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Microsoft Exchange Online vs. Exchange On-Premise: What Should Your Small Business Choose?

Reading Time: 6 minutes Email is the backbone of modern business communication. And despite the recent popularity surge in platforms like Slack, Zoom, and MS Teams, email shows no sign of slowing down. It’s thus imperative that businesses take their email infrastructure seriously. After all, email downtime invariably equals business downtime. And there are valid concerns over email cybersecurity, price, compliance, and more. Microsoft Exchange Online and Microsoft Exchange On-Premise are two extremely popular email infrastructure choices for small to medium-sized businesses (SMBs) in South Africa. Both offer their own pros and cons and technical differences, which is vital for business owners and senior management to understand. In this article, we cover some key differences between Exchange Online and Exchange On-Premise with the South African SMB in mind.   What is Microsoft Exchange On-Premise? Microsoft Exchange On-Premise is a server-based email solution, meaning it requires substantial server and networking hardware physically installed on your business premises, i.e., a server room, to operate. On-Premise is extremely powerful – provided that a business is able to invest time and money into server upkeep and management.   What is Microsoft Exchange Online? Microsoft Exchange Online is a Software as a Service (SaaS) email solution that is subscription-based […]
Microsoft Exchange Online vs. On-Premises - What Should Your Small Business Choose
18 Jun, 2022
Reading Time: 6 minutes

Email is the backbone of modern business communication.

And despite the recent popularity surge in platforms like Slack, Zoom, and MS Teams, email shows no sign of slowing down.

It’s thus imperative that businesses take their email infrastructure seriously. After all, email downtime invariably equals business downtime. And there are valid concerns over email cybersecurity, price, compliance, and more.

Microsoft Exchange Online and Microsoft Exchange On-Premise are two extremely popular email infrastructure choices for small to medium-sized businesses (SMBs) in South Africa. Both offer their own pros and cons and technical differences, which is vital for business owners and senior management to understand.

In this article, we cover some key differences between Exchange Online and Exchange On-Premise with the South African SMB in mind.

 

What is Microsoft Exchange On-Premise?

Microsoft Exchange On-Premise

Microsoft Exchange On-Premise is a server-based email solution, meaning it requires substantial server and networking hardware physically installed on your business premises, i.e., a server room, to operate. On-Premise is extremely powerful – provided that a business is able to invest time and money into server upkeep and management.

 

What is Microsoft Exchange Online?

Microsoft Exchange Online - iSite Computers

Microsoft Exchange Online is a Software as a Service (SaaS) email solution that is subscription-based and powered by the Microsoft Azure cloud. Exchange Online does not require servers to be installed on your premises. Email systems are instead powered via the internet from Microsoft data centers. A monthly fee is paid to Microsoft for handling this aspect on behalf of your business.

Exchange Online is a newer technology compared to On-Premise. Many features are included in the platform by default and are ‘done-for-you’ by Microsoft.

Microsoft Exchange On-Premise vs. Exchange Online – Points of Comparison:

Reliability and Uptime

Extreme reliability and extreme uptime are one of the major benefits of Exchange Online since it runs on cloud computing infrastructure.

In fact, Microsoft provides a 99.9% uptime guarantee in the SLA for Exchange Online. This translates to just 8 hours and 46 minutes of unplanned downtime per year. You may even claim a refund from Microsoft if outages exceed this time.

With Exchange On-Premise, reliability and uptime are almost entirely dependent on your internal server hardware, configuration, maintenance, and disaster recovery strategies. The duty is either upon your in-house IT staff or a managed IT services provider (MSP) to keep email running smoothly.

That said, your uptime and reliability requirements will naturally depend on the size and nature of your SMB, and its overall dependency on email. The email uptime demands for a 25-person accounting firm won’t match that of a nationwide manufacturing chain. It’s thus imperative to determine the unique impact of downtime to your business specifically, and find an Exchange option that reasonably exceeds it.

 

Support for Third-Party Add-ins

A variety of third-party applications, called add-ins, can provide additional features to Exchange. These vary from advanced cybersecurity (Exchange Online Protection by Mimecast) and backup solutions (Veeam Explorer for Microsoft Exchange) to managed email marketing suites (Exclaimer) to name a few.

Both Exchange Online and On-Premise support third-party add-ins. However, support is greater and typically easier to implement and manage with Exchange On-Premise. Some legacy systems and protocols are likewise expected to conflict with Exchange Online and will need to be stopped or changed if your SMB decides to migrate from On-Premise.

