What is Microsoft Exchange Server? Microsoft’s Groupware explained
Microsoft Exchange Server is an established groupware solution for internal corporate email communication and collaboration. The software can be operated locally in your own data centre as well as through cloud-based models. We explain how Microsoft Exchange Server works, present editions and usage models, and show which options are available after support ends for Exchange Server 2016 and 2019.
Exchange Server deployment models
Microsoft Exchange Server can be used in different operating models. In addition to cloud-based operation as Software as a Service (SaaS), it is also available as a licensed server solution in your own data centre or via an external Exchange Server hosting provider:
- On-premises: If you want to integrate Microsoft’s groupware solution into your own IT infrastructure, you need a server licence that entitles you to install the software on your own hardware. In addition, all accessing users or devices require so-called Client Access Licenses (CALs). With the on-premises model, Exchange Server is operated under your own control. Operation and maintenance are entirely the company’s responsibility. Today, local deployment is usually done with the Exchange Server Subscription Edition (SE).
- Exchange Online: As part of Microsoft 365, Microsoft Exchange Server is also provided as a cloud service. In this case, Exchange Server is not operated in your own company, but hosted in the Microsoft cloud. Usage is based on user-based subscriptions, known as User Subscription Licenses (USL). Exchange Online can also run in parallel with an on-premises Exchange Server, for example in hybrid scenarios.
- Exchange Server hosting: In this usage model, an external service provider delivers the Exchange functions and takes care of operation, maintenance, and licensing. Companies access the groupware via subscription-based pricing models without having to run their own server infrastructure.
Technical foundations of an Exchange architecture
An Exchange infrastructure typically spans multiple physical or virtual servers. The functions provided on each system are defined through so-called server roles. Current Exchange versions combine the core functions in the Mailbox server role. This role handles tasks such as managing mailbox databases as well as accepting and processing client connections. A separate Client Access role is no longer required.
An Edge Transport server can be deployed as an additional server role. It is typically operated in an upstream network segment known as a demilitarized zone (DMZ) and provides additional protection for email traffic between the internal network and the internet, for example through anti-spam mechanisms and mail flow rules.
In larger environments, multiple Mailbox servers are often combined into a Database Availability Group (DAG). Traffic distribution is managed through a load balancer to ensure high availability.
Users typically access the servers through Microsoft Outlook, Outlook on the web, or mobile devices. Communication between clients and servers takes place through standardised interfaces and protocols such as HTTP(S) and Exchange Web Services (EWS).
Exchange Server features
Microsoft Exchange Server provides a central groupware platform that helps businesses organise communication and collaboration across the company. Its feature set includes email services, calendars, contacts, tasks, and notes.
Exchange Server also supports appointment and resource scheduling, distribution list management, and the shared use of mailboxes and calendars. Security features such as encryption, authentication, and data processing policies are built into the platform.
Combined with other Microsoft services such as SharePoint or OneDrive, Exchange Server can further streamline workflows, for example by enabling shared access to documents or collaboration in teams.
From Exchange 2019 to Exchange Server Subscription Edition (SE)
With Exchange Server 2019, Microsoft laid the technical foundation for today’s Exchange architecture. The focus was primarily on improved security, better performance, and stronger alignment with modern server environments.
Today, Exchange Server is operated on-premises as Exchange Server Subscription Edition (SE). This is a continuously maintained licensing and servicing model without traditional version jumps. Technically, Exchange Server SE is based on the Exchange 2019 architecture but is developed on an ongoing basis.
Security updates, performance optimisations, and adjustments for current operating systems are provided regularly. For businesses, this model enables long-term, predictable on-premises use, provided they meet the required licensing and update conditions.
How do I choose the right Exchange usage model?
Which Microsoft Exchange usage model is suitable depends primarily on operational responsibility, control requirements, and internal IT resources. The following key questions help with classification:
Exchange Server SE (on-premises) is a good fit if
- you have an in-house IT department,
- you need custom configurations or special integrations,
- data needs to remain entirely in your own data center,
- legal or organisational requirements restrict cloud use.
Exchange Online is a good fit if
- you want to outsource email infrastructure operations as much as possible,
- you need high scalability without running your own servers,
- you already use or plan to use Microsoft 365 services,
- low administrative effort is a priority.
Hosted Exchange Server is a good fit if
- you want to use Exchange features,
- you cannot or do not want to operate your own server infrastructure,
- you want more control than a pure cloud solution provides.
