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SharePoint vs Office 365: A Roadmap for Enterprise Decision-Makers

Should your organization choose SharePoint On-Premises or implement Office 365 in the cloud? This side-by-side comparison will help you decide which solution best matches your organizational priorities.

Are you planning to implement an enterprise collaboration solution? Or maybe you have been using a SharePoint-based intranet for a while and consider upgrading it? You might also hesitate whether to keep relying on on-premises solutions or join the list of cloud adopters. If any of these thoughts come to your mind regularly and you stick to the Microsoft software, you will most probably face the dilemma between having a SharePoint On-Premises solution and deploying the Office 365 suite. 

The decision is never easy to take—even less so if you’re not fully aware of how the solutions differ. To help you figure out the pros and cons then, this comprehensive comparison of SharePoint Server 2019 (the latest version of on-premises SharePoint) and Office 365 should be of value.

How to choose between SharePoint On-Premises and Office 365? Find the ultimate comparison of two collaboration platforms here.
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Architecture and Infrastructure: On-Premises vs Cloud

To run SharePoint 2019, it's essential to have on-premises hardware that suits the platform’s requirements, and organizations have to maintain that hardware ongoingly. That may not be a big deal if you have other on-premises applications and know how to manage your infrastructure, especially when you have dedicated SharePoint specialists on board.

Conversely, if yours is a new business or a small organization scaling for the first time beyond minimal hardware needs, Office 365 is less burdensome and costly to implement. You will need little internal IT resources and no capital outlay to get your SharePoint solution up and running.

The platform maintenance is another aspect to keep in mind. While the later server versions of SharePoint are updated and patched with smaller data packages than their predecessors, you will still need a professional team in your organization to install them. With Office 365, global updates and maintenance are handled by Microsoft, with virtually no downtime. 

The Cost of Licensing and Long-Term TCO

Of course, a SharePoint vs Office 365 decision will seldom depend on architectural considerations alone. The overall cost will naturally be a prominent item on the procurement agenda, necessitating a calculation of the total cost of ownership (TCO). 

Perpetual License vs Subscription Model

As previously mentioned, SharePoint 2019 brings a slew of hardware and human resource costs, and will necessarily involve a much larger implementation project. Then, there is the cost of the perpetual license. The latter guarantees the sole proprietorship of the software and provides access to the platform to a specific number of users.

An approximate calculation of your potential investment in the initial deployment of SharePoint On-Premises will result in an impressive number. Let’s say, if your organization uses a basic three-tier architecture with four servers and you need to ensure the access to a SharePoint portal for 1,000 people, your initial costs will easily cross the threshold of $200,000. With further customizations, the full project price can become a true behemoth.

Obviously, such an impressive initial cost of a SharePoint On-Premises deployment made the platform unaffordable for smaller businesses. Office 365 solved this budgeting issue through a subscription model. To access to Office 365, you have to pay a monthly fee per user, as long as your business continues using the suite. The Office 365 monthly fees look very attractive with the most comprehensive subscription for $35 per user per month.

Long-Term TCO of On-Premises vs Cloud Collaboration Solutions

All in all, since on-premises solutions comprise one-time costs, it appears logical that the TCO will be lower for SharePoint 2019 than for Office 365. Even given that with Office 365 you get a multifunctional suite, an indefinite number of subscription payments will presumably add up to a higher sum than that spent on an on-premises solution.

Indeed, if you ensure the access to the Office 365 E5 plan for 1,000 users, you will cross the threshold of $400,000 already in a year. The subscription payments will be more moderate if you choose SharePoint Online stand-alone: going for the Plan 1 for $5 per user per month, you will end the first subscription year with a $60,000 bill with no customizations included.

It’s also important to remember that both deployment types usually come with a range of additional investments that include fine-tuning, ongoing support by an in-house or third-party SharePoint team, security and compliance, etc. Basically, the final TCO will depend heavily on the planned customization scope and maintenance effort. At the same time, as soon as you finish tuning SharePoint On-Premises, you will be able to cut your investment substantially, while your cloud deployment will be a non-stop fee counter at all stages of its lifecycle.

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Development and Customization

One of the most significant benefits of SharePoint On-Premises is that it enables its owners to bring in custom features in many different ways, using both server-side and client-side customization methods. With SharePoint 2019, customization is limited only by your IT specialists’ imagination and skill.

Unlike SharePoint Server, Office 365 doesn’t accept server-side customization due to the shared nature of the hosted infrastructure. As for client-side tuning, extensive customization has always been considered risky, since major code changes can wreak havoc. For instance, regular updates from Microsoft’s side can break customizations, resulting in time-consuming and costly testing and troubleshooting.

It doesn’t mean that Office 365 is impossible to customize, though. Many of the customization tasks possible in SharePoint 2019 are also achievable in Office 365. Here are a few examples, along with brief descriptions of the approaches required, which are similar for both products.

  • Branding: You can customize branding elements such as logos, colors, headers, and footers using the Composed Looks feature.
  • Navigation: You can specify navigation links to add new elements to site navigation.
  • Workflows: You can use Microsoft Flow (the successor to SharePoint Designer) to create custom workflows. However, to access Flow from SharePoint 2019, you will need to include an on-premises gateway in your system architecture.
  • Forms: SharePoint forms can be customized using PowerApps. Again, an on-premises gateway is required for SharePoint 2019.

