What Is a Hosted Email Service?

Email isn't going away any time soon. Despite a rise in adoption of collaboration-based communication platforms such as Microsoft Teams or Slack, 86 percent of professionals prefer to use email for business purposes. How companies host, store, and distribute their email—that's the area that has undergone a massive transformation. Businesses are veering away from costly onsite email servers running products such as Microsoft Small Business Server and looking instead to the cloud with hosted email solutions. Businesses of all sizes have realized the wisdom of going with a scalable and secure hosted Software-as-a-Service (SaaS) solution with guaranteed uptime that breaks down pricing into flexible, per-user charges.

Running in-house email servers does provide more control and wider customization as well as tracking and compliance for small to midsize businesses (SMB). But they require specialized on-site IT staff as well as the need to manually manage and support both hardware and software. A third-party hosted email service matches many of the advantages of in-house email without the expensive initial investment. The ability to manage the number of users, access the latest security protocols, and enjoy ease of connectivity and deployment of hosted solutions makes it a viable and competitive option.

Even businesses with dedicated on-site IT staff have seen the wisdom of moving their email service. The advantages include per-person cost averages, cutting-edge security, cheap email storage, and simple ease of connectivity and deployment. While these advantages hold true for most organizations, there are not only exceptions but also hidden "gotchas" you should look for before selecting a cloud-hosted email provider.

Know Your Costs and Your Users

Cost is probably the most popular driver for businesses moving email to the cloud. On average, it's simply cheaper on a per-user basis when you factor in not only the cost of server hardware and connectivity but also add-on security products and the knowledgeable staff necessary to run them. But there's also the a la carte options menu.

Hosted email often comes as part of another service, such as web hosting or Infrastructure-as-a-Service (IaaS). Since that means there will be many extras available with these services, it's inescapable that you'll be paying for those extras in some way. Purchasing them usually means a slight uptick in that per-user price. Many businesses find that, once they're done selecting all of their needed "optional extras," their end price can often reach as high as $10 or more per user. This can start to add up for larger teams. It's somewhat like buying cable service: sometimes you need to pay for the channels you don't want to get the couple of channels that you need. There is also the old adage that "you get what you pay for" when it comes to quality. This is almost always true when considering an email host.

The flip side of that coin is specialization. Many operators believe that hosted email services are useful mainly to companies interested only in general-purpose email use and that any specialized application requires an in-house deployment. This might be true depending on the app but it might not depending on the capabilities offered by the hosted email provider. Email marketing is a great example. Some hosted email providers have special service suites aimed specifically at email marketers, many of whom can send out thousands of emails per month, focused not so much on communication as they are on marketing. These service providers deliver more than just volume, too, as they also offer custom email creation tools and sophisticated marketing and tracking metrics.

Email Usage Patterns Are Changing, Too

Along with specialized uses for email, you should investigate how your users are emailing on a daily basis. Email has come a long way in 40 years and the way people use it has significantly evolved. That's important because it will impact the tools and features you need to look for in your hosted email provider's client software. Sure, Microsoft Outlook is still the most popular on-site email client, but a fast-increasing number of today's email users are opting for other email clients, such as Thunderbird, or all-web clients, such as Google's hugely popular Gmail. These clients can be very sophisticated and, depending on what your users are doing with email, they can have a big impact on your day-to-day business process.

An example here is the rapidly growing trend of "inbox zero." It's actually known by a variety of names, but it refers to the practice of keeping your email inbox count at zero stored emails. Essentially, it's dealing with every email as it comes in and then deleting or archiving each one so that your inbox is always empty. This boils down to a fundamental shift in how users are utilizing their email inboxes.

Inbox Zero graphic above from ReachMail Media Services.

A survey conducted (see graphic above; click to enlarge) by email marketing software provider and consulting service ReachMail Media Services of over 1,000 respondents found that varying percentages of different worker generations attempted to adhere to "inbox zero," while other generations actually preferred using their inboxes as personal information managers.

That's a big difference, with "inbox zero" requiring an email client with great archiving that works over multiple device types. Meanwhile, at the other end of the spectrum, the personal information managers need something more like Microsoft Outlook, with excellent search capabilities as well as a good storage contract on the hosting side because these types of inboxes are often tens of gigabytes (GB) per user.

