By Peter Pawlak [bio]
Posted: Feb. 19, 2007

The following an excerpt of a Research Report published by Directions on Microsoft, an independent research firm focused exclusively on Microsoft strategy & technology. More samples of our content, as well as a list of upcoming articles and reports are also available.

Exchange Server 2007 and Outlook 2007, released Nov. 2006, mark the first major upgrade of Microsoft's e-mail platform in nearly four years. Besides enhancing existing capabilities, Microsoft added new regulatory compliance (information retention and privacy), unified messaging, and high availability features. While many Exchange 2007 and Outlook 2007 features will pique the interest of organizations, upgrading to Exchange 2007 is not as simple as upgrading from Exchange 2000 to 2003, and some of the new capabilities impose additional licensing costs—even for customers covered by Software Assurance contracts.

Exchange Server 2007 and Outlook 2007 include significant improvements in five areas that are important to businesses—availability, regulatory compliance, unified messaging, cost of ownership, and mobility. These features have the potential to justify an investment in deploying Exchange 2007 or upgrading from earlier versions.

Availability

Users have come to count on e-mail to be as reliable and available as the telephone. An expanded set of redundancy features helps Exchange 2007 tolerate failures in individual system components without taking down the whole e-mail service for extended periods of time.

The single most significant resiliency improvement in Exchange 2007 is the new continuous replication feature, which maintains independent up-to-date replicas of Exchange mailbox and public folder databases across multiple disk drives, computers, or physical sites. After a disk failure or database corruption, an administrator can manually switch to a replica in a matter of minutes. With the more expensive Enterprise Edition of Exchange 2007, switchover happens automatically so that, at worst, users see very brief interruption in service. This is in contrast to Exchange 2003, for which database problems could necessitate restoration from tape backup, causing lengthy downtime as well as the potential loss of users' most recent messages and other data.

Regulatory Compliance

In recent years, the legal landscape for handling e-mail and other electronic documents has changed dramatically. Many new regulations governing records retention and the treatment of sensitive data have been imposed on companies worldwide. Furthermore, well-known legal cases have highlighted the dangers that e-mail and other electronic records can pose to organizations.

Exchange 2007 includes several new features to help implement document retention policies and other aspects of regulatory compliance. For example, Exchange 2007 can be configured to automatically retain particular types of messages for a mandated period of time, as well as to remove unneeded content that has no business value and may pose unnecessary legal risk. Furthermore, users can mark messages with particular classifications (e.g., "Company Internal") to aid policy enforcement. Administrators can set up rules to inspect every message (including attachments) sent or received and take prescribed actions under specified conditions; for example, a rule could block forwarding of messages classified as "Company Internal" outside the company.

Unified Messaging

Another feature completely new to Exchange 2007 is the ability to place voice mail and incoming faxes into the same inbox as e-mail and provide users access to all types of messages from a PC, Web client, or mobile e-mail client, as well as from a standard telephone using voice commands. While unified inbox and telephone access solutions for Exchange have been available for some time from third-party vendors, only a small percentage of Exchange customers purchased and deployed the technology.

There are three major reasons why customers may find Microsoft's unified messaging solution more compelling than alternatives. First, once an organization has upgraded to Exchange 2007, the incremental licensing and integration costs for unified messaging are modest, especially compared to competing solutions. Second, for corporate IT, Exchange 2007's unified messaging features promise lower ongoing maintenance costs by consolidating e-mail, voice mail, and incoming fax services into a single system. And third, Exchange 2007's new regulatory compliance features apply to voice mails and faxes as well as e-mails, providing the ability to enforce a common set of retention policies across all communications types as required by regulations or legal proceedings.

Cost of Ownership

Exchange 2007 promises to drive down ongoing system maintenance costs and lessen IT workloads by making server consolidation and management via scripting more practical.

Exchange 2007 is the first Microsoft server application to ship solely for use on 64-bit versions of Windows Server 2003. Microsoft redesigned the mailbox database and other core components to take advantage of the vastly larger amounts of physical memory supported by 64-bit servers. This, combined with the fact that Microsoft now eliminates the artificial database size limits it imposed with prior versions of Standard Edition, makes it practical to consolidate more users onto a single mailbox server.

Exchange 2007 uses PowerShell, the company's next-generation shell-scripting engine, as the interface to the product's configuration settings and internal status information. The Exchange 2007 administrative console runs on top of PowerShell, so any task that can be done in the console can be accomplished at the command line or by executing a script. In fact, console wizards display the script commands they're performing, allowing an administrator to paste these commands into a script he is composing.

