Microsoft Exchange: On-Premises vs Cloud

deeserve support clients with Exchange, both On-Premises and in the cloud with Microsoft 365 (including a hybrid solution). Either solution has it’s share of advantages and disadvantages.

Microsoft Exchange: On-Premises vs Cloud

In IT support there are some fundamental truths:

  • Hardware will fail a day after the warranty expires.
  • Recovering long deleted files is indistinguishable from magic.
  • Users start to riot when they lose access to email.

The first commercial release of Exchange, Microsoft’s Email Server, was all the way back in 1996 building on the success of previous products such as Microsoft Mail. Exchange has continued to evolve and the current version, Exchange 2019, was released in 2018. Microsoft has been making a concerted push into the Software as a Service (SaaS) market for some time, spearheaded by Office 365 which launched back in 2010. Microsoft 365 (was Office 365) is a suite of services including Office apps, SharePoint, OneDrive and, of interest to this article, Exchange.

The deeserve IT support team helps clients with Exchange, both On-Premises and in the cloud with Microsoft 365 (including a hybrid solution). We have experience of both as either solution have their share of good and bad points, and we consider some of them here.


Most IT Support Pro’s will tell you that patches and updates for Windows Server 2019 seem to take longer than ever before and require forward planning for downtime on production servers. Add into that Microsoft release Cumulative Updates (CU) for Microsoft Exchange every 3 months that can take from 1.5 to 2 hours to apply (as its effectively a whole new Exchange install). Microsoft 365 takes all of this away, you are always running on the most current release, all of the heartaches of updates has been taken away, but you are assuming that everything goes ok in the background, which brings us onto:


Exchange (like any application running on Server 2019) will rely on security patches and updates to both introduce new features and resolve potential security issues. Your server will almost always need to be restarted as part of this process, and this isn’t like a normal restart, you may be sitting there watching the Windows spinner whilst the screen says “Please wait while we update your computer”. If you only have one Exchange server then this would mean email is down, one alternative would be to have a second Exchange server and configure a Database Availability Group (DAG), users connect to the IP address of the DAG so one Exchange server could service their requests whilst the other updates.

Microsoft 365 still suffers from uptime issues and these are often highly publicised (see the third rule above) when they occur and you have no control over them at this point, you are reliant on Microsoft resolving the problem to restore services.

On the back of a recent client request, I compiled uptimes of all On-Premises Exchange servers we maintain and the average was around 99.91% uptime.


Exchange On-Premises needs a server to run on (even if virtual, you still need a host), a Windows Server 2019 licence, an Exchange 2019 licence plus user licenses (Client Access Licences (CAL)).
That server then needs power, cooling and a cabinet/environment to sit in. Microsoft 365 has an initial setup cost (from an IT support provider such as ourselves) and then has an ongoing cost per user per year, which is a predictable cost. However, there is a break-even point after the high initial cost of the On-Premises solution, so depending on your hardware obsolescence policy versus your number of users, some basic maths can work that out.

3rd Party Addons

The one add on we are usually asked about is Exclaimer, which provides the ability to add customer footers to people’s emails as opposed to the plain text option you get by default. Exclaimer sits on a server in your network (even on the same server as Exchange) and adds the footer automatically when an e-mail is sent, from any device. With Microsoft 365, it’s a bit different – Exclaimer is still an option, but mail has to be routed to Exclaimer’s own servers for the footer to be applied. This may introduce a time factor for delivery of e-mails, or you may not want another third party effectively scanning your e-mails, so this may not be compatible with your company’s way of working and policies.

There are also other 3rd party add-ons for Exchange, and having it On-Premises gives you the option of modifying and configuring Exchange in ways you simply cannot do with Microsoft 365.
Powershell works for both On-Premises and Microsoft 365 (albeit with different connection steps), but custom options are very different, and again, depending on your company’s requirements, this could be a hurdle.

Data Location

Something we’d not really considered until we were asked specifically is where the data is located. Obviously, if it’s an On-Premises solution you can point to your server room or cabinet, however, when it’s in the cloud it becomes a bit more nebulous. Most services give the option of continental choice (such as Europe vs America, etc) but Microsoft 365 tends to set up the data in the same country where the tenant was created.

Some companies may have very specific reasons for wanting to lock down the location of their data such as security, compliance, or 3rd party client requirements.

If you’re a larger Microsoft 365 customer (currently 250 seats or more, and on certain plans only), you can configure where data for specific users is stored in the world through Microsoft 365’s Multi-Geo feature – but you still can’t physically point to the data and it’s still pretty vague such as “in the UK” or “in North America”.

There is no perfect solution that will satisfy all requirements as everyone has a slightly different goal to other people – On-Premises might seem like an “old fashioned” solution, but it still works for a lot of companies.

Get in touch if you wish to discuss your requirements in more detail – and we’ll work out which solution would work better for your business.

More services to help

We offer a comprehensive range of IT services to suit all businesses - from "helpdesk"-style IT support to data centre hosting services.

Proactive IT Systems

Established solution partners

  • Microsoft
  • Hp
  • WatchGuard
  • cisco.

Want to work with us?

We are driven by creating experiences that deliver
results for your business and for your customers.
Or just email on [email protected]