Practical IT Research that Drives Measurable Results

Make the Decision to Upgrade to Microsoft Exchange 2010

1Info-Tech Research Group

It’s Time for a Change: Let’s Talk about Exchange

• With the November, 2009 release of Exchange 2010, Microsoft has brought some major changes to its cornerstone unified communications product.

• In spite of major improvements in Exchange 2007, many customers didn’t make the move from Exchange 2003 saying 2003 was still good enough. The majority of enterprises are currently using Exchange 2003.

• For most organizations, a 5-6 year refresh cycle is the standard for e-mail platform upgrades. Therefore, there is significant pressure for enterprises to upgrade from Exchange 2003 to Exchange 2010.

• Microsoft releases significant platform upgrades twice as fast as organizations need, creating pressure to upgrade earlier than warranted.

• This storyboard highlights the new features of Exchange 2010 and Info-Tech’s recommendations for upgrading.

• Use this research to determine if you should upgrade to Exchange 2010 and if you should use an on-demand, on-premise, or hosted deployment method.

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Executive Summary

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• Microsoft’s Exchange 2010 offers significant features and advantages over previous versions.

• Those considering e-mail archiving will find Exchange 2010’s solution is good enough for most organizations but fails to meet many regulatory compliance mandates.

• Given migration cost and effort, Info-Tech recommends that clients currently running Exchange 2007 wait for a future release.

• For those organizations running Exchange 2003, Info-Tech recommends skipping Exchange 2007 and migrating to Exchange 2010 as soon as possible.

• There are three migration paths for these organizations – migrating to a traditional on-premise solution, an on-demand solution, or a hosted solution.

< 500 Mailboxes 500 – 2,000 Mailboxes

> 2,000 Mailboxes

At Exchange 2007

Do not upgrade. Re-assess each year based on requirements.

Do not upgrade. Re-assess each year based on requirements.

Do not upgrade. Re-assess each year based on requirements.

At Exchange 2003

Upgrade to an on-demand Exchange 2010 solution.

Use TCO to decide which deployment method is best (i.e. on-demand, on-premise, or hosted).

Upgrade to an on-premise Exchange 2010 solution.

What’s New in Exchange

2010Enhanced Features E-mail Archiving

Advice for 2007 Users

Upgrade Paths

< 500 Mailboxes

> 2,000 Mailboxes

500 – 2,000 Mailboxes

Info-Tech has found that 89% of all organizations are planning on-premise deployments when upgrading to Exchange 2010.

Info-Tech Insight:

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• Cheaper, higher capacity storage such as Serial Advanced Technology Attachment (SATA) and Fibre Channel.

• Continuous replication technology combined CCR and SCR to create a Database Availability Group (DAG).

• Choice of on-premise, on-demand, hosted, or a combination.

• 90% reduction in Input/Output Operations per Second (IOPS) from 2003 to 2010.

What’s New?

Support for lower cost storage‚ enhanced availability‚ and new remote experience highlight Exchange 2010

changes.

As companies look for new and easier ways to replicate their e-mail data to a remote location,

Exchange 2010 offers high availability and disaster recovery in its new unified platform.

For more information on new features of Exchange 2010, see Info-Tech’s note, “

What’s New in Exchange 2010?”

Continuous Availability with Exchange 2010

Source: Microsoft

Exchange 2010’s integrated e-mail archiving is good enough for most organizations but fails to meet

compliance mandates. • Exchange 2010’s built-in archiving solution adds approximately 20% to the

original server licensing fee.

• Microsoft’s archiving solution is not good enough for compliance requirements. Some limitations:

– Unable to set a minimum retention requirement, only maximum retention time.

– Only for content residing in e-mail stores and will not address archiving needs that apply to all enterprise content.

– Archives are stored in the storage device and database, reducing DR capabilities and storage capacity.

• Info-Tech recommends that enterprises compare the cost of Exchange’s archiving solution to the cost of a third party add-on that might be more suitable to the company’s needs. To determine if Microsoft’s archiving solution is sufficient for your business needs, refer to the ITA Premium research note, “Exchange 2010: Don’t Upgrade for E-mail Archiving Alone.”

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What’s New in Exchange

2010Enhanced Features E-mail Archiving

Advice for 2007 Users

Upgrade Paths

< 500 Mailboxe

s

> 2,000 Mailboxe

s

500 – 2,000

Mailboxes

Why You Should Wait

• E-mail platforms require significant infrastructure investments. ROI is rarely achieved in the typical vendor product lifecycle of three years. Organizations typically deploy e-mail with an expectation of a 5-6 year refresh horizon – twice as long as Microsoft’s interval between upgrades.

• IT shops running Exchange 2007 on Windows Server 2003 would need to first upgrade to Windows Server 2008 before deploying Exchange 2010.