Exchange Server SE and Exchange Online at a glance
Exchange Server SE and Exchange Online mainly differ in terms of operation, responsibilities, and licensing. The following overview compares the key features, benefits, and differences between the two options.
| Feature | Exchange Server Subscription Edition (SE) | Exchange Online |
|---|---|---|
| Operating model | On-premises in your own data centre or infrastructure | Cloud service (Software as a Service) |
| Provisioning | Installed and operated by your own IT team | Fully operated by Microsoft |
| Maintenance and updates | Managed by your company | Handled automatically by Microsoft |
| Security measures | Planned and implemented by your company | Integrated into Microsoft 365 |
| Control over data | Full data sovereignty within your own infrastructure | Data is stored in the Microsoft cloud |
| Scalability | Depends on your hardware and infrastructure | Highly scalable and flexible |
| Licensing model | Subscription licence for the server plus client access licenses (CALs), governed by the Modern Lifecycle Policy | User-based subscriptions (USLs) |
| Administrative effort | High | Low |
| Typical use cases | Companies with their own IT infrastructure or specific requirements | Cloud-first environments and companies that want lower operational effort |
Migration to Exchange Server SE or Exchange Online
After official support ends for Exchange Server 2016 and 2019, companies should no longer continue using these versions in production. Existing Microsoft Exchange environments therefore need to be moved to a supported platform. However, a direct upgrade from Exchange 2016 to Exchange Server SE is only possible through an intermediate step with Exchange 2019.
In general, there are two main options:
- Migration to Exchange Server Subscription Edition (SE): This option is suitable for companies that want to continue running Microsoft Exchange Server on-premises. Existing Exchange 2019 environments can be used as the basis for the transition, provided the operating systems and system requirements meet the current specifications. The migration effort usually remains manageable because existing structures can largely be retained.
- Migration to Exchange Online: When moving to Exchange Online, mailboxes and services are migrated to the Microsoft cloud. This is often done gradually in a hybrid scenario, with the on-premises Exchange Server and Exchange Online running in parallel for a limited period. This allows for a controlled migration and helps reduce downtime.
Operating unsupported Microsoft Exchange versions creates a significant security risk. After support ends, Exchange Server 2016 and 2019 generally no longer receive security updates, leaving them vulnerable to known exploits. For a limited period, companies can purchase additional security updates through the Extended Security Updates program. Companies should therefore use only supported Exchange Server versions and install updates regularly to keep operations secure and stable.
Microsoft Exchange Server editions and licensing
Microsoft Exchange Server is available in two editions: Standard and Enterprise. The editions mainly differ in terms of scalability. Client access licenses (CALs) are also required and are assigned either per user or per device. An Enterprise CAL always requires a Standard CAL.
| License type | Edition | Scope of use |
|---|---|---|
| Server license | Standard | Supports up to 5 mailbox databases per server |
| Enterprise | Supports up to 100 mailbox databases per server | |
| Client access licenses (CALs) | Standard CAL | Provides access to core Microsoft Exchange features such as email, calendar, contacts, and tasks |
| Enterprise CAL | Provides advanced features such as archiving, compliance capabilities, and extended policies |
Comparison of Exchange Server licensing models
Microsoft Exchange licensing and billing models differ significantly depending on the operating model. The following overview compares Exchange Server Subscription Edition (SE), Exchange Online, and hosted Exchange in terms of licensing, responsibilities, and cost structure.
| Criterion | Exchange Server Subscription Edition (SE) | Exchange Online | Hosted Exchange, e.g., IONOS |
|---|---|---|---|
| License type | Server subscription plus client access licenses (CALs) | User-based subscription (USL) | Monthly usage fee |
| Billing | Ongoing subscription | Monthly per user | Monthly per mailbox |
| Operation and infrastructure | Managed by your company | Managed by Microsoft | Managed by the hosting provider |
| Maintenance and updates | Managed by your company | Included automatically | Included |
| Security measures | Your company’s responsibility | Part of Microsoft 365 | Included |
| Cost predictability | Depends on infrastructure | High | High |
| Administrative effort | High | Low | Low |
| Typical use scenarios | In-house IT and a high level of customisation | Cloud-first strategies | Exchange use without your own servers |
IONOS Exchange Server as a hosted alternative
With Hosted Microsoft Exchange, IONOS provides the required Exchange infrastructure and takes care of operation, maintenance, and security updates. Companies use the familiar features of Microsoft Exchange without having to run their own server environment.
As a hosting provider with its own infrastructure, IONOS combines proven Microsoft software with high security standards and European data centre operations. A hosted Exchange solution is particularly suitable for companies that want to use Exchange while keeping administrative effort and responsibility for the infrastructure as low as possible.
What are the requirements for using the Microsoft Exchange Server?
Companies that want to operate Microsoft Exchange Server themselves need to account for a significantly higher administrative effort. On-premises operation requires a supported Windows Server operating system and an existing Active Directory infrastructure, as Exchange uses this directory service to manage users and resources.
Today, local operation is typically based on Exchange Server Subscription Edition (SE). This edition supports current Windows Server versions, such as Windows Server 2019 or later, and requires at least .NET Framework 4.8, preferably 4.8.1. Sufficient hardware resources and regular updates are also necessary to ensure secure and stable operation.