How to Choose Between Cloud & On-Premises Dynamics 365 Business Central

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Is Business Central on-premises? Should you deploy Microsoft Dynamics 365 Business Central on the cloud or as an on-premises solution? Here’s what to keep in mind when making this decision. 

Cloud vs On Premises Dynamics 365 Business Central 

Cloud vs On-Premises Dynamics 365 Business Central

While Microsoft Dynamics 365 Business Central may primarily be known as Microsoft’s leading cloud ERP, it is also available as an on-premises solution. And while it offers a lot of the same core functionalities, there are some critical considerations to keep in mind when deciding whether to deploy Business Central on the cloud or on-premises for your organization. In this blog post, we’ve identified the key differences between the two types of deployments to help you find the better fit for your business.  

Costs & Set-Up 

Business Central Cloud: 

  • The cloud version of Business Central is licensed on a subscription model, and you’ll pay on a monthly or annual basis. 
  • As Business Central is hosted on Microsoft Azure, you will not require hardware such as servers in-house or install the software 
  • Maintenance expenses will also be lower, as updates are scheduled automatically and managed by Microsoft or Microsoft partners  

Business Central On-Premises:  

  • On-premises Business Central has a perpetual license, where you pay a one-time fee to own the software  
  • It does require investment in hardware and space, as you will need servers to host the solution  
  • You might also require in-house IT resources to help maintain and upgrade the software 

Overall, your total cost of ownership is much lower with the cloud version of Business Central. In comparison, the on-premises version has a higher initial set-up cost and ongoing future expenses for maintenance.  

Ownership, Recovery, and Upgrades  

Business Central Cloud: 

  • Data is stored on the Microsoft Azure servers, and you access your Business Central instance through a web browser 
  • All software updates are automatic, which will allow you to have the latest version available 
  • Multiple backups are done for you, and Microsoft offers a 99.9% uptime guarantee 

Business Central On-Premises:  

  • Data is stored on your local hardware on your on-premises servers, and you have full access to all the data stored. You access the software locally via individual workstation web browsers 
  • Software updates are not automatic; you will need to install, test, and deploy updates with the help of your in-house team or Dynamics partner 
  • Your IT team will need to maintain backups and have a disaster recovery plan in place  

With the on-premises version of Business Central, you do have greater control and ownership of your business data, as the software is deployed on your on-premises servers. However, this also means that you need to have sufficient IT resources in-house to install product updates and maintain your software and hardware.  

Customizations, Mobility & Scalability 

Business Central Cloud: 

  • The cloud version of Business Central is not as customizable compared to on-premises. Most customizations are implemented through extensions. 
  • You can access Business Central in the cloud from any location, on any device, if you have an internet connection. Speed is reliant on internet service.  
  • It’s also easily scalable as you can add more users for an additional fee. 

Business Central On-Premises:  

  • It’s a lot easier to customize the on-premises version of Business Central, and it supports extensions and core object changes. 
  • You do not need an internet connection to access this version of Business Central as it’s hosted locally.  
  • It’s less easy to scale up quickly with on-premises Business Central as you require additional investment in hardware or systems.  

The cloud version of Business Central is more suitable for businesses who are in rapid stages of growth, as it enables them to scale up very easily and quickly. You only need to pay additional fees to increase the number of end-users, and you don’t need to invest in additional hardware. On-premises Business Central, on the other hand, has the advantage when it comes to customization, as you can both modify the base code to make the software fit your needs or use extensions.  

Integrations and Add-Ons 

Business Central Cloud: 

  • You can easily extend the functionality of your software by installing apps for the cloud version of Business Central through Microsoft AppSource 
  • Business Central in the cloud also supports seamless integration with other Microsoft products such as the Power Platform  
  • Power BI is fully integrated with the SaaS Business Central, and free Power BI basic licenses are available  
  • You can easily integrate Microsoft Teams, as there is an app that lets you connect Teams with your business data  

Business Central On-Premises:  

  • Unfortunately, you cannot use AppSource to install apps with the on-premises version of Business Central 
  • You can integrate with the other Microsoft solutions like the Power Platform, but it will require a data gateway  
  • Teams is unable to integrate with on-premises Business Central at this moment 

The cloud-based Business Central has a more considerable advantage when it comes to integrations as it is easier to extend its capabilities than the on-premises version.  

Cloud vs. On-Premises Business Central: Which Is Right for Your Organization? 

While we personally recommend the cloud version of Dynamics 365 Business Central for small to mid-market companies that are less complex and have limited IT resources, there are instances when your company requires more control over their data or requires niche customization than what the cloud offers, and that’s where the on-premises version would work better. 

Ultimately, choosing whether you deploy your ERP solution as on-premises or in the cloud depends on your business needs and how much you’re willing to invest when implementing or upgrading your ERP system.  

Book a free 1-day Business Central Assessment with Kwixand Solutions 

We are a Silver Microsoft Dynamics 365 Business Central partner based in Vancouver, Canada, and we help businesses across North America digitally transform. Book a free 1-day Dynamics 365 Business Central Assessment with the Kwixand team to learn more about Business Central and how it could fit within your organization.  

Free Business Central Assessment - Kwixand Solutions


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