zerolag whitepaper roi private cloud vs on premises exchange sharepoint

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ROI of Private Cloud vs. On-Premises

IT Infrastructure for Microsoft Exchange

and SharePoint

Evaluating the Relative Costs of Each Approach


http:///reader/full/zerolag-whitepaper-roi-private-cloud-vs-on-premises-exchangCopyright 2014 ZeroLag 2 www.ZeroLag.com

ROI of Private Cloud vs. On-premises IT Infrastructure for Microsoft Exchange and SharePoint A ZeroLag White Paper

Summary of Key Findings

When deploying Microsoft Exchange and SharePoint,organizations must decide whether employing private cloud or

on-premises IT infrastructure is the optimal choice.

Although some organizations will nd that on-premises

implementation of Exchange and SharePoint is the preferred

solution, this approach is seldom the most cost-effective option.

Indirect costs of on-premises implementation:

Loss of focus - Diverting IT resources

from core competencies and strategic

initiatives entails opportunity costs.

Increased risk of downtime- Missed emails and

less productive staff can result in lost revenue.

Uneven support Leading private cloud providers

employ expert support technicians who work 24x7x365 to

ensure that systems operate at peak effectiveness.

Financial costs of on-premises implementation:

High initial investment - Servers, storage

space, and infrastructure required for an on-

premises implementation can be very costly.

Ongoing operating costs Includes

management, utility costs, hardware refreshes and

replacement, software assurance and upgrades,

and expenses resulting from unforeseen events

such as power outages, cyberattacks, etc.

Support staff Median annual compensation for qualied

system administrators is approximately $100,000. [1]

ZeroLag Exchange

and SharePoint Private

Cloud Solutions

ZeroLags Private Cloud

solutions are among the most

reliable and cost-effective

available. We offer SharePoin

and Exchange implementation

for businesses of all sizes

that prefer the advantages

of a private cloud solution

over on-premises hosting.

Private cloud hosting is

more cost-effective

The high up-front and operating c

of on-premises deployments mak

private cloud hosting the better c

for most organizations SharePoi

and Exchange implementations.

[1] Salary.com. Systems Administrator

Angeles. Retrieved January 2, 2014. h

salary.com




Weighing the indirect costs of each approach

Evaluating the relative costs of private cloud and on-premises imple-mentations of Exchange and SharePoint systems can be a complicated

task. Hidden costs, opportunity costs, and the strategic advantages of

each option must be carefully weighed in order make the right decision.

Unquantiable factors can present challenges. Many effects,

such as the impact of maintaining on-premises infrastructure

on your companys strategic focus, can be very difcult or

impossible to accurately measure. Each aspect should, however,

be considered carefully before coming to a conclusion.

When is an on-premises implementation more cost effective?

Although an on-premises solution might seem preferable at rst, it

typically entails hidden costs that cannot be fully anticipated, along

with expenses for unforeseen events such as power outages,

natural disasters, and cyberattacks, that are difcult to predict.

But there are some situations where an on-site solution may

prove more cost-effective and potentially more secure. If

regulatory or other requirements mandate that private data must

be maintained under the exclusive control of an organization, an

on-premises implementation may be the only choice.

Otherwise, companies that use private cloud infrastructure for

their Exchange and SharePoint systems tend to benet from

improved strategic IT focus vs. companies that host these

systems on-premises. Mission-critical email and team col-

laboration systems are also usually more reliable and availablethanks to the specialized, around-the-clock support teams

employed by most leading private cloud providers.

It is critical that every business takes all of these factors into con-

sideration and fully examines the strategic, hidden, and opportunity

costs of each approach before making a nal decision.

Companies that

use private cloud

infrastructure for

their Exchange and

SharePoint systems

tend to beneft

from improvedstrategic IT focus

vs. companies that

host these systems

on-premises.




Comparison of typical 200-user Exchange and SharePoint implementations[2, 3]

On-Premises Private Cloud

Initial Cost License Costs: $33,400

Install & Setup: $7,500

Integration: $5,000

Data Migration: $1,500

Training: $3,000Support: $10,000

Hardware: $15,000

Infrastructure: $1,000

Total Initial Cost $87,100

Setup & Migration: $2,000

Total Initial Cost: $2,000

Operating Cost Antivirus: $6,000

Electricity: $730

Upgrades: $500

Administration: $100,000(1 FTE)

Total AnnualOperating Cost:

$107,230

License Costs: $1,040/mo.

Hosting Costs: $1,500/mo.

Administration: $25,000/yr.

