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Microsoft Exchange Online vs Exchange On-Premise

October 11, 2023

Email may not be the most cutting-edge or secure type of digital technology, but it is essential for doing business. As such, the way your organisation manages email is a key decision. With Microsoft Exchange, you must choose between the on-premise system and the cloud-based Microsoft Exchange Online.

In this post, we will take a close look at both to help you understand the pros and cons.

What is Microsoft Exchange?

MS Exchange is a leading choice for businesses in search of a complete messaging platform. It can be self-hosted or hosted in the cloud, and there are pros and cons of each. The first thing you must do it understand your own requirements, like:

  • What is your budget?
  • What is your timeline for incorporating a new system?
  • What type of environment do you operate in?
  • Are you starting from scratch or do you already have on-premises infrastructure?
  • Do you need complete administrative control?
  • Are you only seeking MS Exchange’s core functionality or would you benefit from collaboration tools?

Comparing Exchange Online and On-Premise

Once you have a strong understanding of your needs, you are ready to compare the two versions of MS Exchange to see which would be the better fit.


Exchange Online offers flexibility in its pricing, as you pay for your licence on a per-user basis. If you go with the On-Premises variety, you will be responsible for establishing and maintaining your server and the hardware that comes with it, as well as acquiring Client Access Licences.

In the long-term, however, the costs of having an Exchange Online subscription may exceed those relating to On-Premises. It depends on how long you plan to keep your on-premises servers – the longer you maintain them, the more you save versus paying for a subscription.

Features and Upgrades

In the modern world, it is important to have the most up-to-date software to remain competitive. Office 365 Exchange can help with this, but it is the Online version that makes this easiest as you can easily upgrade via Office 365.

With the On-Premises version, you will have to manually undertake software and hardware updates and upgrades. This requires some scheduling and commitment on your part.


No business can ignore the importance of security in the digital world. Microsoft is a significant cloud provider and they invest heavily in security, so you can have peace of mind about using their IT services. If you choose Exchange Online, you will have access to all their cloud security features, reducing the risk of breaches via your emails.

If you choose the Exchange On-Premises option, you will need to ensure your IT department stays on top of maintaining the security for your Exchange system. This will involve investing in security measures or using the services of a cybersecurity specialist.


If you choose an Enterprise E1 or E3 business plan, your MS Exchange Online package will include a mailbox capacity of 100GB. With Exchange On-Premises, however, you can define your mailbox quota by assigning the amount of hard disk storage you need for it. Your only limitation will be the amount of storage space available on your server.


With Exchange Online, you are guaranteed 99.9% SLA so availability is very high. Accessibility with regards to Exchange On-Premises will depend on things like:

  • Your infrastructure setup.
  • Server failover.
  • Strategies for disaster recovery.

Essentially, it will be down to your staff to maintain the system availability and address any issues that arise.


In the battle between Exchange Online v. On-Premises, you need to consider the aspect of migration. It can be challenging to migrate to Online from the On-Premises version, but it could be an important step in avoiding the ever-increasing risk of compatibility issues in the future. For a more scalable solution that is future-proof, the hassle of migrating to Exchange Online from your On-Premises solution may be worthwhile.

Public Folders

Public folders are now supported in Exchange Online. But it is possible that you will encounter issues if you attempt to get legacy public folders to modern ones in cloud storage. The difficulty of this causes many to stick with storing their public folders on-premises, but there are risks to doing this.

Anti-Spam and Anti-Malware Capabilities

Microsoft Exchange Online undoubtedly offers superior capabilities when it comes to anti-spam and anti-malware features. With its cutting-edge technology and filtering functions, it is a good solution for fighting spam and reducing the risk of a breach due to a phishing attack.

Third-Party Applications

Certain third-party mail-enabled programs/protocols and legacy applications may not be compatible with Microsoft Exchange Online. In this regard, the On-Premises solution is more flexible, with many ways to work around such issues for integration purposes in your own server environment. If you want to use the Online solution, you may need to retire legacy applications and upgrade to MAPI.

Management and Control

Exchange On-Premises offers greater administrative control over your infrastructure. The Online version gives you less power on the administrative front.


The debate between Microsoft Exchange Online versus On-Premises isn’t really about which is better. It’s about which solution is the better fit for your needs. With its use of cloud computing, the Online version is more cutting-edge and wins on a number of fronts, but there are still many good reasons to choose the On-Premises option. And the challenges for some of migrating from On-Premises to Online may simply not be worth the trouble. Ultimately, you know your business best. Your task now is to evaluate the pros and cons of the two solutions against your needs. If you require assistance doing this, you can contact our expert team and we can consult on the decision. It’s important to get the optimal system for your needs, so take your time with this one.

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