Each option has its pros and cons and I will guide you through some of them, so you can best decide whether Exchange on premise or Exchange Online is the best solution for your organisation.
Advantages of running Microsoft Exchange on premise
1. You keep full control
The hardware and email platform are all yours. You decide on the configuration, the upgrades and system changes.
2. You get more flexibility
As long as both the Exchange and other application servers are hosted on the same local network, it’s much easier to interconnect them with other IT resources.
3. You control your Exchange data
Your data integrity is managed by you and your data is always stored on premise.
Disadvantages of running Microsoft Exchange on premise
1. You can lose your data
Since your data is stored on your own hardware, you need a business continuity strategy, which can be very costly.
2. Hardware and licence costs
Maintaining hardware and Exchange licences requires budget and resources. Your hardware probably needs to be refreshed every few years and new versions of Exchange require different configurations.
3. Security remains a major concern
You must be proactive to configure your network, systems and Exchange against possible threats. Whatever happens, you have to resolve problems as quickly as possible.
The reliability and uptime of your in-house solution depends on how much you are willing to invest, and guaranteeing 99.99% availability requires a costly infrastructure.
Advantages of Exchange Online (Office 365)
1. Get the scalability you need
You get the same features you have with on premise Exchange, but you only purchase email accounts for the number of users you have, and you can easily increase or decrease these from month to month.
2. Cut out costs
Price flexibility is one of the biggest values of Office 365, because you get more than just the email service with your subscription. You can also get access to SharePoint Online, Skype for Business, OneDrive for Business, Yammer and Delve.
3. Reduce risk of losing your email data
You can enable multifactor authentication for your accounts, to harden the access to your email. Microsoft also provides a guarantee against disasters such as power outages, floods, fires etc. so your business can still carry on no matter what happens.
4. Always up to date
With Exchange Online you get access to all the enhancements and innovations for servers and clients as soon as they are released and everything happens seamlessly, so your IT teams don’t need to be involved in the change.
Disadvantages of Exchange Online (Office 365)
1. You give up the administrative control
You don’t have direct access to the Office 365 Exchange servers and the full administrative control that this would give you.
2. Migration can be a hassle
The steps to complete a migration undoubtedly require a lot of effort.
3. Rolling back to an on premise solution is uncertain
Moving your data back into your organisation, if you want to cancel your Office 365 subscription, can also be a complex matter.
Migrating workloads to the cloud is a hot topic in IT boardroom discussions. There are many advantages to moving to Office 365 Exchange Online, including freeing up internal resources, reducing corporate liability and lowering overhead costs. Office 365 has now become the mainstream option for organisations replacing on premise corporate messaging platforms and migrating to Office 365 is now a foregone conclusion for common workloads like email. IT Departments that choose to resist these changes will increasingly find themselves in the minority, defending their decisions to keep Exchange on premise.