For most small businesses, cloud storage (OneDrive and SharePoint through Microsoft 365) is the lower-effort choice for everyday documents, because the storage is usually already included in the licence and the provider runs the hardware. A NAS makes sense when you have large local files, such as video, CAD or imaging, an unreliable internet connection, or a need to keep data on site. Whichever you pick, you still need a separate backup.
This guide is for owners and part-time administrators deciding where the office's files should live. By the end you will have a five-year cost comparison method, a view of how each option fails, and a rule for choosing.
What each option is
A NAS (network-attached storage) is a small server that holds drives and shares them over your network. Synology is a common brand. You buy the unit and drives, set up shares, users and permissions, keep it updated, and back it up.
Cloud storage here means OneDrive for individual files and SharePoint for team libraries, both part of Microsoft 365. Microsoft runs the infrastructure; you manage licences, sharing and policies.
Microsoft's OneDrive service description lists OneDrive storage per user:
| Plan | OneDrive storage per user |
|---|---|
| Microsoft 365 Business Basic | 1 TB |
| Microsoft 365 Business Standard | 1 TB |
| Microsoft 365 Business Premium | 1 TB |
| Microsoft 365 E3 | 1 TB, can be increased to 5 TB |
| Microsoft 365 F3 | 2 GB |
Pooled storage limits still apply at the tenant level.
Step 1: Work out what you are storing
Before comparing prices, list the data in three groups:
| Group | Examples | Natural home |
|---|---|---|
| Personal working files | Each person's documents | OneDrive |
| Shared team files | Client folders, templates, finance | SharePoint document libraries |
| Large or local-only data | Video, CAD, imaging, database dumps | NAS, or cloud object storage |
Microsoft's service description is direct about the boundaries. OneDrive storage is provisioned per user and designed for an individual's personal work files. Storing other data, including system backups and departmental or organisational data, is not supported, and neither is assigning a per-user licence to a bot, department or other non-human entity. It names SharePoint as the right place for content management and collaboration across a team or organisation. So a plan to "put the shared drive in someone's OneDrive" is outside what Microsoft supports.
Step 2: Compare five years of cost
Do the comparison as a five-year total, because a NAS has most of its cost on day one and cloud has it spread out. The headings below are cost lines to fill in with your own quotes. Prices change, so this article does not quote them; use your supplier's current prices.
| Cost line | NAS | Cloud (Microsoft 365) |
|---|---|---|
| Hardware | Unit and drives (plus spares) | None |
| Licences | None for the NAS itself | Per user per month, often already paid for email and Office |
| Power and cooling | Continuous, small | None |
| UPS | Needed; battery every three to five years | None |
| Offsite backup | Required: cloud backup subscription or second device | Optional extra third-party backup |
| Internet bandwidth | Needed for offsite backup and remote access | Needed for everything |
| Remote access | VPN or vendor relay to configure and secure | Built in |
| Administration time | Updates, drive replacement, permissions | Licences, sharing and retention settings |
| Replacement | Roughly every five years or at drive failure | None |
A simple formula:
NAS five-year cost =
hardware + replacement drives + (power x 5) + UPS and batteries
+ (offsite backup x 5) + (admin hours x hourly cost)
Cloud five-year cost =
extra licences or storage beyond what you already pay for
+ optional third-party backup x 5 + (admin hours x hourly cost)The pitfall is counting the NAS purchase price against a monthly fee while ignoring the offsite backup, the UPS, and your own time. The opposite pitfall is counting the full Microsoft 365 licence against the NAS when you were going to buy it for email anyway.
Step 3: Compare how each one fails
Cost is only half of the decision. The other half is what happens when something goes wrong.
| Failure | NAS | Cloud |
|---|---|---|
| Single drive fails | Survives with a redundant drive layout; you replace the drive | Not your problem |
| Office power cut | Needs a UPS for clean shutdown | No effect on the data |
| Theft, fire or flood | Data lost unless an offsite copy exists | No effect on the data |
| Ransomware on a PC | Shares can be encrypted if mapped | Sync can replicate it, but OneDrive restore can roll back |
| Accidental deletion | Only if you configured snapshots or versions | Recycle bin and versioning |
| Internet outage | Local access continues | Synced files stay available on the device; web access stops |
| Account compromise | Local credentials | Needs MFA and conditional access |
| Vendor or product change | You manage firmware and end of life | Microsoft manages service changes |
OneDrive for work or school accounts can restore the whole OneDrive to any point in the last 30 days, from Settings > Restore OneDrive on the OneDrive website. Ransomware detection can suggest a restore date. Files permanently deleted from the recycle bin cannot be recovered through that restore. For a small team this recovery tooling is often better than what a home-built NAS offers by default.
Step 4: Make the NAS safe if you choose one
A NAS is a server and needs the discipline of one.
- Use a redundant drive layout so one drive failure does not lose data, and keep a spare drive.
- Put it on a UPS and set it to shut down cleanly. See UPS sizing for office network gear.
- Keep DSM and packages updated and do not expose the management interface to the internet.
- Back it up offsite. Synology's Hyper Backup supports Microsoft Azure and S3-compatible storage as cloud destinations for folder and package backups, with client-side AES-256 encryption and version rotation. The steps are in Synology NAS offsite backup with Hyper Backup.
- Test a restore every quarter.
Redundant drives are not a backup. They protect against a drive failing, not against deletion, ransomware, fire or theft.
Step 5: Make cloud storage safe if you choose it
Cloud storage also needs configuration:
- Require multifactor authentication for every user.
- Put team content in SharePoint libraries, not in individual OneDrives.
- Use known folder redirection so desktops and documents sync. See OneDrive Known Folder Move with Intune.
- Learn the restore tools before you need them: the recycle bin and Restore OneDrive.
- Decide whether the built-in recovery window is enough for your retention needs. If you must keep data for longer, add a retention policy or a third-party backup.
A decision rule
Mostly Office documents, several people, some remote work?
-> Cloud (SharePoint for shared, OneDrive for personal).
Large local files, or poor or metered internet?
-> NAS, plus offsite backup.
Both?
-> Cloud for documents, NAS for large files, and back up the NAS.
No one to maintain a server?
-> Cloud.Troubleshooting the decision
| Concern | Response |
|---|---|
| "The NAS is a one-off cost." | Add power, UPS batteries, offsite backup and replacement in five years |
| "Cloud is a monthly cost forever." | Check which of it you already pay for; OneDrive 1 TB per user is in the Business plans |
| "Our files are too big to sync." | Keep those on a NAS or in cloud object storage, and sync the rest |
| "We need to keep data on site." | A NAS with an encrypted offsite backup is the usual answer; check your regulatory obligations |
| "What if Microsoft loses our files?" | Keep an independent backup of anything critical |
Closing checklist
- List the data and sort it into personal, shared and large local groups.
- Fill in the five-year cost table with real quotes, including time.
- Choose a home for each group, using SharePoint for team data.
- Whichever you choose, set up and test an offsite or independent backup.
- Record the restore steps and who is responsible.
References
- OneDrive service description: https://learn.microsoft.com/en-us/office365/servicedescriptions/onedrive-for-business-service-description
- Restore your OneDrive: https://support.microsoft.com/en-us/office/restore-your-onedrive-fa231298-759d-41cf-bcd0-25ac53eb8a15
- Hyper Backup specification, DSM 7.4: https://www.synology.com/en-global/dsm/7.4/software_spec/hyper_backup
- Access tiers for blob data (Azure): https://learn.microsoft.com/en-us/azure/storage/blobs/access-tiers-overview
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