Microsoft SharePoint has been around for nearly two decades, used as a trusted tool by countless organizations to easily store, organize, and share information. In recent years, Microsoft extended it as an online service, making it even easier for organizations to access, manage, and use it. Although both SharePoint Online and SharePoint On-Premise are similar in multiple ways, key differences set them apart. In this article, we will discuss the purpose of SharePoint Online and explore how it is different from the On-Premise version.
How is SharePoint Online Different from SharePoint?
SharePoint is a server-based platform. That means it is installed and hosted on a physical server. Users store, organize, and access information from a single location. It also enables users to easily collaborate and share documents, tasks, and other information with colleagues, customers, and partners.
SharePoint Online is a cloud-based version of SharePoint, a collaboration platform part of the Microsoft Office 365 Suite. It offers the same features and capabilities as the on-premises version of SharePoint, but it is hosted, managed, and maintained by Microsoft in the cloud. It allows users to access the platform from anywhere, offering more flexibility and scalability.
Difference Between SharePoint Online and On-Premise: Purpose, Features & Benefits Explained
On one side, we have SharePoint Online, the cloud-based powerhouse that promises seamless accessibility and effortless collaboration. On the other side, we have SharePoint On-Premise, the traditional on-site solution that offers maximum control and customization. So, which path should you choose? As the cloud meets the server room, let’s witness the battle between SharePoint Online and On-Premise.
| Aspect | SharePoint Online (Microsoft 365) | SharePoint On-Premises (Server 2016/2019/SE) |
|---|---|---|
| Deployment | Hosted in Microsoft’s cloud | Installed and managed in your own data center or hosting environment |
| Infrastructure | Microsoft manages servers, storage, patching, and upgrades | Your IT team manages servers, storage, SQL, patching, and upgrades |
| Access | Designed for secure access over the internet from any supported device | Internal network by default; external/VPN access requires extra configuration |
| Licensing / Cost Model | Subscription (per user / Microsoft 365 plans) | Server + CAL licensing, plus hardware, SQL, and ongoing ops cost |
| Scalability | Scales automatically within tenant limits | Depends on your hardware, SQL capacity, and farm design |
| List / Library Limits | Up to ~30 million items per list or library; view and performance thresholds still apply | Similar logical limits (tens of millions per list/library) with SQL and farm design constraints |
| Storage | Pooled cloud storage per tenant, plus personal OneDrive storage | Storage sized and provisioned by you on-prem (disks, SAN, etc.) |
| Updates / New Features | Feature updates, security fixes, and UI changes delivered continuously by Microsoft | You choose when to install CUs/service packs; slower cadence, more control |
| Security Management | Microsoft handles physical security, baseline hardening, and many controls; you configure tenant security, permissions, and compliance | Full control and full responsibility for OS/SQL hardening, patching, monitoring, and perimeter security |
| Compliance & Certifications | Uses Microsoft 365 compliance stack (Purview, eDiscovery, retention, DLP), plus many industry certifications (varies by region/sku) | Compliance depends on how you design, configure, and audit the environment; certifications are your responsibility |
| DLP / Information Protection | Built-in DLP, sensitivity labels, retention, and audit via Microsoft Purview (depending on license) | DLP and classification features available in newer server versions, but more limited and require on-prem policies and infrastructure |
| Authentication & MFA | Cloud identity with Entra ID (Azure AD); MFA, Conditional Access, and modern auth supported natively | Typically uses AD + AD FS or other IdPs; MFA and modern auth possible via federation or reverse proxy, but need to be designed and maintained |
| Hybrid Integration | Integrates with SharePoint Server for hybrid search, sites, OneDrive, and other hybrid scenarios | Acts as the on-prem side of hybrid scenarios with SharePoint Online and Microsoft 365 |
| Customization & Extensibility | Supports SPFx, SharePoint Framework web parts/extensions, Power Platform, apps from SharePoint Store, and REST/Graph APIs; no farm solutions | Supports SPFx, add-ins, and (depending on version) classic farm solutions and server-side code; deeper low-level customization, more upgrade impact |
