This content is part of the Essential Guide: An introduction to SharePoint 2013
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Migrating to SharePoint on-premises vs. SharePoint online

Should you migrate to SharePoint on-premises vs. SharePoint online? The right answer involves factors specific to your company, cost and more.

Organizations that are considering deploying SharePoint must decide whether it makes sense to opt for SharePoint...

on-premises vs. SharePoint online, a cloud-based service in Microsoft Office 365. At first blush, this might seem like a relatively simple decision, especially given many companies' skepticism about moving to the cloud, but there are some serious benefits to farming out the management of SharePoint, as well as several potential issues to consider.

If you opt for SharePoint in the cloud, Microsoft -- not your organization -- assumes the burden of building the necessary SharePoint architecture .

Ultimately you have to weigh factors like your existing SharePoint architecture and hardware configuration, licensing and cost considerations, and the loss of control associated with moving to SharePoint in the cloud. As an IT manager, only you can evaluate these factors in the context of your business operations and requirements to determine the right answer.

Companies weighing on-premises SharePoint vs. SharePoint in the cloud should consider the following:

  • Deployment and migration issues
  • Scale
  • Cost
  • Storage
  • Integration
  • Loss of control
  • Existing SharePoint architecture

We will look at each of these issues in turn.

Deployment and migration considerations

One of the first considerations is whether your organization currently runs SharePoint on-premises. If you have an existing on-site SharePoint deployment it's a straightforward process to create a SharePoint 2013 farm and begin migrating content to it.

On-premises SharePoint content can also be migrated to an Office 365 SharePoint environment, but doing so often requires more planning than an on-premises migration. If you are considering migrating to an on-premises SharePoint 2013 deployment, consider the hardware requirements. The migration process requires you to build an entirely separate SharePoint farm for SharePoint 2013, and then copy content and service application databases to the new SharePoint farm (you cannot perform an upgrade within your existing farm). This means for a period of time you will have two separate, parallel SharePoint deployments. Depending upon the size and scope of your SharePoint deployment, you might need additional hardware to accommodate the parallel SharePoint farm.

Deployment scale

Regardless of whether you have an existing SharePoint farm, you need to consider the scale of the SharePoint 2013 farm you want to install. Although it's possible to create a single-server SharePoint deployment, most production SharePoint farms are distributed among multiple servers. Doing so allows an organization to achieve fault tolerance and scalability for the SharePoint environment.

If you are deploying SharePoint on-premises, it's up to you to determine how many SharePoint servers and database servers you need, which roles those servers should host, and what the SharePoint architecture should look like. It is also your responsibility to ensure all SharePoint servers are properly licensed. While SharePoint isn't necessarily difficult to deploy, it can be tricky to provide the required level of fault tolerance and scalability, while also adhering to Microsoft's licensing requirements and recommended best practices.

If you opt for SharePoint in the cloud, Microsoft -- not your organization -- assumes the burden of building the necessary SharePoint architecture. The fact that Microsoft Office 365 customers do not have to worry about architectural planning or server-level licensing could be the most compelling reason to deploy SharePoint in the cloud.

Cost considerations

Technical knowledge isn't the only barrier to building a scalable and fault-tolerant SharePoint deployment. Cost is also a major consideration. SharePoint farms often consist of several SharePoint servers, and each one must be properly licensed.

Office 365 deployments differ in that the number of SharePoint servers (or infrastructure servers) required to support a SharePoint deployment has no impact on the cost of implementation. Office 365 is licensed by way of a flat-rate, per-user subscription fee. This licensing model allows you to reap the benefits of an enterprise-class SharePoint farm without having to worry about keeping track of the number of SharePoint server licenses you consume.

Office 365 may also reduce administrative costs related to ongoing maintenance. For instance, Microsoft performs ongoing patch management and server upgrades. Similarly, your IT staff is freed from the burden of migrating to the next version of SharePoint when it becomes available because Microsoft performs the migration for you.

Office Web app costs

Another cost-related consideration is whether you plan to make use of the Microsoft Office Web Apps. Both on-premises and cloud-based deployments of SharePoint 2013 allow use of Office Web Apps, but Office Web Apps are licensed differently.

All Office 365 subscription plans allow users to view Office documents online. Additionally, the small business subscription (Subscription P) and most of the enterprise and midsize business subscriptions (Subscriptions E2, E3 and E4) allow for online editing of Microsoft Office documents. This capability is also available in one of the kiosk subscriptions (K2).

When it comes to on-premises deployments, there is no requirement to license Office Web Apps to view Microsoft Office documents. But if the organization is going to use Office Web Apps for editing documents, they must be licensed. Licensing is part of the volume licensing agreement for Microsoft Office 2013 Standard and Professional Plus, as well as through select Office 365 subscriptions.

Data storage considerations

Another important consideration is the volume of data you plan to store. On-premises deployments can theoretically accommodate an unlimited amount of SharePoint data. All you have to do is to acquire and provision the necessary storage hardware.

In contrast, SharePoint online subscriptions do not include unlimited data storage. Microsoft sets the limit for team storage beyond 10 GB at 500 MB per user. Additionally, there is a maximum storage quota at the subscription level. The limit for almost all of the SharePoint online subscriptions is 25 GB. The exception is the small business subscription (Subscription P), which has a maximum storage limit of 35 GB.

Feature parity

There are disadvantages to using Office 365 beyond the storage limitations mentioned above. A key concern is the lack of feature parity with SharePoint 2013 on-premises. Many companies have customized applications for their environments and many have to be retooled in migrating SharePoint to the cloud. Retooling, of course, cuts into the cost savings that motivated the migration to begin with, and, in some cases, retooling for the cloud may prove impossible.

For more on SharePoint 2013

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In other cases, companies may try to fill feature gaps of SharePoint online by purchasing apps from the Office 365 apps store, but this can drive up costs as well. Furthermore, there are no guarantees that the apps store even offers an app that meets the organization's needs.

Application integration

Another concern is the tight integration of SharePoint 2013 on-premises with other applications. SharePoint Server is much more than just a server application. It's a fully extensible Web platform. As such, many organizations have invested significant resources in customizing SharePoint to provide integration with a critical line of business applications, such as customer relationship management software, enterprise resource planning or other systems.

Loss of control

Another concern in migrating SharePoint to the cloud is a loss of control. Once you hand over the keys to the kingdom in managing SharePoint you may not be able to ensure business continuity. More important, if Microsoft creates a patch -- or even a new version of SharePoint -- that breaks one of your Web apps, you won't have a way to test the patch ahead of time or to prevent a problematic patch from being deployed.


As you can see, you have to account for several factors when deciding whether to deploy SharePoint 2013 on-premises or in the cloud. Cloud-based deployments are most appropriate for organizations that do not wish to undertake the cost or complexity of building a scalable and fault-tolerant SharePoint farm. On-premises deployments are better suited for organizations that need more storage than Microsoft provides or greater control over the farm's architectural design.

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