Differences between Exchange Server (On Premise) and Exchange Online (Office 365 – Cloud)

Differences between Exchange Server (On Premise) and Exchange Online (Office 365 – Cloud)


There are so many reasons and benefit having the Cloud Office 365 Exchange Online Mail server on the cloud.

Having a physical Exchange Mail Server is a very expensive cost for any company to buy and maintain.

The upfront and running costs are very costly.


Exchange Server (Office 365 – Cloud)

Exchange Online (On Premise)

Total Cost of Ownership

  • Hardware and Software – Office 365 eliminates the need for physical and virtualized hardware,storage, and software licensing

  • Management and Maintenance – Microsoft provides full management and maintenance of Exchange Online with 24/7 Support

  • Backup – Microsoft provides automatic real-time backup and recovery for alternating datacenters

  • SPAM Protection – Microsoft provides built-in SPAM and Anti-Virus protection with Exchange Online

  • Encryption and Archiving – Microsoft provides email encryption and unlimited online archiving with its E3 plan for Office 365

You will need to buy hardware and software for

  • Hardware Server

  • OS Server Software

  • Mail Server Software

  • Antivirus Software

  • Antispam Software

  • UPS

  • SAN/NAS Storage

  • Mailbox Backup

  • Archival Mailbox Storage

  • Extended Maintenance Services for 24/7 (for Server)

  • Extended Warranty for Server and other Network Devices

  • Higher Service Level  Agreement (SLA) for Internet Services

  • Redundancy Hardware and Services (for failover)

Running Overhead and related Supporting Costs

  • Bundled in Office 365

  • Electricity of running server, air-con, UPS, backup

  • Maintenance services for software

  • Antivirus and Antispam software subscription

  • Maintenance cost of servicing aircon

  • Rental of Backup generator in case of building electricity servicing (requirement by PUB)

  • Need Internet Services with Static IP

  • Need to pay for services to monitor IP Address for Blacklist Listing Services.

  • Need to pay for Secondary MX Mail Server, in case of main mail server failure

  • Need to pay for redundant Internet Services, in case of primary internet access failure.

  • Rental Cost of Office Space

  • The cost of Server Rack or any furniture.

  • Cost of Cabling/Labeling

  • Additional Storage cost for inactive or old email mailbox

High availability

  • High availability and redundancy is built in and there is a financially-backed 99.9% SLA for Exchange Online.

  • Can implement Exchange Database Availability Group (DAG). Will lead to increased Costs.

Future Proof

  • No need to upgrade anymore. No more downtime for migration to newer version or hardware

  • Need to engage time-consuming and expensive migration exercise every 4-5 years.

  • Migration may cause some downtime.

  • Newer version every 3 years. Exchange 2003,2007,2010,2013,

Increased IT administrator

productivity and manageability

  • Lesser work to administer and manage

  • Need to track and monitor for disk space.

  • Need to clear mail logs.

  • Need to track and manage backup for User Mailbox.