SharePoint Online vs SharePoint On-Premises: What's Better?

SharePoint Online vs SharePoint On-Premises:
Which is the best version?

SharePoint is the Microsoft 365 tool developed for digital collaboration in the company and mainly used for content creation, document management, and knowledge sharing within an organization.

It is a centralized platform where business teams can collaborate, optimize data management, and thereby increase productivity. Precisely because of its collaborative features, SharePoint is used as a starting point to build the corporate intranet and the integrated Microsoft 365 digital workplace.

Example of a SharePoint intranet created with intranet.ai

There are two versions of SharePoint: SharePoint Online and SharePoint Server (On-Premises). While both can be useful for digitizing an organization's processes and communication, it is essential to consider that:

• Microsoft SharePoint Server (On-Premises) is the local version of the platform, allowing companies to maintain full control over data management and their IT infrastructure.
  
  
• Microsoft SharePoint Online is the cloud-based version offered as an integral part of the Microsoft 365 suite, enabling organizations to benefit from SaaS (Software-as-a-Service) without the need to manage physical servers.
  
  

If a company intends to start a new SharePoint project and aims for the longevity of the developed solution, the choice between the two versions should lean towards SharePoint Online. We'll understand why as we continue reading this article.

SharePoint Online vs SharePoint On-Premises:
What are the differences?

What are the differences between SharePoint Online and SharePoint On-Premises? To answer this question, we analyzed the most important aspects that help companies make the best decision.

First, we addressed the issue of data size, highlighting that SharePoint On-Premises offers storage space limited to the storage available on the infrastructure’s servers, while SharePoint Online has specific limits.

Next, we discussed costs and licensing, highlighting the differences in pricing models between the two versions. Finally, we explored updates and management methods. Whether you choose the flexibility of the cloud with SharePoint Online or prefer the full control offered by SharePoint On-Premises, it is important to decide based on your company's needs in terms of storage, costs, and management.

Regardless of the choice, however, it is essential to follow Microsoft’s roadmap to stay updated on how the company plans to develop both solutions moving forward.

Data size

SharePoint On-Premises can support an unlimited amount of data.

What you need to take into account is the size of your SQL Server instance, keeping in mind that all assets stored in SharePoint On-Premises are serialized and saved as blob objects inside the SQL database.

SharePoint Online, on the other hand, is entirely cloud-based and does not include an unlimited data storage offering.

Microsoft has set the limit to 1 TB + 10 GB per user with a license. If the company needs more space, it can obtain it through a specific add-on for the Microsoft Office 365 subscription.

To learn more, read our article on how to manage storage space
in SharePoint with Microsoft 365 Archive (and beyond).

There is also a maximum quota for data stored in SharePoint Online site collections, set at 25 TB.

Modern document library in SharePoint Online

Costs and licenses

To choose the most suitable version of Microsoft SharePoint for your company, costs must also be taken into account.

Regarding SharePoint On-Premises, it should be noted that a SharePoint farm requires multiple server instances and that a specific license is needed for each instance. In addition to these licenses, you must purchase licenses for SQL Server, Windows Server and add the purchase of the necessary hardware to support everything, considering that the on-premises version is very demanding in this regard. Moreover, for each user who will access the SharePoint intranet, a specific CAL license (Standard or Enterprise) must be purchased.

For SharePoint Online, costs are related to the number of users who will use the product. The subscription to the cloud version allows you to quickly make SharePoint available in the company, without having to worry about any kind of maintenance. In addition, you can access all tools for collaboration, communication, and cloud storage with a Microsoft Office 365 license.

Specifically, SharePoint Online is included in the Office 365 Business or Office 365 Enterprise license. It also has a dedicated license called SharePoint Online P1/P2, intended for users who do not require an email inbox.

Both versions allow access to Microsoft Office web applications. The only difference lies in the type of license: the on-premises version requires a dedicated license to allow users to view and edit business documents via web apps.

The cloud version, instead, allows you to view and edit documents directly from the cloud, without the need for additional licenses.

Microsoft updates

Updates for SharePoint On-Premises must be managed by the internal IT department of a company, which has full control over installation and distribution processes.

SharePoint Online, on the other hand, is managed directly by Microsoft when it comes to both installation and the distribution of the latest updates. But there's more.

Microsoft is focusing its efforts on developing innovative technologies based on the cloud and artificial intelligence. As a result, SharePoint Online is at the center of an innovation process that has recently seen the growing integration of Microsoft 365 Copilot and the introduction of SharePoint Premium into the market.

SharePoint Premium is Microsoft's new offering, primarily based on Microsoft Syntex and SharePoint Advanced Management. It introduces advanced AI-based content management features, such as automatic document tagging, sensitive information redaction, optical character recognition (OCR), and integration with electronic signatures through partners like Adobe and DocuSign.

This recent version of SharePoint is designed to enhance content management and security, especially for large organizations. It includes tools to address issues such as uncontrolled sharing of company documents and offers AI-based recommendations for managing access and content lifecycles.

Going back to our topic, SharePoint Premium is exclusively reserved for SharePoint Online. This is because many of its features, including those based on AI and automation, require a cloud infrastructure to operate efficiently.

Microsoft's AI works best when it can access data and resources distributed on a large scale in the cloud, which is not possible with an on-premises version of SharePoint. On the contrary, scalability and computing power are required—benefits that only cloud platforms can ensure.

