On-Premise vs. Cloud Email
Email Options: A Significant Decision
It goes without saying that email is a necessity for any business today, regardless of industry or size. However, the available solutions are drastically different in many ways. The choice can have a significant and long-lasting impact on your company’s efficiency, effectiveness and bottom line. Therefore, it pays to consider those differences before you invest in a solution or take the leap to change from one to the other.
On-Premise vs. Cloud
Essentially, there are two major options for email hosting: creating your own on-premise solution or paying a third party to host all of your email in the cloud. While hybrid solutions do exist, we’ll focus on the different advantages and limitations of these two options. Once you understand the key differences, you will be better equipped to make the right decision for your organization’s unique needs.
Key Differences Between On-Premise and Cloud Email Hosting:
Flexibility
Cost
Security
Scalability
After we’ve examined these four critical differences, we’ll take a look at several other considerations which can also have an impact on your business.
Flexibility: What Can Email Do for You?
There is a widespread shift in the business world from self-hosted or on-premise email to the use of cloud services. According to a report from the Radicati Group, cloud business email accounts are expected to account for 87 percent of all business email accounts by the end of 2022. Obviously, this is a very different picture compared to just a few years ago, when companies of all sizes maintained their own email servers. Why the transition? One reason is that cloud email can do things that self-hosted or on-premise simply can’t.
Because cloud-based email is hosted offsite, it’s not tied to your company’s physical location. That gives you the freedom to move your business or renovate your property without impacting your email solution. It also means that if something goes wrong at your building, such as a loss of power or a natural disaster, your email will be unaffected. Because you can access your email system’s administration controls from anywhere, you don’t have to be in the office to change a setting or add a user. Similarly, because your email is not running on hardware in your building, you don’t need to assign your employees to maintain or monitor it. This frees up your human resources to focus on your core business.
Finally, while it is possible to configure mobile access for an on-premise email solution, it’s a lot of extra work. What’s more, the result is not always 100% reliable. Cloud-based email supports the use of mobile devices natively, giving you and your employees easy access to all of your company’s important communications at work, at home, or on the road.
Cost: Up-Front and Ongoing
Another reason many businesses have switched from on-premise to cloud email is cost. Broadly speaking, a cloud-based email solution is roughly two-thirds as expensive as an on-premise solution for the same number of users, according to one in-depth cost-benefit analysis. The true cost savings of cloud email could be even higher once you factor in facilities and payroll expenses, as your company may need less space and fewer employees as a direct result of not hosting your own email. However, it’s important to understand the different types of costs associated with the two options, as well as the total dollar amount.
As you probably know, business expenses are generally divided into two types: capital expenses (capex) and operating expenses (opex). The essential differences between the two are as follows:
Capital Expense: A one-time purchase or investment that increases the value of the business and which depreciates over time
Operating Expense: An ongoing cost incurred during regular business and offset by ongoing revenue
On-premise email solutions incur a large capital expense when first deployed. Then they are followed by a significantly lower operating expense for a number of years thereafter. This ongoing cost reflects maintenance, electricity, staff, and monitoring. Furthermore, an on-premise email solution will generate another capital expense when it needs to be upgraded, generally every five years. However, as mentioned above, a capital improvement does increase the value of your business, at least on paper.
Cloud email solutions, on the other hand, do not incur a capital expense. Instead, the cost of a cloud-hosted email service shows up entirely as an operational cost for as long as you use the service. While this doesn’t carry the benefit of increasing your company’s value on the balance sheet, it makes it easier to absorb the total cost into your budget.
Which type of expense you prefer depends on your business model, as well as on your capital and your cash flow. Broadly speaking, larger businesses prefer the capital expense with lower ongoing costs. This increases the value of the company’s assets while allowing bigger profit margins. By comparison, many smaller companies prefer to pay operating expenses because they don’t possess a lot of capital, and the operating costs are absorbed every month by incoming revenue.
Security: Knowing Who Has Access to Your Email
Whether you choose on-premise or cloud email hosting has a significant impact on how you approach the security of your company’s email. Generally speaking, an on-premise email solution may provide greater security. Because the data never actually leaves your building, your email remains safe inside an isolated network and behind your company’s firewall.
Furthermore, you have a greater degree of control over your data when you’ve built the system yourself and your employees have physical access to the server. You can monitor email activity as aggressively as you want. You can also scan your entire network regularly for any malicious software or activity. For these reasons, companies which require the highest possible security, such as government or financial institutions, generally prefer to keep their email safe within their own walls. Finally, some industries face increased regulation, such as HIPAA requirements for healthcare. These businesses can find it easier to maintain compliance when they have complete control over their own systems.
