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Microsoft Dynamics 365 Business Central – Cloud or On-premise?

Microsoft Dynamics 365 Business Central is a top end-to-end solution to manage all business operations efficiently. Businesses can use Dynamics 365 to streamline various business processes, including sales, marketing, supply chain management, finance, customer support, production, and operations. Dynamics 365 can be set up as a cloud-based or on-premise version. However, being a Microsoft Dynamics 365 consultant, we understand businesses or end users of this business central software are frequently confused about which version is better suited and advantageous for them.

Let’s examine a wide range of variables that can help you choose between a cloud-based and an on-premise version for your company.

1. Cost of License

Businesses using the on-premise version of Business Central must pay a one-time upfront charge for perpetual licenses.

Businesses can pay a monthly or annual subscription price for the licenses they acquire for the cloud-based version based on the number of users in their organization.

2. Setup and Maintenance Cost

The on-premise solution incurs more significant infrastructure-related expenditures for purchasing servers, storage, additional backup storage, etc. All of this takes time and demands a significant initial investment by the organization. The company needs to modify its current arrangement and make additional infrastructure investments to achieve significant growth. The money and effort required to ramp up the on-premise version are much higher than those required for the on-cloud version.

The Microsoft Azure cloud hosts the cloud-based version of Dynamics 365, and Microsoft’s staff is in charge of the security and upkeep of the software. The cloud-based Business Central system is simple and easy to implement. A company does not need to spend on hardware infrastructure such as servers or additional software for installation. It is also easily scalable, as the organization may purchase additional licenses for the additional resources or users they require and begin utilizing it virtually immediately.

3. IT Team Requirement

The in-house IT department is responsible for installing, updating, upkeep, security, and supporting an on-premise version of Dynamics 365. The company could require a larger IT team with various skill sets to execute this. The majority of their time is spent making sure the systems are functional.

On the other hand, Microsoft’s team is in charge of most of the cloud-based solution’s upgrades, maintenance, security, and support. A company can handle its obligations with a small and efficient IT crew. Additionally, they gain extra time from routine duties and concentrate on resolving urgent company problems, which increases productivity.

4. Customization

The on-premise version can be customized easily because it supports extensions and object changes. The internal team must test various extensions and changes to ensure proper operation. 

Only the available extensions allow customization in the on-cloud version.

5.Key Takeaway

Hope, you will be able to make an informed choice with the assistance of the information mentioned above.

The Microsoft Dynamics 365 Business Central on-cloud edition is appropriate for you if you are a small or mid-sized business with limited resources and money and do not mind putting your data on external safe cloud servers.

However, you should choose the Microsoft Dynamics 365 Business Central on-premise version if you are a big business with a sizable IT budget, require total data access and control, or want a highly customized solution to fit your unique requirements. 


Online24x7, a Microsoft Dynamics 365 partner, has made businesses aware of the immense possibilities and extensive features of Dynamics 365. Our consulting teams are well-versed in the solution.

By Michael Caine

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