Exchange Online vs. On-Premises: Comparative Guide

Summary: It is a comparative guide where readers can understand the Exchange Online and On-Premise servers. This article is broken down so readers can compare the Exchange servers based on features, plans, and services. This article includes walkarounds so that users can take preventive measures before they get stuck in the wrong situation.

medium to large-sized businesses all need a high-performance messaging platform with useful features that are scalable to an organization. Microsoft understands the business needs and has introduced the Exchange server in two versions, hosted (on-premise) and cloud (online). Due to a lack of knowledge of the features, business users can’t decide which Exchange server is best for them.

We break down the comparison of both Exchange versions into different sets. So that users can easily understand and make better choices for their business.

Table Of Content

· What is Exchange Online?
· What is Exchange On-Premise?
· Exchange Online vs. On-Premises: Comprehensive Comparison
∘ Cost
∘ Security
∘ Feature Upgrades
∘ Availability
∘ Storage
∘ Third-Party Plug-ins
∘ Anti-Spam/Anti-Malware
∘ Regulatory Requirements
· Walkarounds
∘ Conclusion

What is Exchange Online?

Microsoft Exchange Online is also called Microsoft Office 365. It provides software-as-a-service (SaaS) for messaging and collaboration on a subscription basis. Exchange Online is a cloud-productivity suite that does not require servers to be installed on a local system.

All the services are available online and powered by Microsoft data centers. Users who want to access the services need to buy a plan based on a monthly or yearly basis. Exchange Online has more enriching features.

What is Exchange On-Premise?

Microsoft Exchange On-Premise is a server-based messaging and collaboration solution. It requires server and networking hardware to be installed on your local system. For productivity, on-premise is powerful software that enables offline access for businesses. Services and features in Exchange on-premise are monthly and yearly subscription-based.

Exchange Online vs. On-Premises: Comprehensive Comparison

Cost

Regarding cost, Exchange Online is quite flexible and allows you to choose and pay for licenses per user per month or annually. Online prices start at $4.8 per user per month and it varies for service add-ons.

If you are looking for Exchange On-Premises, you will require two licenses for access, i.e., a server license and a client access license. Microsoft Exchange Server comes in two editions: Standard and Enterprise. The Standard edition comes at $700 with 5 mounted databases per server and the Enterprise edition starts at $3500 with 100 databases mounted per server. The Client Access license with the Standard edition costs around $70, while the Enterprise edition costs another $40 per user.

Note: All the price mentioned in this section as per 2022 records.

However, Exchange Online users don’t need to buy server plans, which reduces the investment and is good for small-scale businesses.

Security

Exchange Online is a cloud service provider where all user data is stored and accessed. To protect the information on the cloud, Microsoft invests significantly in security so users can apply different security features.

If users are looking for Exchange On-Premises security, then the IT department takes complete responsibility for maintaining and protecting your Exchange system.

Regarding security, Exchange On-premise wins the race because it reduces the risk of losing your email data and prevents security threats. Due to the server being on the cloud, there is likely a risk of security threats.

Feature Upgrades

Many experts advised that your features should be upgraded to the latest version so that users do not face any complications in the process. The features of Exchange Online vs. On-Premises vary due to the server providers. Office 365 Exchange can help its users stay up-to-date and they can upgrade the features automatically via Microsoft 365.

However, in the case of the Microsoft Exchange On-Premises version, the local IT department is responsible for performing software and hardware upgrades manually according to the schedule.

Note: Exchange On-Premises may not receive a newer version after the 2019 version, which is extended to October 14, 2025.

Availability

When users talk about availability in exchange, many factors have to be considered, like disaster recovery, redundancy, uptime guarantees, and failover. Exchange Online guarantees 99.9% higher availability with less manual overhead and built-in redundancy, failover, and disaster recovery capabilities.

While on-premise system offers less availability and require more investment in IT infrastructure and better maintenance for disaster recovery and failover capabilities. Support and response times can vary according to the company’s resources and expertise.

Storage

In terms of storage, users have to consider mailbox storage and the scalability of both servers. Office 365 Exchange Online provides mailbox storage with a capacity of 50GB and 100GB for Plan 1 and Plan 2 users, respectively. However, users can expand their mailbox to unlimited storage with add-on prices. It also offers high scalability due to its virtual server; users can expand or degrade the services as per the organization’s needs.

In Exchange On-Premises, an organization can define mailbox storage capacity as per its organizational requirements. Users can configure mailbox quotas according to the limits based on the server’s hard disk storage. Scaling storage requirements in Exchange on-premises is based on budget constraints. More storage requires more investment in complex and costly hardware.

Third-Party Plug-ins

In Exchange Online, users get many third-party plug-ins because of virtual software and the whole software is on the cloud. However, some third-party applications and protocols might not be compatible with Exchange Online. Users using a lower version or plans that do not support modern data complexities should opt for MAPI for a better experience.

Exchange On-Premises users somehow have fewer third-party plug-ins in comparison to Online. However, it takes the edge over its rival in terms of compatibility, as it provides more flexibility for integration purposes in the same server environment.

Anti-Spam/Anti-Malware

When we compare Anti-Spam and Anti-malware features in Exchange Online vs. Exchange On-Premise. Users should consider how these platforms perform email security and data management.

Exchange Online provides built-in protection such as Exchange Online Protection (EOP) and Advanced Threat Protection (ATP), which includes safe- attachments and safe-links with Microsoft 365 Defender. It includes spam filtering, which helps identify and block spam emails before they become a threat to users.

Exchange On-Premises users get built-in anti-spam and malware protection features but to be configured by the admin. It includes different agents for protection purposes, such as Connection Filtering Agent, Content Filtering Agent, and Sender ID Agent. Malware protection for on-premises systems generally depends on third-party tools.

Regulatory Requirements

Regulatory requirements include data residency, compliance certifications, control and customization, audit capabilities, and data retention policies. With Exchange Online, Microsoft provides geographic data storage and transparency for where data is stored and processed. It also offers built-in compliances such as ISO/IEC 27001, ISO/IEC 27018, SOC-1, and SOC-2.

In on-premise systems, users get full control over physical and logical data locations. It mostly relies on third-party audits to achieve and maintain certification. It also allows flexible implementation of compliance controls based on specific needs.

Walkarounds

This section includes points where the software fails to fulfill the user’s needs.

• Migration is an important feature to consider in the battle between the different versions of Exchange. Microsoft provides a manual method for migrating data, where users feel daunted and require proper knowledge of exchange software. Exchange to Exchange Migrator is an automated tool for data migration between different versions of Exchange in simple and easy steps.
• Suppose the admin, after understanding all the factors, wants to upgrade from Exchange to Office 365 or vice versa. Migrating between software is challenging in Microsoft and raises the risk of data loss and security threats. Users can opt for Exchange to Office 365 Migration Tool to easily migrate all their mailbox data to different servers.

Also read: Upgrade Exchange 2016 to 2019 hybrid

Conclusion

After reading all the factors one should able to compare Exchange Online vs. Exchange On-premise, we can conclude both have pros and cons. One has to first understand the business requirements and then understand these factors to make a better decision.