You can now deploy Microsoft Dynamics 365 for Finance and Operations in the cloud or on-premises. Cloud deployments offer a software system that is fully managed by Microsoft, while on-premises deployments as name suggests, are deployed locally within a customer’s data center.

Important: On-premises deployments of Microsoft Dynamics 365 for Finance and Operations are NOT supported on any public cloud infrastructure, including Azure.

The following table provides a comparison of the capabilities provided by the two deployment options.

Why cloud

Cloud deployments provide a cloud service that is easy to scale up or down as needed, as well as data centers that are fully managed by Microsoft. The time spent implementing Finance and Operations can be significantly shortened, fewer customizations may be required, and the costs of IT hardware and infrastructure are lower.

Cloud deployments include high availability, disaster recovery, sandbox environments, and application lifecycle management combined with cloud-based systems of intelligence, infrastructure, compute, and database services in a single offering. When needed, data failover in the cloud, automated deployment and continuous updates, and elastic compute capacity are available. A cloud deployment also provides data aggregation, financial reporting, and intelligence.

The cloud service provides customers with the greatest value, the broadest range of functionality, the best application lifecycle experience, the easiest and broadest integration with Microsoft Azure services, the best option for business insights and intelligence, and the most value for customers’ technology investments.

Why on-premises

With an on-premises deployment, existing data center investments can be leveraged. Customers can also configure their enterprise preferences to meet their needs.

The regulatory and compliance requirements of their business,

Comply with data sovereignty rules in regions where there are no Azure Data Centers, or

Ensure business continuity in areas with limited public infrastructure.

A customer’s business data and processes are disconnected from the cloud and are stored and run locally in the customer’s or their partner’s data center. Some connectivity is required for system management and updates which are enabled through Microsoft Dynamics Lifecycle Services (LCS), a cloud-based application lifecycle management service. Customer data that is related to the configuration and application customization may be stored in the cloud.

For customers who choose to run Finance and Operations in their own data center, the on-premises deployment option will have a similar user-interface and application functionality as other deployment options. However, customers must take on the following responsibilities:

Stand up their own infrastructure.

Configure their own high-availability and disaster recovery solutions.

Stand up sandbox environments.

Manage their infrastructure, including scheduling operating system updates.

The additional costs to deploy and manage these capabilities might lead to higher deployment costs and a greater Total Cost of Ownership (TCO). Tools for deploying the Finance and Operations software and updates will be available to partners and customers via Lifecycle Services. Unlike the cloud deployment option, Advanced Analytics and Azure Machine Learning services are not included in the on-premises deployment option. Talk to us regarding TCO comparison depending on your current and future state of your infrastructure.

Features not implemented in on-premises deployments

There are some features that have not yet been implemented and planned to be part of future releases. However, there are few features that are not intended for on-premise deployments.

Features not yet implemented

The following features have not yet been implemented in on-premises deployments. These features have not been deprecated. If these features are critical to your on-premises deployment, please let Microsoft know to help in prioritizing on the Dynamics 365 Application Ideas site.