Microsoft Online: How Hosted Exchange Reduces Costs by 30% and Greater

In case you have been under a rock for the last few months, you probably have heard that Microsoft has jumped into the cloud computing world through a service called Business Productivity Online Suite or BPOS.

According to Microsoft, BPOS is:

“a set of Microsoft hosted messaging and collaboration solutions including Microsoft Exchange Online, Microsoft SharePoint Online, Microsoft Office Live Meeting, and Microsoft Office Communications Online. These online services are designed to give your business streamlined communication with high availability, comprehensive security, and simplified IT management. When your company subscribes to one or more of the services, it connects to the rich interactivity of on-premises client and server applications with the flexibility and scalability of Web-based services. Because Microsoft hosts the services, it reduces your company’s need to maintain IT services on site. Many organizations today are moving to this "software-plus-services" model, because it decreases the need to manage hardware and software.”

Basically, it a hosted model, or “Software as a Service” (SaaS), of several Microsoft stacks that take the headache out of managing them internally at your organization.

Some Statistics on SaaS:

• By 2012, 20% of enterprise market e-mail seats will be delivered via SaaS and similar models versus 1% of enterprise seats in 2007 (Gartner)
• Solution providers say that software giant Microsoft—and not Google—will be their biggest competitor for managed and hosted software and services over the next 24 months (Gartner)
• The worldwide enterprise e-mail and calendaring market is forecast to grow at a compound annual growth rate of 10.6% from 2007 through 2012, with regional differences being evident (Gartner)

• Hosted business e-mail market segment will grow at an average annual growth rate of 26% between 2007 and 2011 (Radicati)

Cost Estimator on Seat Basis:

Microsoft has a great tool for helping people discover the costs associated with their BPOS offering. The links are:

Canadian Costs: http://www.microsoft.com/online/estimator/default.aspx?lang=en-ca
US Costs: http://www.microsoft.com/online/estimator/default.aspx?lang=en-us

Cost Analysis for 500 Seats of Email only:

Over a 6 year period, a company may see a $580,000 reduction in costs.

In this scenario, specific to hosted email or hosted exchange, the total cost of ownership for a 6 year on-premise solution is $1.2M or an average of $200K/year. With Microsoft's hosted email solution, the cost is $620K over 6 years, which is $103K/year or a savings of just under $97K per year. This is a 49% cost savings.

BPOS/Microsoft Online Benefits:
There are numerous benefits to going with a hosted model as opposed to on premise. Some benefits include:

1. Total cost of ownership reduction – often 30% and greater
2. Elimination of future implementation costs
3. Reduced capital costs
4. Reduced patching, security and upgrade costs
5. Reduced software license costs
6. Decreased upfront investment
7. Improved security and data privacy
8. Improved compliance

The bottom line is, BPOS or Microsoft online can had a significant impact on helping reduce costs on a service that is non-core to most companies. It is an option that really should be explored.

If you would like to have a free Cost Analysis for your organization, please contact Avanade at 403-476-1473 in Calgary or email us here .