SharePoint Online vs SharePoint On-Premises:
final considerations

If a company is considering creating its intranet with SharePoint but has no idea whether to use the cloud or on-premises solution, it should also take recent trends into account.

As mentioned, Microsoft has adopted a "cloud-first" strategy. This means that investments will increasingly focus on developing new features for the online version and, only later, these will be made available for on-premises installations.

As a result, Microsoft’s most modern technologies will primarily be available for the cloud versions of its applications and (perhaps) later for the on-premises versions. However, there is no certainty that all the latest features will be available for on-premises solutions. In the case of SharePoint, not all integrations with other Microsoft 365 applications can be made available locally.

Comparison between the versions of Microsoft SharePoint:

When to choose SharePoint On-Premises?

The on-premises version of Microsoft SharePoint is the most suitable choice if your company:

• already has a dedicated infrastructure
• relies on high compliance standards
• aims to achieve economies of scale on licenses

In addition, SharePoint On-Premises offers more storage space and greater control over farm architecture. It also allows the intranet to be made available exclusively on the corporate network.

When to choose SharePoint Online?

SharePoint Online is the best choice for creating a scalable and intelligent intranet. With the cloud service, it is possible to save on costs and reduce the complexities involved in an intranet project. For example, it does not require the creation or maintenance of a specific IT infrastructure.

These are some of the reasons that led us to align our intranet solution with Microsoft's "cloud-first" strategy: we do not support installations of our ready-to-use SharePoint intranet in on-premises environments.

Smart and scalable SharePoint intranet with intranet.ai

How to migrate from SharePoint On-Premises to SharePoint Online

Migrating from SharePoint On-Premises to SharePoint Online is a crucial step for companies aiming to bring the benefits of the cloud into their operations. Think about scalability, accessibility, and advanced security features that only the cloud version of SharePoint can offer.

But how can you migrate from SharePoint On-Premises to SharePoint Online without compromising data security and integrity?

A possible solution is offered by Microsoft itself. It’s called the SharePoint Migration Tool, a free tool designed to effectively manage the migration to SharePoint Online.

Despite the ease of use of the Migration Tool, attention must be paid to the planning of the entire process, which needs to be thorough and comply with a series of technical and procedural requirements.

Let’s explore this process in more detail in the following sections.

Preparation and requirements for migration

First of all, it is necessary to ensure that the company's IT environment meets all the conditions for migration. SharePoint Migration Tool requires:

• a stable internet connection
• access to SharePoint Online or OneDrive endpoints.

It is also essential that the company has administrators with the necessary permissions on both the source SharePoint server and the destination cloud environment. This means that the users responsible for the migration must have Microsoft 365 permissions to access and manage data on both sides.

Once these initial requirements are met, you can move on to the installation of the Migration Tool. This is a straightforward procedure, as the tool can be downloaded for free from Microsoft's website.

After installation, the tool must be configured to manage aspects such as network connections and corporate proxies. It is particularly important to configure proxies properly to ensure that communication with Microsoft’s cloud is not blocked during the migration. This includes adding Microsoft endpoints to proxy exceptions, if your company uses this type of connection.

Preliminary analysis with SMAT

Before proceeding with the actual migration, it is advisable to perform a preliminary analysis using the SharePoint Migration Assessment Tool (SMAT for short), a complementary tool that scans on-premises sites to identify any compatibility issues.

This is a fundamental step to prevent issues that could slow down or even interrupt the migration. SMAT provides detailed reports on elements that may require special attention from the IT department, such as:

• custom configurations
• complex workflows
• outdated web parts

Migration task configuration

Once the analysis phase is complete, you can proceed with the migration tasks. SharePoint Migration Tool allows for individual migrations or the use of CSV files to perform bulk migrations, facilitating automation in case of large data volumes.

Additionally, SharePoint Migration Tool supports incremental migration, allowing the transfer of only new or modified files compared to those already migrated. This feature is particularly useful in progressive migration scenarios or when continuous data updating is a priority.

Monitoring and reporting

A final important aspect of the migration to SharePoint Online involves monitoring and the subsequent generation of detailed reports to assess the success of the data transfer.

SharePoint Migration Tool offers detailed reports in CSV format, documenting the migration progress and providing useful information about:

• successfully transferred files
• non-migrated data
• any errors
• completion times

These reports also provide valuable insights to help plan and optimize future migrations, improving the effectiveness of the entire process.

What are the main differences between SharePoint Online and SharePoint On-Premises?

SharePoint Online is a cloud-based solution that is automatically updated, while SharePoint On-Premises requires local servers and manual updates.

Which is the most cost-effective choice, SharePoint Online or SharePoint On-Premises?

SharePoint Online reduces hardware and maintenance costs, while SharePoint On-Premises involves expenses for servers and licenses.

What are the storage limits in SharePoint Online and SharePoint On-Premises?

SharePoint Online offers 1 TB plus 10 GB per user, while SharePoint On-Premises depends on the server’s capacity.

How customizable are SharePoint Online and SharePoint On-Premises?

SharePoint On-Premises supports extensive customizations, while SharePoint Online offers limited options.

How can I migrate from SharePoint On-Premises to SharePoint Online?

The migration can be performed using the SharePoint Migration Tool and requires careful planning to ensure secure data management.

When is it advisable to move from SharePoint On-Premises to SharePoint Online?

SharePoint Online is ideal for those seeking scalability and aiming to optimize resources for IT management.