Many organizations that once shifted email and productivity workloads to Microsoft 365 (Office 365) are now “repatriating” them to on-premise email servers. This trend is highlighted by several key drivers – financial, technical, compliance and control. In practice, businesses cite soaring cloud costs, regulatory/data-sovereignty concerns, performance/reliability issues and a desire for tighter control as motivating factors. In this post, we summarize these reasons and note key examples when possible.
- Financial/Cost Pressures: Cloud email can become unexpectedly expensive. Enterprises pay per-user licenses plus usage fees for storage, bandwidth and egress, which accumulate as data grows. For example, Microsoft 365 Business Basic costs $6.00 per user, per month. For 100 users, this adds up to $7,200 per year. MDaemon, on the other hand, costs only $1,106 for 100 users, for one year (including MDaemon AntiVirus and ActiveSync). This represents over $6,000 in savings, and even when you factor in hardware costs for an on-premise mail server, the cost savings for moving email back in-house are evident.
- Legal/Compliance and Data Sovereignty: Highly regulated industries and governments worry about where data resides and who can access it. Recent regulatory findings have shaken confidence in Microsoft’s multi-tenant cloud for sensitive data. In March 2024 the EU’s Data Protection Supervisor ruled the European Commission’s use of Microsoft 365 “infringed” EU data-protection rules (GDPR for EU institutions), citing vague contracts and uncontrolled data transfers outside the EU. The EDPS ordered the Commission to stop sending EU citizen data to Microsoft’s non‑EU servers.
Likewise, UK police found that Microsoft could not guarantee UK-only hosting for M365 mail, contravening UK data-sovereignty rules. The Scottish Police Authority revealed that Microsoft “cannot guarantee data sovereignty for M365”, problematic under law enforcement privacy laws.
- Technical and Reliability Issues: Cloud email occasionally suffers outages, misconfigurations, or performance bottlenecks that undermine business needs. So far this year, multiple Microsoft 365 outages have been reported. Here are a few key examples:
- January 13, 2025 – Multi-Factor Authentication (MFA) Outage
- March 1, 2025 – Global Outlook and Microsoft 365 Outage
- March 3, 2025 – Microsoft 365 outage due to software bugs introduced in an update
- Strategic Control and Policy: Beyond cost and compliance, moving email back in-house can be a strategic choice. On-premises systems allow an IT team to “regain control” of infrastructure, customizing features, upgrade timing and security policies without waiting on a vendor roadmap. Organizations also cite risk of vendor lock-in as a concern. A recent article notes that many firms are disillusioned by the rush to move to the cloud and are now repatriating to tailor IT to their specific needs.
Examples of Recent Migrations
- GEICO (Insurance): U.S. insurer GEICO undertook a large-scale cloud “repatriation” of data and apps. According to Rebecca Weekly, GEICO’s VP of Infrastructure, a decade into their Azure strategy the company saw cloud costs and outages spike. “Ten years into [the cloud] journey… their bills went up 2.5 times and their reliability challenges went up quite a lot.”
- Dropbox: Though not an email service, Dropbox is a high-profile case of an enterprise moving off the public cloud to save money. Dropbox migrated around 90% of roughly 600 PB of customer data from AWS into its own data centers. The result: a 15% reduction in planned IPO expenditures, shaving $74.6 million from operating expenses over two years. Its AWS bills dropped by $92.5 million in one year. Dropbox’s CTO bluntly noted that using a public cloud means “you’re paying more for that infrastructure than its lowest possible cost.”
- EU and UK Public Sector: Regulatory bodies are reconsidering cloud email. After the EDPS ruling (March 2024) that Microsoft 365 usage by the EU Commission was non‑compliant, EU agencies have had to audit or suspend M365 deployments. In the UK, the Scottish Police Authority explicitly noted Microsoft’s inability to meet UK-only data rules.
Key Takeaways
- Cost vs. Benefit: Lower predictable costs are often the biggest lure of on-premise email systems. Analyses note that avoiding variable cloud fees and egress charges can yield long-term savings for stable workloads.
- Data Governance: Firms in heavily regulated sectors (finance, government, healthcare) cite sovereignty rules and compliance audits as a top reason to leave the public cloud. Being able to prove exactly where data resides (e.g. inside national borders) is a common requirement.
- Control and Customization: On-premise systems give internal IT more control over security and feature rollouts. Repatriation can be seen as a way to “regain control” and tailor infrastructure to the company’s needs. This can include using specialized hardware, enforcing internal patch schedules, or integrating legacy on‑prem applications more easily.
- Reliability and Performance: Persistent cloud outages or performance hits (especially over slow links or for large mail archives) can make on-premise more attractive.
So, the bottom line is that many businesses are moving email back on-premises. Key decision drivers include high ongoing cloud costs (especially for storage/egress), strict compliance or data-residency rules, and a desire for greater control or stability. As one cloud expert summarizes, organizations are rethinking the “siren call” of always-on-the-cloud – instead opting for hybrid or fully on-prem setups where it makes strategic sense. Email platforms like MDaemon Email Server are among the options being considered for organizations seeking cost-effective, secure, and customizable alternatives to cloud platforms like Microsoft 365.
How to migrate to MDaemon from Microsoft 365 and other mail servers
If you’re currently using Microsoft Exchange Server, Microsoft 365, or any other mail server, MDaemon includes tools to help you migrate from other email services.
MDMigrator can be used to migrate users, email, calendars, contacts, tasks & notes from Microsoft Exchange Server.
- Knowledge Base Article: How to Migrate to MDaemon using the MDMigrator Application
The ActiveSync Migration Client can be used to migrate from other mail servers such as Kerio, IceWarp, and any other mail server that supports ActiveSync.
- Knowledge Base Article: How to Migrate to MDaemon using the ActiveSync Migration Client
As always, our support staff is here to help if you have questions. You’ll find our support options here: https://mdaemon.com/pages/support-options
