Microsoft Dynamics 365 Cloud vs On-premise Comparison

Let’s Understand the Best Deployment for Your Office.

Global enterprises are gradually moving their business applications to various online platforms. Businesses are, however, debating which deployment (in-cloud, on-premise, or as-hybrid) they should pick because each business-case is different and needs to be assessed, accordingly.

There are various aspects, including data security, system integrations, and access to critical information, among others, that businesses consider before deciding to opt any deployment for their business tools.

Dynamics Square Experts are proficiently assisting businesses to explore and understand which Microsoft Dynamics 365 installation is the best for their offices.

Microsoft Dynamics 365 ensures flexibility and comes with these deployment options:

  • In-Cloud – hosted by Microsoft
  • On-Premise – installed on private servers, and
  • As-Hybrid – essentially combines the features of in-cloud and on-premise deployments

Microsoft Dynamics 365 In-Cloud Deployment

Presently, nearly 90% of new Dynamics 365 customers opt for an in-cloud deployment.

Microsoft Dynamics 365 cloud deployment ensures numerous capabilities for modern businesses, including information security and flexibility – to increase the users count or to integrate more applications at anytime.

Key Features

  • Quick and seamless implementation without incurring additional hardware expense or hiring in house IT resources
  • Minimizes overhead spending required to maintain a dedicated private server
  • Facilitates consistent product developments along with assured weekly updates
  • Releases new features twice in a year
  • Zero new license costs and no recurring license renewal expenses with a predictable monthly subscription
  • Five layers information security and data protection
  • Seamless disaster recovery services, including EU standards and ISO27001 compliance
  • Efficiently works on the Microsoft Office 365 platform through a smart integration of SharePoint, Skype Messaging, Hosted Exchange, and many more
  • Intelligently executes integrated web portals, Microsoft Social Engagement, and voice of the customer surveys.
  • Embedded Artificial Intelligence (AI) capabilities
  • Supports applications and tools built on the universal Power platform

Microsoft Dynamics 365 On-Premise Deployment

On-Premise Microsoft Dynamics 365 is essentially deploys on private servers, ensuring absolute control and management of the huge information stored on the internal databases.

Key Features

  • Retain full ownership of business information
  • Additional investments to be made in existing hardware and IT infrastructure
  • Efficiently manage and control the updates related to applications
  • Ensures flexibility to employ internal IT professionals or outsource external IT support to manage installed applications
  • Generates business focused intelligent reports, including SQL Server Reporting Services (SSRS)
  • Minimizes and control online / cloud data storage expenses
  • Works seamlessly even with basic internet connection

Take a look at the graphic below – on the surface, cloud and on-premises solutions look identical! Let’s dive into a comparative cost analysis between the cloud and on-premises to understand the right solution for your organization.

Dynamics 365 Cloud Vs On-premise Comparison

The below comparison table will enable you to precisely understand and decide which Microsoft Dynamics 365 deployment – in-cloud or on-premise – will suite your business requirements.


Microsoft Dynamics 365 – In Cloud

Microsoft Dynamics 365 – On Premise

Cost Model

Monthly subscription

Huge initial capital investment (CapEx

Information Storage

Information stored in secured Microsoft data centre

Complete ownership and control over the stored information

Data Access

Access only through application program interface (API) or report connectors

Full access

Storage Space

5-GB (additional 2.5-GB for every 20 licenses)

Limited to available server storage

System Administration

Minimal internal administration required Microsoft manages the system infrastructure

Requires internal or vendor partner maintenance


Quick and seamless

Time taking and complicated

Hardware Requirement

No additional hardware required

Executed either from existing hardware or might need additional servers

Maintenance Expenses


Involves huge spending on maintaining and upgrading servers


Reliant connectivity with 99.9% financially supported by Microsoft

No internet connectivity required to access applications or information

System Updates

Updates (both minor and major) rolled out consistently

Minor updates can be held back until the next major release


Applications available for offline access

Applications available for offline access


Higher flexibility through integrated redundancy capabilities

Executed either from existing hardware or might need additional servers

Hardware Requirement

No additional hardware required

Hardware dependent and its expensive to install redundant server for back-up

Power BI


Not Available

We know you’re facing an important decision about modernizing your current Dynamics 365 On-premise solutions and potentially dynamics 365 on premise to cloud migration.

If you’re Dynamics on-premise customer today, then you’re already cloud-ready.

Are you looking to access cutting-edge technology, control costs and complexity and improving overall IT productivity? Our Dynamics 365 experts help you accelerate your journey and minimize risk. Talk to our experts today!

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