• Businesses that have invested in any of Exchange 2007’s availability options require a complete restructuring to take advantage of DAG.

• For more information, refer to the ITA Premium research note, “Exchange 2010: Transitioning from Exchange 2007”.

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69% of organizations running Exchange 2007 are planning to upgrade to Exchange 2010. Info-Tech highly recommends they do not.

Info-Tech Insight:

Organizations running Exchange 2007 have no compelling reason to upgrade to Exchange 2010.

On-demand Exchange

2010 solution

Upgrade if you are using Exchange 2003; use this matrix to pick your path.

Exchange 2010 Upgrade Decision Matrix

< 500 Mailboxes 500 – 2,000 Mailboxes

> 2,000 Mailboxes

At Exchange 2007

At Exchange 2003

Use TCO to decide

on-demand on-premise or

hosted.

On-premise Exchange 2010

solution

To find out what to watch for when upgrading to Exchange 2010 and why transitioning to Exchange 2007 should not be on the agenda, refer to the following ITA Premium research notes: “Exchange 2010: Transitioning from Exchange 2003” and “Infrastructure Impact of Exchange 2010”

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• Mainstream support for Exchange 2003 ended in April, 2009.

• Microsoft’s partners no longer develop add-ons that support Exchange 2003.

• Exchange 2010 offers greater functionality, an enhanced remote experience and tighter integration with other Microsoft products.

• Exchange 2010 supports lower cost storage solutions that earlier versions did not.

Why should you upgrade?

Businesses running Exchange 2003 with less than 500 mailboxes should upgrade to an on-demand Exchange

2010 solution.Why should you move to on-demand?

• The triple upgrade scenario presented by new hardware, Windows Server 2008, and the migration to Exchange 2010 poses too high of an expense and strain on resources for most small companies.

• On-demand partners can provide high availability more cost effectively than an on-premise deployment.

• Info-Tech recommends clients look at Microsoft Exchange Online as it offers a lower TCO and will be upgraded to Exchange 2010 in mid-2010.“We were extremely close to going

with Google Apps. Exchange 2010 kept us by allowing us to remove our existing voicemail box and combining voice and e-mail services together.” – CIO, Non-Profit Organization

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• Mainstream support for Exchange 2003 ended in April 2009.

• Microsoft’s partners no longer develop add-ons that support Exchange 2003.

• Exchange 2010 offers much greater functionality, improved availability options, and tighter integration with other Microsoft products.

• Capability exists to enable a hybrid deployment – allowing users to connect to on-premise servers when on the corporate network and an on-demand solution when travelling.

Why should you upgrade?

Enterprises running Exchange 2003 on-premise with more than 2,000 mailboxes should upgrade to Exchange 2010

on-premise.Why should you go on-premise?

• The bandwidth demand that 2,000+ users place on a business’ WAN and router are too great to justify the speed and cost required to support a hosted Exchange environment.

• Large organizations typically have the resources required to complete the migration without external support.

• Exchange 2010 allows mobile users to connect directly to the server without requiring a connection to the corporate network.

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Organizations running Exchange 2003 with 500 to 2,000 mailboxes should use TCO to determine best deployment

method.From 500 – 2,000 Mailboxes, the Key Decision Factor for Choosing a

Deployment Method is TCO

Remember

TCO varies for mid-

sized organizations depending

on availability

needs, number of end users,

and hardware

requirements.

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

250 500 1000 1500 2000 2250

Number of Mailboxes

Cos

t ($

)

On-Demand Hosted On-Premise

Range: 500 – 2,000 Mailboxes

On-demand or Hosted is

best

On-premise is best

The grey zone: Use TCO to

determine what method is best

$100,000

$300,000

$500,000

$700,000

$900,000

$1,100,000

250 500 1000 1500 2000 2250

Number of Mailboxes

Cos

t ($

)

On-Demand Hosted On-Premise

Range: 500 – 2,000 Mailboxes

On-demand or Hosted is

best

On-premise is best

The grey zone: Use TCO to

determine what method is best

TCO calculated over 5 years

Organizations with 500 – 2‚000 mailboxes must determine if

on-demand or on-premise has the lowest TCO.

• This tool compares the total cost of ownership of Exchange 2010 under three different delivery models: on-demand (SaaS), on-premises (in-house), and hosted.

• It will assist in building a business case for the upgrade.

• Use Info-Tech’s “Exchange 2010 TCO Calculator”

• For more information on determining the best deployment method, see Info-Tech’s: “Exchange Server 2010: Off-Premise or On-Premise?”

