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Why the Cloud will not eliminate the On-Premise email solution.. yet.

Created: 28 Feb 2014 • Updated: 28 Feb 2014
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If any part of a business today could be the most critical for success, it would be the company's email system. Numerous Osterman Research surveys show that the majority of decision makers prefer to maintain the responsibility for email inside the organization – as shown in the figure.

Osterman_research_Cldvsonprem_1.JPG
 

Devalue the Cloud?
Since the preference for on premise solutions is evident, does this mean the cloud is less of a factor over time? Not by a long shot. Osterman Research surveys, as well as those from many other research firms, indicate that the cloud is a very popular deployment model for email capabilities and that its capabilities are becoming more important and more widely accepted over time. The cloud offers a number of important benefits, not least of which are its low and predictable cost of ownership, the ability to let specialist providers manage key email and related functions and the freeing up of IT staff for other initiatives. Our research shows that cloud-based email is becoming more popular over time with significant growth in the number of corporate users served by this delivery model.

Benefits of the Cloud.
The cloud is currently popular for services ranging from email to CRM to storage to archiving. The interest and enthusiasm in the cloud is not without merit because of the many benefits that the cloud delivery model can provide:

• Unlimited storage and retention model
• Low and predictable cost of ownership
• The shift from a capital expenditure (CAPEX) to an operating expenditure (OPEX) model
• Ease of managing IT services
• Freeing up IT staff to spend time on more strategic tasks and less time on routine maintenance of
   email servers and other parts of the infrastructure
• The ability to add new services quickly and easily
• Many organizations (mid to large size) are moving to cloud based email systems

Osterman Research anticipates that North American corporate email users served by a cloud-based messaging system will increase from 7% of users in 2010 to 21% by 2013. Similarly, 34% of users used a thin client (e.g., a Web browser) to access email in 2010 – Osterman Research forecasts this figure will increase to 44% by 2012, indicating further reliance on cloud-based delivery of email services. While the cloud has traditionally been considered a viable option only for small organizations that lack dedicated IT staff to manage on-premises infrastructure, that is no longer the case. Many enterprises have opted to deploy cloud-based email for some or all of their users.

In short, the cloud delivery model is as viable for large enterprises as it is for smaller companies.

Benefits of the On Premise Solution
There are a number of benefits that the on-premises model for email delivery can provide.

These include:

A variety of On Premise solutions
On-premise solutions offer a wide variety of delivery models, including on-premises physical servers, on-premises virtualized servers, purpose-built appliances and virtualized appliances.

A greater number of email solutions offers more options
As the traditional model for deploying email, there is a wide variety of on-premises emailsolutions available on the market from a large number of vendors. While many of these vendors also offer cloud-based solutions, the majority of these vendors’ email-related revenue comes from on-premise solutions.

Large number of operating systems and virtualization environments supported
On-premises solutions are also available for virtually every operating system, including Windows, Linux, Mac, etc., as well as for VMware, Microsoft Hyper-V and Citrix XenServer.

Ability to run key processes in-house
Finally, there are some capabilities that are best served by on-premises solutions, including very high volume, time-sensitive email broadcasts; some types of customer-service communications; and some billing applications, among others.

Use of a multi-vendor architecture
On-premise solutions also offer the ability to use a multi-vendor architecture that may reduce the risk of external attack and that can reduce the risk of data breaches.

Avoiding potential problems associated with multi-tenant environments
Although there are a number of robust multi-tenant, cloud-based systems in use today, there are potential disadvantages of a multi-tenant architecture, including one tenant periodically consuming the majority of system resources, greater sensitivity to scalability issues, and potential security issues. The inherent single-tenancy of on-premise solutions largely avoids these issues.

Potentially low cost of ownership
While the cloud boasts a low cost of ownership, many on-premises solutions can also offer low cost of ownership. Osterman Research cost modeling has demonstrated, for example, that some (although definitely not all) on-premises email systems offer about the same cost of ownership as many cloud-based email solutions, particularly if an on-premises solution includes features that might represent an extra cost from a cloud provider.

Certain key regulatory requirements require On Premise products
Another important benefit of on-premise email solutions is that they permit complete control over the custody of data. A company using a cloud provider may not be able to exercise this level of control over how and where their data is managed, resulting in potential legal and/or regulatory problems. This is a critical consideration in a variety of situations.

Re-use of existing servers and other infrastructure components
Another benefit of an on-premises delivery model, particularly for organizations that are migrating or upgrading from one email system to another, is the ability to re-use existing servers and storage hardware. Hardware re-use can provide a significant cost reduction, particularly for smaller organizations that are spreading the cost of server hardware over a relatively small number of users.

Encryption and Data Loss Prevention
Another benefit of an on-premises delivery model, particularly for organizations with regulatory requirements, would be the twin needs of identifying and securing an organization's sensitive information.  On-premise deployment of these technologies offers capabilities that meet the needs of finding sensitive information where it lives and allowing appropriate access to authorized users.  The selection of a cloud-based messaging provider doesn't usually include data loss prevention or encryption.  Most organizations are frustrated when they attempt to retrofit new security tecyhnology with their new cloud-based messaging infrastructure and are forced to choose a less-capable solution that interoperates with their messaging provider.

Which solution is best?
There is no absolute. Email systems are designed as the central hub for information sharing and communications in all aspects of business today. Small, medium and large organizations must significantly reduce the cost of their IT Infrastructure while offering the flexibility their respective business needs to operate with the utmost efficiency. While the cloud solutions offer somewhat more flexibility and help to remove some of the IT overhead, the On Prem solutions offer a wider range of services and scalability while maintaining certain regulatory requirements. The decision will be based on the need and the scope of the organization.