Online vs. On-Premises

MS SharePoint

SharePoint Online and On-Premises: a Comparison

What’s better: the cloud or on-premises? Which SharePoint version is more suitable? Our expert Christoph Vollmann has compared the models and summarized the most important differences.

MS SharePoint Online and MS Office 365 are made available in the form of Software as a Service (SaaS) and therefore take a few tasks off your hands that until now you have had to control yourself in the classic on-premises versions. To give you a better picture and help you understand which version is most suited to your needs, I’m going to outline eight comparisons that demonstrate the differences in how these software products work:

#1 Range of Functions – Mobile First, Cloud First

Microsoft has pursued a “mobile first, cloud first” strategy for some time. When it comes to SharePoint, this means that new features are initially implemented for the online version and then made available for the On-Premises installations somewhere down the line.

The so-called Modern Sites are doubtless the most eye-catching of the recent innovations. They involved a complete redesign of the SharePoint interface. This redesign is entirely responsive (so ideal for use on mobile devices) in its very inception. What’s more, it comes with a new development approach for expansions, which goes by the name of SharePoint Framework.

This approach will continue to expand, and new Community Sites with a modern look and feel will be available shortly. Take a look at the SharePoint Virtual Summit from May 2017 to see what this will involve.

It is probable that the modern pages will also be ported toward SharePoint On-Premises. But this example alone shows you the direction in which we are heading. Initially at least, new and modern tools will only be available for the cloud. Indeed, it is reasonable to assume that certain tools will be available exclusively in the cloud.

#2 Modern Collaboration Tools

Microsoft has really set about overhauling the entire Office 365 suite in recent years. Modern tools to increase productivity are already available to you online.

The integration of Microsoft PowerApps, Microsoft Flow, Azure functions and others in SharePoint Online provides entirely new options to use SharePoint content and processes.

But the relevant questions for you are as follows: how do my employees want to work? How do they work today, and what do they expect of a modern platform? If you are already faced with the requirements of mobile access or even mobile collaboration, I believe that you will find no alternative to the use of Office 365, i.e. SharePoint Online.

Of course you can also work with a hybrid option, and likely it will be attractive to some of you. After all, you can keep your files in the data center while still enjoying the benefits of SharePoint Online. For more information on this subject, take a look at the blog article Hybrid scenarios with SharePoint 2016.

#3 Updates

You have to install and manage your own updates for the on-premises version of SharePoint. In contrast, Microsoft manages the installation and deployment of updates for SharePoint Online.

#4 Availability

You have control of availability if you operate a dedicated datacenter. But in Office 365, Microsoft guarantees 99.9 percent availability of services (including Exchange and SharePoint), provided you have an SLA.

#5 Backups

Microsoft creates regular backups of the entire farm for SharePoint Online. What’s more, it ensures system redundancy so that all services remain available, even if certain components fail in the datacenter.

But you will have to take care of creating and then testing your own backups if you run a dedicated datacenter.

#6 Connection of External Users

You need to create your own infrastructure (and it’s quite a lot!) to connect external users if you run SharePoint On-Premises. If that weren’t enough, you will have no choice but to set up security features (e.g. logging and multi-factor authentication) yourself.

SharePoint Online already comes with the ability to connect external users. This feature can be expanded simply with a variety of Azure services, so that features such as two-factor authentication and others can be implemented quite easily.

#7 Scaling

If you use the SharePoint On-Premises version, you are responsible for detecting and dealing with bottlenecks, which occur for instance when database queries take too long. But Microsoft takes care of scaling on your behalf if you use Office 365.

#8 Management

You can do whatever you please if you have your own farm, of course. To do this, you have Central Administration at your disposal on the one hand, and PowerShell as Local Administrator or Farm Administrator on the other.

SharePoint Online involves using a farm that is delimited according to clients, but still accommodates several others. This is why you only have access to the SharePoint client level, and not to the farm level. This organization is shown in the SharePoint Admin Center.

But you do have the option of loading various Power Shell cmdlets that allow you to automate administrative tasks in SharePoint Online. These PowerShell commands run on their own infrastructure and connect with SharePoint Online or Office 365 as necessary.

You will continue to find certain services that would normally be at home in your Central Administration (for instance the Business Connectivity Service and Managed Metadata) in SharePoint Online. But Microsoft has improved this aspect by introducing multi-client capability for this area of the SharePoint online version as well.

Here another quick rundown of these points of comparison

SharePoint On-PremisesSharePoint Online
Range of functionsNew tools are made available at a later datePorted initially by MS to the online version
Modern collaboration toolsYou are responsible for implementationMicrosoft works intensively on these tools
UpdatesManaged and installed by youManaged and installed by Microsoft
AvailabilityYou are in charge of availabilitySLA with 99.9% availability
QuisquerutrumAenean imperdiet
BackupYou need to create backupsMicrosoft ensures backup and redundancy
Connection of external usersInfrastructure required on your sideAlready included
ScalingResponsibility for detecting and rectifying bottlenecks lies with youMicrosoft looks after scaling
ManagementCentral Administration and PowerShellSharePoint Admin Center and PowerShell

My Advice

In Office 365, Microsoft gives you the opportunity to access all of the main programs in your company at the drop of a hat – and that’s not everything. It sustainably lightens the workload in your IT department, while the subscription model eases the strain on your company’s coffers in the long term. What’s more, it allows your employees to use the Office products on their smartphones, tablets and laptops, without incurring additional costs.

When is SharePoint Online the better option?

  • If you want to get things up and running quickly: in most cases it will only take minutes to set up an Office 365 account. SharePoint will be at your fingertips in no time at all
  • If you are keen to reduce the costs of your dedicated infrastructure
  • If you want to collaborate with external employees, partners or customers
  • If you would like to use new technologies like Office Delve and Sway
  • If you want to provide your employees with state-of-the-art tools for mobile deployment as well

When is SharePoint On-Premises the better option?

  • If you already have a dedicated infrastructure for SharePoint
  • If you have integrated external employees and customers in your infrastructure already
  • If you require so-called farm solutions – so programs that penetrate deep into the system
  • If you are required to do so for data protection reasons
  • If your Internet connection does not have sufficient bandwidth


  • User Productivity
  • SharePoint, Microsoft, SaaS, PowerApps

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Christoph Vollmann

Senior SharePoint Consultant

SharePoint consulting incl. requirements analysis, conceptual design and mapping of business processes

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