The Only Two Reasons You Should Ever Run Exchange On Prem (and neither is a slam dunk)

Nov 13, 2023 by Mark Alexander

In the ever-evolving world of IT infrastructure, one decision organizations are facing—if they’ve not already dealt with it—is whether to maintain an on-premises Microsoft Exchange server or to migrate instead to Exchange Online, part of the cloud-based Microsoft 365 offering. While advantages of a cloud architecture apply to more organizations than ever, this decision still isn’t exactly a one-size-fits-all scenario. Careful consideration will help you make an informed choice for your business, and this article will catch you up to speed on what factors may be worth considering.

Exchange has become the workhorse of corporate email since it’s first release in April 1996. It’s hard to find a definitive source for Exchange’s market share, but it’s safe to say it’s the most widely used corporate solution for email and shared calendaring on the market with Google’s Workspace coming in a distant second. If you work for an organization with more than 50 employees, chances are high that you and your coworkers have Outlook on your desktop, which is communicating directly with an Exchange Server somewhere.

That “somewhere” has traditionally meant a physical server located within your organization’s firewall, but today it more often means the cloud, and, specifically, an Exchange service hosted by Microsoft, a service that currently goes by the name Exchange Online. Many organizations have yet to migrate their Exchange to Microsoft’s hosted version, but the reasons for maintaining their own Exchange servers are fewer than ever. In fact, there are really only a couple that we typically encounter that IT shops cite for keeping Exchange on premises.

Cost Savings

While I would argue that Exchange Online is likely the more economical choice for most organizations of up to a few hundred employees, there are those larger enterprises that can, in some cases, make a valid argument for cost cutting by keeping Exchange on prem. But here’s the deal. These are companies with a broad and deep IT resource pool with ample expertise to effectively administer Exchange and deal with complications that may arise along the way. They have experience managing hardware and networking solutions, along with heavy investments in cybersecurity. They have the discipline to keep systems hardened and up to date.

By leveraging staff expertise, smart procurement, and skilled management of IT assets, large organizations have a good chance at squeezing a little more return from an on prem invesment in Exchange compared to the cost of the subscription-based Exchange Online.

For mid-sized and smaller organizations, on prem Exchange is a tall order. Smaller IT teams rarely have deep experience configuring or administering Exchange, and in fact are usually too busy dealing with a wide range of user crises to be burdened with maintaining what is arguably a company’s most critical application, at least from the users’ perspective.

And the challenges aren’t limited to lack of expertise. An on prem Exchange solution also implies having to manage licenses and hardware lifecycle. Scariest of all, what happens when there’s an outage? Granted, it’s not like outages never happen with externally-hosted solutions, but the chances of your on prem solution having issues is far greater, and when it happens the pressure is squarely on the shoulders of your organization’s IT team. There’s little that will upset users more than the inability to send and receive email.

Greater Control

Some folks like to be in control, and who am I to judge? Running Microsoft Exchange in your own data center offers your IT organization all the control it could ever desire with email. Using Exchange Online, on the other hand, comes with limitations as far as granular control of every configurable option is concerned.

So without trying to peel this apart and explore what control really means in this context at a detailed level, I’ll share my own perspective on this. It’s email, folks. Just how much control does one really need? Is there really a benefit to having access to some additional configuration settings in the software, or to being able to select your hardware? Does that benefit outweigh the costs that come with supporting a critical piece of IT infrastructure?

That’s not for me to answer on behalf of another, of course, and so I’ll agree here and say that yes, if you’re looking for greater control of your Exchange environment than that afforded by Exchange Online, then on prem is likely the best direction for you.

Okay, I’ll Grant You a Couple More Reasons (but they’re edge cases)

A less common, but obviously legitimate reason for hosting Microsoft Exchange on prem is related to regulatory compliance. Whatever the underlying regulatory objectives, sometimes organizations have little choice.

Sometimes environmental or workplace circumstances dictate what works and what doesn’t. I’ve worked with an offshore organization that used on-vessel Exchange servers to facilitate a quality user experience on each of the floating rigs. Offshore work presents extenuating challenges for stable and fast internet, so a cloud-based email solution isn’t an ideal fit.

For Everyone Else

I suspect I may have left out a good reason or two to host Exchange on prem, and I hope you’ll reach out and share them with me. But in case it’s not clear already, for the vast majority of organizations out there who simply would not realize or appreciate an on prem Exchange environment (or have the in-house staff to do so), Microsoft’s Exchange Online is a powerful and proven platform at this stage. If you’re at a crossroads and trying to determine whether Exchange Online is the right direction for your organization, I hope this article provides some insight.

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