SBS 2011 Premium versus Cloud

We're looking into this right now for a similar sized client who needs to replace their SBS 2003 server. The way we look at it is, they need to have a server on-site anyways as they have several line of business applications that wouldn't work or aren't offered as Software-as-a-Service (SaaS).

Factoring that in, well, the (billable) time it would take to migrate all their mailboxes and data to a cloud solution (as I understand it each mail profile needs to get transferred twice: once to the cloud, once back down to create an offline .OST) plus the domain migration, troubleshooting, network changes (see below) etc. is likely pretty close to the same amount of time it would take to do a 2003 to 2008 migration, so there's really no savings in labor.

Now compare licensing of Windows SBS 2011 Standard vs. cloud-hybrid using Small Business Essentials plus Office365 or BPOS (and any/all the add-ins), and the savings are again, not much, certainly not much when you consider a year's worth of per-seat cloud fees.

There's also bandwidth/cap considerations to look at, plus upgrading network equipment for load balancing/redundancy (and likely getting a second Internet connection on a different carrier/network i.e. ADSL and Business cable Internet) that would be required if the business effectively shutdown due to any Internet outage when going with the cloud.

There's also x-factor stuff like Office macros/add-ins (you wouldn't believe how many offices out there have some "must have" Word or Excel macro) that might not work with Office365.

Basically, there's just a ton of variables here, and call me cautious, I just don't see most offices moving to a fully cloud-based offering right now. Hybrid/partial cloud services augmenting your current infrastructure? Absolutely, we're using Amazon EC2 for several clients for Web application hosting, Barracuda for off-site backup, and can definitely see the new Private Cloud offerings being a great fit for a disaster recovery failover. But completely moving to the cloud for everything? I just can't see not having some sort of server running locally and if that's the case, why not put SBS on it?

Even with your 0% accept rate, I'll make an exception for this one.

On-Premise failures are almost always something you caused/failed to prevent. Which notably lowers the available modes of failure. Introducing the "cloud" adds many more, most of which will be completely outside your control (and you'll spend more time tracking down the location of the failures).

That said, you client is quite small, and it's likely to come down to a initial costs decision. The "cloud" is probably going to be cheaper for them; but more complicated, if they have little tolerance for failures I'd strongly advise against it.

I have never lost a client by recommending what's best for them.

Just make sure you're clear about where your responsibilities end and what is up to the cloud to do right. The biggest issue with any outsourced service is responsibility and expectations. Because "cloud" is a nebulous term for many users, they may expect more than it can deliver. When there are failures you dont want unhappy users pointing the finger at you saying "you said this was cloud; cloud means no outages!"

I won't go into the cloud versus local analysis but I will say that they'll still have local resources that will need to be managed:

workstations and/or thin clients

network devices (switch, router, firewall)

printers

telephones and telephone system

So the nature of your relationship (and retainer) may change but I don't see why it has to be an all or nothing proposition.

We have a customer who recently moved the bulk of his IT operations to our cloud service but he still retains a local IT resource for the things I mentioned.