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Hosted Exchange - A utility type of IT Investment

Posted Nov 29 2010 11:40am

Within your portfolio you have a mix of investments, there are strategic transformational and growth investments, and then there are the utility investments. Those essential services needed to run the business but in a cost-effective manner. The decision to move to a hosted exchange environment is a utility investment.

There are some positives within the move to hosted exchange. First, there is the general "greening" of the datacenter as you remove from your carbon footprint a rack full of hub, bes, mail store, and encryption servers and appliances. The other is this is a better way to manage IT risk. You can contract for increased availability, and a time window for remaining current on new releases. Additionally, the expertise for handling email systems is high priced and specialized. There is not a large pool of exchange rangers working at health systems. The risk management methodology is one of transition to the vendor. This is a key point to consider when moving to hosted exchange as you negotiate to find balance between email service quality and the cost of the service.

On the matter of IT staff, don't fool yourself, there is not a reduction in IT Staff. It is more a change up on which expertise you will need. Currently you may have high end architects, mid-tier engineers, and ticket neutralizing technicians. In the hosted environment, you will need a different expertise and it also depends on what is negotiated in the contract. If you move level 1 support to the hosted vendor, those technicians may not be needed. However, this is an expensive option and it maybe worth only having the outsourced exchange vendor support level 2 and level 3, and keep several ticket neutralizing technicians on staff. Your high end architects will probably be moved to other transformational investments. However you will need a good sourcing manager to manage the vendor.

On financing, it will be a change from capital investments for servers, software and appliances to an operational expense for email service. The benefit here is that it will be easy to create useful ways of how much this service runs for the institution. Just be sure to include the new expanded internet pipe or mpls wan connection for larger systems.

As always, it is a good idea to vet the idea out in a business case. Clarify the project's objective, total cost of ownership, return on investment, and internal rate of return. As you explore vendors they should help you determine if this is an endeavor worth planning out, and how many resources are needed to implement and sustain.

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