W H I T E P A P E R

Does Your Dynamics 365 Solution Belong in the Cloud?

Choosing the Correct Deployment for Finance and Operations

Introduction

Microsoft Dynamics 365 for Finance and Operations provides a flexible, integrated solution across a variety of industries; it’s no wonder so many businesses and organizations have already implemented some form of Dynamics 365 already. While the ability to manage accounts via the customer relationship management (CRM) workstream will also prove valuable, this article will focus primarily on the enterprise resource planning (ERP) workstream.

For clarification, the workloads classified as part of the ERP workstream are: Finance and Operations, Talent, and Retail. The workloads associated with the CRM workstream are: Project Service Automation, Field Service, Customer Service, Sales, Customer Insights, and Marketing.

Until recently, ERP solutions were only available via on-premises deployments. The Finance and Operations workload within Dynamics 365 is the first of the ERP workloads to be capable of joining the CRM counterparts in the cloud to create one, connected business solution.

Despite the power that comes with the always-on Microsoft Azure Cloud, there are plenty of organizations which are opposed to this still newer technology for one reason or another. Whether it’s human resistance to change or if there’s a greater business need to consider, choosing the right deployment option will be critical to the success of the implementation. To that end, it’s important to first understand what options are available, as well as to explore which capabilities may be of particular importance to any given business.

Defining the Options

Microsoft Dynamics 365 doesn’t eliminate the ability to deploy on-premises for ERP solutions (or CRM, for that matter). Rather, it enables new options with a full cloud deployment or a hybrid version of on-premises and cloud options. This has created choice for organizations, as well as put into play stepping stones for those wishing to make a gradual shift to a cloud-based ERP solution via a hybrid deployment. It also creates a way for organizations to utilize the power of the cloud, even if they have business requirements which require certain information to be stored via on-premises data storage due to data or other privacy laws/policies/concerns.

The three deployments now available are most commonly referred to as: On-Premises, Cloud, and Hybrid.

Does Your Dynamics 365 Solution Belong in the Cloud?:

Choosing the Correct Deployment for Finance and Operations

Defined: On-Premises Deployment

In an on-premises deployment, data is stored locally in data centers controlled by the organization or their partner’s data center. Dynamics 365 is deployed locally into the organization’s own data center, and none of the data or application is stored in the cloud – although connectivity is still required to Lifecycle Services, for deploying code and hotfixes.

In an on-premises deployment, the organization becomes the singular data trustee, and they are now responsible for ensuring the server reliability and data security for their environment.

Defined: Cloud Deployment

In the case of a cloud-based deployment, Dynamics 365 for Finance and Operations can be deployed as a cloud ERP service which is fully managed by Microsoft. All applications and data for a cloud-based deployment are stored, as the name implies, in the cloud. Similar to the other deployment methods, the system can be accessed via a standard HTML5 web client, which results in being able to access organizational data from nearly any modern computer or mobile device. However, unique to the cloud, no additional work is required to setup this access.

“Microsoft Dynamics 365 is at the forefront of the movement to bring the power of the cloud to ERP.”

Defined: Hybrid Deployment

A hybrid deployment of Dynamics 365 results in a solution where data and transactions can be captured locally, but it’s also replicated to the cloud, allowing a single view of all the stored data, as well as a redundancy for data recovery. In a hybrid deployment, local applications are typically leveraged as well to capture and process transactional data.

The data trustee in a hybrid deployment becomes a shared role with Microsoft maintaining server access and data security for the cloud instance and the organization being responsible for that which is on-premises.

In a cloud deployment, Microsoft is the sole data trustee, and they become responsible for maintaining the server access and data security associated with the environment.

Evaluating the Options

As with most choices in life, there are a number of pros and cons to each deployment option available, and what’s good for one organization isn’t always what’s good for the next.

A good partner firm can provide a comprehensive review of a business to evaluate what is best for their organization. The following section will dive into some of the higher level details the organization and/or partner will need to consider prior to arriving at a decision.

Things to Think About: On-Premises

Perhaps the most pertinent thing to mention when considering an on-premises deployment – especially for organizations seeking to maximize their deployment – is that many of the features and integrations which make Dynamics 365 so powerful are not readily supported or available via a strictly on-premises deployment. While that doesn’t necessarily mean they aren’t accessible and never will be, it does imply additional development time and work – as well as extra licensing and license costs – are needed to integrate solutions such Power BI and other useful solutions organizations regularly employ to run their day to day business operations and financial decision making.

For some organizations, this limitation may not be a hinderance, but considering the complexity of many organizations, this can lead to unnecessarily bloated development costs considering the number of integrated services required to effectively manage a business including property management, inventory levels, equipment depreciation, incoming revenue, as well as customers and maintenance in the field. This ability to view all this information in a relevant and efficient manner via reporting tools such as Power BI can become especially important as the organization grows.

Beyond the additional development needed to maintain an integrated system, an on-premises deployment makes the organization the sole data trustee, and it becomes responsible for all server maintenance, including high-availability and disaster recovery options. This typically creates additional costs in equipment, electrical/power costs needed to run and cool servers, as well as additional human capital needed to staff the data center(s). Furthermore, the staff maintaining the data center(s) will require specific software knowledge around Azure Service Fabric, which would not traditionally be in a data center.