Configuration and Compatibility

The cloud certainly makes delivering email to your users easier but, for the vast majority of organizations, there's still going to be some setup required beyond simply activating the service. At a minimum, a domain must be purchased and configured to point to the new email host. The service provider can make this process very simple or they can make quite hard; this is something you should watch for in the provider's customer support forums as well as in our reviews. In most cases, there is a validation phase that will require some technical familiarity, though a few providers go so far as to walk even neophyte users through it step by step. Other solid services bolster excellent support with tutorial articles and videos that also walk you through the process. The worst will leave you to figure it out on your own.

Post initial setup, a primary concern will be the log-on issue. If your organization is fine with a separate log-on for your email provider, then this step will be quick. However, that's not typically what businesses want or users expect. In general, users expect to sign onto their desktops and have their email and file sharing sign-ons happen as part of that one-step process. Not surprisingly, this is called Single Sign-On (SSO) and it's enabled in one of three ways: through the use of a back-end directory service like Microsoft Active Directory (AD); an identity management service, like Okta (one of our Editors' Choice winners in that category); or several compatible web services that include SSO along with other apps and email services, like Google G Suite Business and Microsoft Office 365 Business Premium (two of the top providers reviewed here). Which method you choose depends on how your business is configured today and your long-term cloud services strategy. It's definitely a conversation you'll need to have either with your in-house IT staff or your outside IT consultant.

Your next major concern will be compatibility. It's not a shock that most businesses run on Microsoft Windows and use some form of Microsoft Office. Being able to use common third-party clients such as Microsoft Outlook can often be a concern, and even today, compatibility with Microsoft Outlook isn't necessarily guaranteed. This is especially true when sending and receiving meeting invites. It only takes one garbled meeting invite to realize how frustrating this can be in the real world. Even if using Microsoft Outlook isn't a concern, portability is. If the service is entirely web-based, then is there a means for me to take my email offline and send email when I connect?

It is also necessary to study email alternatives as part of your email service setup plan. Email is the standard way to communicate and it is familiar to most users, but it isn't always the most effective or expedient method. Email can be slow, result in delayed responses, and messages are rarely read to completion. Because of this, many businesses require additional "collaboration" tools, that various email services also include, in order to fill the communication gap more effectively.

Examples of this include things such as instant messaging (IM) and team chat tools, video conferencing software, online meeting collaboration tools, shared team intranet sites, and more. Some even integrate with third-party tools such as Slack, a highly popular collaboration tool that combines customizable chat "channels" with file sharing and project management. For those who want to integrate with certain apps more deeply or integrate with custom-developed apps they have built in-house, many bigger-name email services will provide robust application programming interfaces (APIs) that will let your in-house developers or consultants deliver on those needs. They will need to be involved in the email service selection process, however, as this is an important consideration during your evaluation period.

The Mobility Factor

One of the most important compatibility factors to consider with email is the mobility question. How often do your employees need to access email via mobile devices? That's an important issue because most email hosting providers deliver some kind of web client usable as a default inbox. Almost all of these can be accessed via a mobile device, so if your employees don't need to access their emails on the road that much, then such mediocre clients are probably fine.

Things are probably more complicated than that, though. As a recent survey conducted by market research firm Statista clearly shows, email is one of the most popular apps for mobile devices across most organizations and even consumers. Given how many workflows, business processes, and just plain important communications take place over email, this is one area where you likely shouldn't skimp.

Most Popular Email Client Platforms, December 2018

(Image credit: Statista)

Once you discover how pervasive mobile email is in your organization, then it automatically becomes an important point in choosing a hosted email provider. Does the provider offer their own dedicated mobile email client or do they promote a third-party solution? If they have their own, which mobile operating systems or devices does it support?

Most companies will prefer a third-party solution since not only will these be more capable, they'll also be supported more effectively by related back-end apps, such as mobile device management (MDM) platforms and mobile-oriented endpoint protection solutions. You'll also have an easier time pushing a third-party platform out to registered client devices, though some hosted email providers can help with this step.

