Why Use Exchange Online?

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Yet another post on this subject but this time with real costs of owning Exchange on premises. Clearly showing all the Capex and Opex costs related to savings made by adopting Exchange on line.

Note: technical bits are removed so that focus is on the business benefits.

Posted by: Sean O’Farrell, 18 June 2013

Microsoft Office 365 is a great fit for small businesses, it just makes sense. A small business doesn’t have the budget for large amounts of storage and infrastructure refreshes. So for a small monthly fee which can go up or down, small business can use Office 365

Recently, (when I was drawing some Visio diagrams for a customer proposal), it dawned on me, that Office 365 also make sense for enterprise customers and I will explain why.

One of the big stumbling blocks for enterprise customers is the monthly recurring costs. However, nearly all enterprise customers have Microsoft Enterprise Agreements and I am increasingly surprised at how enterprise customers don’t understand the benefits of an Enterprise Agreement. There are many benefits but I am just going to list some relevant to Exchange Online.

  • Microsoft Planning Service Days: Microsoft can help transition to cloud services through an existing EA Agreement
  • Exchange Core Cal: If you have an Exchange Core Cal, this covers you for an on premise Exchange Cal and Exchange Online Cal

The example below shows a brief example of a 2,000 user company in different geographical locations and using on-premise Exchange.

What Does It Cost to operate Exchange On-Line?

So let’s look at some of the costs associated with maintaining and running this on-premise solution.



WAN Links

Possibly €60k per annum for the 3 sites


How much would the storage cost for 25gb * 2000 users cost? A storage refresh will also need to be considered after 3 years

Power Consumption

Most likely the Exchange server will be running on a virtualisation platform. A rough guess for all 3 sites €50k per annum.

Hardware Vendor Support

On the SANs and virtualisation hosts, roughly €30k over 3 years

Mail Hygiene

Potentially €50k per annum

Hardware Deprecation

New hardware becomes old the minute it is delivered to site
Exchange Admin Staff Cost
Possibly €100k per annum

Exchange 2013

How much would it cost to upgrade this entire organisation to Exchange 2013?

Backup Software

Possibly €10k per annum

Backup Hardware

Hardware refresh after 3 years possibly €100k

So for 2000 users this is minimum GBP 310K per annum. WIth big unknowns, which in our experience could bring the whole sum to the staggering figure of  GBP 1 mil. 

Enter Exchange On Line 

Benefits and challenges of both Exchange On-Line and classical on premises Exchange

By adopting Exchange On-Line as business email solution all of the above cost and infrastructure could either evaporate, or be dramatically reduced . For large customers, the use of Microsoft’s Windows Azure Active Directory is required. It synchronizes  thousands of users passwords as well. So for a large company the complete on-premises infrastructure for business email using Exchange, could be replaced by ONE server. For the SME’s it is ZERO servers.

So now Exchange on-line starts to make sense. Enterprise customers are licensed to do this right now and probably don’t even realise it! 

If ordering today, our example company will pay for the Exchange Online Plan 2 (full functionality plan) for 2000 users just GBP 120K. (prices good 2015 Jun 08)