On-Premise Exchange vs Office 365

In the last few years, cloud technology has been booming.  Companies such as Amazon Web Services and Microsoft have been offering their flavour of cloud solutions for everything from virtual servers, to Hosted Exchange.  

In this article however, I want to talk about the difference between the cloud Exchange solution (Office 365) and an on premise exchange solution.  What the advantages are of both, and the disadvantages as well.

On-Premise Exchange

For a very long time, companies have been leveraging Microsoft technologies to use Exchange for their email systems.  The majority of companies in the past have been using an on premise version of Exchange to look after their email solution.  This was the industry standard, and in many ways still is today.  Having a server located within your office, running something like Exchange 2010.


  • Hardware ownership
    • Hardware is owned by the business.  They have full control over where the data is stored.
  • Data Sovereignty
    • Knowing where your data is kept.  It’s located within your office on the server that makes the humming sound in the corner of the room.  Not missing in some unknown location within a datacentre that you not only don’t have access to, but don’t even know where it’s actually located.
    • Some industry types require data to be kept within Australia
  • Server upgrades
    • When keeping your data onsite, you can control when servers are updated, when they’re upgraded and can control the down-time associated with this.
  • Fast data access
    • Nothing is faster than having Gigabit Ethernet access direct to your Exchange Server if you have to pull down your massive Outlook profile.
  • Backups
    • You control when your systems are backed up, so you can ensure that data retention is what you require it to be.  You will never need to worry about finding data that was deleted a long time ago provided you’ve configured your backups to work correct.


  • Hardware maintenance costs
    • Having physical hardware onsite means that in time, it’s going to wear out, become hold and will require upgrading.
    • Having onsite systems means that the onus will fall on the business to ensure that their systems are maintained.
  • Large initial financial outlay
    • If you’re wanting to go for on premise Exchange, you will have a significant outlay to purchase servers, Exchange server and then IT costs to get everything either setup from scratch, or migrated from another system.
  • Server Maintenance
    • You will be looking at 2-4 hours a month for server maintenance.  Depending on whether you have internal IT or whether you outsource, this could be a cost that’s not factored into the equation of moving to a cloud system, or moving to an on premise Exchange.
  • Potential additional IT Skills required
    • Depending on the IT knowledge of your IT team or staff currently employed by your business, you might require more knowledge to setup and configure an on premise Exchange system, rather than having Microsoft do it all for you in the cloud.
  • Reliability and uptime
    • 100% dependant on your office’s internet connection, power supply and overall configuration.


Office 365

Microsoft are now offering a cloud-based Exchange solution called Office 365.  This has been out since around 2011, and has been booming since its launch.  It offers a very similar solution to what you would be given if using on premise Exchange, but 100% in the cloud.  This is charged using a subscription method where a user will pay per user per month.


  • Services packaged under one subscription
    • Exchange
    • Office
    • Lync/Skype for Business
    • SharePoint
  • Software Assurance
    • Constant software updates provided you continue to subscribe
      • Exchange is upgraded to the latest version as required
      • Office is updated to the latest version as required
  • Scalable
    • Don’t have to worry about server hardware if you’re adding more users and more mailboxes to the system.  It’s infinitely scalable.  The only thing that changes is your monthly subscription.
  • Coverage
    • Not dependant on your office’s upload speeds
      • Accessible anywhere internet is available
      • Fast download speeds allow mailboxes to be pulled rather quickly
  • Up time
    • Office 365 meets ISO standards and offer 99.9% guaranteed up time
  • PAYG
    • Pay as you go subscription method allows you to sign up with very minimal financial outlay and then expand as you require it
  • Updates
    • Server hardware and software upgrades are completed by Microsoft themselves.  These are rolled out as gradual improvements to minimise any downtime or user disruption.


  • Data storage location
    • Data is stored in Microsoft approved Datacentres which are unknown to the user.  Whilst data sovereignty is guaranteed, the end user will never know the exact location of their data.
  • Migration
    • Migration to this system can be more difficult than doing an Exchange > Exchange migration.
    • Can potentially require 3rd party tools
    • Different IT Skillset may be required to manage the migration.
  • Server application integration
    • Harder to integrate on-premise applications which require Exchange
  • Subscription based
    • You will always be paying for this service, as long as you require to use it
    • Much higher rate per month and it will always continue


There’s certainly no clear answer as to which system is better for your business.  It really comes down to the type of business that you operate, your current server/hardware setup and then also your long-term IT plan.

For a Small Business solution, the cloud Office 365 solution is certainly attractive as it allows less of a financial outlay in the beginning.  Provided that you can budget for the number of users that you require, the added bonus of including Office licenses and Skype for Business can appeal to SMB companies.

Larger Enterprise companies may not find this attractive as they may have Enterprise Agreements with Microsoft which allow for Software Assurance and have Exchange and Office included.  At the end of the day, it really is going to be a question that you will have to ask yourself, and take into considering your unique operating requirements.


Unfortunately, this isn’t a question that provides a clear outcome here.  Every company is going to have different requirements, and that means that the on premise Exchange solution or the Office 365 solution may suit your needs differently to other companies.

What we would suggest is to sit down with your IT department, or your IT Provider if you outsource, explain your goals and see what they recommend.  The good news is that regardless of which path you go down; a Microsoft Exchange solution can be offered.

Avantgarde Technologies is an IT Consultancy located in Perth, Western Australia. We have Exchange certified and Office 365 certified experts who are available to provide industry expertise and professional recommendations for your Exchange migration needs.

About Name : Adam Arkwright. Visit our website at http://avantgardetechnologies.com.au or contact us at sales@avantgardetechnologies.com.au to find out more.

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