SharePoint Online vs On-Premises

Last updated Thursday, October 7, 2021
SharePoint Online vs On-Premises

According to Microsoft, more than 200,000 organisations and 190 million people have SharePoint for intranets, team sites and content management.

With SharePoint, you can create a central information hub for your business, so everyone can tap into the same documents and resources.

Anytime, anyplace, anywhere.

Today, we’re going to be comparing two setup variations of SharePoint:

SharePoint Online vs SharePoint On-Premises

So, how do you choose the right platform for your business?

First, let’s find out what they are:

What is SharePoint?

SharePoint Online

SharePoint Online, part of the Microsoft 365 office suite, is a powerful web-based application used for collaboration and information exchange across a business.

Just like SharePoint On-Premises, SharePoint Online allows users to store, share and manage content seamlessly.

Put simply, it is the cloud version of SharePoint.

SharePoint Online is licensed on a per-user basis. You can purchase SharePoint Online as a standalone plan or included as part of Microsoft 365 plans.

Options include:

  • SharePoint Online Plan 1 – Targeted towards SMEs
  • SharePoint Online Plan 2 – Fully featured with capabilities for enterprise level without Office applications
  • Office 365 E3 – Fully featured with all Office applications and services

SharePoint On-Premises

SharePoint On-Premises is when your in-house IT or IT support manage SharePoint in your local environment, i.e. Company data centre.

For On-Premises, intranet sites are licensed using a Server/CAL (Client Access License) model.

SharePoint Server 2019 is required for each running instance of the software, and CALs are required for each person or device accessing a SharePoint Server.

Options include:

  • SharePoint Standard CAL: the Standard CAL delivers the core capabilities of SharePoint
    • Sites: a single infrastructure for all your business websites
    • Communities: an integrated collaboration platform
    • Content: enterprise content management (ECM) for the masses
    • Search: people and expertise search, visual previews, visual best bets
  • SharePoint Enterprise CAL: the Enterprise CAL delivers the full capabilities of SharePoint
    • Sites: a single infrastructure for all your business websites
    • Communities: an integrated collaboration platform
    • Content: ECM for the masses
    • Search: standard search features plus entity extraction, video search, item recommendations
    • Business solutions (includes Access Services and InfoPath Services)
    • Business Intelligence for everyone (includes Power View, PerformancePoint Services, Excel Services, and Visio Services)

Why should I use SharePoint?

According to a study, 86% of business owners and staff attribute workplace problems to inadequate or poor communication tools.

SharePoint addresses the very heart of this problem.

Check out some of the benefits below:

  • Work smarter. Create new, all-electronic working processes, so your people can focus on their work instead of shuffling paper.
  • Cultivate collaboration. Open up new possibilities for collaboration, allowing your team to share ideas, spark connections and develop innovations.
  • Keep everyone in the loop. The ideal way to share company news and important guidance for teams.
  • Manage your documents. All your information is available to everyone, everything is searchable and automatic version control shows you exactly who changed what and when.
  • Free up your workflows. Create and manage new workflows for the vital tasks you do every day, so you can handle them quicker and easier than ever before.
  • Safe and secure. Set profiles and permissions for everyone in your team, so they can only access the data they need.

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

Dedicated Hardware

  • SharePoint Online: Uses Microsoft Cloud data centres. Does not need dedicated onsite hardware.
  • SharePoint On-Premises: Requires purchase of onsite dedicated hardware.

Updates & Infrastructure

  • SharePoint Online: Updates and patches are carried out automatically by Microsoft.
  • SharePoint On-Premises: Maintained by your IT support team and kept up to date with patches and other updates.

Data Backups

  • SharePoint Online: Backups are managed by Microsoft, with limitations. Read about Microsoft’s Shared Responsibility Model when backing up Microsoft 365.
  • SharePoint On-Premises: Backups will need to be created, tested, and managed by your IT support team within your local environment.

Data Storage

  • SharePoint Online: Data is stored on the cloud.
  • SharePoint On-Premises: Data is stored on your local network.

Data Security

  • SharePoint Online: Data is maintained according to industry-specific security standards.
  • SharePoint On-Premises: You will be responsible for the security of your data.


  • SharePoint Online: Part of your Microsoft 365 plan. Billed monthly per user.
  • SharePoint On-Premises: You’re looking at the purchase and upkeep of hardware, along with the cost of licenses, etc.


  • SharePoint Online: Limited customisations.
  • SharePoint On-Premises: Unlimited customisations.

External Users

  • SharePoint Online: Can be easily expanded with a variety of Azure services, to connect external users.
  • SharePoint On-Premises: Infrastructure for connecting external users must be built and adjusted manually.


  • SharePoint Online: Microsoft takes care of scalability.
  • SharePoint On-Premises: Scalability is your responsibility.

New Tools

  • SharePoint Online: Tools and functions are continuously introduced and updated by Microsoft.
  • SharePoint On-Premises: Tools and functions are made available by your IT support team when available.

What is a SharePoint hybrid?

With a SharePoint hybrid, productivity services in SharePoint Online can be integrated with on-premises SharePoint Server to provide unified functionality and access to data.

If you want to gradually move your existing on-premises SharePoint Server services to the cloud, you can have a staged migration path by extending high-impact SharePoint Server workloads to SharePoint Online.

A hybrid environment allows trusted communications between SharePoint Online and an on-premises SharePoint Server.

Once established, you can configure integrated functionality between services and features such as Search, Follow, and user profiles.

When should I choose SharePoint Online?

SharePoint Online is your best choice when looking to build a scalable intranet.

It saves costs and reduces complexity.

With this option, you avoid spending time and money on creating the necessary infrastructure.

When should I choose SharePoint On-Premises?

On-Premise is the best choice if you already have a dedicated infrastructure.

It is ideal if your business has the following requirements:

  • High compliance standards
  • High customisation requirements
  • More storage space than Microsoft offers
  • Greater control over the architecture of your SharePoint farms
  • Intranet to be available only on your business network


Ultimately, your decision will depend on your business requirements for business continuity, compliance standards, and information security.

On-premises and online are similar in terms of basic functional coverage.

SharePoint On-Premises is dependent on your internal capabilities and regulatory requirements.

It allows more direct control over your information and compliance standards.

However, it brings with it greater complexity.

SharePoint Online is simpler to setup and manage.


We really hope you enjoyed our comparison to SharePoint Online vs On-Premises.

Now we’d like to hear from you:

Do you have any further questions about SharePoint?

Perhaps you are considering it at the moment?

Either way, let us know your thoughts.

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