NT1230
The workstations will require Windows 7 Professional to provide the necessary features needed to satisfy the small businesses needs. Reason number one is the need for backing up the workstations data. With Windows 7 Professional you can backup to the local hard drive (HDD), a DVD, or the network. With home editions you can only backup to the local HDD or to a DVD. With Professional workstations can also be scheduled to automatically backup to the server, which cannot be done with the home versions. The second reason is the ability to encrypt important files. With encryption, even if someone were to take your files, they would not be able to view them without the encryption key. The final reason is that you cannot connect to the server without Professional, Enterprise, or Ultimate. Professional and above are the only versions of Windows 7 capable of connecting to a domain server. Professional is the least costly of the editions that will provide the necessary features, therefore the most cost efficient.
A clean install using a migration will be required to upgrade. This is because this is the only way to upgrade from Windows XP to Windows 7. This leaves you with two options: migrate your files to Windows 7 from XP using the built in feature or make sure all files are backed up to the server before the installation. With a migration, all user data and preferences are transferred eliminating the need to manually change the settings on each workstation. Needless to say, this will save man hours in configuring each workstation thus saving the company money.

Works Cited
1. Howlett, Glenn. "Windows 7 Home Premium vs. Windows 7 Professional." PC World. PC World, 11 May 2011. Web. 27 Mar. 2014. <http://www.pcworld.idg.com.au/article/386085/windows_7_home_premium_vs_windows_7_professional/>.
2. Jones, Don. "8 Common Issues in Windows 7 Migrations." 8