Cloud Email Vs On-Premise Setup: A Step-by-step Cost Benefit Analysis

This document highlights the TCO for a customer having 10000 mailboxes (as a sample) and who is making a choice between an in premise email system and a cloud email system

Cloud setups by their very nature follow the Opex model of costing. In premise setups are typically a combination of Capex and Opex costs. For in premise setups, there is a fixed upfront cost to purchase equipment, servers, storage etc and then an ongoing Opex cost to maintain and run this setup.

For the purpose of making an apple to apple comparison between a Capex intensive in premise setup and an Opex based cloud setup, we have assumed a lifetime for all capex purchased and converted these expenses into annual opex costs.

Also for the sake of building this document, we have assumed an in premise Mithi Connect Xf setup and have compared it with the Mithi SkyConnect cloud email service.

If a similar exercise is done for any other product and service, the results would be quite similar. While the content may vary, the context is the same.

We would need to start by defining the ideal architecture for an in premise setup, so that we can arrive at its annual bill of material.

 

In premise Email Solution Architecture


Note: This setup does not consider a DR site or redundancies to achieve extreme high availability as is promised by cloud setups.

In premise setup and costing for a 10000 user workload


The picture above illustrates a basic infrastructure to host a 10000 user email workload.

It also demonstrates the various teams required to maintain and monitor the setup.

Thus to make this setup possible we will need the following components:

 

Component Annual cost* (USD) Description
Infrastructure Elements and Costs
One Mail Server 2,500 This annual cost assumes that the server has a 3 year life (warranty) and is purchased for an upfront cost of USD 7,500
One Front End Server 2,000 This annual cost assumes that the server has a 3 year life (warranty) and is purchased for an upfront cost of USD 6,000
SAS Storage (live store) 1,680 Need 10TB of live store, which costs 168 per TB a year. SAS storage is purchased for an upfront cost of 500 per TB and has a lifetime of 3 years.
Backup Tape system 3,000 Considering a reliable system with multiple tapes, purchased at an upfront cost 9,000 and has a life of 3 years
Data center costs (for all equipment) 3,000 Co-location and network charges
Automated monitoring via a SaaS tool 220 Using SaaS monitoring tools
Bandwidth consumption 7,500 This covers the Internet bandwidth consumption, for inbound mail flow and access to the in premise servers for roaming users. This is approximately 30 mbps across all devices and locations with average assumptions of consumption patterns (peak hours etc)
Services Costs
Day shift administrator 6 people (3 shifts over 24/7) 27,000 Assumes a cost of 375 including salary and overheads
NOC operator 3 people (3 shifts over 24/7) 13,500 Assumes a cost of 375 including salary and overheads
Software Costs
Clean mail solution 45,000 This cost assumes a subscription of USD 4.5 per user per year
Connect Xf subscription 75,000 Assuming a per user per year subscription of 7.50
TOTAL Annual cost (A) 180,400
Effective cost per user per year =(A)/10000 18

Cloud setup and cost for 10000 users


For a SaaS service, you don’t have to provision any infrastructure. Simply sign up, provision users and consume the services. The following are the components of a cloud infrastructure for an email setup. There are only 2 components to be considered by the customer, viz. The bandwidth and the internal IT team to front end the queries by the end user.

Component Annual cost* (USD) Description
Infrastructure Elements and Costs
Bandwidth consumption 7,500 This covers the Internet bandwidth consumption for all the users will access the cloud setup over the Internet. This is approximately 30 mbps across all devices and locations with average assumptions of consumption patterns (peak hours etc)
Services Costs
Day shift administrator 6 people (3 shifts over 24/7) 27,000 Assumes a cost of 375 including salary and overheads. These are internal helpdesk staff who support the 10,000 users by taking back to back help from the OEM.
SaaS Costs
Mithi SkyConnect Venture subscription 117,000 Assuming a per user per year subscription of 11.70 for the Mithi SkyConnect Venture subscription, which offers 1GB per user
TOTAL Annual cost (B) 151,500
Effective cost per user per year =(B)/10000 15