Customizations within SharePoint 2019 and Office 365 versions are also possible with SharePoint Framework (SPFx). SPFx simplifies the development process considerably, particularly in Office 365, and enables SharePoint developers to build responsive, mobile-ready apps using an adapted development environment.

To summarize the customization and development aspect of SharePoint vs Office 365, it’s fair to say that SharePoint 2019 offers more flexibility. Alternatively, if you prefer keeping things simple, Office 365 may be a more suitable choice.

User Experience

When it comes to usability and user adoption, SharePoint 2019 and Office 365 are closely matched. Both platforms benefit from Microsoft’s mobile-friendly and responsive modern UI, which is faster and slicker than the classic user interface.

SharePoint 2019 still offers both classic and modern interfaces. That, along with the broad range of customization options, may present more opportunities to enhance user engagement. 

Modern vs classic SharePoint

Meanwhile, Office 365 does tend to make customization less complicated, to the point where users without coding knowledge can personalize their productivity tools.

Unlike SharePoint 2019, Office is a fully integrated suite of productivity applications, allowing users to create, change, publish, share, and work together on documents, spreadsheets, presentations, and more. Still, you should be careful about which Office 365 package you select and how you implement it, especially if you choose one of the options that include desktop applications.

The reason for this caution is in users’ resistance to change. Let’s say, your objective is to move your business applications and data to the cloud, and you have a workforce that is used to the desktop Office applications. The continued presence of these tools might obstruct adoption of the web and mobile versions.

Collaboration Capabilities

If collaboration is a priority for your organization, SharePoint 2019 is one of the most capable platforms available. Indeed, before Office 365 came along, SharePoint Server was the most frequently adopted collaboration solution, and few enterprises would go for any other product for content sharing and management. With the introduced improvements, SharePoint On-Premises has become even stronger but it gave way to the more promoted Office 365 suite. There is a good reason for Office 365 popularity, though.

With Office 365, Microsoft has taken enterprise collaboration several steps further, since SharePoint is just one component of the platform with a much broader range of capabilities. Office 365 puts together content creation, management, and publishing; project management; knowledge management; social and team collaboration. It also includes extra collaborative tools for real-time team communication and remote collaboration (Microsoft Teams, Yammer, Planner, Sway, Stream, etc.).

Office 365 full ecosystem

However, there is a negative side to this abundance, since the multitude of Office 365 applications may cause great confusion among employees if you don’t provide them with the guidance on each app and the collaboration scenarios it covers. As a result, the suite might be underused because employees will switch to more familiar tools, or it will eventually become messy. To avoid that, every company has to elaborate on the Office 365 adoption program coupled with training activities.

When we speak about collaboration capabilities, it is important to point your attention to one more tricky point. Apart from Office 365, there is Microsoft 365 on the market. Perhaps, Microsoft could have made a better choice in naming its cloud products for enterprises, since it’s too easy to confuse Office 365 with Microsoft 365.

The key difference between the two products is that Microsoft 365 has a larger offering and includes the full Office 365 suite, Windows 10 OS, and a collection of mobile device and identity management tools. By its nature, Microsoft 365 can be a great solution for smaller businesses that often look for all-in-one software.

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Security and Compliance

Any attempt to deep-dive into a SharePoint vs Office 365 comparison in terms of security and compliance would require an article of its own. However, if your organization treats data security as a primary concern and operates a policy of maintaining data in-house, then SharePoint 2019 will probably be your preferred choice. There’s nothing quite like the confidence inspired by a solution hosted on-premises, giving your IT team full control over all aspects of security, governance, and compliance.

Not that Office 365 is lacking anything in this regard, but it is a cloud platform. This in itself can be perceived as a risk for companies concerned primarily with protecting intellectual property or customer data.

The beauty of SharePoint 2019 is that despite being an on-premises solution, it was designed by Microsoft to provide an experience as close to SharePoint Online as possible. It is also easy to integrate with cloud applications.

These qualities make it a suitable platform for any organization planning to migrate to the cloud at some future point. Similarly, it’s a great choice if you’d like to develop a hybrid environment, with some elements of your collaboration platform hosted on-premises and some in the cloud.

A Summary of Scenarios

As with any impartial software comparison, it would be improper to promote one version of SharePoint over another. However, it can be helpful to recognize some scenarios in which one version might be the most suitable. To that end, let’s conclude this comparison of SharePoint 2019 and Office 365 with a short summary.

Choose SharePoint 2019 when:

  1. Your organization finds it essential to maintain control over the solution, data security, and compliance; for instance, if you are in the healthcare or financial industries.
  2. You expect to build a highly customized SharePoint solution, with programming capabilities on both the server- and client-sides.
  3. Your business is not ready or willing to migrate to the cloud, either now or in the immediate future.
  4. You expect to migrate to the cloud, but wish to do so in smaller steps, perhaps beginning with a hybrid solution.

Choose Office 365 when:

  1. Your organization is medium-sized or small, and you have no sense of how fast, or how much, it will scale in the next few years.
  2. You need an enterprise collaboration solution that does not require much capital investment.
  3. You need a combination of various collaboration tools.
  4. Your organization employs a distributed workforce.

Ultimately, your choice will require careful consideration of needs relating to architecture, cost, customization, user experience, collaboration, and data security.

SharePoint vs Office 365 summary
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