# NAS vs Cloud Storage for a Small Business: Cost and Risk Compared

> Compare a NAS with cloud storage such as OneDrive and SharePoint for a small business: what each costs over time, how each fails, and a simple way to decide.

Source: https://www.epifive.com/blog/nas-vs-cloud-storage-small-business · Published 2026-10-25 · EpiFive

## Key takeaways

- Compare five years of total cost, including drives, power, UPS, offsite backup and administration time, not the purchase price against a monthly subscription.
- Microsoft 365 Business Basic, Standard and Premium each include 1 TB of OneDrive storage per user, so many offices already own cloud storage.
- A NAS protects against a drive failure but not against theft, fire, ransomware or deletion, so it always needs a tested offsite backup.
- Microsoft says OneDrive is for personal work files, and SharePoint is the right place for team and departmental documents.
- Choose the cloud for shared documents and remote access, and a NAS for large local files or unreliable internet, and back up whichever you pick.

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:

```text
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.

1. Use a redundant drive layout so one drive failure does not lose data, and keep a spare drive.
2. Put it on a UPS and set it to shut down cleanly. See [UPS sizing for office network gear](https://www.epifive.com/blog/ups-sizing-office-network-gear).
3. Keep DSM and packages updated and do not expose the management interface to the internet.
4. 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](https://www.epifive.com/blog/synology-nas-offsite-backup-hyper-backup).
5. 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:

1. Require multifactor authentication for every user.
2. Put team content in SharePoint libraries, not in individual OneDrives.
3. Use known folder redirection so desktops and documents sync. See [OneDrive Known Folder Move with Intune](https://www.epifive.com/blog/onedrive-known-folder-move-intune).
4. Learn the restore tools before you need them: the recycle bin and **Restore OneDrive**.
5. 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

```text
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

## Frequently asked questions

### Is a NAS cheaper than OneDrive or SharePoint?

It depends on how long you keep it and what you count. A NAS has an upfront cost for the unit and drives, plus power, a UPS, an offsite backup and your time. Microsoft 365 plans include OneDrive storage of 1 TB per user, so for many offices the storage is already paid for. Add up five years of each rather than comparing a purchase price with a monthly fee.

### Does a NAS replace the need for backup?

No. A NAS with mirrored drives survives a single drive failure but not theft, fire, ransomware or accidental deletion. You still need a separate offsite copy, for example Hyper Backup from a Synology NAS to a cloud destination such as Microsoft Azure.

### Is cloud storage a backup?

Not by itself. OneDrive and SharePoint keep deleted files in a recycle bin and OneDrive can restore to any point in the last 30 days, which covers many mistakes and ransomware events. Microsoft's service description, however, says OneDrive is for an individual's personal work files and that storing system backups or departmental data there is not supported.

### Can I use both a NAS and cloud storage?

Yes, and many small offices do. A common pattern is cloud storage for day-to-day documents and a NAS for large local files, with the NAS backed up offsite. The cost is complexity, so only do it if each system has a clear job.