Online or On-Premises: Which Version of Microsoft Dynamics 365 Suits You the Best

With unrivalled flexibility, Microsoft Dynamics 365 is available as a cloud service, or installed as an on-premises database. Microsoft Dynamics 365 is available in the cloud or can be implemented as an on-premises or hybrid solution, offering unrivalled flexibility to move from one deployment model to another.

Microsoft has adopted a ‘cloud first’ approach to its release cadence for many years. Many new capabilities have been introduced as ‘cloud-only’ placing clear daylight between these. 

Dynamics 365 On-premises (Customer Engagement) v9.0.2 was released in Autumn 2018. Consequently, this does not include any enhancements subsequently released for the Online edition.

New on-premises versions are released every couple of years. In contrast, Microsoft makes automatic weekly updates to D365 Online that cover performance improvements and new features. In addition, two major updates are released each year which can be previewed in non-production environments.

Dynamics 365 On-Premises

  • On-premises Dynamics is installed on your server giving you complete control of the management and maintenance of your database.
  • Utilize your existing investments in hardware and IT infrastructure
  • Retain complete ownership of data with an on-premises deployment, providing you with full control of how, where, and how long you store business and customer data
  • Full control over when upgrades are applied and when app changes are enforced
  • Utilize in house personnel or outsourced IT resources who will manage your system
  • Create your own SQL Server Reporting Services (SSRS) reports
  • Avoid the prospect of cloud data storage costs
  • Doesn’t require a fast internet connection

Dynamics 365 Online (Cloud)

  • Your database is protected on Microsoft’s secure servers in the UK that are accessed through a web connection. Just increase users or add more capabilities whenever you need and rely on our ongoing Dynamics 365 managed service and support.
  • Implement Dynamics quickly without in-house IT resources or incurring hardware expense
  • Avoids the overhead of maintaining a dedicated CRM server
  • Faster mobile access as this does not route through an Internet Facing Deployment
  • Mobile experience easier to configure through responsive Unified Interface
  • Quickly benefit from ongoing product development in weekly updates and biannual releases
  • No upfront license costs or recurring software license renewal expense
  • Only pay for what you use – increase and reduce subscriptions when needed
  • Predictable monthly subscription
  • Data protected by 5 security layers and disaster recovery service – includes ISO27001 & EU standards compliance
  • Enterprise-grade security – as standard and configured without costly setup or overhead of maintaining ADFS on-premises
  • Built on the Power Platform – with a unifying Common Data Service where Dynamics and Office 365 data is stored and connected with 3rd party apps
  • Power Automate (Microsoft Flow) – no need for the installation overhead of this data gateway
  • Included embedded AI capabilities 
  • Exchange Online – connecting Dynamics 365 apps and Exchange Online is a simple process in the cloud. For an on-premises implementation there are many infrastructure considerations. These include opening up Exchange web service URLs through a firewall as well as authentication considerations. 


Dynamics 365 Online average subscription cost.  $80/user/month (average between the Sales Enterprise $95/user/month and Sales Professional $65/user/month.

The on-premises licensing is a perpetual license model (you buy the licensing and own it forever). The cost of an on-premises license is $2,873 and comes with 3 years of maintenance (software assurance).


Cloud Dynamics 365 option is suitable for an organization of any size. It’s more cost-effective than buying or renting a dedicated server. You won’t need to handle any server maintenance, and all support requests can be performed very quickly.

In case of strict compliance requirements or sufficient budget to handle the integration costs with the on-premises version, which include the hardware and license price, you will be able to experience the full potential of Dynamics 365 customization possibilities, as well as offline access. Moreover, it will be more convenient in the long term.

SA Technologies, being one of the leading Microsoft CRM Consulting solutions provider company, recommends Dynamics 365 to our clients for its unique properties like self-service and peer to peer community support, omnichannel support, unified platform, among others; it helps them to earn customer loyalty, stay agile in this ever-changing market and boost business opportunities.