SharePoint Online VS SharePoint On-Premise: Which Should You Choose?

SharePoint comes in two versions: online and on-premise. What are the differences between them? How do you choose the best solution for your business?

Keep reading the article to find out which solution is best for your business.

Microsoft SharePoint is a collaboration tool from Microsoft primarily used in the workplace for content management, electronic documents, and knowledge sharing. SharePoint is a centralized and secure platform that enables workgroups to collaborate, manage data and improve efficiency.

SharePoint is used to create intranets and digital workspaces due to its collaborative features.

SharePoint comes in two versions: SharePoint Online and SharePoint Server (On-Premise). While both can be beneficial depending on the company’s specific goals, it’s important to remember that:

  • Microsoft SharePoint Server (latest version 2019) is an obsolete product that will no longer receive updates. Microsoft announced at Microsoft Ignite 2020 that a new SharePoint Server will be released in mid-2021 with a license subscription model. So far, however, there is no news on this statement.
  • Instead, Microsoft SharePoint Online is a 100% SaaS offering included with Microsoft 365 subscription, representing the present and future of the product.

If you start a new SharePoint development project, the decision between the two versions should be clearly in favor of SharePoint Online if you want the project to last in the medium to long term.

Now let’s look at the differences between the two options.


Which version of SharePoint is best for your needs?

Size of the data

You can base your decision on how much data you need to store. The data storage capacity of the on-premise solution is unlimited. You just have to think about the size of your SQL Server instance and remember that all assets in SharePoint On-Premises are serialized and stored as blob objects in the SQL Server database.

Because SharePoint Online is entirely cloud-based, there is no unlimited data storage option.

Microsoft has set a limit of 1 TB + 10 GB for each licensed user per company. If you need additional storage, you can purchase it as an add-on to your Microsoft Office 365 subscription. Also, there is a 25 TB limit on the amount of data that can be ingested from SharePoint Online sites. You can always find more information on the Microsoft website at this address.

Costs and Licenses

When choosing the right software to support work in the company, costs must always be considered, including direct licenses and additional costs.

When considering the SharePoint On-Premise solution, you should keep in mind that a SharePoint farm requires multiple server instances, each requiring its own license. In addition to these licenses, you will need to purchase SQL Server, Windows Server, and most importantly, the necessary hardware to support everything as SharePoint has high hardware requirements.

Instead, you must purchase a separate CAL license for each user using the SharePoint intranet (Standard or Enterprise).

SharePoint Online is priced based on the number of users who will be using the product. A subscription allows you to quickly make SharePoint available in your organization without worrying about maintenance. There is also a special license called SharePoint Online P1/P2 for users who don’t need the mailbox.

Access to Microsoft Office web applications is possible in both versions. Only the license type changes. The on-premise version requires an exclusive license to view and edit documents with web applications.

With the cloud version, on the other hand, you can view and edit documents directly in the cloud without the need for additional licenses.

Updates from Microsoft

The company’s IT department manages the updates to the on-premises versions of the intranet and decides when to install and manage the available updates. To continue receiving Microsoft support, you must keep your work environment up to date.

Instead, Microsoft takes care of installing and distributing updates for the online version of the working tool.

What to consider when choosing between SharePoint Online and SharePoint On-Premise?

If you’re thinking about building your own corporate intranet with SharePoint but aren’t sure whether to go with the cloud or go with an on-premises solution, consider the recent trends.

Microsoft has adopted the “cloud-first” strategy as stated in the premise of the article. This means that Microsoft implements new features first for online versions and then later makes them available for local installations.

New and modern tools will initially only be available in the cloud, on-site installations will follow later. Also, not all features will be available for the on-premise solution: all integrations with other Office 365 features will not be available on-premises.

When should you choose SharePoint Online?

Make an informed decision with short-term repercussions by opting for the online version, which saves time and money by eliminating the need to build the necessary infrastructure. You can benefit from future product improvements if you agree to follow the publisher’s update schedule. We have decided to follow Microsoft’s strategy with and do not support installations of our intranet in local environments.

When to choose SharePoint On-Premise?

If you already have dedicated infrastructure, work in a company with high compliance standards, have high customization needs and want to save money on licenses, on-premise is the best option. It’s the perfect solution for companies that need more storage space than Microsoft provides or that want more control over farm architecture.

If you want your intranet to be accessible only from within the corporate network, SharePoint On-Premise might be the best option. Choosing a SharePoint version is crucial for your business. In terms of basic functionality, on-premises and online solutions are still similar. The decisive factor is which of the two versions can be adapted to the specific requirements.

Final Thoughts:

If you’re not sure which version is best for your needs, you can create a hybrid intranet to get the most out of both options. Or you can contact Al Rafay Consulting for help.