online vs on premise

SharePoint Online vs On Premise

With its widespread use by over 200,000 organisations and 190 million people for intranets, team sites, and content management, Microsoft SharePoint has become an indispensable business tool. It allows companies to centralise information, making it easy for the entire team to access needed documents and resources. This is key to boosting collaboration and keeping everyone aligned, no matter where they are.

Today, we’re comparing SharePoint On-Premise vs Online to help determine which option best fits your business’s unique needs.

What Are the 2 Main Versions of SharePoint?

There are two main versions of SharePoint – SharePoint Online and SharePoint On-Premise. Each comes with its own set of features and ways to set it up, so you can pick the one that fits your business needs best.

1. SharePoint Online

SharePoint Online, a vital component of the Microsoft 365 suite, offers a robust web-based platform enabling seamless collaboration and information exchange within organisations. Microsoft ensures data protection through redundancy across its servers and data centres.

Like its on-premises counterpart, SharePoint Online facilitates effortless content storage, sharing, and management on a multi-tenant server, effectively making it SharePoint’s cloud version. Licensing for SharePoint Online is per user, available both as a standalone option or within Microsoft 365 plans.

2. SharePoint On-Premise

SharePoint On-Premises involves your internal IT team or support managing SharePoint within your local environment, such as your company’s data centre. Licensing for On-Premises SharePoint intranet sites is handled through a Server/CAL (Client Access License) model. Each active instance of the software necessitates SharePoint Server 2019, and each user or device connecting to a SharePoint Server must have a CAL.

This configuration grants organisations full authority over their SharePoint environment, from customisation and security settings to data storage. It’s an ideal solution for businesses with stringent data sovereignty or bespoke integration needs.

Differences Between Microsoft SharePoint On Premise and Online

This section dives deeper into SharePoint Online vs SharePoint On Premise key differences, helping businesses choose the correct version based on their operational needs, security requirements, and collaboration objectives.

Dedicated Infrastructure

  • SharePoint Online: The online version operates on Microsoft’s cloud data centres, eliminating the need for businesses to invest in or maintain dedicated onsite hardware. This significantly reduces upfront and ongoing costs related to physical servers and infrastructure.
  • SharePoint On-Premise: This SharePoint solution requires purchasing and setting up onsite dedicated hardware. Organisations must manage procurement, installation, and maintenance of server equipment, making infrastructure a key factor in the total cost of ownership and control over the SharePoint environment.


  • SharePoint Online: This version includes your Microsoft 365 plan and offers a monthly per-user billing approach. This subscription model provides scalability and predictable, recurring costs, eliminating the need for significant initial investments in hardware and infrastructure.
  • SharePoint On-Premise: The costs for SharePoint On-Premise are more intricate, encompassing the purchase and maintenance of dedicated hardware, software licenses, and possibly extra expenses for business-specific customisations and integrations. The initial setup cost is higher due to these factors, with organisations also needing to budget for continuous system maintenance and upgrade expenses.

Licensing and Updates

  • SharePoint Online: Microsoft handles automatic updates and patches, ensuring your SharePoint environment remains current with the latest features and security enhancements. This hassle-free approach lets businesses focus on leveraging the platform rather than maintaining it.
  • SharePoint On-Premise: Your internal IT team manages updates and licensing, applying patches and other updates as needed. This offers greater control over the update process, essential for organisations with custom applications or integrations. However, it requires your team to monitor, test, and deploy updates, demanding significant resources.

Data Backup

  • SharePoint Online: While Microsoft manages backups, it’s crucial to recognise the limitations of this setup. Organisations using SharePoint Online should become familiar with Microsoft’s Shared Responsibility Model regarding Office/Microsoft 365 data backup. This model clarifies Microsoft’s responsibilities versus those of the organisation, highlighting the necessity for an independent backup solution.
  • SharePoint On-Premise: For those opting for SharePoint On-Premise, the onus of creating, testing, and managing backups lies solely with the internal IT support team. It demands a robust strategy and dedicated resources to ensure data integrity and the ability to recover data. Contrary to SharePoint Online, where Microsoft handles specific backup and recovery aspects, SharePoint On-Premise necessitates an internal, complete backup solution, granting businesses total control over their data backup and recovery efforts.

