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To Go Online or to Go On-Premise, That is the Question

If your organization is considering using Microsoft Dynamics CRM it is important to determine which hosting option is best for your business. Microsoft offers businesses flexibility to choose from two options – their hosted cloud Online service or On-Premise that can be hosted by the customer directly.

Historically, On-Premise was the only option customers had, but now with Microsoft’s Online hosting service, On-Premise is fast getting superseded by Online. While making this decision it is important to consider both a technical perspective as well as a business perspective. While there are a lot of excellent technical comparison articles online; this piece is focused on helping you make a business assessment considering 5 key factors.

#1 Cost: A key consideration for any software purchase is cost – both upfront and ongoing maintenance. With an On-Premise option, businesses pay set-up costs, which include hardware and server licensing, in addition to ongoing infrastructure maintenance and IT resource expenses. With the Dynamics CRM Online option, the user license fee covers all hardware set-up, server licensing and maintenance costs. The best way to truly evaluate the cost benefit difference is to conduct a forecast analysis across a few years, this way your business can get an accurate picture of short-term and long-term costs. Prices change periodically and you can check Microsoft’s pricing page for more details.

#2 Data:  When it comes to data there are two common concerns we hear from customers – ease of access and security. As for security, Microsoft has an excellent track record and supporting business cases of clients with highly classified data using CRM Online. In fact, a lot of small-medium sized businesses are not always able to afford high-end security systems to secure their data, for such customers Online provides superior data security with sophisticated Microsoft technology. As for data access, both platforms provide the same mechanism for accessing data (Advanced Finds, Views and SQL Reports); however with the On-Premise option businesses have direct access to the SQL database, as it is hosted on their servers.

#3 Software Updates: Presently, Online gets updates rolled-out one release sooner than On-Premise (note: there is no visibility on how long this trend might continue with Microsoft’s strategy). This means Online customer can leverage enhanced features sooner than On-Premise customers. Online customers get a window of time within which an update must be installed; however, with On-Premise, customers can decide when they want to install the update. Some businesses find the On-Premise to be more beneficial especially, if their CRM is heavily customized (XRM) as it provides more time to test updates but on a down side it also poses a risk of falling too far behind on the updates and potentially losing Microsoft support after a number of versions. Other customers find Online’s fast updates more beneficial as it lets them leverage new functionality and stay up-to-date with their technology.

#4 Performance: Factually, performance can be argued either way. It depends on whether the On-Premise environment is IFD (internet facing deployment) and how good the server resources and internet connection is. Online speed also depends on how good the server resources are that have been allocated by Microsoft and again, how good the user’s internet connection is.

#5 Strategy: Strategy is an integral part of every business, this includes IT strategy. It is important that the Online vs. On Premise decision also aligns with the business’s strategy. Consider topics like user growth and functional scalability, native integration with the Microsoft ecosystem including applications like Outlook and SharePoint.

Whether you decide to go Online or to go On-Premise, you are not locked down. If your business decides to change direction, it is possible to switch between the two options.

Need help with making a more informed decision? Or exploring a third option of other hosting services? Talk to us for expert advice.


Nawal MohsinaWritten by Nawal Mohsina
Principal Consultant, mcaConnect