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Hosted or in-house email?

The pros and cons of setting up your own email server or outsourcing

Your company's email server handles all your business's incoming and outgoing email. Setting up a new one server can be an expensive business, although upgrading your existing server can be less painful. Once it is running, maintaining is also time-consuming and requires expert technical support staff.

An alternative to running your own server is to use a software service instead. That means paying a monthly subscription charge and having someone else take care of all the technical stuff.

This article looks at the advantages and disadvantages of each option. It deals specifically with Microsoft's email server software, Exchange. If you're not sure whether this is the right email solution for you, compare Exchange to other email options here.

The costs involved in setting up your own Microsoft Exchange server ("in-house Exchange") can quickly add up, which is why some hosting companies reckon that you can save up to 50% a year over three years using hosted Exchange Server (Exchange as a software service) instead.

However, that figure comes with a big caveat: what's right for one business isn't necessarily right for the next. It may be that an in-house solution, managed by an external IT consultant and paid for in instalments is more cost-effective. Make sure you consider your own situation carefully before plumping for one over the other, because both have their advantages. To help you decide, this page explains some of the pros and cons of each approach.

The good

The pros of in-house Exchange:

There's a one-off capital cost for server hardware and software as required - so once you've bought it, it's yours.

If you already have enough IT support services and many servers, adding one more may not be a big technical support burden.

Leasing can reduce the cashflow hit of outright purchase.

Your data is stored on your premises.

The pros of hosted Exchange:

Quote�You only pay for people who are using the system - if people leave your costs go down.�End Quote

There's a predictable monthly fee per user.

No upfront capital cost or cashflow hit from buying a server or software.

The hosting company takes care of installation, maintenance, upgrades and patching.

The price usually includes anti-virus protection.

You only pay for people who are using the system - if people leave your costs go down.

Because it is managed externally, the technical support burden is reduced.

Built-in support for Blackberry without an additional server (from some hosting companies).

Setup is done online as is new user administration.

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The not-so-good

The cons of in-house Exchange:

Looking after an Exchange Server can be time consuming and technically demanding.

If you have to hire someone for IT support, it can be expensive.

Licensing can be expensive, especially if your staff levels fluctuate.

You are responsible for installing effective anti-virus software and other protection, such as upgrades and patches.

The cons of hosted Exchange:

Monthly costs can be expensive.

More storage costs extra.

You have to manage another supplier relationship.

Your data is sitting on a computer in someone else's data centre (but there is a chance it's more secure than one in your own server room).

You may need to keep your data in-house for legal or other business reasons.

The costs

Financially, it's a classic rent vs. buy dilemma. On the one hand, you pay for the server and software and then you own it. On the other hand, you subscribe and keep paying month in, month out.

However, when you factor in the technical support requirements of managing your own server the better analogy is between buying a car and getting one using contract hire. With hosted Exchange, someone else takes care of the maintenance and admin. All you do is use it. However, this service has a cost in itself.

Quote�The upfront costs involved in doing everything in-house are likely to be significant.�End Quote

The upfront costs involved in doing everything in-house are likely to be significant. You'll need to think about the server hardware and software, licences for each user, anti-virus software, as well as some sort of backup device and backup software. You might also need to spend time researching different suppliers, explaining your needs and learning how to set everything up.

Of course, if you work with a reliable IT consultant (like a Microsoft Small Business Specialist) they may be able to help you with in-house setup and support - and you might well be able to pay in instalments. That could cut your costs in terms of the time and money you spend.

The upfront costs that come with hosted Exchange are much reduced. You'll need to spend some time researching suppliers, but then you just pay a per-user, per-month fee that can be as little as �6.50, but which varies by supplier and according to the mix of features and number of users.

What next?

You can get an idea of what's on offer by contacting some suppliers of hosted Exchange. Our list is a good place to start.

It can be difficult to understand the differences between in-house options and hosted software services for email and your company intranet. Read our 60-second guide to see things more clearly.

Yours isn't the first company to consider different email options. Read about other companies who've been there and done it.

Sign into Microsoft Small Business+ for free web-based training and software support.

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How to buy

If you've decided that hosted services are right for you, or just want information about a specific solution, contact one of these suppliers for more information:

- BT

- Cobweb

- Webfusion

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