Office 365 vs. On-Premises Exchange Server

Here are some pros and cons to consider when considering Office 365 vs. On-Premises Exchange Server. In addition, if you are in need of further assistance for consulting, TechiT Services provides Microsoft Consulting (Email Migration Services) & Microsoft Support along with a variety of other IT tech services. We are a local IT services company in San Diego, CA. Give us a call or contact us today; we will be happy to help you and your business meet the needs of the digital future!


  1. Future proof by always providing you with the latest version of the server. Protecting your data by ensuring you have the latest security patches in place
  2. Predictable cost for your Office 365 subscription allows you to budget better by eliminating the risk of hardware failures or other disasters with on-premise systems.
  3. Resiliency and Recoverability Are built into Office 365-hosted Exchange to ensure your data is never lost once migrated into the Microsoft Cloud.
  4. Office 365 provides an Administration Portal (secure website) to make managing all of these service components much more manageable than most in-house systems. Furthermore saves you money by having your IT team spend considerably less time performing maintenance when managing you’re on-premise systems.
  5. Office 365 has unlimited scalability, allowing you to select an appropriate entry point to meet your current needs. Then, expand the services and number of users you want to support. Onboarding new users becomes a quick process, all tied into that single management portal.
  6. Online Archive with bottomless capacity (included with Exchange Online Plan 2)
  7. Legal Hold (requires Exchange Plan 2) allows you to retain the email history of any licensed mailbox indefinitely (so long as the mailbox remains licensed). Also, you can use an In-Place discovery report to local any particular message, which could be in any folder across all of your staff’s mailboxes.
  8. Risks/Cons and potential costs you can incur with an On-premise (Exchange) environment
  9. Legacy versions of Exchange, which reach the end of life after every software lifecycle. Can no further apply patches/updates or support from Microsoft as they are no longer provided. In addition, it exposes the system to security vulnerabilities.
  10. The upgrade of the Exchange server version to a supported version typically costs about $3,000 – $4,500 for the license alone. Not including costs and downtime required to upgrade the system to the new version or new hardware replacements
  11. No redundancies in place or disaster recovery. The site (office) where the servers experience a disaster like a Fire, Theft, Hardware failure, or Power Outage. All your email history is lost, and no new messages can be delivered to or sent by your staff.
  12. The current workload for your IT staff has to additionally maintain email servers while maintaining the existing critical onsite systems.
  13. Limited by factors including Client Access Licenses (CALs) are required for simultaneous connections to your Exchange server and Shared Network drive
  14. Limited by available disk space and manual maintenance required to ensure email history is retained
  15. Attempting to track down a misplaced message or view the entire email conversation is complex with on-premises & legacy Microsoft Exchange systems. The In-Place discovery report tools did not exist in Microsoft Exchange Server until 2016.


Office 365 users often find that built-in Exchange security features are enough to handle common spam and other malicious email concerns. However, with that said, implementing ATP is a good idea, but it can be added to the service later if the cost is a barrier to onboarding. The best way to protect your staff from Phishing attempts is to teach them the best practices on avoiding following links, opening attachments, or providing any information to phishing forms or spoofed sign-in pages.

Also, remember that you only need to fully license your current active staff members for the email services. Any mailbox history from previous employees can migrate into a Shared Mailbox, which does not require additional Licenses.


We recommend using something other than Exchange Plan 1 as it does not support several features that Exchange Plan 2 does. Some of these features are:

  • Bottomless online Archive with each mailbox
  • Data Loss Prevention (DLP) can prevent your staff from exposing sensitive data like credit card numbers either in the body of the message or in an attachment.
  • In-Place Hold and Litigation Hold (Legal Hold) AND Data Loss Prevention (DLP)


Maintaining an in-house Exchange system brings a lot of risk and unpredictable costs. We recommend migrating your email system fully to the Office 365 Hosted Exchange. To remove almost all the risks, you have an in-house Exchange system. Your administrator has automation and policy control via that Management Portal, which can eliminate the need for moving email history to the network share. Each Exchange Online Plan 2 license comes with the Bottom Less online Archive. You are making the current mailbox contents and the individual’s Archived history available in their Outlook clients and the web portal (Outlook Web Access or OWA). You can easily apply a rule across all or a selection of mailboxes that auto-archive messages based on your rule. The most common is to move any message older than 1 year into the Archive.

With the Exchange Online Plan 2 license, your admin can also protect your users’ email history from being lost, even when deleted by the user. An admin can still recover items within 30 days or apply an in-place hold/Legal hold to ensure any deleted items are retained in a non-visible folder. In addition, the admin can find and export a copy of any or all of that mailbox’s content. If you’re looking for Microsoft help Near you, find out more on our blog post: Microsoft Support Center Near you.


Relevant Quotes from Microsoft sources:

  • Some organizations copy or move email to an archive to make sure it isn’t deleted, altered, or tampered with. This increases costs due to the manual efforts required to copy or move messages to an archive or third-party products used to collect and store email outside Exchange.

From <>

  • To access a shared mailbox, a user must have an Exchange Online license, but the shared mailbox doesn’t require a separate license. Without a license, shared mailboxes are limited to 50 GB. To increase the size limit to 100 GB, the shared mailbox must be assigned an Exchange Online Plan 2 license or an Exchange Online Plan 1 license with an Exchange Online Archiving add-on license. This will also let you enable auto-expanding archiving for an unlimited amount of archive storage capacity. Similarly, if you want to place a shared mailbox on litigation hold, the shared mailbox must have an Exchange Online Plan 2 license or an Exchange Online Plan 1 license with an Exchange Online Archiving add-on license. If you want to apply advanced features such as Office 365 Advanced Threat Protection, Advanced eDiscovery, or automatic retention policies, the shared mailbox must be licensed for those feature(s). From <>
  • Exchange Online performs several consistency checks on replicated log files during both log inspection and log replay. These consistency checks prevent physical corruption from being replicated by the system. For example, during log inspection, there is a physical integrity check that verifies the log file and validates that the checksum recorded in the log file matches the checksum generated in memory. In addition, the log file header is examined to make sure the log file signature recorded in the log header matches that of the log file. During log replay, the log file undergoes further scrutiny. For example, the database header also contains the log signature, which is compared with the log file’s signature to ensure they match.


Protection against the corruption of mailbox data in Exchange Online is achieved by using Exchange Native Data Protection. This resiliency strategy leverages application-level replication across multiple servers and multiple data centers, along with other features that help protect data from being lost due to corruption or other reasons. These features include native features that are managed by Microsoft or the Exchange Online application itself, such as:

  • Data Availability Groups
  • Single Bit Correction
  • Online Database Scanning
  • Lost Flush Detection
  • Single Page Restore
  • Mailbox Replication Service
  • Log File Checks

From <>


Still, need to find out more about Office 365 vs. On-Premises Exchange Server?

Are you looking for professional Microsoft Consulting or Microsoft Support to help you along your cloud journey? TechiT Services, a Microsoft Partner Near you, can help. Call us today at 1 (619)764-6150 or contact us online!