The comparison


The table below summarizes the above mentioned numbers and demonstrates that the cloud setup is more cost effective than an in premise setup and offers tremendous benefits in terms of reliability, security and ease of scale, which cannot be easily quantified (problems in these areas lead to frequent downtimes, data loss and dips in performance, which impact productivity)

 

In Premise Setup
(Based on Bare metal and Mithi Connect Xf)
Cloud Setup
(Based on Mithi Skyconnect Venture Subsciption)
Infrastructure Costs (Annual – USD) 19,900 7,500
Services Cost (Annual – USD) 40,500 27,000
Software/Subscription Cost (Annual – USD) 120,000 117,000
Total Cost (Annual – USD 180,400 151,500
Effective per user per year cost (Annual – USD) 18 15
Infrastructure Fixed for a period of 3 years, and will age in performance. When replaced, these become dead assets. The equipment cannot be easily upgraded or modified without risk or major downtime Scalable, continually renewed infrastructure by AWS the cloud provider. Scale up/down, Scale out, Change underlying hardware, all on demand, and within minutes.
Equipment Bare Metal or if virtualised, needing a virtualised environment, further adding to the cost. Difficult to upgrade without much impact. Virtualised and objectified to allow easy and granular addition, removal and growth in the infrastructure. Most changes happen on the fly or the most with a restart. Our servers use fast SSD drives with guaranteed iops
Security Physical and Virtual security of the infrstructure has to be planned, built in and monitored. In addition a clean mail solution has to be deployed in premise or via a SaaS provider Physical and Virtual security provided by AWS. This is certified and monitored security and is a great bonus to being on the cloud. In addition Mith integrates its own firewall, rate controls, policy controls and an integrated SecureMailFlow clean mail service (in partnership with Trend Micro HES) to remove virus and spam resulting in 99.99 % cleaning of junk mail.
Cost Model Capex + Opex Opex
Reliability Reliability and Redundancy has to be built into the infrastructure by careful planning, provisioning of extra resources and automated or manual processes The infrastructure typically has 99.9% level of reliability guaranteed by AWS. In the rare case, if any S1 level issue is to occur, the instances and storage elements are designed to recover rapidly in case of a disaster, thus minimising Recovery time. In addition we over provision to add another layer or reliability to help us deliver on our guaranteed promise of 99.9% uptime.
Scalability A challenge, when it comes to upgrading or scaling out the hardware. Many a times some upgrades need to go through the long purchase cycles since they are capex. At the push of a button, we can provision larger instances, more storage and scale geographies. Unmatched ease of scale.
Monitoring & NOC Need to provision a 24/7 team to work in shifts to monitor and maintain the setup. Mithi has setup a 24/7 NOC using a combination of deep monitoring and alerting automation, standard operating procedures and trained staff to help maintain uptime.
Mithi Application & upgrades Class leading Email and Collaboration Application deployed. Upgrades are typically delayed to avoid downtimes and stay away from change, leading to the customer using older versions and losing out on the benefit of the newer versions. Class leading Collaboration application deployed and continuously upgraded to ensure that the customer is always using the latest capabilities
Backups and Archival Needs a separate server and storage with separate a backup system provisioned to store the archived mail. Reliability of this system also has to be factored in, leading to higher costs Data backups & Mail Archival on ultra reliable multi location S3 cloud of AWS. This boasts of 11 times 9 levels of reliability

Conclusion


It is observed that the TCO of a cloud setup is lower or almost at par with the TCO of an in premise setup and offers immense other benefits, which are difficult to quantify in terms of scalability, performance, ease, convenience, and security.
This means that besides the other benefits, the mathematics behind a cloud setup is also in favour of moving your workload up into the cloud.
(*) The rates are got from reliable sources on the Internet. Even though they are subject to change or may vary, they give a good indication of the cost and allow building out a comparison.

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