Choosing an Email Architecture: Internal or Hosted

If you talk to email specialists what you seem to find, in my small, anecdotal survey of the market, is that half of all of these professionals will tell you to simply install email locally, normally Microsoft Exchange, and the other half will simply tell you to go with a hosted (a.k.a. Software-as-a-Service / SaaS or “in the cloud”) service, most often Google Apps, but email is not such a simple architectural component that it should be distilled to trite answers.  Email is one of the most important components of your business’ communications infrastructure, often surpassing telephony, and choosing the right delivery methodology for your company is critical for your long term success.

We will start by considering some basic factors in email hosting.  Email systems require a good deal of bandwidth, quite a significant amount of storage, high reliability, careful management and significant security consideration.

Bandwidth is the first area to consider.  Every email sent and received must travel between the end user and the email server as well as between the email server itself and the outside world in the case of email destined externally.  In small businesses nearly all email is destined to leave the company network to go to clients, customers, vendors, etc.  In larger enterprises email use changes and as we approach the Fortune 100 email shifts from being almost exclusively a tool for communicating with people outside the organization to being a platform primarily used for internal communications.

This shift in how email itself is used is a very important factor in deciding how to deploy email services.  If email is used almost exclusively internally for intra-staff communications then this will lend itself very well to hosting email systems in-house to increase security and improve WAN bandwidth utilization.  The caveat here being, of course, that a highly distributed company of any size would not keep this traffic on a LAN network and so should be treated as if the email usage is external regardless of whether or not it is intra-staff.  Small companies with communications happening primarily with external users will find better utilization in a hosted service.

Storage is actually often a smaller factor in email architecture decision making than it may at first appear that it should be.  Traditionally email’s storage requirements made a compelling argument for hosting internally due to the cost benefit of keeping large storage, especially that used for archival needs, local.  Recently, large hosted email vendors such as Rackspace and Google Apps have brought the price of online, archival email storage so low that, in many cases, it may actually be more cost effective to utilize hosted storage rather than local storage or, at least, the cost is at parity.  Even long term archival storage can be had very cost effectively in a hosted solution today.

Reliability is a rather complex subject.  Email is critical to any organization.  If an email system goes down many companies simply grind to a halt.  In some cases, the company effectively shuts down when email stops flowing.  Not only do employees stop communicating with each other but customers, vendors, suppliers and others see the company as being offline at best and out of business at worst.  Interrupting communications with the outside world can represent immediate and serious financial impact to almost any business.

Hosted email has the obvious advantage of being hosted in a large, commercial datacenter with redundancy at every level (assuming a top tier vendor) from hardware to storage to networking to power to support.  Hosting email in house requires a business to determine the level of redundancy that is most cost effective given the business’ ability to withstand email downtime and is generally an exercise in compromises – how much reliability can a company do without given the cost necessary to provide it.

Some companies will opt to host email servers at a colocation facility which will provide them with many redundant components but to meet the features of a Rackspace or Google level offering, multiple datacenters would likely be needed.  Colocation is a halfway option providing the technical features of hosted options with the management and flexibility of in-house email systems.

A more common scenario, though, is for companies to host a single email server completely within their walls relying on their internal power, hardware and network connection.  In a scenario like this a company must either take extreme measures to ensure uptime – such as hosting a completely redundant site at immense cost – or front-ending their entire email infrastructure with a reliable online spooling service such as Postini, MessageLabs or MXLogic.  The cost of such services, while critical for the reliability most companies need, is often equal to or even greater than complete email hosting options.  This spooling service cost will likely add an ongoing, scaling cost that will make fully hosted email services always a less expensive option than in-house hosting.

Management cost is very difficult to determine but requires attention.  A fully hosted solution requires relatively little technical knowledge.  Time to manage is low and the skill level necessary to do so is relatively low.  With an in-house solution your company must supply infrastructure, networking, security, system and email skills.  Depending on your needs and your available staff this may be part time for a single professional or it may require multiple FTEs or even outside consultants.  The total time necessary to manage an in-house email system will vary dramatically and is often very hard to calculate do the complex nature of the situation but, at a minimum, it is orders of magnitude greater than a hosted solution.

Security is the final significant consideration.  Beyond traditional system-level security email requires spam filtering.  Handling spam can be done in many ways: in software on the email server, on an appliance located on the local network, farmed out to a spam filtering service or left to the hosted email solution provider.  Spam filtering, if handled internally, is seldom a set and forget service but one that requires regular attention and generally extra cost in licensing and management.

After looking at these main considerations every company should sit down, crunch the numbers, and determine which solution makes the most sense for them on an individual level.  Often it is necessary to use a spreadsheet and play with several scenarios to see what each solution will cost both up front and over time.  This, combined with a valuation of features and their applicability to the company, will be critical in determining the appropriateness of each option.

The secret weapons of the in-house solution are features, integration and flexibility.  In-house email options can be extended or modified to offer exactly the feature set that the organization requires – sometimes at additional cost.  A perfect example of this is Zimbra’s instant messaging integration which can be a significant value-add for an email platform.  This has to be considered in addition to raw cost.  Integration with existing internal authentication mechanisms can be an important factor as well.

In my own experience and cost calculations, hosted solutions represent the vast majority of appropriate solutions in the SMB space due to raw economics while large and enterprise class customers will find insurmountable benefits from the flexibility and internal communications advantages of in-house solutions.  Small businesses struggle mostly with cost while large business struggle primarily with the communications complexity of their scale.  Large businesses also get the best value from in-house solutions due to “professional density” – the inverse number of IT professionals whose time is wasted due to corporate scale inefficiencies.

Today, whether a business chooses to host their own email or to receive email as a service, there are many options from which to choose even once a basic architecture is chosen.  Traditionally only a few in-house options such as MS Exchange and Lotus Notes would be considered but new alternatives such as Zimbra (recently acquired by VMWare,) Scalix and Kerio are expanding the landscape with lower costs, new deployment options and aggressive feature sets.  Hosting’s relative newcomer, and overnight industry heavyweight, Rackspace is drawing a lot of attention with their new email offerings which more closely mimic traditional in-house offerings while Google continues to get attention with their unique GMail services.  I expect to see the hosted email space continue to become more competitive with new integration features being a key focus.

Every business is unique and the whole of the factors must be considered.  Using a combination of business and IT skills is necessary to evaluate the available options and opportunities and no one discipline should be making these decisions in isolation.  This is a perfect example of where IT managers must understand the economics of the business in addition to the technological aspects of the solution.

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