On premise servers or O365? Ask Uncle Rob!

Hey, Uncle Rob!  How do I decide if I should go with on-premise servers or Office365?  I’m confused!

Well, that’s a good (if loaded) question and I’m glad you asked.  I’ll do my best to give some sort of coherent answer.

The first determining factor is “Can my data be stored outside of my national borders?”.  If you are not resident in one of the countries where Microsoft has its data centers then chances are good your data will be stored outside of your country.  If that is the case you need to determine if your data falls under any sort of laws that prohibit the data being stored elsewhere (outside your country).  If you are under this prohibition then the discussion stops here; there is no point in banging your head against a regulatory wall.

The second determining factor is “Do I have the necessary infrastructure to run Exchange/SharePoint/Lync in-house?” (your choice of any/all).   Trust me, this is a loaded question.  There is no longer an SBS offering that could get you in the door, cheap.  So, now you have to look at what you have for servers, what you have for headroom, what it is you need and what licensing is required to meet that need and determine if you can get there.  If you meet the pre-req’s (and have requisite budget) then good on you!  If you don’t have pre-req’s and/or budget then O365 makes considerably more sense as you get lots of “goodies” that, frankly, Microsoft charges BIG bucks for in terms of on prem licensing (think cost of server license (Exchange/SharePoint/Lync), cost of CAL’s (user or device CAL’s for everything), extra licensing for “Enterprise” features, the list goes on).  And don’t discount the requirements for the physical infrastructure (servers, network, storage, etc) as it all adds up.

The third determining factor is “Do I want to support (and backup and patch) all of this stuff in-house?”.  This is a valid question.  If it’s in O365 then the headache is Microsoft’s; if it is your infrastructure then the headache is yours.  If you don’t have the skills in-house to keep all the bits fed and watered you may find that the costs spiral out of control as you bring in outside help.  One of the biggest failures we see is companies NOT planning for what it takes to keep all the wheels spinning on this stuff and this is specially true for smaller organizations that make a “stretch” to bring some of this stuff in-house.

The fourth determining factor is “Do I have budget?”.  I know, I referenced that as part of the second determining factor but it bears repeating.  It can be downright expensive up front to provide what O365 provides on premise.  You need to crunch the numbers to see what works best for you.  I am NOT saying that over the long run one option is going to save money over the other as, ultimately, you can pay out in O365 subscription fees what you might pay out in licensing but it is a case of WHEN do you pay it (up front or over a three to four year term) and what else is involved (soft costs) to keep it all going.  It’s kind of like leasing a car, you really can’t afford to lease something that you can’t afford to finance for purchase BUT you can use leasing to provide a different way to spread out the dollar outlay.  But do keep in mind that there is a definite if not easily definable cost to backup, patch, maintain the environment (soft cost) that you will have to absorb if you go with on-premise.

From my perspective, it is pretty much sheer madness to go the on premise route UNLESS there is a compelling reason to do so as O365 offers so much value.  But there is a place for on prem and that is why Microsoft gives the choice of licensing for on prem or O365 subscriptions.  I can’t tell you what is best for your organization as the technologies are the same (SharePoint is SharePoint, for example).  But I can tell you to think hard on my four determining factors as they will help you make the decision that is best for your organization.  And keep in mind this is not a case of yes/no, true/false; it is a case of a bunch of gray answers and you will have to think hard about all of it.  But if you do the analysis and answer the questions truthfully you should come to the correct decision for your organization.

Geez, thanks Uncle Rob!