On Premise Exchange Is Dead

Grave stone with RIP written on it for Premise exchange

Shocking news rocked the IT world today when it was revealed that Microsoft has successfully quashed on premise Exchange email for small businesses.  They haven’t stopped making or selling Exchange.  You can still buy a current version and it’s even still supported.  Microsoft has just made it prohibitively expensive vs the simpler, cheaper, easier to manage, Office 365.

Story Time

A prospect called me today that still has a 2010 on premise Exchange server in use at their business.  They’ve had problems with reliability of their email (surprise, surprise) as well as getting blacklisted.  Their current service provider doesn’t even have engineers that are experts to troubleshoot exchange on premise anymore.  Worst of all, he asked me for a quote to upgrade it.

I was a little taken aback.  It’s honestly been years and years since I quoted an on-premises exchange server.  I still have guys on my team that know how to support them, but it’s a solution that is rarely asked for.  Office 365 offers so many advantages, and the monthly cost is low enough it’s typically a no brainer for most small businesses.

We talked through a lot of the advantages that O365 has to offer.  We also talked about the potential high cost for licensing and hardware to keep it on premise.  His concerns were around security.  He didn’t like the idea of someone else having his data.

I refuted this idea by discussing the security measures that Microsoft has in its data centers versus what he has in his office.  In addition, we discussed how those data centers have redundant power, internet, heating, and cooling systems that his office doesn’t have.  Biometric security and the whole shebang.  After all of that he still said he would be more comfortable having it in his office and asked me to quote the solution.  He wanted an option to not move his cheese.

Costly Habits

As an exercise I took the time to put together a quote for him to illustrate my point on exactly how dumb what he was asking for is.  The totals were staggering.  Exchange server 2019 has significantly higher hardware requirements than any version of exchange previous.  Specifically, it asks for 128GB of memory just to run Exchange server.  That means that the hardware needed to run it isn’t cheap.  Long gone are the days of an inexpensive SBS server.

When I was done calculating the cost of the hardware, software licensing, and labor to put the solution in place, it came in just under 30K.  This is for a small business.  10 employees to be exact.

I calculated the break even point of what they would pay monthly vs the upfront cost of the server.  Rule of thumb is that if it’s 36 months or less purchasing might be a good idea.  The breakeven on this deal was 21 years!  Honestly it will never make financial sense.  The cost of maintaining, securing, and backing up that server will always be more.  If you have less than 1000 users, this is a no brainer.  Make the move to office 365.


Microsoft’s strategy is to move everyone over to office 365 and collect the monthly recurring revenue from that move.  They’ve been abundantly clear that options like the SBS server of old no longer exist.  Licensing for Exchange costs more than it did previously.  You now must purchase a server licensing and separate exchange licensing.  The hardware requirements for Exchange are ridiculous.  It’s all purposeful.

They started out selling all the benefits of the cloud.  Security, accessibility, high availability, etc.  Now they’ve moved on from the carrot to the stick for those that are left behind and are whacking them with high prices to get them to move.

If your business is still using an on-premises exchange server, it is costing you money every day.  The time to move to Office 365 was years ago, but if you haven’t done so you can still enjoy the advantages today.  Make the move.  i.t.NOW can help.  Give us a call and our experts will get you on the right track.