What is Microsoft Exchange Server? Microsoft’s Groupware explained

For many businesses, seamless communication depends on the internal cooperation of groupware solutions. These make it possible to centrally manage e-mails, appointments, contact information, and tasks. One software that offers such functions is Microsoft Exchange Server. The market leader’s collaborative software is available in two different editions, each offering a different set of functions, and requires the purchase of a corresponding license. Companies have the possibility of using the groupware solution via the cloud or may alternatively operate it as an on-premises software within their own data centres. Read on for an overview of Microsoft Exchange’s functions, as well as an introduction to some of the program’s features, and an orientation on which model is best suited to your needs.

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Exchange Server usage models

The Microsoft Exchange Server is either used as a Software as a Service (SaaS) model or its licensing rights are purchased and then installed on your own server.

  • On-premises: those wishing to integrate Microsoft’s groupware solution into their own IT infrastructure require a server license, which allows you to install the software onto your own hardware. Additionally, using Microsoft Exchange also requires client access licenses (CAL). These licenses either give you access to a specific device, which is then made available to different users, or a specific user is instead authorised to access different devices on the Exchange Server. It’s important to note that such CALs don’t include the user rights for the required client software (Outlook).
  • Exchange Online: as a part of the online service, Microsoft 365, Microsoft also offers the groupware as a cloud service. In this case, Exchange Server isn’t operated on your own computer. Instead, it’s hosted inside the Microsoft Cloud. Access to the software’s functions requires a user subscription, known as a User Subscription License (USL). This allows you to use Microsoft Exchange Server as a SaaS and simultaneously keep things running within your own data centre, enabling alternative solutions, such as hybrid hosting.
  • Exchange server hosting: the third usage model gives you access to Microsoft Exchange Server via a third-party provider. Generally, this involves working with a web-hosting provider that has acquired a license from Microsoft that authorises it to charge for using the desired groupware. This enables end users to book Exchange Server features in the form of on-demand tariff packages.

The model best suited to your needs depends largely on the size of your company. Cloud-based solutions are geared primarily towards mid-sized companies, which normally lack the necessary means for installing and maintaining professional IT infrastructure. Basic data protection measures as well as complicated back-up procedures are both expensive and time consuming to implement on local IT infrastructure. By contrast, it’s up to the operators of large data centres to take care of such measures.

By outsourcing exchange hosting, it’s relatively easy to adjust the required performance level to a company’s needs as they change. Should your company be going through a spurt of unpredicted growth, then it’s possible to add more inboxes to the server without having to invest in expensive hardware or additional licenses.

The on-premises usage model, on the other hand, is aimed at large companies whose IT departments are equipped with the budgets necessary for setting up a secure Exchange Server within their own facilities. And unlike other usage models, like the Exchange Online or Exchange Server hosting options, purchasing server licenses through third-party providers offers the freedom of being able to tailor Microsoft Exchange Server’s functions specifically to your businesses’ needs. What’s more, this option also gives users complete authority over their data. Companies running Microsoft Exchange on their own servers never let their data out of their hands.

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Requirements for using Microsoft Exchange Server

Once you’re certain that you want to rent an Exchange Server, the hosting itself, including hardware maintenance and updates, also becomes the provider’s responsibility. All you need to do is make sure you have access to the required client software (usually Microsoft Outlook). Alternatively, you can use the Outlook on the web app integrated in Exchange Server for browser access. Those wishing to set up the Exchange Server themselves need to be aware that this generally also means having to deal with much more administrative work. The operating systems Windows Server 2012 or Windows Server 2012 R2 are required for integrating Microsoft Exchange 2016 into your own data centre. Additionally, the network also needs to provide the Microsoft directory service, Active Directory; this is because Exchange needs Active Directory for saving and sharing directory information for Windows. For Exchange 2019, however, Windows Server 2019 is required as well as at least .NET Framework 4.7.2.


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The nuts and bolts of Exchange architecture

Under most circumstances, Exchange infrastructure is spread across multiple physical or virtual servers. Just which sub-functions are installed on the respective servers is defined through server roles. While the previous version required setting up mail boxes of individual users and accepting client connections to be carried out through their separate roles, Mailbox and Client Access, Exchange Server 2016 now contains all of these main functions within the mailbox server. This is where the databases are stored and the client requests are received, making an additional client access server superfluous.

