, which led to duplicate efforts and wasted time.

Earlier this year, Tom took the advice of a college classmate and signed a contract with a local value-added retailer (VAR) – a computer and network specialist that comes to your business and fixes your ailing computer system. They installed Microsoft Exchange 2007, part of the Microsoft server product line that provides email, calendaring, contacts and tasks as well as support for mobile and web-based access to information and data storage. The total price tag was $25,000, and the installation took about three weeks to complete. Tom can now access his email anytime, anywhere using just about any Internet-connected device, like his cell phone. But there’s a downside. Tom needs to pay the computer techs $120 an hour to come in each month to keep the system running smoothly.

Shoulda, Woulda, Coulda

The bad news for Tom, and for thousands of other small companies grappling with the same email issues, is that he could have opted for a SaaS solution, like Hosted Exchange 2007, and received all the same benefits for a fraction of the cost.

Unfortunately, for most small and medium-sized businesses, the cost of running a Microsoft Exchange server in-house is simply too much. This is why Hosted Exchange 2007 or Exchange outsourcing makes sense for smaller businesses. This cost-effective solution means that a specialist IT company (like LiveOffice) provides all the technology and support to businesses for a small monthly fee. So, companies get all the benefits of an in-house Exchange Server without the hefty price tag or IT management headache.

There are a number of key benefits to Hosted Exchange, including:

  • Quick Payback. In IT studies looking at a Hosted Exchange solution over three years, some users estimated an ROI of more than 1000%, with payback in less than 30 days. With on-premise solutions, you have to pay for hardware as well as Windows and Exchange Server licenses. There may also be costs related to anti-virus and anti-spam software and client access licenses (such as Microsoft Outlook). Additional costs come in the form of spare parts, overtime for administrative staff, especially if you want 24-7 reliability, and other maintenance-related expenses. In fact, the long-term costs associated with server maintenance usually far outweigh the initial acquisition costs over the life of the server. With Hosted Exchange, there are no initial upfront commitments for infrastructure, hardware, licensing and ongoing IT costs, so the returns are immediate.
  • Better Productivity Gains. Hosted Exchange’s productivity improvements are often enormous. Hosted Exchange customers often attribute gains to: 1) shared calendars, contacts and files; 2) anywhere, anytime access via Outlook Web Access and wireless messaging from your Blackberry or Windows Smartphone; and 3) ability to refocus IT resources on key business priorities.
  • No Scalability Challenges. Scaling an in-house Exchange environment can require purchasing additional servers or upgrading hardware or software. Hosted Exchange customers avoid these costs by simply adding more email mailboxes as needed.
  • Enterprise-class Infrastructure. The best Hosted Exchange providers have designed and built their network to minimize email downtime. This means they have highly secure, geographically dispersed data centers that can guarantee 99.9% network uptime.  Translation: Your email is always available. This also means that your service provider manages the upgrades and security patches that are required to keep your network running smoothly.
  • Refocus Your IT Resources. You can dedicate precious time, resources and expertise to doing all the day-to-day tasks necessary to keep your in-house network and hardware up-and-running optimally 24-7-365, but why? A hosted solution allows you to focus your technical staff on core business issues to grow your revenues and profitability.
  • Spam and Virus Protection. Some Hosted Exchange providers also offer spam and virus protection, which can help eliminate 99% of unwanted email before it ever reaches your inbox. It also screens for and quarantines any viruses, which can bring your email system to a screeching halt.
  • Outlook 2007 Included. Several Hosted Exchange providers offer a complimentary copy of Outlook 2007 for access to your email when you’re not connected to the Internet. This way, you can read all of your email as well as draft new emails and schedule meetings, which will then be updated (synchronized) the next time you are connected to the Internet. In addition to Outlook in the office, users can securely access Outlook email, calendars and contacts from any browser, from any location with Outlook Web Access (OWA), the online companion to Outlook.
  • Budget Friendly. Another benefit of Hosted Exchange 2007 is the pricing model. The cost for this hosted service is generally charged on a flat per user, per month basis (often between $10 and $15 for each mailbox). This makes budgeting easier and streamlines your cash flow, since you don’t have to worry about depreciation of expensive upfront capital expenses.
  • Manage Email Accounts. Some of the best Hosted Exchange vendors offer a simple Web-based management portal, which lets you directly manage your Exchange environment without having any in-depth technical knowledge. Your administrators can easily set up new users, perform tasks like email routing and manage mailbox storage limits and permissions with just a few key strokes.
  • Mobile Messaging. Many Hosted Exchange accounts can easily be upgraded to include real-time synchronization of email, calendars, contacts and tasks with your BlackBerry or Windows Smartphone. This way, you’re always connected, no matter where your job takes you.
  • Customer Support. Because you have effectively shifted your IT burden and headaches to a vendor, they are on the hook to serve you. So look for vendors with U.S.-based support centers that can do everything—including the worrying—for you.

The fact is you already have too much on your plate. Between meeting the needs of your customers, generating new business, worrying about employee issues and managing the day-to-day finances of your company, do you really have time to concentrate on your email system or worry about the latest online virus? More and more small businesses are simply outsourcing these tasks, leaving the associated burden and headaches to a trusted industry expert.

In case you’re curious, if Tom had gone with Hosted Exchange 2007, he would have saved 88% and paid less than $2,000 for his email system in the first year while enjoying exactly the same benefits. Ouch, that hurts!

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