Google uses its own products. They live in GMail and Calendar.
Here's a cite: http://blogoscoped.com/archive/2008-03-12-n39.html
Try your free or less expensive options first and see what your employees think. At our company (back when we were a startup) our first IT hire's first job was to install Exchange -- the executive team was absolutely done with the inferior product that we were using before it.
Another reason you may wish to not use a hosted environment: your company's data can't be monitored or revealed by a subpoena to the hosting company if there's no hosting company. You can be sure that Google complies with subpoenas and court orders unless they're laughably vague and potentially useful for a PR stunt.
gMail and gCal are a potent combination.
I think that migration's case it's online. I've readed about it.