Skype for Business: On Premise vs Hosted

For companies looking to implement Skype for Business as their office phone system and unified communications platform, there are several options.

Skype For Business On Premise:

An on premise configuration requires not only large capital expenditure on infrastructure, but high levels of expertise in server configuration and maintenance as well as telephony expertise. To build a reliable Skype for Business on premise a company will incur a far greater TCO (total cost of ownership) than a hosted solution, but the benefit is total control over the platform, its settings and customization. It also gives companies the freedom can implement changes and upgrade more rapidly, or slow the change management if needed. This level of control is generally only needed in niche scenarios, and the cost of the hardware and a full time Skype specialist generally doesn’t justify the benefits.


  • All features and functions are available to you
  • Total control of customizations on the Skype for Business server
  • Total control of upgrade timing
  • Higher levels of security



  • High Infrastructure Expenses
  • Full Time Skype for Business expert is needed
  • Overall much higher TCO than hosted solutions


Best Use Case:

Companies with high requirements on security and customization who can afford the setup and maintenance costs and staff.

Skype for Business Online- Hosted

Skype for Business Online is hosted Skype for Business through Office 365. Beginning on Dec 1, Microsoft began offering Skype for Business Online with Cloud PBX as part of their Office 365 offering that is meant to replace your office phone system. Since Skype for Business is Microsoft’s product you could assume they would be the best company to host their own platform. This may become true in several years, but right now Skype for Business Online is missing several key enterprise voice features that are available through On Premise and 3rd party hosting. Besides missing features, it gives you the least amount of control over customization on how the phone system works.
The best thing Skype for Business Online has going for it today is that companies on Office 365 have a single portal to control their entire email and phone system infrastructure, and it is very simple to manage. A knowledgeable IT staff member can easily manage the platform without a major learning curve. In terms of cost for a hosted platform, adding Skype for Business with Cloud PBX to your Office 365 license is expensive. Skype for Business Online is best for small organizations that don’t need any kind of enterprise phone system features, and want a hosted phone system.


  • One portal in Office 365 for email and phone system
  • Easy to setup and maintenance
  • Minimal Infrastructure upgrades needed
  • Lowest expertise needed for use and maintenance
  • Low TCO



  • Expensive when compared to third party hosting
  • Missing major features required for most enterprise setups
  • New to market and not fully tested or thoroughly reviewed
  • Minimal control over upgrades and customization


Best Use Case:

Smaller companies that don’t require much customization or enterprise voice features

Hosted 3rd Party

Hosted Skype for Business is the best all-around price per performance solution available for companies looking to implement Skype for Business. In a hosted Skype environment you have minimal capital expenditure in initial setup. The only infrastructure needed is a fast, stable internet connection, and the only hardware to be purchased is telephone handsets and/ or headsets. Most of the configuration and customization is done through the hosting company, and depending on the hosting partner and what you pay for, determines the level of sophistication your Skype for Business platform can achieve.
Most hosting partners offer a multi-tenant environment where you are sharing the platform with other customers. This is the most common setup as well as most cost effective. You have higher levels of customization than Skype for Business Online through Microsoft, but many customizations aren’t offered due to multiple customers sharing the same system. Hosting companies also offer dedicated environments where you have your own Skype for Business server, but they manage and maintain and upgrade it for you. This is generally the most expensive option available but it gives you maximum control without the headache of creating your own environment and maintaining it.
Another big advantage the 3rd party hosting model has over Microsoft’s offering is support. Some have US based support that is far more responsive and knowledgeable and quicker to resolving issues and troubleshooting than calling Microsoft. For most medium to large businesses hosted Skype for Business in a multi-tenant environment is the best solution.


  • Enterprise features and functions
  • Minimal infrastructure upgrades needed
  • Lowest TCO
  • Greatest variety of options in what you can purchase
  • Low expertise needed for use and maintenance



  • Minimal control over upgrades and customization (Depending on partner and environment)
  • Less Secure than On Premise (Depending on partner and environment)


Best Use Case:

Medium to Large companies who want the most features, for the lowest cost, and no infrastructure
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