Scalability

Scalability refers to how flexible a system is in adapting to the real-world needs of your business.

Exchange Online reigns supreme when it comes to scalability. Because the system is practically virtual, upgrades and downgrades to meet your email requirements are both instant and cost-effective. Opening a new branch across the country and adding forty new employees? It just takes clicks to get your email backbone setup with Exchange Online. No hardware involved. The same ease applies when downgrading.

Exchange On-Premise is scalable, too. But it may require some capital outlay, hardware installation, hiring server technicians, scheduled downtime, and more if you need to scale your email capability. Implementing resource and storage changes are far slower than with Exchange Online, and may require days to weeks of planning and consulting.

Nevertheless, it’s dependant on the nature of your business and projected growth. If urgent, major, and/or agile changes to your business email demands are not expected, Exchange On-Premises should be perfectly sufficient in this regard.

 

Price

Exchange Online works on a subscription-based model. A fixed fee is paid monthly to Microsoft on a per-user basis, with several plan options that offer varying levels of functionality. Recurring costs are generally easy to predict and budget accordingly. Because there are no hardware requirements and migration is straightforward, capital outlay is minimal with Exchange Online. SMBs can get started without major investment.

Exchange On-Premise, on the other hand, requires a hefty capital outlay for server hardware, in addition to Client Access Licenses (CALs) from Microsoft. Maintaining a server room is the financial responsibility of your business from then on. As email needs change, it’s also a costly exercise to upgrade hardware requirements.

It’s hard to make a cost comparison based on numbers alone.  IT experts thus use the time for better context. In general, Exchange On-Premise is more cost-effective if servers will be sufficient for 10 years, with upgrades done every three years. If more frequent server upgrades are needed to meet growing email demands, then Exchange Online is often the better choice.

 

Disaster Recovery

Exchange Online data, such as emails and contact lists, are automatically replicated to multiple Microsoft data centers across the world, thanks to powerful data resiliency strategies like Exchange Native Data Protection. No matter the cause of disaster and data loss (whether fire or file corruption), your business will always have a complete, very recent email backup in the cloud.

Disaster recovery can be equally powerful with Exchange On-Premise, with the caveat that a cloud-based solution is used for off-site storage. So, in the event of a disaster that strikes your server room in the office (whether looting or a leaking pipe), you can restore just as easily as with Exchange Online.

Learn About the 3-2-1 Backup Rule:

Backing Up To An External Hard Drive Is A Big Mistake

5 Reasons Why Backing Up to An External Hard Drive is a BIG Mistake

 

Cybersecurity

Although Exchange Online and On-Premise handle cybersecurity differently, there is no real difference in the end result. Both offer extremely powerful safeguards and proactive protection methods against spam and modern email threats, such as ransomware, business email compromise, and DDOS. Hence for many SMBs, cybersecurity shouldn’t be a decisive factor when comparing the two options.

Regulatory Requirements

SMBs in various industries (particularly medical, legal, financial, and governmental) may have laws and standards (such as POPIA and ISO/IEC) regulating email.

With Exchange Online, both your email data and email infrastructure are in the hands of an overseas third-party, i.e., Microsoft. This poses a privacy risk, as well as the inability to enact certain technical changes which could raise compliance issues if applicable to your business. Exchange Online has compliance offerings for ISO/IEC 27001, ISO/IEC 27018, SOC 1, and SOC-2. View more here.

Related:

Security and Compliance for Exchange Online

On the other hand, fulfilling compliance and regulatory requirements is generally straightforward with On-Premise. A number of legal and compliance requirements for email simply don’t apply. There is greater ease and flexibility to implement required changes (although it will come with some work and cost). Exchange On-Premise is, therefore, an attractive option for SMBs in regulated industries.

 

Summary

There’s no clear winner when it comes to the Microsoft Exchange Online vs. Exchange On-Premise discussion.

Third-party support and regulatory compliance are far better with Exchange On-Premise. Whilst scalability, reliability, and uptime are big benefits with Exchange Online. Price, disaster recovery, and cybersecurity can tilt either way depending on the business.

 

Book a Free Consultation for Advice on Your Next Step

It’s best to speak to the experts before committing to a decision.

iSite Computers is here to help. We are an official Microsoft Partner and Managed IT Services Provider.

Book a free, no-obligation consultation with our team, and we will take the time to learn about your business email needs and advise a way forward to match your budget and goals. Alternatively, call us directly on +27 31 812 9650  or email rd@isite.co.za.

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