(25% of 1 FTE)

Total AnnualOperating Cost:

$55,480

Reliability Average of 40 hours downtime per year[4] 99.99% to 99.999% uptime SLA

Maintenance

and Control

More difcult tomaintain and operate.

Complete control andcustomization.

Virtually zero maintenance;much easier to operate than

an on-premises solution.

Level of control availablevaries by provider.

The fgures shown represent estimates; actual costs will vary.

[2] ZeroLag pricing for single location solution, effective January 2014. [3] Software Advice. Total Cost of Ownership Calculator. Retrieved

December 16, 2014. http://www.softwareadvice.com/tco/




What are the initial and long term fnancial costs?

When determining whether an on-premises or private cloud

SharePoint and Exchange solution is best for your business, one

of the most important considerations is cost.

Generally, private cloud solutions offer a lower initial cost as well

as long-term savings. However, actual costs can vary depending

on the solution and the IT infrastructure already in place.

Companies that already have an extensive IT staff and hardware

might nd that they can deploy SharePoint and Exchange with

only modest expense.

But for most companies, private cloud is a more cost effective

solution. Typical savings over on-premises hosting are 30% to

80%, with greater savings for companies that would otherwise

need to add signicant infrastructure to support an on-premises

implementation. [5]

[5] ZDNet. How Much Does Exchange

Really Cost? http://www.zdnet.com/

blog/saas/how-much-does-exchange-

really-cost/609

For most companies,

private cloud is a mor

cost effective solution

Typical savings over

on-premises hosting

are 30% to 80%




Lower Initial costs

Lower Operating Costs

Less Downtime

Increased efciency

Reduces or eliminates

upgrade costs

[6] Dell. Retrieved January 2, 2014.

http://configure.us.dell.com

[7] ZDNet. Toolkit to Calculate Data

Center Power Usage. http://www.

zdnet.com/toolkit-calculate-data-cen-

ter-server-power-usage-7000013699

[1] Salary.com. Systems Administrato

III, Los Angeles. Retrieved January 2,2014. http://salary.com

[5] ZDNet. How Much Does Exchang

Really Cost? http://www.zdnet.com/

blog/saas/how-much-does-exchange

really-cost/609

Why is private cloud hosting usually more

cost effective?

There are a variety of factors that make private cloud

SharePoint and Exchange hosting more cost effective

than on-site hosting.

1. Lower initial costs

The hardware, software, physical facility, IT staff, and supportinginfrastructure needed for on-premises hosting can be very

costly. Suitable single server congurations range in price from

$1,500 to $5,000 or more, with organizations supporting a large

number of users requiring clusters of multiple servers and more

extensive storage systems. [6]

2. Lower operating costsOnce you own the servers and software, and have your

Exchange and SharePoint systems up and working, there are

still more costs. The average server consumes more than

$700 of electricity each year. [7] On- site servers must also be

managed, updated, and maintained. The median compensation

for a Sr. System Administrator is $99,520 per year. [1]

These expenses make on-site hosting a much more costly

option compared with private cloud. For example, after switching

from on-premises hosting to a private cloud solution, Serena

Software cut its annual Exchange hosting costs from $1 million

to $250,000. [5]




3. Less downtimeDowntime can be expensive. For businesses that rely on

Exchange email and SharePoint collaboration, this can beespecially true. If the system goes down, customer commu-

nication and employee productivity suffers.

Leading private cloud providers guarantee 99.999% uptime or

better, so reliability is never an issue.

4. Increased efciencyAnother important consideration when deciding between

on-premises and private cloud SharePoint and Exchange hosting

is the effect it will have on your companys efciency. Although

this can be difcult to quantify, there are several ways private

cloud will likely make your employees more productive.

With a private cloud implementation, IT team members will be

able to focus more on your companys core competencies and

strategic initiatives, and allocate less time and resources to infra-

structure problems. And because private cloud hosting is usually

more reliable and available than on-site hosting, staff can com-

municate and collaborate without interruption.

5. Reduces or eliminates upgrade costsAlthough some companies might nd that the monthly expense

for on-site hosting is lower than a comparable private cloud

solution, these gures usually do not take into account the

need to upgrade and replace equipment as it fails or becomes

obsolete.

With private cloud solutions, these costs are included in themonthly fee and clients are protected from unexpected expenses

due to premature hardware failures.

The bottom lineon private cloud

Financial advantages are

one of the most compelling

arguments in favor of private

cloud for SharePoint and

Exchange implementations.

In almost every scenario,

private cloud will beaton-premises deployments,

both for initial and long-term

operating costs.




How reliable will my Exchange and SharePoint

implementation be?

