@siringo said in On prem Exchange hardware questions.:
I did the maths and it worked out it would take them 4 -5 years on Office 365 before they would reach what they had to outlay for new server h/w, licensing etc. And the other thing was, that at that 4 year point, they may be starting to look at replacing h/w and O/S again, so moving to the cloud (O365) won out.
Exactly, it is a RARE shop that can make on prem cost less than cloud, even with O365 - unless the on prem is cutting a lot of corners, which can be perfectly acceptable depending on the business. At 100 users, that's $400/mo or $4800/year. Not very much considering what you get.
To do that on premises you need a moderate server, nothing crazy, but can't be some old junk just lying around. And to be anything like O365, you'd need at least two servers, not necessary in an HA cluster, but immediately available secondary hardware absolutely. So figure at least $6K for one server, $12K for the pair.
Now add licensing. That's Windows Server and Exchange licenses, then CALs and Exchange CALs. That's many thousands right there. That'll like take you to around $18K or more, and being on the skimpy side at this point.
Now we have to add HVAC and electrical costs for on prem, which isn't huge, but will be hundreds or thousands a year that people tend to overlook.
And now the IT costs. Running those servers, doing updates, supporting them when there is an outage. That stuff adds up, quickly. There's realistically no way that you can do this for under $500/mo and at some point you are getting a full time admin just for this and anyone qualified will be at least $90K a year in loaded costs! We'll ignore what you are "likely to need" and focus on the $500/mo which is $6K a year - just realistically no way to get below that with two Exchange servers, all of the associated infrastructure just for that, patches, updates, hardware, etc.
That puts it at $24K for that first year to have even a modicum of comparability to O365 and doesn't even begin to address things like enterprise hosting or redundant ISPs or anything like that. Figure you will pay that every five years, except the IT cost is annual. So add another 4 years at $6K and that's $30K over 5 years or $6K per year...
That makes it, ignoring all HVAC and electrical costs, real estate costs, ISP costs.... at least $1200/year more than O365 while getting quite a bit less in most cases. If you don't care about uptime or risks, you can shave a lot of costs off of that but only by not trying to match O365 in any way. Which is perfectly fine if that works for your business. But apples to apples, you might be able to match O365 somewhere north of 200 users, but only by taking on risks for trivial savings.
Now if you have thousands of users, of course, it's worth evaluating. But at thousands of users, MS will cut you some slack on the O365 price, too.
I'm confused...Didn't you just say a few posts ago that you agree that cloud is almost never cheaper? And now you say in this post that it's a rare shop that can make cloud cheaper than on-prem? I'm going through the same math and trying to decide which way to recommend for 75-80 users. We're pretty stuck with office due to how a couple of our teams use macros behind Excel for several things. Management folks would potentially like to take advantage of Teams and maybe SharePoint. So it may make sense. We already have all the hardware, hvac, ect. in place because we're already hosting multiple virtual host servers, so the infrastructure is good. We're also one of those places that hasn't had an Exchange outage (specific to the Exchange server) with our on-prem solution. We've had a couple extended power outages or Internet outages over the years, but nothing really to speak of. We've been on Exchange/Office 2010 until now because there's been really no compelling reason to change. The way it looks to me is at 75/80 users the costs over 6-7 years (if you keep your Exchange and Office suite that long) are then starting to equal out, and at that point you're probably looking to upgrade again with a large capital cost so it maybe makes sense to go Microsoft 365 and stay current, have access to Teams and Sharepoint, etc. But your statement on both sides of the aisle there (both on-prem and could almost always being cheaper) was kind of confusing to me.
