Microsoft Dynamics 365 On-Premises vs Cloud

Find a simplified comparison of the core functionalities, technicalities, and usability of D365 on premises or cloud deployment.


Dynamics 365 On-Premises Vs Cloud: Which one is for you?

No doubt, the applications of the Dynamics 365 suite have no match in terms of performance, user interface, effectiveness, or scalability.

The best part about Microsoft's top business applications is that they offer flexible deployment options: cloud, on-premises, and hybrid.

Here is the major question you might want to ask: which deployment option suits your business?

To get the best answer capable of accelerating your business to new heights, you need to understand your business requirements. All businesses are unique and run on different methodologies to offer the best to their customers.

Note: With the major update released in 2016 until now, more than 60% of businesses have moved to the cloud with the D365 cloud option.

Once you have knowledge about your business and its requirements, you can proceed with comparing D365 on-premises and cloud options.

Isn't this simple?

Why you Should Compare Microsoft Dynamics 365 on-premises vs cloud?

If you are looking for the perfect deployment option that supports your business, you should compare different options.

First, you need to understand your business requirements and predict the upcoming demands of your business. Once you have the core details about your business, proceed to compare different options and choose the best that comes with cost-effectiveness, practicability, and reliability.

Don't feel pressured. The team at Dynamics Square is available to help you choose the best working solution for your business.

Dynamics 365 On-Premises

The Dynamics 365 on-premises deployment option is hosted on a customer's personal data centre. It can only be accessed within company premises, making the entire system free from malware and cyberattacks.

Dynamics 365 Cloud (Online)

The Dynamics 365 cloud (online) deployment option is hosted on Microsoft-owned cloud servers (Azure) or third-party cloud servers. Based on a monthly subscription licence, the solution can be accessed globally with data security from the cloud provider.

Avail Continuous Support for your Business Beyond Implementation!

Join hands with a cost-effective D365 Marketing implementation partner today and avail support beyond it.

Microsoft Dynamics 365: Best Deployment Options for Businesses.


On Cloud

Best for SMBs and works on monthly licence model.



Best for large organisations and Govt. agencies with highly confidential data.



Best for complex industries with uneven business requirements.

Microsoft Dynamics 365 Cloud Deployment

The cloud is the advanced deployment choice for modern businesses that are looking for agility and easy scalability. Based on our data, 90% of Dynamics 365 on-premises users are willing to move to the cloud, and more than 60% have already opted for it.

Simple and rapid implementation

No need for in-house IT experts

Low investment costs and zero maintenance costs.

Minimises running costs due to monthly subscription plans.

Automatic updates and upgrades

Full data security and data protection


Easy disaster recovery services by Microsoft (EU standards and ISO 27001)

Smart integration with other Microsoft products, including SharePoint, Office, and Power Platform

Shows real-time data insights

Comes with built-in AI and other latest technologies

Simple and interactive user interface

Supports rapid implementation

Microsoft Dynamics 365 On-Premises Deployment

We have been using on-premises deployment to run our business solution for years and are pretty much used to its functionalities. It is a secured database with complete control over the data and the way it is managed.

Controls the entire data

A bit expensive when compared to the cloud

For further upgrades, extra investment is required

Internal IT team manages maintenance and updates

Complex process to integrate other business solutions


Requires experts to upgrade the system

Complete data protection

Works seamlessly without internet

High maintenance and working costs

Complete data protection

Dynamics 365 On-Premises Vs Cloud

The below comparison table will empower you to precisely understand and decide the best deployment option for you based on your business requirements.

Key-CapabilitiesMicrosoft Dynamics 365 Cloud (Online) Microsoft Dynamics 365 On Premise
Cost ModelMonthly subscriptionHigh investment
Data Server Data stores in Microsoft Azure Data stores in in-house servers
Data Accessibility Using application program interface (API) or report connectors Full access
Storage Space 5-GB (additional 2.5-GB for every 20 licenses) Based on company servers
System AdministrationMicrosoft manages the system infrastructure Requires internal IT team or vendor for maintenance
DeploymentRapid and seamless Time taking and complicated
Hardware RequirementNo additional hardware requiredMight need additional servers to operate
Maintenance ExpensesNoneHigh maintenance cost
ConnectivityReliant connectivity with 99.99% Uptime SLA's supported by Microsoft No internet required (100% in-house)
System UpdatesUpdates (both minor and major) rolled out consistentlyMinor updates can be held back until the next major release
MobilityApplications available for offline accessApplications available for offline access
FlexibilityHigher flexibility through integrated redundancy capabilities Hardware dependent and its expensive to install redundant server for back-up
Data Visualisation Advanced using Power BI Not Available

Avail Continuous Support for your Business Beyond Implementation!

Join hands with a cost-effective D365 Marketing implementation partner today and avail support beyond it.

Dynamics 365 Finance On-premises Vs Cloud

Feature CloudOn-premises
SOC 1 Type 1 Certification YesNo
Live Help YesNo
Integration with LCS, SharePoint, Power BI, and RCS YesNo
Integration with Power BI Desktop NoYes
Configurable Business Process YesNo
Task Recorder YesNo
Payroll -Direct Deposit YesNo

Dynamics 365 Supply Chain Management On-Premises vs Cloud

Feature CloudOn-premises
Cost accounting for Power BI and Mobile App YesNo
SOC 1 Type 1 Certification YesNo
Data Management via extension YesNo
Live help support YesNo
Demand forecasting YesNo
Vendor collaboration YesNo
Task Recorder YesNo

Dynamics 365 Human Resources isn't available with on-premises server deployment.


Transform and digitalize your business to create a monopoly in the market

It’s high time you considered cloud deployment to supercharge your business growth with the minimum investment.

It might be tough for you to decide the best deployment for your business. In such a case, the experts at Dynamics Square are available to help you out and show you the right path. Our expert opinion can lead you to great success and a profitable business.

If you're a Dynamics on-premises customer today, then you're already cloud-ready.

The cloud implementation can empower you to avail cutting-edge technology, manage costs, eliminate complexities, and improve overall IT productivity.

Talk to our experts today!

To make an informed decision on the right option for you, understanding the differences is crucial. Therefore, below we have created an infographic to highlight the key features of each approach

cloud vs on-premises

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