Although there are many free and inexpensive email servers available (such as Sendmail, Mercury Mail and Mail Enable), if you want the full functionality of Outlook such as calendaring, scheduling and fax integration, you need Microsoft Exchange Server 2000. Unfortunately, the product is not cheap, and a five-user license will cost $2,900, with an additional $2,188 for the Windows 2000 Server (W2KS) operating system licenses. If you are a small business of less than 50 users, you can obtain Exchange as part of Microsoft Small Business Server (SBS) at $3,318 for five licenses inclusive of SQL Server and other goodies. As well as being better value, SBS is easier to install and set up than the Back Office version of Exchange as there are numerous Wizards to assist with server configuration.

As Exchange 2000 relies upon Active Directory services, it requires a Windows 2000 server running SP 1 or higher. Although you can upgrade an existing NT or SBS 4.5 server to Windows 2000, you are better off backing up all of the data, wiping the hard disk and starting from scratch as this will give you a much cleaner install without obsolete files from previous systems. While not strictly necessary, it is also advisable to back up the contents of your existing mail box (by exporting it to a .PST Personal Folder File) in case something goes wrong during the upgrade process.

To install SBS (or Windows 2000 Server) CD set your server to boot from the CD and follow the prompts. If you are using SBS you will configure the server and Exchange after all the server applications have loaded, whereas if you are running W2KS on its own, you need to ensure it is properly configured before loading Exchange.

When you load Exchange it updates the Active Directory schema (database definition) to incorporate additional Exchange information (such as email address, home server etc). This process can be time consuming (taking up to an hour), especially on slower machines, so you need to be patient. After the schema has updated, Exchange files are copied across and, if you are using SBS, you will be prompted to insert various CDs. After the files are installed and a reboot later, you are presented with the SBS welcome screen which sets out the tasks you need to follow to configure SBS and Exchange. This welcome screen is actually a Microsoft Management Console snap in, which can be opened by choosing Console | Open | C:/Program Files/MicrosoftBack Office/Documentation /ToDo/ToDo.msc.

One of the first tasks is to add users to your server and Exchange. With the Active Directory integration, you can configure users for the server and Exchange simultaneously although the easiest way is to use the Add User Wizard. This Wizard guides you through entering all the necessary information to load users onto the system, create their home directories and Exchange mail boxes. After the Wizard has finished, you're presented with a summary screen that details the tasks performed.
As you work through the Wizard, you are prompted to create a network setup disk which configures the user's workstation to log onto the domain and downloads the latest versions of Outlook and Internet Explorer from the server. If you don't wish to use the network setup disk, configure the workstations manually by following the procedure in article 316418 at support.microsoft.com.

At this stage you can transfer mail internally and use calendaring and scheduling, but if you want to send and receive mail from the Internet, you need to re-enable the network interfaces and configure your Internet connection. Select whether your Internet connection is via dial-up (modem), router (ISDN or cable) or full time broadband (DSL, Frame Relay or T1). SBS includes a form for this information that can be completed by your ISP or network support person. The Wizard will guide you; however some understanding of TCP/IP networking, subnets and DNS is handy as some of the networking issues can be quite technical.

After you have configured the network you need to specify the email configuration for Exchange. The default, which is with SMTP for email transmission and POP3 disabled, is adequate for most networks. However, you'd need to enable POP3 if you want to retrieve email using a non-Microsoft email client such as Eudora.

If you have a permanent Internet connection (ISDN, DSL or cable) with a fixed IP address, Exchange can act as your mail server by using the domain name system to directly receive mail and deliver it to the remote system. If you are using a dial-up connection or your server won't be on all the time, you will need to ask your ISP to collect your email, store it and forward it to your Exchange server when you are connected to the Internet. While this saves on a permanent Internet connection, there is an inevitable delay between the time mail is sent and received depending upon how often you dial up your ISP. Many businesses may find this problematic if time sensitive emails, such as sales quotes, need to be sent. Check costs carefully as a heavily used dial-up connection may be more expensive than a permanent one when you take line rental and call costs into account overall.

Everything should now be configured properly, but test that each workstation can log onto Exchange, mail can be transferred internally and Internet mail can be sent and received, preferably by sending mail to an external email address. If you have problems, set Exchange to forward copies of all non-delivery reports to your email address through the Exchange System Manager. System Manager can be accessed by going to Start | Programs | Microsoft Exchange | System Manager. System Manager uses a tree analogy to access various components of Exchange. Find the parameters for non-delivery reports by opening Servers | Protocols | SMTP | Default SMTP Virtual Server and right clicking on properties. To set the destination for non-delivery reports choose the Messages tab and enter your email address in the 'Send copy of Non-Deliver Reports to. . .' box.

Exchange settings can be further refined to control security, set limits on user mail boxes, create mailing lists and manage shared folders.  As users rarely empty their email boxes unless forced to, set a reasonable size limit on each mail box by going to Servers | First Storage Group | Mailbox Store and right clicking to access properties. Choose the limits tab to specify the maximum size and when warnings will be issued. You may want to automatically block known spam sources by going to the Default SMTP Virtual Server parameters and choosing the access tab to control who can and can't access the mail server.