Exchange Online vs. Exchange Server: Which is the better option for you?

Exchange Online is now the flagship messaging and collaboration platform included in Microsoft 365. Exchange Server, meanwhile, had been the flagship messaging platform from Microsoft since it was introduced in 1996. Both get the job done, of course. But is one better than the other? Let’s see.

Exchange Online

When used with Microsoft Outlook, Outlook on the web, or Outlook Mobile, users can access their email, calendars, contact information, and tasks. Exchange Online is accessible from almost all devices, including Android, iOS, and Windows 10 devices. Key Exchange Online features include mailboxes, online archives, and calendars. Each user gets his or her own mailbox and, with some plans, users can even leverage an online archive for older emails. Calendars can be used to track upcoming events and can even share access to their calendars via delegate access.

With Exchange Online, users can view and edit Office attachments online and they can use shared mailboxes for groups of users that need to share info located in a central mailbox. Administrators can enforce message policies and compliance through retention policies, message encryption, eDiscovery, data loss prevention, and journaling.

Exchange Online’s anti-spam and anti-malware features that are included as part of Exchange Online Protection provide configurable anti-spam protection and protection against malware.

With configurable mail flow, Exchange Online offers organizations the ability to support customized mail flow options for hybrid solutions, partners, and even third-party services. Exchange Online, for example, allows you to create inbound and outbound connectors in Office 365 that leverage additional security settings for mail flow with a business partner.

Another key feature of Exchange Online is the mobile and multiplatform access that it provides. In other words, the organization’s users can access Outlook mailboxes and calendars not only from Windows devices but from Mac clients as well, via MAPI over HTTPS or via Microsoft Graph. Outlook on the web supports mailboxes and calendars on virtually any platform, and mobile devices can access mailboxes and calendars via Exchange ActiveSync.

Exchange Online can even be integrated with an on-premises Exchange Server organization via a hybrid deployment. In a hybrid configuration, the Exchange Online org and the on-premises Exchange org share a single namespace. This allows for secure email communications between cloud users and on-prem users, and also supports calendar sharing and mailbox moves between Exchange Online and the on-premises Exchange Server.

Exchange Online vs. Exchange Server

Although you are probably not going to have a choice in the future, as long as Exchange Server is around, you need to decide if Exchange Online is for you. To do so, you need to understand the key differences between Exchange Online and the on-premises Exchange Server offering. Let’s take a look at some of the key differences between Exchange Online and Exchange Server.


Exchange Online supports mailboxes of 50GB or more, while many on-prem Exchange deployments include mailbox size restrictions that often limit mailbox sizes to far less than 50GB. For an organization to support mailbox sizes on the same order as Exchange Online, storage can very quickly become a major cost, because, in addition to lots of FAST storage needed for mailbox data storage, support for lots of large mailboxes also requires storage to back them up — whether the backups are brick-level or store-level.


To achieve high availability with an on-prem Exchange solution, you need to purchase and configure quite a bit of hardware to provide the infrastructure needed for hosting multiple mailbox copies. You also have to deploy and configure load balancing — and, for true high availability, you really also need an alternate datacenter.

Along with all the bells and whistles that are required for a truly highly available on-prem Exchange deployment comes the required knowledge to support those bells and whistles. Having an Exchange administrator (or even engineer) on staff to manage Exchange is one thing. However, once you introduce additional networking hardware to provide the load balancing, you need an entirely different set of skills on-hand to manage that hardware.

Exchange Online, on the flip side, is automatically configured for high availability right from jump. Exchange data is automatically replicated to multiple datacenters, providing inherent data protection and high availability. By offering high availability features right out of the gate, Exchange Online provides the kind of availability that would normally be reserved for large organizations with lots of deep technical knowledge on staff to even the smallest organizations.


In an on-prem Exchange environment, IT staff needs to purchase an Exchange-aware backup solution, which can actually be quite expensive. That staff then needs to manage the Exchange Server backups. If you’ve ever managed Exchange backups, you’ll understand how much of a chore that Exchange backups can really be.

While there are no native backups, per se, in Exchange Online, the service does replicate the Exchange data across multiple servers and datacenters. You can then configure retention settings by configuring single-item recovery and litigation hold.

A complaint that some Exchange Online users have is that there are no native options for point-in-time recovery of Exchange Online mailboxes. This means that if a user deletes an important email, it could be tough to recover that email. However, deleted items are stored in the Deleted Items folder of the user’s mailbox, making them easily recoverable without the need for a restore. Hard-deleted items, which are those deleted emails that are removed from the Deleted Items folder or that have been deleted by pressing Shift+Delete are usually recoverable if they’re identified quickly.

By and large, organizations can get by without actual Exchange Online backups. That said, there are third-party options for those who do need (or want) a true backup of Exchange Online mailboxes.

Other differences

Exchange Online also offers features like Office 365 groups. These groups integrate multiple Office 365 features together. You simply don’t have access to these features with an on-premises solution.

Another “benefit” of Exchange Online that may actually be viewed as a drawback by old-school Exchange admins is the fact that you don’t have any access to the Exchange servers in the Microsoft datacenters. Exchange Online servers and mailbox databases are 100 percent managed by Microsoft. As an old-school Exchange admin, I appreciate the ability to get in and muck around in my Exchange servers. That being said, I also recognize the shift to Exchange Online, so I’ve gotten used to the fact that I won’t be able to get my hands dirty as often as I used to.

Because Microsoft’s push is to get everyone to Exchange Online, there are often new features that get added to Exchange Online that won’t be available in an on-premises Exchange organization. So, as you can see, there are quite a few benefits to be realized by moving to Exchange Online as part of a move to Microsoft 365.

Exchange Online: For many, the future is now

Exchange Online is clearly the way forward. Although Microsoft released Exchange 2019 this year, I can’t imagine there being another on-prem release after that. I mean, think about it. With a seven-to-10 year support window, we won’t likely see support for Exchange 2019 end until at least 2026 or later. With the move to Exchange Online in full swing now, I don’t see how Microsoft could justify another on-premises release that would require support beyond that.

Whether you like it or not, Exchange Online is here to stay.

Featured image: Shutterstock / TechGenix photo illustration

Thomas Mitchell

I am a 25+ year veteran of the IT industry and a subject matter expert in multiple disciplines, including Microsoft Exchange, Active Directory, and Microsoft Azure. My in-depth knowledge of these and other disciplines allows me to not only design and implement solutions based on these technologies but to also teach them. I hold the Cloud Platform and Infrastructure MCSE, as well as several other certifications.

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Thomas Mitchell

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