Evaluating Options for Exchange Server in 2025

Exchange Server Subscription Edition Comes into View

With the end of support for Exchange Server 2016 and 2019 rapidly approaching on October 14, 2025, organizations that rely on these versions must make a strategic decision for their messaging infrastructure, with Exchange Server Subscription Edition (SE) defined as the destination for Exchange on-premises mailboxes.

This article gives practical guidance for the available options. Equipped with this knowledge, you should be able to make a better decision for your organization.

Our Example Organization: A Complex Long-Term Hybrid Org

To provide some real-world context, let’s consider a multinational engineering firm – we’ll call them Practical 365 Engineering Inc. This organization works with both government and private sector clients worldwide, meaning they must comply with a complex web of regulations and contractual requirements. Some clients, particularly in government sectors, mandate strict data residency, requiring that email data be stored within specific geographic locations.

As a result, Practical 365 Engineering Inc. makes the strategic decision to maintain a hybrid environment: Microsoft 365 and Exchange Online for users without data residency restrictions, and on-premises Exchange Server for those who do.

Their current on-premises deployment includes multiple Database Availability Groups (DAGs) distributed across several regions (North America, EMEA – including the UK, Middle East, and APAC) to ensure high availability and disaster recovery. Each region maintains a hybrid connection to Microsoft 365 for features like free/busy sharing.

The organization relies on third-party solutions for backup (a “WORM”-style backup solution) and enterprise archiving (using Enterprise Vault for on-premises users). Their infrastructure is built on modern hyperconverged platforms with ample compute and fast SSD storage, providing headroom for growth and facilitating ongoing upgrades. They are currently in the process of migrating from Exchange Server 2016 to 2019, deploying new DAGs region by region on their existing compute and storage platform.

Exchange Server SE: What’s Changing?

The core of Exchange Server SE is a rebranded and re-licensed version of Exchange Server 2019 CU15. If you’re already on Exchange 2019, the upgrade process will be very familiar. The most significant change is the shift to a subscription-only model. Perpetual licenses are gone. You’ll pay an annual subscription, either directly or through Software Assurance on existing licenses, to maintain access to updates and support. Think of it as “evergreen” Exchange, like Exchange Online in Microsoft 365 (but without the features enabled by the Microsoft 365 ecosystem).

Importantly, the initial release of Exchange Server SE is more about the change in licensing and support rather than introducing new features. Microsoft’s focus is to move on-premises customers onto the subscription model. Expect more significant feature additions in subsequent Cumulative Updates (CUs), starting with Exchange Server SE CU1.

Two Upgrade Paths

The best upgrade path depends on your current Exchange Server version:

1. The Simplified Path (In-Place Upgrade from Exchange Server 2019 CU14/CU15):

If you run Exchange Server 2019 CU14 or CU15, you are in a good position because the upgrade is a relatively simple process.

• Process: An in-place upgrade is very similar to installing a Cumulative Update. The existing Exchange binaries are replaced, but no mailbox moves or new server builds are required.
• Advantages: This is the fastest, simplest, and least disruptive upgrade path.
• Action: If you’re on Exchange 2019 CU13 or earlier, update to CU15 immediately. This is a critical prerequisite for a smooth transition to SE.

2. The Legacy Upgrade Path (Exchange 2016 and earlier):

If you still use Exchange 2016 (or earlier versions), you must perform a “legacy” upgrade. This is the traditional approach, and it is more complicated:

• Step 1: Plan: Determine your server roles, DAG structure, and capacity requirements for the new environment, considering future growth and scalability.
• Step 2: Build New Servers: Install Windows Server 2022 (or 2025, when supported) and Exchange Server 2019 CU15. Do not introduce these new servers into your existing Exchange 2016 (or earlier) environment until you’ve completed step 4.
• Step 3: Prepare Active Directory: Follow Microsoft’s guidance for preparing Active Directory and domains for Exchange Server 2019.
• Step 4: Remove All Legacy Exchange 2013 Servers: This is crucial. Exchange Server 2019 CU15 and Exchange Server SE will not install if any Exchange 2013 servers are detected in the environment. For Exchange 2016, see the coexistence table below. Follow best practices for decommissioning Exchange servers, including proper removal from Active Directory. See our guide on decommissioning Exchange 2013 servers for an example of the steps involved.
• Step 5: Introduce New Servers: Once all older Exchange versions are gone, you can introduce the new Exchange 2019 servers.
• Step 6: Migrate Mailboxes: Use standard Exchange migration tools or coordinate using PowerShell for larger, more complex migrations.
• Step 7: Update Configuration: Update Autodiscover, DNS records, and your hybrid configuration (if applicable).

