This article discusses three potential methodologies for deploying Dynamics 365 for Finance and Operations -- cloud, edge and on-premises -- and outlines the potential advantages and disadvantages of each.
Originally published in H1 2018 D365UG/AXUG Magazine
Out of the three layers of ERP deployment and utility, the third layer of cloud services offered today is what most of us in the Microsoft Dynamics world are familiar with: SaaS. Software as a service focuses on a specific service targeted toward a specific market/group of Users performing a set of business functions. If the acronyms ERP or CRM rang in your ears while you read this, you’re right. Well, sort of.
Because of the vast repertoire of functions offered within Dynamics 365 for Finance and Operations, it’s considered a combination of PaaS (platform as a service) and SaaS by some, and just SaaS by some in the consulting community.
With the onset of more than one methodology to deploy and use Dynamics 365, what are the different factors that you might consider when deciding on the type of platform and methodology to adopt and to implement the Dynamics 365 suite of ERP systems?
Cloud
Let’s consider deployments on the cloud first. The unique selling proposition (USP) of this deployment technique is that hardware and peripheral software are not deemed to be individual components of investment. When deploying via the Microsoft Cloud, you can leverage on the Microsoft stack of products: Power BI, Outlook 365, Logic Apps, and Machine Learning. If you’re deploying Dynamics 365 via the cloud, you get additional benefits of integrated Power BI, Outlook 365, and CRM, not to mention the fact that subscription-based SaaS allows automatic deployment, updates, and code upgrades through Microsoft Dynamics Lifecycle Services (LCS), thereby reducing hardware and software costs, installation, maintenance, and implementation costs as well.
You implement only what you need, and you pay for only what you use. Literally. The periodic subscription fee involved, along with the additional costs of support, training, and updates form a part of your operating expenses, unlike the on-premises ERP solution, where the investment almost always has to be capitalized. Perpetual availability, easy disaster recovery, and the availability of sandbox environments, coupled with the requisite infrastructure to not only run your ERP, but also to install and run other software, count as advantages here when we talk of deploying Dynamics 365 on the cloud. All the data is stored in Microsoft’s data centers, and Microsoft plays data trustee here.
So why would you not deploy Dynamics 365 or any Dynamics ERP on the cloud? If you’re a data-sensitive skeptic but also a primary decision-maker for IT purchases in your company, you may also want to explore the hybrid or on premises deployment options.
Edge
Let’s look at the deployment via the Edge methodology. It’s apt for companies who want decreased capital expenditure in IT infrastructure and also want to stay up-to-date with their software and code upgrades. Ironically, this is turning out to be a stepping-stone for companies to get bolder and take that risk of exploring cloud solutions instead of on-premises solutions, after a period of using software on Edge.
Anyway, this can’t be ignored. The simple facet of working on the “edge” is that data is stored in local data centers or vendor-managed data centers that aren’t Microsoft data centers. Now you could also view the data on Microsoft’s Cloud, provided that the data sync is set up and the cloud is turned on. When Microsoft cloud is turned on, you can use BI, Machine Learning, etc. to analyze and structure your data. So, you get the best of both worlds. When does this help?
- If your company or units is/are located in geographies with either poor or intermittent data connectivity, it gets imperative to be able to still operate your ERP without being net-dependent.
- In industries like retail, this model works best. Stores with POS can operate on their local database and sync with the cloud at a later date and time.
- To comply with local requirements of storing data locally in addition to on the cloud.
On-Premises
On-premises comprises our traditional solutions that run locally. This means you spend on procuring not just the ERP, but also its licenses, expend on the cost of installing requisite hardware and software to run it, and pay to implement it, as well as avail of paid support services by the implementing Partner. That doesn’t change with the hybrid or the cloud solution. What does change is how you view your ROI. Recouping your costs with an on-premises solution takes a longer time than when you deploy and use ERP via the other two methods. You also have to be responsible to pay for later upgrades, hardware/software acquisition/upgrades to support newer versions, protecting your data, and upgrading the system on time. So, amongst the three deployment options, which one would you choose?
Companies today want an ERP solution with enhanced reporting capabilities as well as one to record transactions with the least effort, time, and dependence on network. And they want all of this without falling behind technology-wise, leveraging superior analytical and reporting capabilities on the cloud without the responsibility of maintenance. I’d want what the Microsoft cloud offers.
So, being a rather cautious and prudent investor, I’d put my money on the hybrid option whilst considering the complete cloud deployment option at a future date. The reasons being the significant benefits of analytics and embedded intelligence available at a significantly lower cost, full control over my data, and the solution being maintained on local servers easily accessible by my personnel as required and lesser dependency on external parties for network and server plus auxiliary software and hardware maintenance.