In the current version, the Edge Transport Server maintains its old positon as a second server. Most of the time, this server is separately installed in an upstream perimeter network, the so-called demilitarised zone (DMZ). Through anti-spam and e-mail flow rules, this serves as an additional safeguard for e-mail transfer occurring between local networks and the internet. Following this, classic Exchange architecture consists of an edge transport server and any number of mailbox servers that are organised in a data base availability group (DAG). The load distribution is regulated by a load balancer.

Access to the mailbox server is generally gained through the client program, Outlook, the web app Outlook on the web, or a mobile device. Alternatively, Microsoft Exchange Server functions can also be used via the Linux software, Evolution. The central interface for communicating with Windows client programs is MAPI (Messaging Application Programming Interface). Outlook for Macintosh uses the server interface EWS (Exchange Web services). RPC (Remote Procedure Call) or HTTP (Hypertext Transfer Protocol) are used as transfer protocols.

While client requests from the local network or externally via the internet directly access the mailbox servers of the Exchange architecture through the load balancer, e-mails originating from an external SMTP server first pass the perimeter network with the Edge Transport server before being forwarded to the load balancer and thus to the mailbox servers. The following graphic shows the classic structure of an Exchange architecture (version 2016):

Range of functions of Exchange Server 2016

Originally developed as an e-mail system, Exchange Server was then expanded and transformed into a high-performance groupware solution by Microsoft. The Exchange Server 2016 version contains the following features:

  • E-mail (POP, IMAP, SMTP)
  • Planner and calendar function
  • Task management
  • Contacts
  • Address book
  • Notes
  • Mobile e-mail access (ActiveSync)
  • Anti-spam filter (Intelligent Message Filter (IMF), SmartScreen)
  • Anti-virus filter
  • Anti-virus API for third-party providers
  • Certificate-based authentification
  • Sender ID identification
  • Encryption via secure/multipurpose internet mail extensions (S/MIME)
  • Global mail admission management with black and whitelist
  • Web app Outlook on the web
  • Web access to server functions
  • Data loss prevention
  • Spell check
  • Extended search function

Data stored on mailbox servers can be deposited in both private as well as public folders. What’s more, integrating Exchange Server into Microsoft Products, SharePoint and OneDrive, helps make collaborative work more convenient.


Microsoft plans to keep Exchange 2016 support running until October 2025.

Popular exchange server alternatives featuring a similar range of functions are Open-Xchange, IMB Notes, Zimbra, Zarafa, and Scalix.

New in Microsoft Exchange 2019

In October 2018, Microsoft introduced the new version of Exchange: in terms of security and performance, the 2019 version has definitely improved. Exchange now supports Windows Server Core, for example. The minimalist server installation offers attackers fewer opportunities to become active. In addition, administrators in the lean environment run less risk of incorporating errors that hackers could use as a gateway. The other important security innovation: From now on, access to Exchange management from outside can be blocked directly.

Microsoft has improved performance by greatly optimising searches. This goes hand in hand with a much faster failover. In addition, Microsoft Exchange now also supports modern hardware: 256 GB can be used as RAM and 48 processor cores can be used in parallel.

Several new functions have also been introduced for end users. At the same time, some features that were important for certain companies have disappeared:

New Removed
Do not forward: The function allows only the creator of a calendar event to invite other users. Unified Messaging has been removed (in favour of Skype for Business).
Further development of out of office note: Creating calendar entries that let others know the user is absent.  
E-mail addresses with non-English characters are no longer a problem.  
Administrators can delete calendar events created by former employees.  

For more detailed information, please refer to our detailed article on Microsoft Exchange 2019.

Product editions

There are two editions of Microsoft Exchange Servers: Standard and Enterprise. These are available as both server licenses as well as client access licenses. While the server license deals with scaling groupware solutions, the CAL edition differs in terms of its performance features:

Server license Scope of use
Standard For the standard edition, Exchange Server 2016 supports up to 5 mail server databases
Enterprise For Enterprise edition, Exchange Server 2016 supports up to 100 mail server databases
Client Access License (CAL) Scope of use
Standard CAL Access to standard functions, like e-mail, calendars, and contacts.
Enterprise CAL Access to Enterprise features, like Unified Messaging with a voicemail function, Exchange Online Protection for expanded protection against viruses and spam, an integrated archive function, and protection against data loss

With CAL, you can either license a certain device or an individual user. In order to purchase an enterprise CAL, the Standard Cal must first be bought.

While the standard server license is aimed at small businesses, Microsoft aims to target large organisations with the Enterprise license.


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