On-Premise vs Cloud: Comparison of two different Dynamics 365 ERP deployment

Many businesses are making the shift towards digitalization. After the changes caused by the global pandemic, it has become a dire need of the day. ERP and CRM (Customer Relationship Management) solutions are becoming increasingly popular among businesses from all industries. Since all businesses have different workflows and privacy requirements, decision makers usually get stuck over the cloud or on-premises choice. It is a necessary decision to make before you can start your Microsoft Dynamics 365 implementation. So, to offer you assistance in making the right call, we have made a detailed comparison between these two. 

If you are confused between Cloud ERP and On-Premise ERP, here is a quick definition to bring you up to speed. 

On-Premise Dynamics 365 ERP

This ERP solution is for businesses looking to install Dynamics 365 to their private servers after purchasing software licenses per the number of professionals intended to be using the ERP solution. Even though the software licenses are a one-time purchase, but the total cost of building an IT infrastructure from scratch is too great. Later, when your business expands and you find yourself in need of additional modules, you may have to pay additional costs and upgrade your IT equipment. This option also requires heavy maintenance.

Cloud Microsoft Dynamics 365 ERP

This ERP deployment is the easiest one out there. All you must do is to subscribe to Microsoft services, pay the subscription fee and you will be able to use the ERP solution. Once you receive your login credentials you or anyone from your organization can access the software from anywhere using any device with an internet connection. All the data is stored in the cloud and you do not even have to install your private servers. When your business grows, all you must do is to upgrade your subscription and unlock additional features. 

Features of an On-Premise Dynamics 365 ERP

Here are the features of an on-premises ERP solution:

Increased Visibility

With on-premises ERP deployment you get to keep all your data on your private servers and you can easily access it whenever you want. You also get notified if someone in your team applies any changes. There are no internet connectivity barriers here. 

Complete control over your data

Businesses generate a great deal of sensitive data that is stored in the ERP systems. With on-premises deployment all the consumer and employee information are secured on your private servers. You have complete control over this data! 

High-end security

Hosting Dynamics 365 ERP on-premises, allows you to have increased security as nothing is connected to the cloud or stored online. You have an enhanced control over all physical accesses and it is not shared with any third-party. 

Easy Customizations 

On-premise offers increased options of customization as it involves the software to be integrated into your business’ IT infrastructure. 

Seamless Connectivity

You do not need to be connected to the internet to use your ERP software. The entire solution is built on your physical IT infrastructure so you get seamless connectivity without going online. 

Save up on costs

Although the upfront costs of on-premises deployment are more than the cloud-based ERP solution, it becomes cost effective for large scale organizations as they get save up on Cloud-s per-user subscription charges. 

No vendor dependency 

Getting an on-premises ERP system allows you to make swift decisions over the control of your ERP solution. You do not have to depend on a third-party to upgrade their systems to you can use the latest technological features. 

Features of Cloud-based Dynamics 365 ERP 

Here are the features of a cloud-based Dynamics 365 ERP solution.

Low IT costs 

With cloud-based deployment you do not have to buy servers and hire IT staff. You just pay a subscription fee and start using the ERP solution from any device connected to the internet. It is that easy!

High-end security

Companies such as Microsoft have more money to invest in the data security than any private SMB out there. Therefore, with cloud-based deployment you get to enjoy high-end data security at a fraction of the actual costs. 

Scalable ERP

Cloud-based ERP solutions are developed to grow with your business. As your operations increase you can opt and pay for additional features. 

User-friendly ERP 

Cloud-based ERP solutions are extremely easy to use. Their increased connectivity and intuitive interface allow you to streamline business processes, and improve operational performance.


When you opt for cloud-based ERP solution you also get a mobile-friendly interface which means you can use it from your smartphone while you are travelling. All you need is a good internet connection. 

Latest technology

In cloud-based ERP deployment, your service provider manages system updates and you get to take advantage of the latest updates without worrying over licensing, implementation, and support costs. 

Time-saving solution

In any business, time is of the essence and a lot of it is wasted when new software gets implemented. Then you also must spend additional time over training your staff to use the new ERP solution. With cloud-based ERP deployment you only focus on user adoption while the vendor takes care of setting up the system. 

Ending remarks

This was a detailed comparison of the features and benefits of cloud and on-premises ERP deployment. While there are benefits with both these options, businesses need to carefully consider their operations and workflow before deciding on either one of them. The size of your organization and your budget will play a huge part here so choose wisely. 

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