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Microsoft Office 365 Cost Savings for a Small Business

August 27, 2014

I work with a customer that generates $25 million dollars per year in revenue with an office staff of ten.  For the last six years they have used Microsoft Small Business Server 2003 installed on a Dell PowerEdge 2650 server for e-mail messaging.  Recently they have reached the maximum database size limit of 75GB for Exchange 2003, see Microsoft TechNet Database Size Limit Configuration and Management.  As a result they will have to upgrade Exchange, unfortunately the existing server is also out of warranty and will also need to be replaced.  Unfortunately, Microsoft Small Business Server is no longer available, see Microsoft waves goodbye to Small Business Server.  As a result, moving to the next release of Microsoft Exchange would require a dedicated a dedicated server, here is a quick overview of the costs associated with the upgrade:

  • Dell PowerEdge R320 Server $1,939.00
  • Microsoft Server 2012 Standard Edition $882.00 + 10 CALs $498.00 = $1,380.00
  • Microsoft Exchange 2013 Standard Edition with 10 CALs $1,489.89
  • Trend Micro InterScan Messaging Hosted Security (anti-spam/anti-virus) 10-user $249.99 per year.
  • First year cost – $5,058.88
  • Second year cost – $249.99
  • Third year cost – $249.99
  • Total Cost – $5,558.86
  • Note: Total does not include installation and/or maintenance costs and assumes the use of existing backup software/equipment.

I was surprised at how expensive the overall solution was for such a small office.  As the trusted adviser for my customer I felt obligated to investigate alternatives.  My customer had two key requirements:

  1. The solution must allow them to continue using Microsoft Outlook client on the desktops.
  2. The solution must support for e-mail for the iPhone.

With the customers requirements documented, I began investigating alternatives.  Presently, Microsoft 365 services offers hosted mailbox services for $5 per user, per month.  That puts the annual cost for 10-users at $600, and the 3-year cost at $1,800.  On premise equipment is not required, which will save my customer $3,758.86 in capital costs over the three year period.  After presenting the proposal to move the office to a Microsoft hosted messaging solution, my customer emphatically responded, “Sounds like a no-brainer to me!  Let’s do it!”

It has been almost a year since I have helped this customer migrate their existing Exchange 2003 messaging infrastructure to the Office 365 Small Business solution and there have two unexpected benefits related to availability and maintenance costs.  In the beginning of 2014 my customer experienced an extended power outage due to a Winter Storm.  During that time the customer would not have had access to e-mail if it had been hosted in the office.  Hosting the customer’s messaging infrastructure at Microsoft allowed them to communicate throughout the outage using their iPhones.  In 2013, prior to the migration, the customer spent $2,216.28 in maintenance upgrades (replacing failed hard drives, applying service packs, updates, and hotfixes, manual database defragmentation, and updates to anti-virus software).  Since the migration the customer has not spent a single dollar on maintenance costs.

Hosting IT resources offsite isn’t the answer for every customer situation, but in this case it was the best possible solution for supporting an upgrade to my customers messaging infrastructure.

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