Exchange Server On-Premise vs Microsoft Office 365

To choose the best solution for your business, it is important to understand all the options. To assist your business to make an informed choice, I will provide the advantages and disadvantages of each possible solution. One thing is very important, these will not tell you which one is the best, there is no better solution, only the one that’s best for you and your needs.


Exchange Server On-Premise

On-Premise usually refers to keeping a server(s) required for Exchange to run within the company. Although many are quick to tell you that, this is absolutely the best solution for anyone in any scenario, I will disagree. I am not against On-Premise, in fact I found myself using it many times but it is not always the best solution.


– The hardware belongs to the business with full control. Hardware ownership is also considered a disadvantages as all the associated maintenance and hardware problems will need to be dealt with by the business.

– In-house Exchange Server enables simpler integration to external systems that will work with MS Exchange. Examples: File-Smart & Mail-Store, etc.

– Exchange Data is in your control and you have the location.

– Server updates, re-starts, backups and shutdowns can be controlled and conducted at a time convenient to the business.

– Upgrades and Server configuration changes can be applied to the infrastructure at a time that is convenient to the business.

– Good Performance and access times are achieved if the Exchange Server is well configured and setup because of the end user proximity to the Server performance and access to information is not reliant on the Internet. Outages, bottlenecks to the business internet connection will not affect accessibility and performance.

– Full accessibly of Mail Boxes from anywhere externally provided that there is an internet connection.

– Complete email archiving together with sophisticated search facilities.

– Public Folders allowing the sharing of one Mailbox to all users. Efficiency in the use of storage.

– Supports ability to configure multi-level and high- level security.

– Supports the wiping of mobile devices including IPADs in case they have been stolen.



– Hardware maintenance and issues become the responsibility of the business to resolve.

– Large initial dollar investment in Hardware, Software and associated Licensing.

– Server Maintenance requires approximately 2 – 4 hours per month, more than the cloud solution (Casual consultancy rates is $165 per hour).

– Additional IT skills will be required to Support the Exchange Server and associated infrastructure. An example is, if the Exchange Server crashes any number of different components within your infrastructure including other Servers that host Active Directory (User Accounts/Security), DNS Internet Connections and Firewalls may require maintenance. Office 365 (externally hosted Exchange) allows the business & staff to utilize mobile devices and home internet connections enabling business continuance.

– Reliability & Uptime of internally hosted Exchange Server is completely dependent on the Exchange Server configuration and the level of investment in infrastructure to successfully host an Exchange Server.  Large Corporates like Telstra and Microsoft have multiple failsafe levels making outages very unlikely (99.9% uptime).


Microsoft Office 365

The best value for money and reliability amongst the current Cloud Solutions is Microsoft Office 365. Office 365 is available in a number of variants.  The recommended product to best meet your business requirements is Microsoft Office 365 Midsize Business Edition.


– Packaged solution including: Exchange, Lync and SharePoint services.

– Includes the latest version of Microsoft Office License.

– Implemented extremely quickly and efficiently.

– Offers excellent security, stability, functionality, scalability.

– Service is assessable anywhere that has internet service available.

– The product is guaranteed as 99.9% availability on service, minimal to no down time.

– No End User Maintenance required. All Maintenance and Support handled by Microsoft.

– Monthly pay as you go model allows a business to commence operations quickly without the associated high cost for in-house infrastructure

– All server hardware and software upgrades are completed by Telstra / Microsoft and are attended to as gradual improvements minimizing the impact to the business.

– Frees up upfront capital expenditure that allows the business to invest in business growth projects/ assets.

– HIPPAA, FISMA and ISO27001 Certified therefore meeting all the requirements of Government and Overseas organization for security and Data handling.

– Blackberry hardware is supported at no additional cost.



– Data stored in a Microsoft approved location unknown to the end user.

– Data may be susceptible to laws and regulations of other overseas countries.

– Difficult migration requires third party tools and can be time consuming especially if there is a requirement to visit individual user PC’s.

– Difficult to integrate Server installed applications.

– Subscription software results in higher payments over a longer period of time however, keeps the software up to date but ensures both hardware and software remains up to date.

– Limited to no legal archiving capabilities.



Those are the main advantages and disadvantages when choosing what to do with Exchange. Of course there is not one perfect solution that will always work. We have been running Office 365 (Cloud) for over 2 years and have a number of clients as well. I can say that we have had zero issues during this time.

My recommendation would be the Cloud solution as the advantages out weight the on premise solution.  Having said that the on premise will work and easily supported.


* Article written by Greg Gardiner, who is is the managing Director of Priority Networking and has over 20 years of experience managing IT infrastructures in small, medium and large enterprises.