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I'm setting up a computer network for a small (10-20 people) company. They are currently using a Hosted Exchange service they are totally happy with. Other than that, they are starting from scratch (office doesn't even have furniture yet). They will need some kind of file sharing server set up in their office.

If I set up a machine as a file server and nothing more, users will have three passwords to deal with: local machine, file server, and email.

If I set up a Domain Controller, identities for local machine and file server will be the same. But what about the Hosted Exchange server? Must the users have a separate email password, or is it possible to combine the two? (I realize it might depend on the specific hosting provider, but is it possible?)

If not, it seems like I have these options:

  1. Deal with it: users have a separate email password.
  2. Host Exchange on the local server: more than they want to manage in-house?
  3. Purchase a hosted VPS, make it part of the domain, and host Exchange there. (Or can/should a VPS be a domain controller?)

I realize I have a lot of questions in there. The main one: is there any reason to use a Hosted Exchange service if I'm setting up other Windows services?

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You're going to have to live with the hosted password being different. It is possible to build a single-sign-on solution that integrates with a hosted Exchange company but it is a custom solution that I've only seen done for large customers with lots of money. The future in this regard is promising as Microsoft has several efforts underway that aim to allow such federation to work much more easily but that doesn't help you now.

As for your primary question, there are many good reasons to continue using hosted Exchange rather than setting it up on one of the Windows servers you're installing:

  1. You already said they are totally happy with the service. Don't fix what isn't broken.

  2. It seems like it would be so simple to just install Exchange locally and you're done. But I guarantee you that the scope of that project would quickly get more complicated. You would need to purchase and install an antivirus solution. You would need to purchase and install an antispam solution (or outsource just that part). Very likely one or more users takes advantage of Blackberry so maybe you need a BES server. Etc.

  3. If you install a local mailserver, they're stuck with the burden of Exchange support permanently. This will either increase their support costs (paying you more to manage patches, troubleshooting, and upgrades) or force someone internal to learn Exchange a bit to keep it going.

Personally, I think 10-20 users is a no-brainer for hosted email. The cost per mailbox for hosted Exchange has become so competitive that it is pretty tough to beat with a local install when you don't have internal IT resources.

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