Data Security

  • SharePoint Online: Microsoft prioritises data security, which is evident in SharePoint Online’s adherence to industry-specific security standards like ISO 27001 and GDPR compliance. With Microsoft’s robust security infrastructure, it counters a broad spectrum of digital threats. This ensures that your data in the cloud is protected by top-tier encryption, both at rest and during transmission.
  • SharePoint On-Premise: Choosing SharePoint On-Premise places the security of your data directly in your hands. It becomes your responsibility to implement and maintain comprehensive data security measures, including setting up firewalls, anti-malware software, and intrusion detection systems. Although this approach grants more control over security, it necessitates a significant commitment from your IT team to develop and maintain security protocols that meet or surpass industry norms.

SharePoint on premise

Data Storage

  • SharePoint Online: A key difference between SharePoint Online and On Premise is in data storage. Using Microsoft’s robust cloud infrastructure for data storage, SharePoint Online offers scalability and flexibility. This model allows organisations to tailor their storage needs as business demands change. Additionally, its cloud-based nature supports remote access, empowering employees to collaborate and access data globally with an internet connection.
  • SharePoint On-Premise: Those that choose the on premise solution have their data hosted on the organisation’s local network within its servers. This arrangement allows companies complete control over data storage, location, and security measures. However, it also places the onus on organisations to manage server maintenance, scalability, and data security. Data access is generally limited to the corporate network unless measures are taken to facilitate secure remote access.

External Users

  • SharePoint Online: Enhances scalability and flexibility through seamless integration with various Azure services, allowing for easy connection with external users. This adaptability makes it an ideal solution for businesses that often collaborate with outside partners, clients, or contractors. The synergy with Azure services facilitates straightforward management of external user access, ensuring security and appropriate access levels are maintained efficiently.
  • SharePoint On-Premise: Requires manual construction and adjustment of infrastructure to connect with external users, demanding substantial time and resource investment for secure access setup. Organisations that choose SharePoint On-Premise must deploy extra security measures and user management protocols to safeguard data while supporting collaboration with external entities.

New Tools

  • SharePoint Online: Microsoft continuously introduces and updates tools and functions, keeping your SharePoint environment at the forefront of technology effortlessly. This guarantees access to the latest features for businesses, enhancing productivity and teamwork among colleagues.
  •  SharePoint On-Premise: Your IT support team provides tools and functions as they become available. This enables a tailored approach to upgrading your SharePoint environment, allowing organisations to choose specific tools or updates for deployment, based on their unique requirements and schedules. However, this method can be slower and require extensive planning and resources for effective implementation.


  • SharePoint Online: Microsoft handles scalability, offering a cloud-based solution that effortlessly scales with your business’s needs. This ensures your organisation can increase storage, add more users, and integrate further services seamlessly, without the hassle of infrastructure concerns. It’s the perfect option for businesses seeking an easy growth path.
  • SharePoint On-Premise: Scalability rests on your shoulders with the on-premises version of the platform. Unlike SharePoint Online, where Microsoft oversees the infrastructure, organisations with SharePoint On-Premise must develop and implement their scalability plans. This involves acquiring extra hardware, managing load balancing, and overseeing server resources to support expansion. While this offers greater control, it demands a considerable investment and expertise.


  • SharePoint Online: It offers a degree of customisation but is more limited compared to its On-Premise counterpart. It facilitates some customisation and personalization; however, its cloud-based nature means deep customisation is restricted to ensure the stability and security of the SharePoint platform. This is ideal for organisations seeking simplicity without the need for extensive custom features.
  • SharePoint On-Premise: This version offers unrestricted customisation capabilities, allowing organisations to fully tailor their SharePoint environment to their unique needs. This customisation level supports the integration of custom solutions, extensive modifications, and using a broad spectrum of third-party applications. However, a dedicated IT team is needed to effectively manage and implement these customisations.

When to Use SharePoint Online?

SharePoint Online is the optimal solution for creating a scalable, cost-effective intranet that simplifies complexity. This cloud-based platform eliminates the need for significant investment in infrastructure development, saving time and money. It provides a range of versatile features to meet diverse needs, including:

  • Centralized management for streamlined operations
  • High customisability to fit specific organisational requirements
  • Advanced tools for documentation and collaboration

Additionally, SharePoint Online facilitates the quick creation of new sites and integrates smoothly with existing applications. It enhances data protection with top-tier security measures and offers a user-friendly interface for effortless operation and support. This makes SharePoint Online a compelling choice for businesses seeking efficient and powerful intranet solutions.

