Share this article

What is Exchange online?

Email is alive and well.

Most Businesses still use Email as the primary form of communication between their clients and their employees. Social Media is a powerful tool that is often utilised for communications between Businesses and their Customers, but Social Media isn’t quite ready to fully replace Emails just yet!  For example, without emails, how could we communicate effectively with our clients? More importantly, how could we send them quotations and invoices!

Email has found a home in the cloud.

Just about every technology application, platform and infrastructure is now available in the Cloud (see the different types of Cloud services models in our article ‘Why should Small Businesses embrace the Cloud in 2019?’) According to LogicMonitor’s Cloud Vision 2020: The Future of the Cloud Study, it is estimated that over 83% of Enterprise workloads will be in the Cloud by 2020. Let that sink in for a second…

Email as a service.

Microsoft now offers its Exchange email platform ‘as a service’ from the Cloud, either as a stand-alone product or as part of an Office 365 subscription. Other Cloud-based alternatives to Exchange online for Business include G-mail (part of G-suite, Googles collection of collaboration and productivity apps) and Amazons WorkMail.  Cloud-based email platforms are a popular alternative to on-premise solutions because of the many benefits that are highlighted below, although there are several risks that should also be considered.

Exchange online vs on-premise

What is Microsoft Exchange Online?

Think of Microsoft Exchange Online as an Email Server that is Hosted and maintained in the Cloud. In terms of accessibility and functionality, there is no difference between a traditional on-premise Exchange Server and Exchange Online.  However, there are many differences between the two when it comes to cost, reliability and maintenance.


Should I upgrade my on-premise email server or move to the Cloud?

If you are reading this Blog post, then the chances are that you’re in the process of making a decision about your Business email and you’re considering making the switch from your antiquated on-premise Exchange server to a Cloud-based alternative – which is probably Exchange Online.


More Businesses are choosing to move their Emails to the Cloud over investing in updating their on-premise email server. The below comparisons will help you to understand why.

Exchange Online vs on-premise cost comparison

Hardware and licencing costs.

Cost is one of the main reasons why Businesses switch to Exchange Online. Moving from a Capex to Opex service model is a complete no-brainer for most Organisations, especially start-ups and small Businesses that have a restricted IT budget.

In addition.

When you break the costs down, it’s easy to understand why so many Businesses are moving their IT Systems to the Cloud. When purchasing (or upgrading) an on-premise email server, you’ll need to purchase Windows server and Exchange licencing, in addition to client access licences for every user within your organisations. The licencing costs alone can run into thousands of pounds before you’ve even purchased the server hardware!


Lets also not forget the running costs involved with hosting a server on-premise. You’ll need to consider costs associated with powering the server 24/7 in addition to ongoing maintenance AND some form of essential backup solution.

In comparison, Microsoft Exchange Online incorporates ALL of the features found in an on-premise exchange solution for a monthly cost that starts from just £3.00 per user per month (at the time of writing).

Based on the cost above, a Company with 20 users could have access to a feature-rich Exchange Email solution for just £720.00 A YEAR!

Exchange online vs on premise -  Reliability


In general, cloud email services are inherently more reliable than on-premise email servers. With an on-premise solution, the reliability of service could be severely affected by power outages or hardware failure, especially if no redundancy has been put into place.

In addition, with an on-premise Exchange server, you (or your IT company) is responsible for the ongoing server maintenance. This maintenance includes updates, patching, general administration and security. If you don’t invest enough time in maintaining your server correctly, then it will become unreliable.


With Microsoft Exchange Online, service up-time is the responsibility of the vendor. Microsoft’s confidence in the reliability of their Cloud-platform is financially backed with a 99.9% up-time guarantee. Microsoft Exchange Online provides all the functionality of your on-premise Exchange server without the responsibility of ongoing maintenance, or reliance on redundancy in the event of an outage.

Microsoft Exchange Maintenance


I’ve touched on maintenance numerous times already, but maintenance is a cost that often gets overlooked when Small Businesses conduct their budgetary planning for the year ahead.

On-premise Microsoft servers require a minimal amount of scheduled and unplanned maintenance in the form of patching, rolling out updates and services packs. Implementing this type of maintenance can be quite complex. If regular maintenance isn’t conducted regularly then you risk compromising your Company emails.

In addition.

Maintaining an Exchange server isn’t always simple. Implementing updates and patching can be a complex exercise – and one that can be further complicated if any updates fail or not applied correctly.

With Exchange Online, the responsibility of all security updates, patching and upgrades is the responsibility of the vendor.  You will still be required to administrate Exchange server (adding/removing accounts/ AD integration/ user permissions etc.) but all other maintenance tasks are the responsibility of Microsoft.

Microsoft exchange updates

Version updates.

Once your on-premise Exchange server becomes outdated, you will need to purchase new Server Licencing and client access licenses. As stated previously, depending on the size of your Business, this cost can run into thousands.

