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Cloud vs On-Premise Dynamics 365: What’s Best For Your Organisation?

Maintaining employees’ productivity has always been a challenge for organisations, and they are constantly working to find solutions that can help them scale their working capacity. But due to Covid-19, organisations have entered a new debate of cloud vs on-premise Dynamics 365. 

Now, it’s essential to have a remote workplace, but some organisations still struggle to decide which Dynamics 365 instance is best for them. The world has started preferring cloud models as the global IT industry has moved to a hybrid or fully remote workplace. 

What Is On-Premise Dynamics 365

Even when Microsoft focuses on the cloud implementation of Dynamics 365, you can still opt for the on-premise version and install the apps on your dedicated servers. If your business needs require you to control your data, on-premise Dynamics 365 is perfect for you. However, your organisation will have to purchase software licences from Microsoft first. 

You also need to purchase the necessary hardware to build your server and protect it from vulnerabilities. Therefore, as an IT director, you will have to approve the investment of significant resources to attain the full functionality of Dynamics 365 in your organisation. 

On-premise infrastructure gives you the authority to configure the applications to meet your specific regulatory requirements. However, your IT department will become responsible for the server’s maintenance and management to avoid downtime. You need to plan recovery procedures, maintain testing environments and schedule regular system updates. 

Cloud Vs On-Premise Dynamics 365

Here is a table to help your organisation conclude your cloud vs on-premise Dynamics 365 debate.

CapabilitiesOn-Premise Dynamics 365Cloud Dynamics 365
CostHigh initial capital investmentFlexible monthly payments
Data StorageComplete ownership and control over company dataData stored at a secure Microsoft Data Centre
Data AccessFull accessAccess through APIs
Storage SpaceAs per server configuration5 GB
AdministrationRequires internal maintenance, IT department might have to ask the vendor for assistanceMinimal need for internal administration as Microsoft manages the system infrastructure on the organisation’s behalf
DeploymentSetting up a server to host Dynamics 365 is time-consuming and difficultImmediate deployment as there is no need to set up the server. 
Hardware needsExecution takes place with existing hardware, or new hardware is inducted to meet requirementsNo additional hardware is required
Expected maintenance expensesRegular maintenance is expensiveNo maintenance expenses
Server up-timeDepends on the company’s internet connectionMicrosoft ensures 99.9% up-time through SLAs
System UpdatesThe IT team needs to schedule updates, leading to expected down-time.Microsoft rolls out updates consistently
Power BINot available for On-premise Dynamics 365Integrated with Cloud Dynamics 365


Why Choose Cloud Dynamics 365

Dynamics 365 can empower and scale productivity within organisations through Office 365 and other meaningful real-time business insights. However, the concept of a remote workplace has significantly expanded in the lockdown timeframe, and organisations require an infrastructure that’s always available. 

Therefore, if you come across the cloud vs on-premise Dynamics 365 debate, you should opt for the cloud infrastructure due to the following reasons: 

  1. Enhanced Security
    Microsoft provides the highest level of data security for their cloud than most organisations can afford, which is included in their service agreement. You can define the number of users who access your data to ensure that an unauthorised user does not access it. 
  2. Zero Hassle
    Microsoft takes care of all upgrades, maintenance, and system administration needs of the cloud. Therefore, you will not have to commit significant resources to your IT department for regular maintenance. 
  3. Low Cost Involved
    Since you don’t have to purchase and set up a server infrastructure, you will save significant capital expenditure. Cloud Dynamics 365 offers monthly subscription plans, which allow organisations to manage their cash flow and reduce their costs. 
  4. Flexible Scaling
    With cloud Dynamics 365, you can add or remove users to allow your organisation to meet its changing business demands. If you come across short projects, you can immediately induct new users and only pay for the duration of your project. 
  5. Enjoy Higher Cost Efficiencies
    Since Microsoft only charges you for the users actively using your cloud, you don’t have to purchase product licences upfront. Therefore, with Cloud Dynamics 365, you only have to pay for the resources consumed by your business and not for the help you might need in the future. 


In the debate on cloud vs on-premise Dynamics 365, organisations can significantly benefit from the cloud infrastructure due to its flexibility and cost-effective nature. Microsoft has included numerous SLAs that ensure the security and integrity of your data stored on its servers. There is no need to worry about glitches, bugs or cyberattacks with Dynamics 365.

Not sure how to incorporate Dynamics 365 within your organisation? Get in touch with our Microsoft Certified Experts to start your journey today.

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