Case study

Clothing manufacturer designs a platform for future growth with Microsoft Exchange Online

  • Microsoft Exchange Online

    "We are looking at hosting our enterprise resource planning system and other servers in the cloud. It was a no-brainer that Microsoft Exchange Online should lead the way."

    -Doug Vargo, Financial Controller, 2XU

    Founded in 2005, Melbourne-based sportswear company 2XU manufactures and retails high-performance sporting and fitness apparel worldwide. Since 2007, the company has grown at around 25 percent a year, expanding from one retail store to 15 outlets across Australia and New Zealand, and trebling staff numbers to around 60 full-time staff. 2XU also has about 40 distributors selling into markets in Asia, Central and South America, Europe and the United States and Canada.

    2XU relies heavily on its email to conduct business nationally and globally. By early 2011, the company’s email system was struggling with a large number of users and a high volume of graphic files sent between stores, overseas distributors and its factories in Asia. The company realised it needed a scalable email system that could grow with the business, allow virtually unlimited users and provide fast, easy access to staff working remotely.

    2XU chose to upgrade to Microsoft Exchange Online, a cloud-hosted solution that is now part of the Microsoft Office 365 portfolio of communication and productivity tools. Staff can now use email far more efficiently in the office or when working remotely. They can send important files to the company’s stores, global distributors and offshore production facilities without worrying about managing the size of their mailboxes.

    Business Needs

    2XU is currently growing at around 25 percent per year, and has set aggressive annual growth targets of 25–30 percent over the next five years.

    The company relies heavily on email around the clock to conduct business nationally and internationally with its stores, distributors and factories in Asia, and to communicate with staff on the road.

    Much of 2XU’s design and product development work is handled by staff in its head office. Employees frequently send large graphic files – containing product and packaging designs, technical specifications and product images – to the company’s offshore production facilities. Staff also send marketing, advertising and retail material to the company’s network of stores and distributors.

    "We were experiencing prolific growth in email traffic, due to the rapid expansion of the business and the growing size of our workforce," says Doug Vargo, 2XU’s Financial Controller. "Staff were being forced to archive a lot of emails as their mailboxes reached capacity. Even so, we were running out of storage capacity."

    Production employees were the company’s heaviest email users, sending and receiving designs and technical specifications between the office and production facilities in Asia. They were often required to travel overseas to visit factories manufacturing the company’s sportswear. While on the road, they experienced considerable difficulty sending large files and accessing emails.

    "Our email system was far too slow for anyone logging in remotely," explains Vargo. "The time had come to upgrade."


    2XU’s service provider, Combo – a Microsoft Gold Certified Partner – advised moving to a cloud-based email server. This would support the company as it expanded, as it wouldn’t be limited by hardware constraints or the number of users on its email system.

    Combo recommended Microsoft Exchange Online. Originally part of Microsoft’s Business Productivity Online Services, Exchange Online is now incorporated into Microsoft Office 365. Office 365 is a subscription service that includes Office desktop applications and hosted versions of Exchange Server, SharePoint Server and Lync Server.

    "If 2XU had continued with an on-premise solution, it would have needed to invest in more hardware," says Martin Koval, Combo’s Director of Professional Services. "At 2XU’s planned rate of expansion, the company was likely to run out of physical room in a year or two."

    In April 2011, Combo began migrating 2XU staff mailboxes from the company’s existing email system to Microsoft Exchange Online. This staged process took place over three months, minimising disruption to the company’s day-to-day operations.

    "We were very comfortable moving to an online hosted environment," says Vargo. "Cloud services are the path forward. We’re looking forward to taking advantage of the new, richer communications and productivity offerings included in Microsoft Office 365, with all the benefits that accompany cloud computing," says Vargo.

    "In the longer term, we are looking at hosting our enterprise resource planning system and other servers in the cloud. It was a no-brainer that Microsoft Exchange Online should lead the way."


    In moving to Microsoft Exchange Online, 2XU can now give staff virtually unlimited mailbox capacity to store large graphic files and send them between offices, stores, distributors and production facilities around the world.

    Increased staff efficiency

    2XU no longer needs to worry about the number of staff using the email system or their mailboxes growing beyond storage capacity.

    "As we employ more people, we can scale the system to accommodate them without worrying about the impact on the server,” says Vargo. "Users can send and receive large digital files without running out of space or needing to frequently archive emails to make room."

    Staff no longer spend time managing their mailboxes or waiting for large graphic files to load. They can also locate archived emails more easily.

    "This enables the business to remain agile and efficient in a highly competitive market," says Vargo.

    Streamlined remote access

    2XU’s production staff members are the biggest beneficiaries of Microsoft Exchange Online.

    "Now they can directly access their email from the Microsoft cloud as effectively as if they were sitting at their desk in head office, and can work much more efficiently," says Vargo.

    Reduced upfront and ongoing costs

    Combo calculated it would have cost 2XU A$53,000 over three years to continue running its Exchange Server onsite, with A$22,000 to pay upfront to install new servers.

    By adopting Microsoft’s cloud-hosted solution, the company will spend A$47,000 over three years, with only A$12,000 required upfront for the migration process.

    "Longer term, we would have needed to continue investing in infrastructure,” says Vargo. "We had the added risk of running out of physical space, so we have avoided further expense by moving to Exchange Online now."

    Improved reliability and security

    With Microsoft hosting its email, 2XU benefits from in-built antivirus and anti-spam protection, security updates and systems upgrades without inconveniencing users.

    Exchange Online’s built-in data backups mean 2XU doesn’t have to worry about recovering its data in the event of a power outage, fire or other unplanned outage.

    Vargo has also observed an improvement in system availability. "We used to experience a disruption in our email service at least once every few months," says Vargo. "Since we moved to Exchange Online, I can’t recall one occasion when the email has gone down."

    A launch pad for future growth

    As 2XU grows, it will continue to look for improved performance and cost savings from its IT systems. Microsoft Exchange Online is only the first step in this process.

    "As a global company that depends on a dynamic, mobile workforce, we look forward to exploring the possibilities of working collaboratively in the cloud across a range of applications, such as Microsoft Word, SharePoint Online and Lync Online," says Vargo.

    "Being able to cut the cord between users and their computers gives us a new level of flexibility and productivity," he adds.

    Microsoft Product that was featured

    Microsoft Office 365 is a subscription service that gives you access to your email, important documents, contacts and calendar from almost anywhere and any device.* It is reliable and flexible.

    Microsoft has a variety of plans to meet the needs of your business. Each plan has a 99.9% uptime guarantee and includes the security and support you expect from Microsoft.

    Small businesses and professionals can purchase Microsoft Office 365 through Telstra T-Suite.

    To learn more about Microsoft Office 365, visit

    • Access from mobile devices requires Wi-Fi capability or depends on carrier network availability.

    For More Information

    For more information about Microsoft products and services call the sales and information line on 13 20 58 Monday to Friday 8am to 8pm AEST. To find a partner or solution, visit

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