On-Premises vs Cloud CRM: Choosing The Right Solution For Business Needs

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Marketing Department

Dynamics 365 has two major deployment options: cloud and on-premise. But in recent years, Microsoft has implemented Dynamics 365 using a “cloud-first” strategy. The advantages and disadvantages of each of these deployment strategies will vary based on your company’s demands. It is essential to understand the differences to choose the best selection for you. Therefore, we have examined and emphasized each approach’s key features below.

Explain Dynamics CRM

Dynamics CRM, now known as Microsoft Dynamics 365 Customer Engagement, is a customer relationship management (CRM) platform developed by Microsoft. It is designed to help businesses build and maintain customer relationships, streamline processes, and improve profitability.

Beyond its functional capabilities, a CRM has much more value. It provides a comprehensive and integrated view of client interactions, ensuring that all touchpoints—from sales to support—align perfectly with the long-term objectives of the business. With data-driven insights and an aerial perspective, leaders can make better decisions and develop customer-focused strategies that promote company growth. Moreover, a company’s agility and responsiveness in a competitive market are strengthened by the operational efficiencies brought about by CRMs, which simplify procedures and eliminate redundancies.

Exploring More Than Just CRM: What Dynamics 365 Offers

Dynamics 365 is not an ordinary CRM. It’s an innovative package that recreates how companies function in the digital world. It gives organizations a flexible framework, uses AI, and connects different departments to provide a dynamic toolkit for handling modern challenges and winning opportunities. The Dynamics 365 experience is about accepting a future in which customer-centricity and operational excellence are everyday realities rather than ideals.

With its transformative potential, Dynamics 365 provides flexibility not only in its functionality but also in its deployment options. Companies have the option of using the cloud or an on-premises setup, each with unique benefits and things to think about. Let’s examine these two deployment options in more detail:

Dynamics 365 On-Premises

If Dynamics 365 is hosted on-premise, the database is kept on the company’s server, and software licenses are purchased by the company itself. This gives complete control over how and where corporate data is stored while keeping it all in-house. However, this means that the company is completely responsible for the hardware’s care and maintenance.

Why Would You Choose On-Premise?

On-premise deployment is available for organizations that require control over their server and data. It means that people who have already made major investments in their hardware and infrastructure will be able to use those investments to run their software. Furthermore, you are in complete control of your data, meaning you may customize it to your organization’s unique regulatory or compliance requirements. This deployment approach involves several maintenance and management duties, such as maintenance of the infrastructure, configuration of recovery solutions, establishment and upkeep of testing and sandbox environments, and scheduling and management of operating system updates.

On-Premise Advantages & Disadvantages


  • More control over your data
  • Increased compliance with required rules
  • Works with a basic internet connection


  • The cost of maintaining infrastructure is high.
  • The initial setup cost is higher.
  • Updates must be managed and completed internally.
  • No access to cloud-based services and capabilities such as Power BI, Power Apps, Power Automate, Web Portals, and so on.

Dynamics 365 Cloud CRM (Online)

D365 Online is a cloud-hosted software-as-a-service (SaaS) program. Microsoft’s secure servers safeguard the data, the solution may be remotely implemented, and no hardware is needed. Furthermore, D365 online is significantly more adaptable than D365 on-premise because users may quickly scale up or down and continuously interact with other apps.

Why Would You Choose Cloud Deployment?

The online deployment option has numerous advantages, including remote access, a 99.9% uptime guarantee, and the opportunity to use additional cloud-based services like the Power Platform. Software upgrades (two major releases twice a year known as “waves”) and regular feature updates are issued centrally and guarantee that your customers are receiving the most recent version of the technology, in contrast, to on-premise deployment where updates must be managed by the organization. D365 online maintenance requires less work overall, but there are still certain things to consider, which are covered in more depth below.

Cloud CRM Advantages & Disadvantages


  • Remote access work from anywhere
  • Not much infrastructure to keep up
  • Simple to scale to meet your demands
  • Improved dependability and security
  • Microsoft guarantees an uptime of 99.9%.
  • Upgrades without hassle
  • Complete compatibility with the Microsoft environment
  • Use Microsoft Power Platform to Your Advantage


  • Recurring license fees that rise with time
  • Updates happen automatically, thus testing must be coordinated and carried out.
  • Less control over your data because it is hosted by Microsoft, as compared to on-premise

Considerations For Making a Choice

The deployment strategy is an important consideration when moving to Dynamics 365 or any other corporate solution. This decision has a big impact on cost structure, scalability, adaptability, and operational efficiency. This is supported by research from Forrester Consulting, which found that Microsoft Dynamics 365 Sales significantly improved the productivity, efficiency, and collaboration of sales teams. Important discoveries included a three-year ROI of 215%, a payback period of only seven months, and a 15% boost in seller productivity when working in teams. These findings highlight the possible financial and operational gains that can emerge from choosing the ideal Dynamics 365 implementation strategy.

To make an informed decision between on-premises and cloud deployment, here are some factors to consider:


Consider your budget and whether you choose upfront or continuing costs.

Data Privacy and Compliance

To decide if on-premises is a preferable option, evaluate the data privacy and compliance standards of your industry.


Assess the ease with which each solution can support your company’s expansion objectives.

Resource Availability

Assess whether you possess the IT know-how and resources required to oversee an on-premises solution.

Mobility and Remote Work

Evaluate whether your team requires remote access and how important it is.

Customisation Needs

If a great deal of customization is required, then on-premises would be a better option.

Vendor Trust

Whether the CRM supplier is a cloud service or an on-premises vendor, evaluate their standing and dependability.

Here is a brief comparison of the two options to sum up the details:


Factor Dynamics 365 On-Premises Dynamics 365 Cloud CRM
Control & Security Greater control over infrastructure and data, appropriate for strict security and regulatory requirements Although data is hosted externally, the cloud provider controls security and takes strong measures.
Customization & Integration Direct server access allows for extensive customization and integration possibilities. It may have certain limits, but it allows customization and integration.
Cost Structure Higher initial costs (hardware and software purchases), perhaps cheaper long-term costs Reduced one-time expenses and continuous membership fees
Scalability It can be difficult and time-consuming to scale, and it requires hardware improvements. Easy to add or remove users or features, and very scalable
Maintenance & Updates Updating and maintenance are your responsibilities. Updating and maintaining software is handled by the cloud provider
Accessibility Perhaps a VPN or other secure solutions are needed for remote access. With an internet connection, easily available from any location
Initial Costs Higher initial investment Lower start-up costs and predictable subscription prices
Vendor Trust depends on the capability of your IT staff Believe in the cloud provider’s reputation and dependability.



Businesses need to customize their decision between Dynamics 365 On-Premises and Cloud CRM to their specific goals, taking into consideration aspects like budget, data privacy, scalability, IT resources, and requirements for remote work. Although many modern firms find the flexibility and reduced initial expenses of cloud CRM enticing, an on-premises solution might work better for those who need more control and customization. In the end, this choice is a calculated move towards utilizing Dynamics 365’s capabilities to promote digital excellence catered to the unique requirements and development path of each company.

Marketing Department

Marketing Department

Stallions Solutions’ marketing team is responsible for branding and supporting business development & marketing efforts. We are composed of exceptional graphic designers, technical & creative content writers, and digital marketing specialists. Our content-producing approach is highly professional – from ideation to final article, all marketing experts play their role to generate an amazing piece of content. Our marketing team understands what our customers expect from the business and thus aims to meet those demands.





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