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Microsoft Dynamics 365: Cloud vs On-Premise

Microsoft Dynamics 365 for Finance and Operations delivers capabilities and features to help business enhance their processes and operations. Since this business solution is offered through three (3) different deployment possibilities, Cloud, On-Premise & Hybrid (we will look into the Hybrid approach on our next blog), one of the most common questions for business leaders is why they should choose the cloud option instead of on-premise, and vice versa.

I would like to share with you some similarities and differences between both Cloud and On-Premise Microsoft Dynamics 365 Finance and Operations deployments to help you make the best decision for your business.

Please note this decision should be taken accordance to each company’s core requirements and regulatory statues in certain countries, for example Russia requires servers to be in country and this might influence your deployment decision.

Microsoft Dynamics 365 Finance and Operations cloud-based

Cloud deployment provides a solution that is easy to scale in accordance with your company needs. As data centers are fully managed by Microsoft, the costs of IT hardware and infrastructure tend to be lower than on-premise.

Cloud deployments combine availability, disaster recovery, sandbox environments, intelligence capabilities, infrastructure and database services in one environment. These characteristics allow you access to critical data to enhance decision-making processes.

Why Microsoft Dynamics 365 Finance and Operations cloud-based is the right choice for my business? Particularly, cloud deployment is the right investment if you require a business solution that provides value, a broad range of functionalities, a seamless integration with other Microsoft cloud-based solutions, mobility, data security, powerful business insights and a considerable reduction of costs related with hardware, installation, maintenance and implementation services.

Microsoft Dynamics 365 Finance and Operations on-premise

With an on-premise deployment your business data and processes are disconnected from the cloud. They are stored and run locally in your own data center. This approach requires a data centers and/or server investment. Internet connectivity is required for system management and updates which are enabled through Microsoft Dynamics Lifecycle Services (LCS).

If you choose Microsoft Dynamics Finance and Operations on-premise you will have access to a similar user-interface and application functionality as cloud deployment. Nevertheless, there are some differences you must consider:

  • Can only be 1 version behind Microsoft Dynamics 365 Finance and Operations cloud version. Microsoft’s goal is to eliminate support for multiple versions of Dynamics 365 Finance and Operations. In order to accomplish this, they are requiring on-premise clients to maintain parity with the cloud otherwise the solution may not be supported. This message of course may change down the line based on client feedback.
  • Data high-availability configuration and disaster recovery solutions are directly managed by you or a 3rd.
  • Dynamics 365 Finance & Operations recommends at a minimum 3 environments. Development(DEV), User Acceptance Testing (UAT), and Production (PROD). This requires a robust environment and associated infrastructure and maintenance costs.
  • Your company must manage the infrastructure, including scheduling operating system updates.
  • SQL Data base maintenance must be done internally.

Considering this, the additional costs to deploy and manage these capabilities might lead to higher expenses.  On the other hand, there are several features that are not available in on-premise deployment.

Why Microsoft Dynamics 365 Finance and Operations on premise is the right choice for my business? This scenario, where no business data will be stored in the cloud, is the right investment if you are not ready to run your business on the cloud because of regulations, geographical conditions or recent hardware investments.

Which one is the best for your company?

Choosing the right deployment for Microsoft Dynamics 365 depends on your industry, needs and expectations.

This decision cannot be taken lightly. Thus, I recommend you contact an expert team that will evaluate each deployment to choose the right option for your company.

Fill out our form and we would gladly provide a free diagnostic  and an accurate pricing about Microsoft Dynamics 365 Finance & Operations deployments.

Cloud vs on-premise

If you are not sure which is the best deployment option for your business, I recommend consider the following critical factors to help you make the right decision. In the following table you will find the core benefits of each deployment for your business:

Microsoft Dynamics 365  

Additional considerations

At this point it is important to consider that on-premise deployment doesn’t support all Microsoft Dynamics 365 Finance and Operations features. For example, on-premise scenario doesn’t include cost accounting content pack for Power BI, analytical workspaces, Purchase spend analysis with Power BI reports. Additionally Microsoft Dynamics 365 for Retail and Talent are unavailable.

In the following table, you will find a comparison of cloud and on-premises features:

Microsoft Dynamics 365 Finance and Operations help you meet compliance requirements in different industries, such as:

Microsoft Dynamics 365

Which is the right choice for your enterprise?

There are several factors to consider when choosing how deploy Microsoft Dynamics 365 Finance and Operations. If you’re still not sure which option is your best, let us help you. Contact us and one of our experts will help you to evaluate each deployment to take the right decision for your company.

Tatiana Calero

Tatiana Calero

Content Supervisor at Pangea Group
Tatiana Calero is the Content Supervisor at Pangea Group. She is focused on delivering a clear message about Microsoft Dynamics 365 business management solutions. Tatiana has an abundant experience in the B2B Market, writing articles to companies across a wide spectrum.
Tatiana Calero

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