| Third-Party Apps | Add-ins and SPFx solutions via tenant app catalog and SharePoint Store | Farm solutions, add-ins, SPFx solutions, and other integrations deployed by your admins |
| Mobile Access | First-class support via SharePoint mobile app and browser; no VPN needed in most cases | Mobile app and browser access supported when environment is published externally or accessible via VPN |
| Backup & Restore | Microsoft manages platform-level backup/DR; you use recycle bin, version history, and site/OneDrive restore capabilities; no direct SQL backup control | You design and run full backup/restore and DR at SQL and farm level; more control, more work |
| Governance | Tenant-level admin centers for SharePoint, security, and compliance; policies applied across sites | Farm-level and web app-level governance; you define all policies, quotas, and processes |
| Maintenance Overhead | Lower infra maintenance; focus on configuration, governance, content, and adoption | Higher infra maintenance (OS, SQL, SharePoint, hardware) plus the same governance/content work |
| Best Fit | Organizations that prefer cloud, faster access to new features, reduced infra burden, and strong M365 integration | Organizations that need full data residency control, strict isolation, or deep custom solutions and are willing to own infrastructure |
When to Use SharePoint Online
You should opt for SharePoint Online if:
- You are looking for a more user-friendly and value-for-money option.
- You want a reliable and secure system with regular updates.
- You want low infrastructure and IT maintenance costs
- You aim for fluent collaboration with external stakeholders such as clients, and partners.
When to Choose SharePoint On-Premise
You may choose SharePoint On-Premise if:
- Your organization already has a significant investment in infrastructure, including servers, storage, and networking equipment.
- You need more flexibility for customization and integration with existing on-premises systems.
- Your organization demands high security and compliance requirements that mandate keeping sensitive data on-premises.
- In cases where the network connectivity or bandwidth is limited.
- You need a more cost-effective solution in the long term.
Based on the factors, you can decide between SharePoint Online and On-Premise.
Also Read: What are Disadvantages of SharePoint?
What is the Purpose of Sharepoint Online?
It provides a comprehensive and collaborative platform for organizations of all sizes to store, manage, and share information, applications, and documents. It is a cloud-based solution that enables teams to work together seamlessly, collaborate on projects, organize and manage workflows, and access data from anywhere, anytime, using a web browser or mobile device. This facilitates efficient communication, content management, and collaboration across departments and geographical locations. Additionally, document libraries, lists, team sites, and integration with other Microsoft 365 tools help businesses improve productivity and teamwork in a secure environment.
What are the Features of SharePoint Online?
Let’s take a look at key features of the online variant of SharePoint:
- Site Collections: It supports multiple site collections, allowing you to organize and structure your data more efficiently.
- Web Parts: It provides a variety of web parts to help you customize the look and feel of your site.
- Lists and Libraries: This version allows you to create lists and libraries to store data and documents.
- Wikis: It supports the creation of wikis, allowing users to collaborate in a single location.
- Social Features: Moreover, it provides various social features, such as activity feeds, tagging, and micro-blogging.
- Workflows: The online version of Share Point supports the creation of workflows to automate processes and help manage tasks.
- Content Types: It allows you to create and manage content types, which can be used to categorize and organize data.
- Document Management: It provides document management features, allowing users to store, manage, and access documents in a secure manner.
- Search: It includes an advanced search engine to allow users to quickly find content.
- User Permissions: It provides granular user permissions, allowing you to specify who has access to which data.
- Auditing: It includes auditing capabilities, allowing administrators to track user activity.
- Compliance: SharePoint Online supports compliance standards such as HIPAA, FERPA, and ISO 27001.
- Security: It includes built-in security features, such as encryption, two-factor authentication, and extensive access control.
- Office 365 Integration: It is tightly integrated with Office 365, allowing users to work with documents and collaborate in real time.