When to Use SharePoint On-Premise?

Choosing SharePoint On-Premise is ideal if your organisation benefits from a dedicated infrastructure and has specific needs that necessitate complete control over the SharePoint environment. Here are the key reasons to consider an on-premises solution:

  • High Compliance Standards: Tailor your compliance strategies to meet strict regulatory demands by hosting SharePoint on your local servers.
  • Extensive Customisation Needs: When SharePoint Online’s customisation options fall short, On-Premise deployment allows for far-reaching modifications.
  • Increased Storage Requirements: For organisations whose storage needs surpass the limits of SharePoint Online, an on-premises configuration offers the required capacity.
  • Full Control Over Architecture: Essential for businesses managing complex, large-scale operations, On-Premise gives you authority over your SharePoint farms’ architecture.
  • Restricted Network Accessibility: The on-premise SharePoint version can be confined to your internal network, ensuring intranet access is limited to within your business premises for enhanced security or other specific reasons.

Choosing Between SharePoint Online And SharePoint On-Premises

Deciding between SharePoint On Premises and Online hinges on your unique business needs, factoring in considerations like business continuity, compliance, information security, and digital transformation objectives.

While both platforms provide similar core features, they serve distinct operational and strategic purposes. SharePoint On Premise offers more control over your data and compliance standards, allowing customisation to meet specific internal and regulatory needs. This control adds complexity to your IT infrastructure.

Conversely, SharePoint Online facilitates easier setup and management, offering a streamlined yet potent solution for businesses desiring a flexible and efficient intranet platform. Making the optimal choice involves a strategic evaluation of simplicity versus the necessity for customisation and control.


What are the limitations of SharePoint Online?

A key limitation of SharePoint Online lies in its restricted customisation capabilities. Unlike its On-Premise counterpart, which allows organisations to deeply tailor and integrate custom solutions, SharePoint Online provides a more regulated environment. This approach guarantees platform stability and security, yet may fall short in meeting particular business needs that demand extensive customisation.

Moreover, SharePoint Online is bound by set storage quotas and data handling capacities, which could restrict organisations with substantial data storage and processing requirements. Additionally, access to SharePoint Online is dependent on an internet connection, posing a challenge in areas with unreliable internet infrastructure.

Can I use the SharePoint app for online and on-premises?

Yes, the SharePoint mobile app is compatible with both SharePoint Online and SharePoint On-Premises environments, enabling users to easily access their SharePoint content on the move, irrespective of their organisation’s SharePoint deployment. The app provides smooth integration with both platforms, facilitating effortless navigation, content management, and collaboration from anywhere.

However, SharePoint On-Premises may need extra configuration for secure mobile access. It’s crucial for organisations to implement appropriate connectivity and authentication strategies to safeguard their data while allowing mobile access.

Why is cloud based better than on-premise?

Opting for cloud-based solutions like SharePoint Online presents numerous benefits compared to traditional on-premise setups. For starters, it drastically cuts down on initial expenses by eliminating the need for extensive hardware and software investments. This transition from capital to operational spending is particularly advantageous for small and medium-sized enterprises.

Cloud services also offer the flexibility to adjust resources according to demand, allowing organisations to pay only for what they use. A significant benefit is the ability to access work and collaborate from anywhere, anytime, as long as there’s an internet connection, promoting a more dynamic and efficient business environment. Additionally, cloud providers ensure high-level security and frequent updates to guard against emerging threats, reducing the in-house security management burden.

What is safer: cloud or on-premise?

Choosing between cloud or on-premise solutions for better safety hinges on several factors including your business type, IT team expertise, and unique security needs. Cloud services, like Microsoft’s SharePoint Online, provide robust security, regular updates, and access to a dedicated team of experts focused on defending against the latest threats.

This level of security can be hard for organisations, particularly smaller ones with limited IT resources, to achieve independently. Conversely, on-premise solutions allow full data control and the possibility to implement custom security tailored to your requirements. This approach, though, demands a skilled IT team to regularly update and maintain these security measures against evolving threats.

Scroll to Top