Microsoft Office 365’s debut in June 2011 forever changed the IT capabilities of small to medium size businesses. However, it also presented thousands of companies with the questions, “Should I switch from an on-site Exchange server to Office 365’s cloud-based email solution?” and, “How do I compare Exchange Online and in-house Exchange?”

It can be a comprehensive task to accurately compare Exchange Online and in-house Exchange.

We have worked with hundreds of companies to help them navigate this decision and observed the varying conditions in which organizations intend to implement either Office 365’s Exchange Online or an on-site email solution.

One thing each situation had in common… they’re all different.

What works for your business may not work for another, therefore it’s necessary your company assess everything from ROI to network security when you compare Exchange Online and in-house Exchange.



Exchange Online vs. in-house Exchange

The difference between the two solutions is where the application is hosted, in other words, where and how your data is stored.

  • If your business uses Office 365, your data will be stored in one or more of Microsoft’s various data warehouses across the world (don’t worry, you can control if your data is located outside of the U.S.).
  • With an on-premise Exchange solution, your business will store the application and data in an on-site server at your location.

Neither solution is right for every business, and many organizations adopt a hybrid  as a temporary compromise.

You company should thoroughly assess your IT needs, budget, and value before comparing Exchange Online and in-house Exchange.

Pros of on-site Exchange: Data control and customization capabilities 

When working to compare Exchange Online and in-house Exchange, an on-premise solution may appear more beneficial for those not quite ready for cloud computing.

An on-site Exchange server allows a business to have complete control of the application and the data stored within it. Your organization will be responsible for purchasing, configuring, and maintaining the application. Therefore, if Microsoft releases an update to the Exchange server, your IT team will be accountable for implementing the change.

Owning the application also gives your business more flexibility when integrating the technology with third-party applications and tools. If the Exchange server and the additional third-party application servers are on the same network, you should be able to easily connect them.

For example, you can customize features such as configuring email for multi-function computers, notifications for your                                                                                         customer relationship management applications, and more!

Essentially, an on-site Exchange solution offers a greater range of customization options and YOU are the only one responsible for your business-critical information. Necessary data backup and security protocols are in the hands of your organization.

Cons of in-house Exchange: Accountability and data risk

While an on-premise solution allows for more customization and control, it also rests more responsibility on the shoulders of your business.

Some businesses consider the on-site element of an on-site Exchange server to be a security risk. Without a sufficient Disaster Recovery or Business Continuity plan in place, your business-critical information is left vulnerable when an unexpected disaster occurs.

compare Exchange online and in-house Exchange

If your organization lacks an off-site backup of your business-critical data, a disaster (such as heavy flooding, theft, or a network breach) may result in data loss, business downtime, fines, and even the loss of valued customers.  

A Disaster Recovery and Business Continuity plan can help prevent the loss of critical email and servers, but such solutions can be expensive to build, maintain, and update.

While you will own the Exchange server, the initial purchase of the hardware will not be your only expense. When the equipment reaches its End of Life (EOL), the technology provider will no longer supply the patches and updates necessary to keep your Exchange server secure and operating effectively. When this occurs, your company will need to replace the equipment.

In addition, every time a new version of the software is released, your company will need the time and resources to configure the change. Your business will also need the budget and resources to train those administrators responsible for maintaining the platform.

Keeping an on-site Exchange solution secure can be another roadblock for companies employing the technology. Small to medium size businesses are especially vulnerable as they often lack the tools and expertise to proactively manage an IT security strategy and consistently monitor the Exchange server’s network.

Essentially, an on-premise Exchange solution means one thing, your business is responsible for taking the necessary steps to keep your application running and your network safe from cybercriminals.

Pros of Exchange Online (Office 365): Scalability and accessibility

The advantages of an online Exchange solution are many and if your business is the right fit for a cloud application, you will likely experience increases in productivity and communication across your organization.

Scalability, cost reductions, and increased security are all reasons companies embrace Office 365 with open arms and high expectations.

Office 365 will provide all the same services as the on-premise solution, but with more scalability and innovative features. In addition to Exchange online, your users will have access to Skype for Business, SharePoint, OneDrive Online, Sway, and other features you would otherwise be required to purchase.

If your business needs to increase or decrease its number of licenses, it can do so easily and without penalty. In other words, you only pay for what you need and you can easily add new licenses without additional costs or downtime.

Office 365 also enhances accessibility. Users can access their email, calendars, address book, documents, and more from any place and with any device. ActiveSync automatically synchronizes your account across all devices and the centralized interface makes it easy for users to work remotely.

compare Exchange Online and in-house Exchange

Microsoft stores user data in server warehouses across the world and is responsible for ensuring their customers’ business-critical information remains secure. While this may seem like risky business, Microsoft’s security capabilities are far greater than those of a small to medium size business.

In addition, the off-site storage of your company’s critical data is recommended by IT experts. If a disaster strikes your location, your business can easily restore its data if a backup solution is in place.



Cons of Exchange Online (Office 365)

Scalability, cost reductions, and increased security are all possible to achieve with Exchange Online, however, the cloud software may not be the most fitting solution for your business.  Consider the cost of Exchange Online, and the time and resources needed to transition your business to the cloud.

Cloud solutions like Exchange Online can provide small to medium businesses with enterprise-level tools and their innovative new features. However, there are always risks when embracing something new.

Cloud computing requires a business to release control of the application and the data stored within it. You will not be able to see or touch your server, and that can be disconcerting for some.

Essentially, when a business adopts hosted email, it sacrifices customization and control.

You cannot integrate third-party applications if they must be installed on the Exchange server and your data isn’t within your reach. This may be an issue for companies that rely on a third-party application for tasks such as customer relationship management or have specific compliance restrictions that require client data be stored on site.

Businesses often assume Office 365 is a “plug-in-and-go” application that requires little support or management to use. However, your business will need the support and resources to handle everything from access permissions, to data storage and organization.

Without proper consideration, your business may face challenges which often result in the abandonment of the project when an organization realizes the resources and time necessary to effectively implement the solution.

While it does take effort to move your company’s data to the cloud, it can take an even greater amount of support to bring your data back in-house.  Consult with your IT team or managed IT service provider before making a final decision as a faulty project can impact not only your company’s bottom line, but the steady development of its processes and culture.

Our IT professionals recommend your organization decide on a solution based upon your unique business needs. It may be necessary to perform an IT environment assessment to get a clear picture of how your technology and services work within your business.

Aldridge has served a variety of companies and we know each business has unique stipulations that must be considered when comparing the value of two solutions. If you’re looking to learn more about how to compare Exchange Online and in-house Exchange, talk to our IT consultation team today.