On the other hand, cloud email solutions are generally protected by powerful security measures and housed in secure facilities. What’s more, these security measures are continually updated by the email provider’s staff, removing the burden from your employees. Most businesses find the level of security provided by cloud email to be sufficient and worth the added convenience. Occasionally, large technology companies such as Microsoft and Google suffer well-publicized data breaches. After all, these industry giants make large targets, and they are assaulted every day by criminals all over the world. When these breaches occur, your data could be at risk. Historically, however, the odds of your organization’s data being compromised in such a breach are small. Nevertheless, security concerns are often cited as the number one barrier to the use of cloud computing services in general.
One additional factor in email security is support. In the event of a security breach, a cloud email provider is generally able to provide assistance. For example, your domain name becomes blacklisted because a criminal spoofed your address. A cloud provider can help to get your domain cleared. If you host your own email, you will have to handle the fallout yourself. At the end of the day, the question of what’s best for your business's security will depend on several factors. These include the nature of your business and what kind of IT staff you have to handle your own arrangement. In any case, it’s a decision to be made carefully.
Scalability: Is Your Business Free to Grow?
The final major difference between on-premise and cloud emails is scalability. Simply put, it means the ability of your email solution to deliver as much service as your business needs at an efficient cost. If your business is expanding, you need it to expand to cover more user accounts and more activity. Conversely, if you have to downsize your business, it would be ideal if you could reduce the cost of your email solution.
With self-hosted or on-premise email, your capabilities are limited by the amount of hardware you have installed. If you ever had to increase the number of accounts your business uses, you would have to increase the amount of hardware. You may even have to replace it with more powerful systems. This means an additional capital expense as well as an increase in operating costs. Conversely, if you need to reduce the number of accounts, you would not gain any cost benefit, because your hardware would remain unchanged.
In the case of cloud email, however, adding or removing accounts is relatively easy and doesn’t require any capital expense. Furthermore, the adjustment to your expenses is felt immediately. If you need to trim your business, you can save money on your email solution in the same month. Finally, the cost of adding users is much more granular with a cloud email solution. With on-premise email, you may need to buy a new server just because you took on ten new employees. If you’re using a cloud solution, you can simply pay for those ten additional accounts. In other words, you only pay for what you actually need at any given time.
Last but Not Least
We’ve discussed the four most important differences between on-premise and cloud email solutions. However, there are a number of other factors which may come into play for your business. We’ll cover these briefly here, but if you’re facing a decision about your company’s email solution, you may wish to get solid answers on these topics before pulling the trigger.
Maintenance:
An on-premise email system has to be maintained by your employees. This could mean training or hiring staff. Cloud email services simply have an SLA which covers all ongoing costs.
Time to Deploy:
If you don’t already have an email solution, deploying an on-premise system will have a significantly longer deployment cycle. By comparison, cloud solutions can be up and running right away.
Technology Refresh:
On-premise email systems become outdated, leading to a new capital expense every few years - with accompanying downtime. Cloud email services are kept up-to-date without any additional cost or interruption of service.
Uptime:
The reliability of an on-premise email solution is entirely your responsibility, and it will depend on your hardware and the capability of your IT team. In contrast, cloud email generally comes with a specific guarantee of uptime, usually in the range of 99.9%.
Monitoring:
Keeping an eye on who is using your system and how it’s being used can be helpful for good security. If you’re hosting your own email, the responsibility is all yours. This can be good or bad, depending on your preferences and your resources. Cloud email providers cover this for you.
Backups:
Generally speaking, cloud email is always backed up, unless you specifically delete things. If you’re hosting your own on-premise email, you have to manage a backup solution yourself. This usually means more hardware and additional work.
Disaster Recovery:
This can be the most complex problem to solve with self-hosted or on-premise email solutions. Ideally, it requires the installation of an entirely separate hardware system in a second physical location, which can obviously double the capital expense of your email solution. Cloud email, on the other hand, already provides physical redundancy and instant access to your email, even if your building is completely destroyed.
Whichever Path You Choose, We Can Help
Now that you’re familiar with these important differences between on-premise and cloud email, you’re better equipped to decide what is right for your business. Both solutions are full of potential pitfalls and hidden risks, so it’s best to enlist the services of an expert before you take the plunge. Fortunately, Copperband Technologies has extensive experience with building and configuring on-premise email solutions, as well as offering world-class cloud services such as email and VoIP. Call or email us today, and we’ll help you examine your unique needs and find the right solution for your business and your budget.
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