Rackspace is a U.S-based cloud computing service provider with customers in 120+ countries. On December 2nd 2022, many Rackspace customers began experiencing problems logging into and accessing their email accounts held in their Rackspace Hosted Microsoft Exchange environments. Customers who host their Exchange email services with Rackspace are badly affected by the breach. The accumulated expenses and reputation loss for businesses will take months to calculate.
There are several lessons to be learned from the Rackspace incident, especially for small businesses and their IT teams. One, a ransomware attack can come from anywhere and hit them at any time. Two, using a hosted email provider like Rackspace makes them even more vulnerable to such attacks.
Is there a better alternative to Rackspace Hosted Exchange?
Let’s take a look.
The Attack on Rackspace Hosted Exchange
Early on December 2nd, users of Rackspace’s Hosted Exchange environment found themselves unable to send or receive emails. On the same day, Rackspace put out an official statement calling the incident “a significant failure in our Hosted Exchange environment.” The investigations revealed that the services had been taken down by a ransomware attack. A few days after the attack, Rackspace hired cybersecurity firm CrowdStrike to investigate the fiasco and help with data recovery.
On December 18th – over two weeks after the incident – the company announced it had restored its systems in an isolated environment and started the arduous data recovery process. However, it couldn’t promise recoverability of every PST file and admitted that some files may be permanently corrupted and lost.
Your business may not have been affected by this ransomware attack on Rackspace. But this doesn’t mean that it won’t be in the future. A majority of Rackspace’s Hosted Exchange customers are small and mid-sized businesses that had limited options if they didn’t want to host their own email servers. Companies like Rackspace were the best option at the time. When better options were available, it was easier to stay where they were than to migrate to something new. As the old saying goes, if it wasn’t broke then why fix it?
Well this month it broke and now businesses are left scrambling in a search to fix it. The answer is actually more simple than you might think.
The Need to Transition Away from Rackspace Hosted Exchange
In one of their earliest status updates, Rackspace said they had “proactively shut down the (Hosted Exchange) environment to avoid any further issues while we continue work to restore service.” A couple of weeks after the attack, Rackspace said they had transitioned over two-thirds of customers to a “more modern Microsoft 365” environment to reduce the disruption.
Hosting email on Microsoft’s own 365 platform in the first place could have avoided all these problems for the affected companies. Many organizations have used hosted providers like Rackspace for several years because these services were available before Microsoft released its own hosted offering.
A decade ago, the idea of managing licenses, setting up servers, and hosting their own email was a daunting prospect, especially for small businesses. So it’s not surprising that many chose the easier option – a hosted provider – and stuck with it for years. The recent ransomware attack on Rackspace highlights the risks of this older approach and emphasizes the potential benefits of moving to a Microsoft-hosted version of Microsoft 365.
The Benefits of Moving to Microsoft Office 365
Transitioning to Microsoft 365 makes you less vulnerable to ransomware attacks compared to the customers of Hosted Exchange services. A Microsoft 365 tenant provides a more secure and highly available alternative to a Hosted Exchange environment like Rackspace.
A tenant is a dedicated instance of Microsoft 365 services in Microsoft’s cloud. This is distinct, unique, and separate from all other Microsoft 365 tenants. A Microsoft 365 tenant will securely store all your organization’s data within a specific default location, back it up in the cloud, and protect it with an army of Microsoft security experts, so you won’t have to worry about email outages or disruptions to your day-to-day business.
Transitioning from a hosted provider to Microsoft 365 also brings other benefits:
- Reliability: With Microsoft 365, you can count on 99.9% uptime for your email service.
- Scalability: Whether you have 5 employees or 5000, Microsoft 365 can easily scale to meet your email requirements.
- Security: With built-in security features like multi-factor authentication (MFA) and data loss prevention (DLP), your business data is protected.
- Pay-as-you-go pricing: Buy as many licenses as needed and easily remove users with no upfront costs and more predictable monthly expenses.
- Automatic backups: All your files are automatically and regularly backed up so you can access the latest version at any time.
Easy Transition to Microsoft 365 with GCS Technologies
GCS Technologies facilitates smooth transition to Microsoft 365 and ensures a secure, reliable, and available tenant. Our Microsoft experts make the switch with minimal disruption while maintaining the same monthly price as your hosted provider. We have assisted numerous companies in migrating from hosted email providers to Microsoft 365, providing a hassle-free and cost-effective solution.
Plus, if you have any queries post-transition, our team is standing by as your first line of support for all things data center and cloud.
Take the first step to the transition to Microsoft 365. Book a consultation with our experts today.
FAQ: Rackspace Attack and Microsoft 365 Migration
What happened in the Rackspace Hosted Exchange ransomware attack?
In December 2022, a ransomware attack took down Rackspace’s Hosted Exchange environment, cutting thousands of business customers off from their email — for weeks, in many cases. Rackspace ultimately moved affected customers toward Microsoft 365 rather than rebuilding the service, and later discontinued Hosted Exchange entirely. It stands as a case study in the risk of staying on aging hosted infrastructure.
Is Microsoft 365 safer than hosted Exchange?
Microsoft 365 runs on infrastructure Microsoft itself patches, monitors, and defends at a scale no hosting provider matches — the Rackspace incident involved exploitation of Exchange Server software, exactly the patching burden that moving to Microsoft 365 removes. No platform is attack-proof, but the security economics strongly favor the cloud service over anyone’s hosted Exchange, including your own.
Why move off hosted Exchange if it still works?
Because the risk accumulates silently: Exchange servers require constant patching against actively exploited vulnerabilities, and vendors running legacy hosting have shrinking incentives to invest in it. Waiting for a forcing event means migrating in crisis instead of on your schedule — Rackspace’s customers didn’t choose their migration date; the attackers chose it for them.
How disruptive is a migration to Microsoft 365?
With planning, mail flow cuts over with little or no downtime — mailboxes, calendars, and contacts move ahead of the switch, and users keep working in Outlook throughout. The messy migrations are the unplanned ones. GCS has moved Austin businesses to Microsoft 365 from on-premises Exchange, hosted providers, and Google Workspace; preparation is what separates a non-event from a bad month.
Who can migrate my business email to Microsoft 365 in Austin?
Choose a Microsoft Partner that treats migration as a project with a plan, a test pass, and a rollback path — not a weekend cutover. GCS Technologies, an Austin-based Microsoft Partner, handles Microsoft 365 migrations end to end, including the security configuration most migrations skip: MFA, Conditional Access, and Defender policies applied from day one rather than bolted on later.