Why You Should Choose Hosted vs. On-Prem for Dynamics 365 Business Central

by Nicholas Jackson, TrinSoft Senior Dynamics Consultant

Microsoft offers two flavors of Dynamics 365 Business Central (BC) when it comes to where the base application will be running: hosted (on Microsoft’s servers) or on-prem (on your own servers). Many clients will opt for the hosted option no questions asked, but others may hesitate and want more information on the pros and cons of the two.

We at TrinSoft believe that hosted BC is the best option for nearly all clients. Here’s why:

Server-Free Deployments

Servers are powerful and flexible machines to have at your hands, but they come with high costs and overhead. Servers have a large up-front cost that locks you into a specific piece of hardware with specific resources, being unable to change without additional costs. Servers are also rarely run in isolation, often requiring additional equipment such as universal power supplies, networking equipment, backups, disaster recovery options, and storage devices, not to mention the expensive IT personnel to set up, configure, and maintain these resources. 

With hosted BC, no server is required. All the maintenance regarding the servers running BC is handled by Microsoft’s experts and is included in your BC license cost.

Simple Scaling

When purchasing a server for an on-prem deployment of any application, a judgement call must be made as to what resources will be required, often a very difficult calculation to make. There are many aspects to the performance of a server: networking bandwidth, CPU cores, RAM, storage, etc., and estimates must be made for all of these before locking in a large one-time purchase of a server. If your business suddenly grows, another server must be purchased before the users can use BC, taking days, if not weeks, and requires expensive configuration if running a multi-server deployment.

Microsoft manages all hosted BC environments to ensure it has all the required resources to fully support a lightning-fast interface for all users. Microsoft continually monitors your BC environment and adds additional resources as needed, all bundled into your monthly license cost.

Easy Administration

TrinSoft manages dozens of clients’ on-prem environments, so we are well versed in the procedures and operations required for administering on-prem deployments. Even with our expertise, performing certain actions on hosted tenants is simply quicker and easier.

Adding new users, uploading extensions, creating new environments, and accessing the application are all far easier on hosted environments. This means less time billed to you and saves you additional costs.

Cost Savings

It is hinted in many comments above, but there is absolutely a cost savings to choosing a hosted BC tenant instead of an on-prem tenant. As mentioned above, the total cost of ownership of a server is much higher than the initial price tag – often 2x or 3x the initial price for a given year. The belief that on-prem servers are a one-time cost is not true and must be considered when deciding.

Microsoft differs its billing structure for on-prem vs hosted licenses. On-prem licenses require a large up-front payment, plus an annual enhancement, whereas hosted licenses are simply a pay-as-you-go cost per user, allowing you to add or remove licenses at any time with no concerns about lost investment.

Reliability

Due to their complexity in setup and implementation, on-prem servers often go offline, preventing users from accessing BC at all. There are dozens of pieces of configuration that must be set up properly to allow users to access BC running on a server. If any of those pieces fail, the system will go offline.

Microsoft offers a 99.9% SLA on BC, providing service credits for any period where the uptime drops below that amount; an uptime that cannot be matched with on-prem installs.

Data Security and Access

The leading reason we hear clients wanting to go with an on-prem install is because of data security. They often fear that Microsoft will abuse the fact that their data is stored on Microsoft’s servers. Microsoft has stated multiple times and published many security reports on this topic listed here. Microsoft takes privacy seriously and will not use your data without your permission. Microsoft also holds an impressive list of certifications for its data, meeting many regulatory requirements.

Another common statement we hear promoting the choice of on-prem deployments is the security of the VPN, giving them a more secure connection to BC, but just the opposite is true. VPNs provide a false sense of security. Any method of connecting to your network from the outside world is a security risk and is often the source of malicious users gaining access to environments. Meanwhile, Microsoft adopts a modern zero-trust security model for hosted BC tenants allowing you to define exactly who access BC and when. TrinSoft’s IT experts can also help set up conditional access policies that prevent suspicious requests to your cloud applications and prompt for additional verification.