With Exchange Online, your version of Exchange will always be updated to the latest version at NO additional cost. If you’re creating a Business Case for Exchange Online, then this is one of many incredibly strong selling points!

Microsoft Exchange Scalability.


Maybe we should have included scalability in the costs section, but I think this advantage deserves its own headline. In addition, it is related to the point that we’ve made above about version updates.

Exchange Online is a far more scalable platform when compared to its on-premise Cousin. With an on-premise Exchange server solution, you’ll need to make sure that you purchase enough licences for any new employees that join the company over time.  However, if your Business takes an unexpected downturn and your staff numbers are scaled back (hopefully not) then you’ll be left with the same amount of licences because they cannot be returned, nor can they be resold to another Business if they have already been used.

As a subscription-based service, with Exchange Online you can add and remove users as required without incurring any unnecessary licencing costs.  Your accounts department will love that!

Microsoft Exchange Online Vs on premise - Compliance


Organisations that are required to meet certain compliance requirements can rest easy knowing that Exchange Online meets numerous compliance and regulations certifications. These regulations include ISO 27001 and European Union (EU) model clauses.

Exchange Online vs On-Premise - Security


Exchange Online features Exchange Online protection (EOP), a premium cloud-based email filtering solution that helps to protect you against spam and malware threats. Exchange Online also incorporates several features that are designed to safeguard your organisation from messaging policy violations.

But that’s not all.

It is worth noting that EOP can also be used with on-premise legacy Microsoft Exchange server versions and in a hybrid mailbox environment.  You can find out more about this on the Microsoft EOP webpage.

 Microsoft Exchange Online logo

Here’s a breakdown of Microsoft Exchange Online features.

At the time of writing, Microsoft Exchange online is available in two different flavours which are Plan 1 and Plan 2.  Here’s a breakdown of what’s included, courtesy of Microsofts Exchange Online website:

Mailbox sizes – Another advantage of using a cloud-based email solution is that you don’t need to worry about running out of disc space. With Exchange Online Plan 1, each user has 50 GB of Mailbox storage. This storage is increased to 100 GB per user if you upgrade to Plan 2.

In addition, you’ll be able to send email messages that are up to 150 MB in size, which is fine if the recipient can receive them!

Exchange Online is Outlook compatible – I met a client recently that thought Exchange Online was only accessible via a web browser because it is a Cloud-based Service – but this simply isn’t the case! Microsoft Exchange Online works in the same way as an on-premise Exchange Server. You simply connect supported versions of Outlook to Exchange Online instead of a local server.

Outlook Web Access (OWA) – Exchange Online includes access to Company Emails via Microsofts Outlook web Client.

Auto archiving – Your old emails will be automatically moved to an archived folder, keeping your inbox nice and tidy.

ALL Microsoft Exchange features included – With Exchange Online, you’ll be able to use all of the same features that are included with the on-premise solution. This includes access to all of the collaboration features, shared calendars, global address lists, groups and more.

What else is included with Plan 2?

  • In addition to the 100 GB mailbox, you’ll also get unlimited Email archive storage
  • Hosted unified messaging – This incorporates call answering, a dial-in user interface and automated attendant capability
  • Built-in Data Loss Prevention policies (DLP) – Based on regulatory standards, these DLP policies use deep content analysis to identify, monitor and protect your sensitive data.

Final thoughts.

It’s very hard to recommend an on-premise Exchange server over Exchange Online once you weigh up the pros and cons outlined in this article.  In most ways, it makes both commercial and financial sense for small businesses to opt to Exchange Online because of the switch from Capex to Opex, increased service reliability and mitigating the risk of system downtime.


With the imminent release of Exchange Server 2019, it is clear that Microsoft isn’t finished with on-premise email solutions just yet. There are many users of on-premise Exchange servers that will champion an in-house solution, especially those that have the resources to maintain their server infrastructure to an optimal level. After all, if it isn’t broke, then why fix it?

Thank you for reading our Microsoft Exchange Online vs on-premise article.

About Ohso Technical. 

Ohso Technical is a professional IT Services Organisations that is based in Highams Park, East London. In additional to our Fully Managed IT Support services, we also provide a comprehensive range of Cloud computing solutions, including Office 365 Business. We also provide fully managed server installation and upgrade services to Companies that prefer to use an on-premise Microsoft Exchange server. 

Need some advice? 

If you’re unsure what email platform is the right solution for your Business, then call 020 3963 5533 and  speak directly to a Microsoft Certified professional who will give you expert impartial advice. 

Please keep us honest!

If you spot anything in this article that you believe to be inaccurate then we’d really appreciate you giving us a heads-up! Simply drop us a comment below and we’ll pay you back with our eternal gratitude ?

Share this article

Tell us more about your IT support requirements…

If you are looking for professional IT support then complete the following form below. An account manager will then contact you to discuss your requirements in further detail.

OhSo Technical will use the information you provide on this form to provide you with updates and marketing. By selecting the boxes below, you confirm your acceptance to receive marketing communications from OhSo Technical.