Office 365 or Small Business Server?

Office 365 or my Own Email Server?

Office 365 is Microsoft’s cloud based Exchange and SharePoint product, and Windows Small Business Server is Microsoft’s on-premise server and email solution.  Which should you choose?  There are issues with both solutions that can particularly affect businesses on the Sunshine Coast so you need to consider the pros and cons carefully.

Firstly, regardless of whether you use Office 365 or your own Exchange email server, there’s little argument that Microsoft Exchange email is just brilliant for small business.  With the email centrally managed it is secure, backed up, and with just one mailbox it means all your devices such as Outlook on your PC, on your laptop, iPads and Android phones and tablets, even webmail, are all looking at the same email, contacts and calendars so if you make a change on one device, or send an email on one device, you see that reflected on every device.  Add to that the ability to share inboxes, contacts and calendars with other staff and it’s a no-brainer as far as greatly increasing collaboration and therefore productivity goes.

Office 365 provides all of this functionality via Microsoft’s servers on the internet, i.e. its cloud based. You sign up and pay a fee for each actual mailbox you use, i.e. each staff member with an email address.  Aliases and distribution lists are free.  Microsoft does all the backend work, i.e. server patching, backup etc. so you have no additional IT maintenance costs in relation to email.  At the time of writing the cost of the basic small business plan (which gives you full Outlook collaboration and 25GB mailboxes) was $7.95 per mailbox per month.  To use the service you obviously need an internet connection, and you need a decent one if you have a lot of staff in the office using it.

The other way to get the same functionality is to run your own Microsoft Exchange server in your office. This usually means running Microsoft Small Business Server (SBS), the low cost offering from Microsoft packed with features including Exchange, as well as Active Directory for centralised user and security management in your office.  You can buy the server and SBS as a bundle from server vendors like HP, Lenovo, Acer etc. and the cost can be very low for the functionality – from as little as $2000.  All email is then delivered to the server and users connect to your server in your office, rather than Microsoft’s server in the cloud.  You still need a good internet connection, especially if you have a lot of users outside the office accessing the email.

So which is best for Sunshine Coast businesses?  The main challenge relates to relatively poor access to high speed internet on the coast.  With that in mind Office 365 or your own server depends on the following key factors:

·        How many staff you have
How much email you send internally
Where your staff are
How good your internet connection is
How many external users/devices are accessing the server

Let’s look at these in detail.

How many staff you have

Let’s say you have ten staff receiving email.  For Office 365 you would be paying $79.95 per month or $960 per year.  For $2500 you could buy a very decent SBS server and run it in your office and get all the features of Office 365 plus the extra features SBS has – shared folders/documents for staff, security management etc. However, you will also need it maintained by an IT pro from time to time.  But if you already run a server that shares your documents then you probably have some IT support expenses already and the SBS server can take over from your existing server.

How much email you send internally

With Office 365, every email you send goes to Microsoft’s servers first, then to the recipient, even if that person is sitting right next to you.  For offices with high volumes of internal email, especially those that send a lot of large documents to each other, this is inefficient and slows things down, not to mention using up your internet bandwidth and usage quota.  With a small business server in your office, emails to staff never leave the office and do not use any of your internet connection at all, and are received pretty much instantly, regardless of the size of the email.

Where your staff are

These days many businesses have staff spread far and wide, or working from home or other locations away from the office.  If you are one of these businesses, then Office 365 may be the better choice. With a SBS server in your office, all of these remote users are accessing their email via your office internet connection.  Even with the fastest ADSL2 the upload speed (which is what your office connection is doing when people are accessing their email) is up to 20 times slower than the download speed so email delivery and access will be much slower and it will also affect the internet speed of users in the office.  If you use Office 365 access will be as fast as the users internet connection allows, as Microsoft’s servers operate on connections orders of magnitude faster than or home and office connections.

Don’t be put off though – if you have just a few external users, or external access is limited to staff phones, a normal ADSL connection will generally still be fine.

How good your internet connection is

Some areas of the Sunshine Coast have terrible internet, with access to high speed ADSL2 unavailable, and connections limited to the lower ADSL1 speeds, or no ADSL access at all and reliance on 3g and 4g mobile broadband services, or third party wireless services.  You need to consider your internet speed, along with the factors above, before deciding on either solution.  The best choice will be a balancing act between number of staff, their location, how much external access is required and the volume, recipients and content of email staff send.

How many external users/devices are accessing the server

Again this factor is related to your internet speed.  If you have a lot of external users or devices needing to access the server email, then you either need a fast office internet connection for your staff to connect to your SBS server, or you need to use Office 365 so everyone gets the best speed their connection allows.  If the external devices are mostly phones the internet speed is not so important though as most phones just download a portion of the email and leave attachments alone unless you specifically request them.  If you have a lot of home workers using Outlook though, you will want fast internet for your server.


So what should you buy? It’s not clear cut I’m afraid. Only by considering your business in the context of the points above can you make an informed decision.  Some people hate paying for IT support and would consider Office 365 regardless, as they don’t have to pay anything extra for maintaining their email system.  Others see IT support as a normal expense of a modern business and have no issue paying for good service of a well set up solution.

My own thoughts are that you should seriously consider an on-premise SBS server if you have six or more staff and a half decent internet connection.  By rolling email, security and file sharing into one package you cover a lot of bases in one go, and with the right IT support will also receive answers to your questions and resolution of issues much quicker.  The Office 365 is officially sold through Telstra in Australia which puts a lot of people off and their turnaround time of support questions is truly dire.  You can purchase Office 365 products from other suppliers though who are far better.

Note though that Microsoft is ceasing selling their SBS product at the end of 2013, although it will be supported for some years after that.  They are pushing everyone towards cloud based services, even if it’s premature in some areas with poor internet access and speeds.  Most of us IT pros are very disappointed with Microsoft’s decision because of the fantastic suitability of the SBS product for the small businesses we support.

For more information on Office 365, have a look at the standard small business package here:

For more information on Small Business Server, have a look here:

Microsoft actually sells a version of SBS which combines Office 365 and the other SBS features as well.

Other alternatives

For cloud based email and collaborative services you aren’t limited to Microsoft.  Google, via its Google Apps for Business product range, offer much of the same functionality and it’s a little cheaper ($50 per year per mailbox). However, if your staff uses Outlook, you can’t beat Office 365 or SBS server’s natural and seamless integration into Outlook.  With Google apps you need to use a sync tool/add-on for Outlook which adds another layer of complication. 



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