Microsoft Exchange 2010 TCO Calculator

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Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 TOTAL ($)License/Subscription CostsNumber of Mailboxes: 500 500 500 500 500Fee per User per Month $5.00 $5.00 $5.00 $5.00 $5.00Monthly FeeHardware/Infrastructure CostsServers (see server requirements table) -$ LAN Hardware -$ -$ -$ -$ -$ -$ [Other] -$ -$ -$ -$ -$ -$ [Other] -$ -$ -$ -$ e -$ TOTAL -$ -$ -$ -$ -$ -$ Communication CostsLocal Area Network 20,000.00$ 20,000.00$ 20,000.00$ 20,000.00$ 20,000.00$ 100,000.00$ Wide Area Network 3,000.00$ 3,000.00$ 3,000.00$ 3,000.00$ 3,000.00$ 15,000.00$ [Other] -$ -$ -$ -$ -$ -$ [Other] -$ -$ -$ -$ -$ -$ TOTAL 23,000.00$ 23,000.00$ 23,000.00$ 23,000.00$ 23,000.00$ 115,000.00$ Software CostsOn-Demand Fees (Annual) 30,000.00$ 30,000.00$ 30,000.00$ 30,000.00$ 30,000.00$ 150,000.00$ Windows Server 2008 Enterprise Edition -$ -$ -$ -$ -$ -$ Exchange Server 2010 Standard Edition -$ -$ -$ -$ -$ -$ Exchange 2010 License CALs -$ -$ -$ -$ -$ -$ Hosted E-mail Archiving 1,990.00$ 1,990.00$ 1,990.00$ 1,990.00$ 1,990.00$ 9,950.00$ E-Mail Archiving[Other] -$ -$ -$ -$ -$ -$ [Other] -$ -$ -$ -$ -$ -$ TOTAL 31,990.00$ 31,990.00$ 31,990.00$ 31,990.00$ 31,990.00$ 159,950.00$ Implementation CostsDevelopment/Customization/Integration 30,000.00$ -$ -$ -$ -$ 30,000.00$ Training 6,000.00$ 3,000.00$ 2,000.00$ 1,000.00$ 1,000.00$ 13,000.00$ Consulting 4,500.00$ 2,500.00$ 2,500.00$ 500.00$ 4,500.00$ 14,500.00$ [Other] -$ -$ -$ -$ -$ -$ [Other] -$ -$ -$ -$ -$ -$ TOTAL 40,500.00$ 5,500.00$ 4,500.00$ 1,500.00$ 5,500.00$ 57,500.00$ Maintenance CostsHardware UpgradesSoftware Upgrades[Other] -$ -$ -$ -$ -$ -$ [Other] -$ -$ -$ -$ -$ -$ TOTAL 40,500.00$ 5,500.00$ 4,500.00$ 1,500.00$ 5,500.00$ -$ Support CostsSupport Staff 60,000.00$ 60,000.00$ 60,000.00$ 60,000.00$ 60,000.00$ 300,000.00$ Travel -$ -$ -$ -$ -$ -$ Overhead Labor 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 200,000.00$ [Other] -$ -$ -$ -$ -$ -$ [Other] -$ -$ -$ -$ -$ -$ TOTAL 100,000.00$ 100,000.00$ 100,000.00$ 100,000.00$ 100,000.00$ 500,000.00$ TOTAL COST OF OWNERSHIP (TCO) 235,990.00$ 165,990.00$ 163,990.00$ 157,990.00$ 165,990.00$ 832,450.00$

N/A

On-Demand

N/A

N/A

Summary

• Microsoft’s Exchange 2010 offers lower cost storage options, integrated e-mail archiving, new Outlook Web App and improved business continuity capabilities.

• E-mail archiving in Exchange 2010 is good enough for most organizations but fails to meet many regulatory compliance mandates.

• Info-Tech recommends:– Exchange 2007 IT shops wait for a future Exchange release.– Exchange 2003 IT shops migrate directly to Exchange 2010 as soon as

possible.– IT shops with less than 500 mailboxes move to an on-demand solution.– IT shops with more than 2,000 mailboxes deploy on-premise. – IT shops between 500 – 2,000 mailboxes use Info-Tech’s TCO Calculator

to select the best deployment method.

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Appendix

• Slide 5: Support for lower cost storage, enhanced availability, and new remote experience highlight Exchange 2010 changes

– What’s New in Exchange 2010

• Slide 6: Exchange 2010’s integrated e-mail archiving is good enough for most organizations but fails to meet compliance mandates

– Exchange 2010: Don’t Upgrade for E-mail Archiving Alone

• Slide 8: Organizations running Exchange 2007 have no compelling reason to upgrade to Exchange 2010

– Exchange 2010: Transitioning from Exchange 2007

• Slide 9: Upgrade if you are Using Exchange 2003; Use this Matrix to Pick your Path – Exchange 2010: Transitioning from Exchange 2003– Infrastructure Impact of Exchange 2010

• Slide 13: Organizations with 500 – 2,000 Mailboxes must Determine if On-Demand or On-Premise has the Lowest TCO

– TCO Calculator– Exchange 2010: On-Demand or On-Premise?