20 Feb Dynamics NAV On-premise or cloud? Benefits and risks
Do you want to start working with Microsoft Dynamics NAV (now known as Microsoft Dynamics 365 Business Central) but you do not know whether to do it On-premise or cloud? Do you need more help to differentiate which of the two modalities can be more beneficial for your company? Do you want to take into account what risks each option entails? Keep reading to have a clear perspective on benefits, differences and risks of implementing Dynamics NAV / Business Central On-premise or in the cloud.
NOTE: When in this article is named Dynamics 365 Business Central, keep in mind that it is the same product as Dynamics NAV. In fact, it is his evolution. Same product, same core and same functionalities.
On-premise vs cloud
Before explaining what benefits and risks each implementation modality entails, it is advisable to have clear concepts. What does it mean to implement Dynamics 365 Business Central on-premise? What does it mean to implement Dynamics 365 Business Central Cloud?
Dynamics 365 Business Central On-premise
It is said that a software is on-premise when it is installed as a local application on the servers and computers of the company. The on-premise software requires the company to purchase a software license to use it.
Dynamics 365 Business Central Cloud
The cloud-based software is hosted on the servers of the technology provider. Access to the application is done through the web browser. The cloud software SaaS (Software as a Service) provides that companies pay their licenses monthly to scale or reduce effectively according to the company’s growth.
Main differences between Dynamics 365 Business Central On-Premise and Cloud
Investment in hardware and provisioning
An on-premise implementation results in unavoidable hardware expenses, so that these types of implementations tend to be more expensive. As the equipment where the software will be housed will be in your own facilities, you will have to provide the necessary hardware so that the system can work (servers, databases, computers, etc.). As for the provisioning, a partner must make the configuration of the environment with the associated charge that entails.
In contrast, Business Central Cloud hardly needs any investment in hardware, since Microsoft is directly in charge of the hosting. As a client, you just have to make sure you have a compatible browser version. In regard to the provisioning of the environment, it is almost instantaneous because it is already preconfigured. This eliminates time spent on installation and configuration. In addition, users will have access to the application immediately.
Initial costs vs recurrent costs
Initial and recurring expenses change substantially depending on whether we are talking about an on-premise deployment or in the cloud. If we focus on on-premise facilities, initial costs include those related to the initial set-up (hardware, purchase licenses, implementation). With regard to recurring expenses, you must have the annual 16% that you must pay for the BREP license and the support service that you have contracted. In addition, you may occasionally need developments, training, etc. Attention! If you want to migrate from version, you must carry out an update project since the migration is not automatic.
If, on the contrary, we focus on the cloud, the initial cost will be that of the start-up project of the ERP. As recurrent highlights the monthly subscription cost of the licenses and the support service you have contracted. Of this option it is worth noting that IT updates and maintenance are already included in the monthly price of the license.
The following graph shows the evolution of fixed and recurring expenses. An initial implementation of 2 Essentials users has been taken into account (cloud price € 59 user / month, purchase price € 1,500 user) and 2 Team Members (cloud price 6.80 € user / month, purchase price € 300 user) and a fee of € 200 support per month. The own cost of the implementation project has not been taken into account. As a variable to consider, every 2 years, an additional 1 Essentials user is acquired. The on-premise installation does not have additional objects.
Customizations
From Triangle we always recommend our customers to try to stick to the product standard as much as possible. In this way, costs against migrations are minimized. Now, if for your business case you foresee that personalized customizations will be necessary, for technical advantages in the development, it is better that you opt for the on-premise version. It will allow you to have more flexibility. Keep in mind that the greater the number of customizations, the longer the implementation time and the migration to future versions.
On the other hand, if your balance falls to the cloud version, you should know that Microsoft has enabled an Apps Marketplace known as Appsource through which you can acquire apps and thus expand very specific functionality. If you want tailored customizations you should know that the cloud environment is more restrictive.
Security
Security is one of the main concerns for customers seeking ERP. It is not surprising since it is in the ERP in which data of vital importance for the company is stored as financial data and information of clients and workers. While it is true that years ago there was a distrust of the cloud environment for security reasons, now more and more companies opt for this model in the cloud. Proof of this are the ERP cloud adoption statistics.
As soon as Microsoft Dynamics 365 Business Central Cloud is hosted on Azure, the Microsoft cloud. Imagine if it is certain that some of the main ERP of the competition also lodge in this network, as in the case of SAP. And the best part is that you do not have to worry about anything, since your monthly fee includes maintaining the environment.
If you choose to work on your own servers, you will be responsible for making sure that the security parameters that you implement in your environment are appropriate. The security of the environment and the data security protocols will depend on the criteria and performance of your IT department. It is without doubt a double-edged sword.
Mobility
Accessibility from mobile devices can pose a problem for on-premise deployments. As your data will be stored on your own servers, additional complex configurations will be necessary to access this data from outside. It is not an impassable problem but you must take it into account. If you work on-premise and want to enjoy the advantages offered by mobility, read on to learn about hybrid environments.
On the contrary, if you work in the cloud you can always access your application wherever you are. In addition, in the case of Dynamics 365 Business Central you have available to download native app for smartphone and tablet that you can use from anywhere.
Hybrid environment Dynamics 365 Business Central
Customers who work with Business Central On-premise and do not want to miss the advantages offered by mobility and artificial intelligence can take advantage of these through hybrid installations. It is a purchase of cloud licenses, which offers the option to implement locally on the hardware itself.
Even if you run the application on your own servers, you have a replica in the cloud of your local environment data. In addition, this option allows you to see the % of replication success, so it will be easy to take a more comfortable transition to the cloud if you wish.
As you work on-premise, you will be able to reach a higher level of personalization, as discussed above. However, you should consider that by most number of customizations, fewer objects will be possible to replicate in the cloud.
Final considerations
Contrary to popular belief, many Dynamics NAV or Dynamics 365 Business Central providers are not offering the option to deploy to the cloud. Why? The answer is that the return on investment is much slower. Even so, technology partners must adapt to this new market model that is booming.
Cloud and on-premise pose advantages and disadvantages, so our recommendation is that you work with a partner that can offer both options. This way you will have assured the evolution to the cloud if you want to start working on-premise.
Considering the exposed points you should ask yourself: can I invest initially in hardware? Do I have a qualified and dedicated IT team? Does my implementation require many modifications or can I adapt to the product standard? Do I need to integrate the ERP with other solutions? In these answers you will find the path that will guide you towards the option to choose.
If you are still not sure which option is the most convenient for your business, get in touch with us here and we will analyze it together in a free remote session.