As your business grows, your e-mail solution needs to grow with it. But how do you know when, and how, to scale up? And should you continue to use an on-premise solution, or make the jump to a hosted e-mail provider?

The first step is to evaluate your current system for weaknesses or limited functionality. As Lizetta Staplefoote notes here, if you’re already using an on-premise solution, take notice of the ‘little annoyances’ your users mention, and decide if these are symptoms of larger issues you need to address.

There are several major ‘red flag issues’ that can help make the decision whether to stick with an on-site solution or move to a hosted provider, as outlined in this Rackspace Knowledge Center article. The first addresses Staplefoote’s question.

If your employees are constantly complaining that their e-mail boxes are too small, you may have a problem, the article said. In an attempt to limit the size (and therefore the per-mailbox storage cost) of email accounts, some businesses impose size limits on users’ mailboxes. But this can be more than an inconvenience; it can lead to the deletion of important company intellectual property, or users’ mailboxes may be inaccessible, lowering productivity. If this is a major issue for your business, a hosted provider with dynamic, scalable storage and archiving capabilities could be a better choice.

A hosted solution can also address the issue of remote access for geographically distributed employees, those that do work from a home office, or for workers that travel a lot for business. “For example, if users are clamoring for instant push for mobile, do you really want to spend the budget and time to stand up advanced mobile accessibility on-premise, or does it make more sense to seek out a provider to fill the need?” Staplefoote said.

Remote access to Exchange mailboxes, calendars, contacts and other applications can be complicated to manage on-site, and to keep secure, the article said, in which case a hosting provider can be an invaluable resource.

The same benefits apply to mobile access to e-mail and other business applications, the article said. “More employees than ever need access to their email, calendars and contacts over smartphones and tablets. Unfortunately, IT organizations often find it hard to keep up with the mobile-tech explosion; synching messages and data requires additional servers (and server licenses) that take time and effort to implement,” the article said.

With a hosted provider, secure, reliable access can be extended to any employee, on nearly any mobile device or smartphone without the management headaches and security concerns, and productivity can increase as a result.

Speaking of productivity, if email outages are a constant problem, you should definitely consider a hosted solution. Since email is the lifeblood of your company’s communication strategy, what seems like a “simple” Exchange server outage could cause a ripple effect down the line; shutting down the entire business and compromising security and productivity until it’s fixed.

Cost, of course, is often a major driving factor behind IT investments. But with email, it can be hard to gauge, since it’s a non-revenue-generating application. But there’s a definite disadvantage if your email solution fails, or your company’s exposed to a security breach.

The Knowledge Center has a great total cost of ownership (TCO) comparison chart here that, though the TCO savings can vary based on the size of your organization, shows exactly the value and savings you’ll get from a hosted solution.

In every case, however, according to the Knowledge Center, “the hardware, IT infrastructure, labor and other costs associated with an on-premise Exchange deployment make it significantly more expensive than a quality hosted Exchange service. With the additional impact of indirect TCO benefits – automatic upgrades, rapid deployment and scaling, reducing the impact on a company’s internal network and other factors – the difference becomes even more clear. For the vast majority of companies that consider a hosted Exchange solution, the TCO savings are dramatic and undeniable.”

All of these problems can impose major, and completely avoidable, business costs. The solution – moving to a quality hosted email service – can help reduce your risk, improve productivity and free your IT staff to focus on more important tasks that add lasting business value.

This is a special guest post by Sharon Florentine. Sharon is a freelance writer who covers everything from holistic veterinary care to data center technology and occasionally blogs for business email provider Rackspace Hosting.