Reliability can make the difference between a SharePoint and

Exchange implementation that increases productivity and makes

your company money, and one that consumes unexpected time

and resources.

Although both in-house and private cloud hosting can be

extremely reliable options if implemented correctly, private cloud

usually has the advantage.

Private cloud solutions are more reliableThe average on-site server suffers 40 hours of downtime each

year; the equivalent of approximately 99.5% uptime. [4] That can

cost companies thousands of dollars in lost leads, customer sat-

isfaction, and employee productivity.

Leading private cloud providers offer service level agreements

of 99.999% (or even 100%) uptime, equating to a maximum of

5.4 minutes of downtime each year.

Downtime can be costlyThe costs of missed emails, unproductive workers, and unhappy

customers can be staggering. An estimated $26.5 billion is lost

every year in North America and Europe due to IT downtime. [8]

Although each companys situation varies, using private cloud

hosting could potentially save your business a signicant amount

as measured in missed opportunities, lost productivity, and a

tarnished reputation.

The costs of missed

emails, unproductive

workers, and unhappy

customers can

be staggering.

An estimated $26.5billion is lost every

year in North Americ

and Europe due to

IT downtime.[8]

[4] Gartner. http://gartner.com

[8] Information Week. IT Downtime Costs

$26.5 Billion In Lost Revenue. http://ww

informationweek.com/it-downtime-costs-$

billion-in-lost-revenue/d/d-id/1097919




How much control is needed?

Aside from explicit nancial considerations, companies mustalso determine how their SharePoint and Exchange imple-

mentation will affect them strategically and practically. A major

reason organizations decide to go with an on-premises solution

is the control and customization that it offers.

For those companies that need extremely unique solutions, par-

ticularly customization achieved via 3rd-party add-ons, there

is little option except for on-premises hosting. But for the vast

majority, private cloud solutions can offer all the power and

control needed.

Hosted options are usually easier to control and operate than

their on-premises counterpar ts. For example, even non-technical

personnel can add and remove users, manage mailboxes, and

perform other tasks that previously required IT department

intervention.

Will the data be safe?Data protection is another important factor for companies trying

to decide whether to keep their Exchange and SharePoint

system on-site or on a hosted server.

For many organizations that deal with sensitive or private

information, keeping data in-house might seem to be the better

option. However, on-premises data storage may not be as safe

as it seems, particularly if multiple layers of physical security are

not implemented.

Hosted Exchangeand SharePoint

solutions are

usually easier to

control and operate

than their on-premise

counterparts.

On-premises data

storage may not be

as safe as it seems,

particularly if proper

physical security isnot implemented.




Likewise, on-premises solutions are often susceptible to

security risks from outdated virus protection, server and network

hardware that isnt kept up-to-date with the latest patches, and

an understaffed IT department thats too busy to closely monitor

infrastructure for security issues.

Private cloud solutions can keep your data safer

Private cloud solutions are usually much more secure than their

on-site counterparts. Because hosted SharePoint and Exchange

implementations are hosted in commercial data centers andmanaged by a team of professionals well versed in security best

practices, they are usually better able to protect their clients

data than the clients are themselves.

The cloud providers professional IT staff ensures that all

critical system components are secured against intrusion and

actively monitors infrastructure to quickly detect and repel any

cyberthreats.




Which solution is right for my business?

Private cloud solutions are a better choice for most businesses, with

lower initial and long term costs compared to on-premises hosting.

In some situations, such as for organizations that already have

extensive IT infrastructure and staff, the estimates in this guide

may not apply. In those cases, it may be more cost effective to opt

for an on-premises deployment.

Similarly, for companies that need to keep data on-site or require

advanced customization and functionality not offered by private

cloud providers, on-premises implementations of Exchange and

SharePoint may also be the only options available. These situations

are usually the exception.

Private cloud solutions are right for most companies

A 2010 survey found that 91% of IT professionals believe that cloud

computing will overtake on-premises before 2015. [9]

Only time will tell if that prediction is accurate. But the reasons

for this trend are obvious. In nearly every scenario aside from

the exceptions discussed above, private cloud offers a more

reliable, easier-to-use service at a signicantly lower cost than an

on-premises implementation.

A 2010 survey

found that 91%of IT professionals

believe that

cloud computing

will overtake

on-premises

before 2015. [9]

[9] IBM. Tech Trends Survey. 2010.


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zerolag whitepaper roi private cloud vs on premises exchange sharepoint

Documents

private cloud oronpremises

private cloud solutionover

premises hosting

premises implementation

sharepoint systems

indirect costs

opportunity costs

utility costs