- Mobile Access: SharePoint Online includes a mobile app for iOS and Android, allowing users to access their data from anywhere.
- Video Streaming: It even supports video streaming, allowing users to share and view videos directly from their SharePoint site.
- Collaboration Spaces: It allows for the creation of collaboration spaces, allowing users to work together on projects in a secure environment.
- Blogging: Interestingly, it provides a blogging platform too thus allowing users to share their thoughts and ideas with others.
- Synchronization: SharePoint Online supports synchronization, allowing users to access their documents and data from multiple locations.
- Customization: It allows users to customize their sites with custom themes, navigation, and other features.
- Forms & Templates: SharePoint Online includes a forms feature, allowing users to create and manage forms for data collection. It also provides templates, allowing users to quickly create sites and webpages with pre-built content.
- InfoPath: It supports InfoPath, allowing users to create custom forms and workflows.
- Business Intelligence: It provides business intelligence tools, allowing users to access and analyze data.
- Reporting: This app allows users to generate reports and view data in various formats.
Also Read: 22 Best Client Management System Software
SharePoint List vs Excel Features Comparison
Here is a brief comparison of SharePoint list vs Excel features that helps you identify which tool is more suitable for your requirements.
| Aspect | SharePoint List | Excel Table (stored in OneDrive/SharePoint) |
|---|---|---|
| Primary Use Case | Structured data for teams (tasks, issues, simple records) with views, permissions, and web UI | Analysis and calculation of data, complex formulas, ad-hoc reporting, and modeling |
| Storage & Location | Lives inside a SharePoint site; accessed via browser (and sometimes Power Apps/Power Automate) | Lives inside an Excel workbook stored in OneDrive/SharePoint; opened in Excel desktop or Excel for the web |
| Collaboration | Multiple users edit list items simultaneously in the browser | Multiple users co-author the same workbook when stored in OneDrive/SharePoint |
| Versioning | Item-level and list-level version history, if enabled | File-level version history managed by SharePoint/OneDrive; you can restore earlier file versions |
| Data Structure | Column types (text, number, choice, lookup, person, date, etc.) enforced at item level | Table columns are typed loosely; data validation is possible but easier to break |
| Views & Filtering | Rich built-in views (standard, grouped, calendar, gallery), filters, sorting, conditional formatting; personal and public views | Filters, sorting, pivot tables, charts, and (desktop) Custom Views; strong analysis features but fewer “governed” list-style views |
| Permissions | Item or list level permissions integrated with SharePoint security; easier to control who can read/edit what | Permissions at the file or library level; harder to enforce row-level security without extra tools |
| Forms & Data Entry | Browser-based forms; can be customized with Power Apps; good for everyday CRUD operations | Data entry via Excel grid or forms; can become error-prone if many users edit structure |
| Integration | Works well with Power Apps, Power Automate, Power BI, and other Microsoft 365 services as a “data source” | Also integrates with Power Automate and Power BI; Excel is widely supported as a data source across many tools |
| Validation & Governance | Centralized schema in the list; admins can lock down columns, content types, and policies | Validation rules exist, but users can change or remove them more easily, especially in desktop Excel |
| Reporting & Analytics | Basic charts and views in SharePoint; better when connected to Power BI | Strong built-in analytics: formulas, charts, pivot tables, Power Pivot/Power Query; very good for reporting and analysis |
| Offline Use | Browser-centric; offline use needs extra tools or export | Excel desktop works offline; syncs when file is saved back to OneDrive/SharePoint |
| Best Fit | Shared, structured data that needs web forms, permissions, and workflow (tasks, requests, registers, light apps) | Analysis-heavy scenarios, calculations, financial models, or one-off reports that need Excel’s full power |
Recommended: 10 Functions of MS Excel that Everyone Should Know
In conclusion, SharePoint Online and On-Premise have unique strengths and limitations, making it important for organizations to evaluate their specific needs before deciding which platform to use. Before you decide, carefully consider all of these factors and choose the platform that aligns best with your organization’s goals and objectives.