Important: You must upgrade to Exchange 2019 CU15 before moving to Exchange Server SE. It’s a two-stage process for Exchange 2016 users.

For our example organization, Practical 365 Engineering Inc, we’ll be looking at a mixture of both options by default – an in-place upgrade for the Exchange servers running Exchange Server 2019, preceded by completing the legacy upgrades first.

Additional Considerations for Legacy Upgrades

Because a legacy upgrade involves building a new environment, it’s an opportunity to optimize your infrastructure:

• Long-Term Capacity Planning: Since in-place upgrades will become the norm, plan your Exchange 2019 infrastructure (server sizing, storage, etc.) with long-term growth in mind. Consider scalable on-premises solutions like hyperconverged platforms and flash storage.
• Operating System Choice: When building new servers, use the newest supported Windows Server version (currently Windows Server 2022, with Windows Server 2025 support coming). This maximizes the support lifecycle of your infrastructure. Crucially, ensure your internal teams have validated and approved the newer OS version, including any necessary security and monitoring tools.
• Infrastructure as Code: If your operations team can handle the workload and will be deploying Exchange Servers on a regular basis as part of the natural lifecycle of your servers and environment, this could be a good opportunity to move to an Infrastructure-as-Code approach.

If you are already on Exchange Server 2019 today, then this raises an important question: should you redesign your existing environment now to factor in these requirements? For our example organization, part way through a legacy upgrade, it would be an important question, and in a larger organization where significant planning & expenditure has already occurred, it will make sense to continue with current plans, and in parallel begin planning an in-place upgrade to Exchange Server SE with minimal changes to the existing environment (taking the Simplified Path). Then, consider the additional optimizations if they provide operational benefits.

Exchange Server Coexistence

Table 1 shows which versions of Exchange Server can coexist in the same organization. Once Exchange Server SE CU1 is released, it will not allow any coexistence with previous versions. All servers in the organization must run on Exchange SE to install Exchange Server SE CU1 or later:

Licensing Implications

Exchange Server SE uses a subscription model. You have two options:

• Microsoft 365/Office 365 Subscriptions: If your users already have licenses that include Exchange Online (e.g., E3, E5), these licenses cover on-premises Exchange Server SE usage.
• Server Licenses and CALs + Software Assurance: If you do not have cloud subscription licenses, you must purchase Exchange Server SE licenses for each server and CALs for each user or device and maintain active Software Assurance. Software Assurance is required to receive updates and support.

Unified Messaging (UM) Alternatives

Exchange Server SE does not include traditional Unified Messaging. Organizations relying on UM must either:

• Migrate to Cloud Voicemail: Microsoft’s preferred solution, integrated with Teams.
• Third-Party Solutions: Cisco and others offer solutions that may integrate with Exchange Server SE. Thoroughly research and test compatibility.

Don’t Forget Your Ecosystem

Ensure the systems associated with Exchange Server are compatible:

• Backup and Recovery: Is your current solution (Veeam, Quest, etc.) ready for Exchange Server 2019 CU15, and do they have a roadmap for Exchange Server SE support?
• Enterprise Archiving: If you use something like Veritas Enterprise Vault, double-check compatibility.
• Email Security: Ensure your email security gateways or appliances are up-to-date and support the latest Exchange versions.
• Legacy Tools: Make sure you are not running out of support tools for older versions of Exchange.

Your Action Plan

1. Inventory: Use PowerShell to get a complete picture of your current Exchange environment. Microsoft’s HealthChecker.ps1 script can be useful for gathering this information automatically, including build numbers and CU versions.
2. Check Licenses: Verify your current licensing and Software Assurance status. Budget for the subscription model.
3. Assess UM Needs: Determine your path for voicemail if you are moving from Exchange Server 2016 and use Unified Messaging today: Cloud Voicemail or a third-party solution.
4. Contact Vendors: Confirm compatibility of your existing solutions and their plans for Exchange Server SE.
5. Plan and Test: Create a detailed migration plan and test it thoroughly in a lab environment.
6. Upgrade to Exchange 2019 CU15: This prepares you for moving to Exchange Server Subscription Edition.
7. Communicate: Keep your IT team, stakeholders, and users informed.

The move to Exchange Server Subscription Edition is a significant change for on-premises Exchange deployments. It’s a shift towards a subscription model that emphasizes continuous updates and closer alignment with Microsoft 365.

While the initial SE release focuses on licensing and support, future updates will introduce new features.

Proactive planning, a thorough assessment of your environment, and a well-executed upgrade strategy are essential for a smooth transition. Don’t wait until the October 2025 end-of-support deadline – start preparing today.