AI & automation
n8n or Power Automate – which tool for which job?
n8n or Power Automate? Strengths, limits, licensing, data location and AI compared, with a decision guide for SMEs that use Microsoft 365 and other software.
Two tools, two approaches
Power Automate
Power Automate is Microsoft's automation service within the Power Platform. A cloud flow runs in the Microsoft cloud and starts on an event, a schedule or a click. Links to other services are connectors (standard or premium). Desktop flows operate Windows applications through mouse and keyboard, as a person would; this is called robotic process automation (RPA).
Its strength is Microsoft 365 integration: sign-in through Microsoft Entra ID and approvals in Outlook or Teams. The limits appear with other systems: premium connectors such as HTTP and SQL Server, custom connectors and the on-premises data gateway for systems on your own servers are not included with Microsoft 365.
n8n
n8n is a workflow automation platform in which you assemble workflows from building blocks called nodes. Ready-made nodes cover many services, including Outlook, Teams and SharePoint, and the HTTP Request node can call almost any web service through its programming interface (REST API).
n8n is strong at integrating systems, transforming data and adding AI steps. The flip side: self-hosting makes updates, backups, monitoring and security your job, and n8n recommends it only to experienced users.
Licensing – what is included and what is not
Power Automate
Many Microsoft 365 licences allow cloud flows with standard connectors, such as Outlook, Teams, SharePoint and Excel Online, with a lower daily action limit than Premium. They do not include premium or custom connectors, the on-premises data gateway, RPA or AI Builder. For those, you need:
- Power Automate Premium per user: premium and custom connectors, the data gateway, attended RPA at the user's workstation and process mining.
- Power Automate Process: licenses one cloud flow regardless of user licences, or one machine for unattended RPA.
- Power Automate Hosted Process: RPA on machines run by Microsoft.
n8n
The Community Edition is free and self-hosted under the Sustainable Use License: you may use and modify n8n for your own internal business purposes, and a service provider may set it up and support it for you. You may not, for example, offer n8n as a service in which your customers build their own workflows.
n8n Cloud (Starter, Pro and Enterprise plans) runs n8n for you; n8n says the data is stored in Frankfurt. For self-hosting, only the paid Business and Enterprise editions add single sign-on (SSO) with your company account, Git version control and separate environments; external secret stores such as Azure Key Vault and log streaming to your own systems are Enterprise only. Edition features change over time, so check the edition comparison.
Where is the data processed?
In Power Automate, every flow belongs to an environment, a container with its own location and permissions. Switzerland is a Power Platform data centre region, and the default environment sits in your Microsoft 365 tenant's home location. Where Microsoft has introduced macro regions, new environments get a geography such as "EU and EFTA", with Microsoft choosing the data centre; pinning an environment to Switzerland then requires Advanced Data Residency for all Microsoft 365 licences. For Swiss environments, Microsoft says generative AI features process data within the EU Data Boundary if you allow data movement across regions.
With n8n, you choose the location, for example your own Azure subscription in Switzerland North (Zurich). Workflows, credentials and execution data stay there, provided the database and storage do too.
Either way, each connected service processes data where it runs, including any AI model. With Azure OpenAI, the deployment type decides whether processing is global, within a data zone or within a specific geography; see AI with your data in Switzerland. Under the revised Federal Act on Data Protection (FADP), check your processor contracts and any disclosure of personal data abroad.
AI in your workflows
In n8n, the AI Agent node connects a language model with tools, meaning actions such as a search or a list entry, and the agent decides which to use. You choose the model, for example Azure OpenAI (called "Microsoft Foundry Chat Model" in n8n) or a model you run yourself via Ollama. A person can be required to approve certain tool calls first, for example in Teams or Outlook.
In Power Automate, Copilot turns a plain-language description into a draft flow; Microsoft notes it is optimised for English. AI steps inside a flow use AI Builder, for example for invoices, receipts, text recognition or prompts (your own instructions to a language model). Any flow with an AI Builder action is a premium flow, and usage is moving to Copilot Credits: since 1 November 2025, new customers cannot buy AI Builder capacity, and from 1 November 2026, new or renewed licences no longer include AI Builder credits.
Governance – who may do what?
In the Power Platform, the default environment is open to all licensed users and, according to Microsoft, not meant for production, so give business-critical flows their own environment. Data policies, also called DLP (data loss prevention) policies, sort connectors into Business, Non-Business and Blocked, and connectors from different groups cannot be combined in one flow.
In n8n, roles and projects control who sees which workflows and credentials; the Community Edition has neither projects nor sharing. Credentials are stored encrypted and cannot be decrypted from a backup without the encryption key, so back up the key with the database.
Decision guide
| Criterion | Power Automate | n8n |
|---|---|---|
| Operation | Microsoft cloud, no infrastructure of your own | Self-hosted, such as on Azure in Switzerland, or n8n Cloud |
| Included with Microsoft 365 | Cloud flows with standard connectors | No; Community Edition free to self-host |
| Other systems, your own interfaces | Premium or custom connectors with a premium licence | HTTP Request node in every edition |
| Old Windows applications | Desktop flows (RPA) | No desktop automation |
| AI steps | AI Builder (premium), Copilot Credits | AI Agent node with a model of your choice |
| Governance | Environments and data policies | Roles and projects; SSO and Git from Business |
| Billing | Per user, per flow or per machine | Paid plans by executions |
Power Automate fits when:
- the process runs mainly in Outlook, Teams, SharePoint or Excel
- standard connectors are enough
- an old Windows application has to be operated via RPA
n8n fits when:
- industry software, web shops or your own interfaces are involved
- AI steps need a free choice of model
- you want to decide where your workflows run
Often the answer is both: a property management firm, for example, uses n8n to read invoices from a mailbox, extract the supplier, amount and due date with AI and write them to a SharePoint list; a Power Automate flow with standard connectors then starts the approval in Teams.
How to get started
- List three to five recurring processes with their trigger, systems, data, volume and approvers.
- Check your existing licences and the connectors each process needs.
- Clarify where data may be processed and check your environments' regions.
- Assign each process to a tool; for n8n, choose hosting and edition.
- Pilot one process with a responsible owner and error alerts, and compare effort and corrections before and after.
- Set the rules before you expand: environments and data policies, or roles, backups and version control.
We help you sort your processes and set up the right tool – see AI & automation. Have a process in mind? Get in touch. For a practical example, see AI for fiduciary and accounting firms.