Exchange Online vs On-Premise

While business use of instant messaging has greatly increased recently, with applications like Microsoft Teams being used regularly for day-to-day conversation. But email still reigns supreme when it comes to business communication.

Perhaps the most popular choice for email is Microsoft Exchange. Historically, this would have been hosted in an On-Premise server. But in the last few years we’ve seen the introduction of Exchange Online – removing the need for the server.

We’ve broken down some of the key features to see which wins in the battle of Exchange Online vs On-Premise.

Exchange Online or Exchange On-Premise


The cost of Exchange Online is flexible. Businesses need to buy licenses for their users. There are a few options for buying licenses – it is possible to buy a standalone Exchange Online license, or if you would like additional Office applications, the majority of Microsoft 365 subscriptions include Exchange.

With Exchange On-Premise, you will be responsible for the server and maintaining all server hardware. you will also need to acquire Client Access Licenses (CALs). Exchange On-Premise has a higher up front cost. But if you plan to keep the same server for, as an example, 10 years – upgrading every 3 – it may work out cheaper than the cost of Exchange Online licenses.


Microsoft looks after all Exchange Online servers. Microsoft invests heavily in security, employing around 3,500 full time security professionals. How many businesses out there can say the same? There is a reduced risk of losing important email data with Exchange Online.

Having Exchange On-Premise means you are fully responsible for maintaining the server, all day every day.

Features and Upgrades

If you want all of the latest features and the most up-to-date software, Exchange Online is the way to go. And combined with Microsoft 365, you’ll always have the latest tech. If security vulnerabilities are discovered, Microsoft will add fixes to the next updates.

Exchange On-Premise has to be updated manually – your business has to upgrade hardware and software as and when they’re required.


Exchange Online has a 99.9% uptime SLA. Chances are, it will be up and running all the time you need it. On-Premise is dependent on your other IT systems and infrastructure.


With the most basic Exchange Online license, each user gets 50GB if mailbox storage. With On-Premises, you can define mailbox quotas in accordance with your organizational requirements. And mailbox quotas are limited only by the capacity of the server’s hard disk storage.


Exchange Online comes with built-in spam and malware filtering capabilities. On-Premise relies on third-party filtering to deal with spam.

Management and Control

With Exchange Online, Microsoft manages everything. You just need to buy licenses and you’re good to go. If you want greater administrative control over your infrastructure, On-Premise offers this.

Benefits of Exchange Online and Benefits of Exchange On-Premise

Benefits: OnlineBenefits: On-Premise
99% uptimeTotal control
Low up front costSpeed of operation
Predictable costsFunctionality
Operational expenseCustomizable
High availability 
Challenges: OnlineChallenges: On-Premise
Lack of controlPotential downtime
Ongoing expenseUnknown expense
 Expertise required

Exchange Online vs On-Premise: Which is Right for Me?

Both are excellent options for business email. Smaller organisations with minimal IT presence may prefer the Online option, while those with experienced IT teams may prefer the controls given by On-Premise infrastructure.

Want your emails in Exchange? Speak to ACUTEC about your options.

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