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Hosting SharePoint 2013: On Premises or in the Cloud?

Office 365, specifically SharePoint Online, is now a consideration for a significant number of our SharePoint projects. Identifying whether the solution should be in the Cloud or On Premises is critical not only to the success of the project but to the long term the overall IT strategy of our clients.

For many projects the overall IT strategy is what determines a preference for either the On Premises solution or the Cloud solution. If the preference is for the latter, specifically SharePoint Online, it is then important to determine whether this is a good fit for your organisation and what limitations there could be.

To cloud or not to cloud?

Microsoft has been working hard to reduce the list of limitations and increase the feature set available in SharePoint Online (powered by the cloud).* Scorecards and Dashboards are the main features that Microsoft identify as missing, however most Business Intelligence features such as Excel Services, PowerPivot and PowerView are now readily available.

There are a number of limitations of the SharePoint Online platform, most being a small reduction in a piece of functionality. It is important to understand the requirements for your SharePoint system as fully as possible before choosing whether your SharePoint is On Premises or hosted on SharePoint Online. For a full detailed description of what is or isn’t included in Office365 and a comparison between the different plans, this TechNet article provides an in-depth analysis, as highlighted in the article: “All Office 365 plans include the SharePoint Online service, but not all plans support all SharePoint features.”

Other technical limitations in utilising SharePoint via the cloud that are likely to impact your decision making are:

  • Reduction in Custom Development options: As this is a shared platform, Microsoft has to ensure that no custom development will have an impact on the system as a whole and on other customer sites; therefore there are more boundaries than with an On Premises system. Farm Solutions are not allowed although Sandbox Solutions are supported. Microsoft is recommending a new development approach for SharePoint moving forward: the new ‘App’ model which is fully supported SharePoint Online. This may not only prevent some functionality from being developed but may also increase development time for other solutions, due to the way they need to be implemented.
  • Search: This is one of the most improved features in SharePoint Server 2013. Improvements have been made across the board from advanced indexing and query capabilities to the powerful User Interface and the ‘Content Search’ web part.  However SharePoint Online may not be suitable for Search based solutions, as content may not be indexed frequently enough to provide meaningful results. Microsoft aims to index content within 6 hours, however during busy periods we have seen this increase to 24-48 hours. For this reason Search based solutions on SharePoint Online should be considered carefully, especially compared to On Premises where a search-centric platform could be indexing content every 15 minutes or less!
  • Access to On Premises data: Accessing data across the Internet is likely to have some impact on speed.
  • Migration of existing data to SharePoint Online is a time consuming process: There is no way to do a database backup and restore onto SharePoint Online, so unless the migration can be carried out manually, third party tools are often required. We will shortly share a blog article investigating this migration to SharePoint Online.

Additional decision making factors

There are benefits and limitations of all hosting, regardless of the functionality provided and these are often easier to identify, but have a significant impact on the decision.

  • Licensing: Purchasing licenses for SharePoint 2013 vs paying monthly for SharePoint Online. The number of Users you have and your agreement with Microsoft has significant impact on whether this is cost effective. SharePoint On Premises is also soon to be available on a SPLA basis, allowing companies to pay monthly for their licensing.
  • Costs: Factored into the cost of On Premises deployments needs to be the initial outlay for servers, software (Windows, SQL, antivirus) and the ongoing maintenance costs of keeping the servers running, such as general maintenance, patching, etc.
  • Exchange & Lync: Utilising the full Office 365 platform has some synergy with using SharePoint, both from a cost and an ease of use perspective.
  • Integration with existing Active Directory: If you have an existing Active Directory On Premises, this can be synchronised with Office 365 to allow users to login to Office 365 with their email address and normal AD password. This synchronisation also simplifies the Starters and Leavers process.
  • Reliability: The Office 365 platform is more reliable than most On Premises installations, with the uptime for the last quarter at 99.99% – that represents less than 13 minutes of unavailability in a 3 month period. Although redundancy can be added to On Premises server farms and downtime schedule at a convenient time for the business, Office 365 still represents a very reliable system.
  • Network Issues: For some organisations, often those based in less developed areas of the world, On Premises is likely to be the only solution as the Internet connection is so unreliable that it would have a major impact.
  • Control: As with all hosting, you relinquish some control, which in many ways is the beauty of it. However at times, such as when a platform is migrated this lack of control can be disruptive. This can mean that although performance is generally good, there can be occasions when performance is affected and you have no control over the Infrastructure to remedy this.
  • Frequent Upgrades: Microsoft is now committed to continually adding functionality incrementally rather than waiting for 3 years to release a new version of the product. SharePoint Online normally receives these updates before they are added to a Service Pack for the On Premises version. Whilst this functionality may be of benefit and some organisations benefit from this change, others may resent the lack of control with new features being added before they have sufficient time to evaluate them.
  • Migration: With SharePoint Online the migration of sites from one version to the next is inevitable, Microsoft provides an option to delay this upgrade by up to 12 months but then the migration will take place. This frequency of change may be too much for many organisations, especially those who have recently migrated to the SharePoint Online platform and then are subsequently migrated again. For most Customers, the migration from SharePoint 2010-based SharePoint Online to the SharePoint 2013-based SharePoint Online was painless. However for customers with a large amount of custom development this can be a painful experience. Microsoft now has a development programme where requests can be placed for Test or Development systems to be upgraded 1 month prior to production instances, however this may not be enough time for some organisations to fully test and resolve issues.
  • Legal requirements: For some, storing data in the cloud is complex from a legal perspective and sometimes this makes it unfeasible. For some clients, the issues have been around where the data is actually located – for EMEA Customers this tends to be in Data Centres in Ireland and the Netherlands. Microsoft publishes further information on this which you can view here.
  • External Users: The number of external users may have an impact on the cost, both for Office 365 (paying the subscription for external users) and On Premises (paying for sufficient bandwidth and facilities for remote access). In SharePoint Online, External Users with Microsoft Accounts (Live ID) can access the system free of charge up to a maximum, depending on your plan.


In summary, SharePoint Online now provides most of the functionality available in the On Premises versions of SharePoint 2013. However the exact functionality required should be weighed against the service descriptions provided by Microsoft and the reduction of custom development options and complexities around migrating existing data.

Following the analysis of the technical capabilities of the platform, the business requirements can be analysed to ensure the platform chosen offers the most cost effective, reliable and suitable solution to meet the needs of your individual organisation.

*This article discusses the functionality of the Office365 Team Site not the Office365 Public Site, designed for public facing websites, which is far more limited.

By Jenny Clayton, Associate Senior SharePoint Consultant

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About the Author

Our technical team contribute with blogs from their respective specialities, be that Azure, SQL, BizTalk, SharePoint, Xamarin and more. From the lead architect to developers and testers, each person provides content straight from their experience.

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