Security and Privacy

For email, security starts with spam, otherwise known as unsolicited email. This is often the bane of not only those who live in their email inboxes,but also of the IT administrators who manage email services. The good news is that spam filters are getting better every day and email providers tend to deploy the very latest and greatest for their customers. The bad news is that these filters still aren't perfect, which means they can catch a lot of "good" email but often vary significantly in effectiveness. Today's spam filters are based largely on machine learning (ML) as the primary method of determining what's bound for the trash bin. Given that ML gets more effective over time, it is no surprise that the services that have been around the longest tend to have better spam detection.

For those unlucky enough to choose an email host that doesn't have built-in spam detection, it can often be an ordeal to route email correctly through a third-party filtering service. Some businesses actually prefer engaging with a third-party spam filterer, mostly for compliance or customization reasons. But, for the majority of SMBs, this is headache they would be best off trying to avoid.

Data protection is another key email security concern. Inboxes often contain GBs of business-critical and personal data, so not just hackers but also legitimate marketing companies can make big money off mining email data—and this sometimes includes the very company that is providing the email service to you. Fortunately, most companies, including your hosting provider, are pretty good about keeping out of private data, but it's important to be aware of when these policies have failed. Security breaches are commonplace and it's important to know how your data is being managed. To protect yourself, be sure to inquire about data safety capabilities on the provider's side, especially around encryption and malware scanning. But be sure to implement additional measures on your side, as well, including encryption for those using local email clients as well as deploying personal virtual private networks (VPNs) to folks accessing their email from multiple locations.

But your service provider isn't your only worry. If you've opted for any third-party email integration, like combining your email with a third-party customer relationship management (CRM) provider (such as Salesforce), that opens your company's email up to either data-snooping apps deployed by Salesforce or to any data breaches that originate with that service. So the more informed you can be about what's attached to your email service, how that data's being used and accessed and especially by whom, the better off you'll be when it comes time to send confidential email.

One great way to protect data is by using email encryption. This feature can do wonders for protecting your organization's privacy and that of your employees, but it demands some investigation when you're selecting your provider. Is it built-in or do you require a third-party tool? Does it use common standards that the recipient can process? What about Secure Sockets Layer (SSL) certificates? Are they included or do they need to be purchased separately? The best-in-class tools will not only make encryption easy for anybody to configure and use, buy they'll also make it easy for you to understand pre-purchase.

Antivirus and Phishing Detection

What about the time you clicked on that PayPal link that wasn't really a PayPal link? "Phishing" is a term applied to either websites or emails that pretend to be something they're not in hopes of getting a user to click on something they should have ignored. This tactis is done in hopes of then getting users to provide confidential information they would have otherwise kept to themselves, typically like passwords, financial information, or other personal data. While there are security measure that fight this, the mechanics behind phishing are, unfortunately, also consistently becoming more sophisticated. Even some dedicated antivirus and business-class hosted endpoint protection suites are having trouble keeping up.

While most businesses will have such suites in place, it often falls to the email service to provide an additional layer of anti-phishing and anti-malware protection. Our reviews found a surprising variance in this department, however, ranging from very robust to completely non-existent, so be careful. Since it's such a huge liability for business owners, this could be one of the most important factors in terms of background features. At the very least, it's better than filing an insurance claim or outright losing funds due to simple social engineering tactics.

For any business user or organization today, the decision to use email is a no-brainer. Business simply can't be done in many cases without it. But that doesn't mean you can interchange email platforms or service providers at will. Digging into the capabilities of these services reveals a great deal of additional feature scaffolding that surrounds almost every email implementation by necessity.

Ultimately, it boils down to a balance between cost, features, and risk. It's always tempting to simply jump on the lowest-cost solution, but the fact that email is ubiquitous keeps this from being the smart play. It's nearly impossible to escape using it, which means your users, your customers, and the guts of your business have all come to depend on it in different ways. You need to discover those ways, evaluate them, and then choose a service that either meets or improves on them. This takes time, discussion with your IT staff, and some investigation; these are steps you don't want to skip. Otherwise, you'll pay for it later.