Accessibility from Mobile Devices and Browsers

In addition to adding voice access, which allows users to navigate messages and calendar entries over a standard phone and hear the information read back, Exchange 2007 also improves users' ability to access the system from a PC's Web browser or a compatible mobile device.

With Exchange 2007, browser-based access is improved to the point where its capabilities are nearly on par with Outlook 2007 if Internet Explorer version 6 or higher is employed. The biggest difference is that browser-based access requires an active Internet connection, whereas Outlook 2007 can be used offline.

Exchange 2007 inherits the direct-push synchronization support for mobile devices first introduced in Exchange Server 2003 SP2 in late 2005. This feature works with Windows Mobile 5.0 devices (Pocket PCs and Smartphones), as well as non-Windows mobile phones that have Microsoft's ActiveSync technology built in (from vendors such as Motorola, Nokia, Palm, and Sony Ericsson). By downloading new items to these devices immediately rather than at scheduled intervals, direct-push makes them viable alternatives to RIM's BlackBerry. Exchange 2007 will offer further improvements when combined with devices built on Windows Mobile 6.0 (code-named Crossbow and scheduled to ship in the first half of 2007), such as allowing mobile device users to perform searches on their entire Exchange 2007 mailboxes, not just the items cached on the devices.

Assessing the Cost to Upgrade

The licensing and labor costs associated with migrating from earlier versions of Exchange are not trivial.

As with any major new Exchange version, new licenses must be purchased for each server and each user, at prices in line with those for Exchange 2003. However, Exchange 2007 requires additional "enterprise" user licenses for certain new capabilities, such as unified messaging. The requirement affects even customers who purchased Software Assurance with Exchange 2003 on the expectation that they'd be able to upgrade to the next version at no additional expense.

Because of architectural changes and other reasons, migrating an existing system to Exchange 2007 will be more complex and laborious than the upgrade from Exchange 2000 to 2003. One major impediment, arising from Exchange 2007's 64-bit requirement, is the fact that existing Exchange servers cannot be upgraded in place to Exchange 2007; administrators will have to set up new server hardware or rebuild existing servers from scratch. Furthermore, organizations wanting to exploit Exchange 2007's new unified messaging capabilities will need to factor in the expense of hiring a system integrator to help them with the potentially complex task of integrating Exchange with the organization's existing telephony equipment.

What's Ahead

This report provides CIOs, solution architects, and partners with a comprehensive introduction to evaluating Exchange Server 2007 and Outlook 2007 and planning its deployment in the following chapters:

"Unified Messaging Advances Voice Mail" describes how Exchange Server 2007 consolidates e-mail, voice mail, and incoming fax services into a single system, allowing IT staff to devote less time to system administration and giving users the ability to check all their messages in one place.

"Mobility, Spam Blocking, and Calendaring Enhancements" explains how improvements in Exchange 2007 and Outlook 2007 make Exchange more accessible from mobile devices and browsers, lessen the chance that important e-mail is misidentified as spam, and increase the ability for users to manage their personal schedules and shared resources, such as a conference room.

"Other New Features in Outlook 2007" discusses Outlook enhancements—such as the new user interface, support for Internet calendar, and RSS support—that benefit all Outlook 2007 users, not just those who use Outlook as a client to Exchange Server 2007.

"Driving Down Costs and Lessening IT Workloads" reviews the new security, scalability, availability, and manageability improvements that promise to lower the cost of maintaining Exchange. An accompanying sidebar discusses the technical complexities associated with upgrading earlier versions to Exchange Server 2007.

"New Features Assist in Regulatory Compliance" outlines new capabilities in Exchange 2007 that make it more practical for organizations to conform to regulatory requirements governing information retention and privacy as well as to reduce litigation risks by "shredding" old messages they aren't required to keep.

"What's New in Exchange Development" describes the new APIs that Exchange 2007 offers developers, the APIs that have been removed, and the types of applications developers can build using the system. It also looks ahead to what APIs might be removed in future versions of Exchange.

"Packaging, Licensing, and Pricing" summarizes the differences between the two server packages Microsoft sells (Standard Edition and Enterprise Edition), the two types of Client Access Licenses Microsoft offers and the features conferred with each, as well as pricing details.

"Resources" contains links and pointers to additional material about Exchange Server 2007 and Outlook 2007.