While some of these points may appear to be roadblocks to an organization, there are times they may be necessary.

Most obvious: if an organization is accustomed to managing their own on-premises environment, it may simply be easier to upgrade to a similar deployment from an organizational politics point of view. While making a big decision, such as deployment type for an ERP solution, based on organizational politics may appear to be a way of avoiding confrontation rather than finding the best solution, there are times it is necessary. ERP implementations are known for having high rates of failure, and a leading cause is lack of user adoption. If sticking with a deployment option that’s familiar is what it takes to get user buy-in and adoption, it may well be worth sacrificing some of the benefits that come with a cloud-based deployment.

Beyond the user adoption dilemma, hardware investments on previous implementations may also come under consideration. If an organization has already invested in servers and other hardware necessary to run an on-premises instance, it may be more cost effective to deploy on-premises until the investment has been recovered and the hardware depreciates, making it necessary to look towards new solutions again.

For organizations caught in a scenario such as the hardware investment presented in the last paragraph, it should be noted that opting for an on-premises deployment doesn’t lock an organization into this setup for good. Microsoft has promised a one-time move capability from on-premises to the cloud for customers who wish to manage the move to the cloud on a more measured timeline for their business needs. This one-time move is limited to progressions towards the cloud – not from the cloud to on-premises, therefore highlighting Microsoft’s commitment to placing more functionality into cloud-based software solutions.

Legal restrictions may also dictate how an organization wishes to deploy their ERP instance. Laws will vary by locality, industry, and more, but a common theme across restrictive laws is data storage and security. With a world which is increasingly becoming digital, governments are beginning to recognize the importance of protecting the security of data for their citizens.

Since a government’s authority extends only to the border of their jurisdiction, it’s not uncommon to have laws which require, for example, health data collected by healthcare providers be stored in the same country in which the provider is practicing. A healthcare provider in the United States may be restricted to storing data on servers which are physically located within the United States. While Microsoft Azure allows for certain geographic specifications for which servers house data, some companies may still want or need to maintain local data residency in order to maintain compliance.

Things to Think About: Hybrid

Moving along to hybrid deployment options, there are a number of benefits to straddling the line between online and on-premises deployments.

A hybrid deployment is most useful in scenarios where processing of data can be supported and/or safeguarded through the use of local hardware, such as point of sale (POS) machines. In this setup, transactions take place in a local application, and the data is stored locally in the organization’s data center. The transaction is then replicated into the cloud, which in turn harvests all data being replicated into a single source. This allows decisions makers and others in the business a central point from which data can be analyzed to make appropriate decisions.

The single hub of business data isn’t the only benefit to a hybrid deployment. Businesses also benefit from safeguarded data. For instance, in places where internet reliability may be unpredictable – or during unexpected outages in high reliability geographies – the local applications continue to function, processes data locally and syncing with the cloud upon restored connectivity.

Imagine the headaches a large retailer can save with this method. Rather than being unable to process transactions due to internet downtime, they’re able to process transactions seamlessly to the local, on-premises instance. Thus, the retailer prevents making customers wait or missing out on sales opportunities due to an outage.

Of course, data security and storage laws are also reason to consider a hybrid deployment as well. Organizations which are beholden to laws requiring local data storage are unable to take full advantage of all the cloud has to offer on its own. In situations where data must be stored locally, but it is not restricted from being stored elsewhere, hybrid options may still be a consideration. Often this will not be the case since typically the intent of these laws is to restrict data from flowing outside the localities governing authority. However, if the law specifies data must be maintained locally but doesn’t restrict it from being replicated outside the locality, it may be feasible to have Finance and Operations deployed via the hybrid option. Organizations can store data locally, satisfying applicable laws, and also have the capability of leveraging all the cloud has to offer via the online portions of the deployment. This data replication is an all or nothing setup, so organizations should exercise due diligence when determining the intent and letter of their applicable laws and regulations.

Things to Consider: Cloud

The most obvious benefit to a cloud-based deployment of Dynamics 365 is that Microsoft becomes the singular data trustee, responsible for maintaining the integrity and security of the servers and hardware necessary to safeguard an organization’s business data. Disaster recovery services allow organizations to operate knowing the data vital to their operations is secure and available, including in the event of flood, fire, or other disaster which may wreak havoc on the physical data center. Data is replicated across multiple data centers in different geographies, reducing the risk from physical data center damage.

Beyond disaster recovery, organizations also benefit from high availability options with cloud deployments, managed by Microsoft. Cloud ERP deployments are able to accommodate increased server demand without the additional costs. When deployed locally, an organization would need to account for periods of high demand through additional hardware and staffing costs for their data centers, but with this included in online deployments, this burden is removed. It also ensures an organization is less likely to experience downtime due to high usage which may not have been predictable.

If disaster recovery and high availability options don’t sound intriguing, this will: new features and functionality. This will not impact the core functionality of the platform, as Microsoft has committed to ensuring all deployment options for Finance and Operations have the same core functionality, deployed through Lifecycle Services. However, anything offered outside this core platform will likely be seen in the cloud first. Microsoft has made this intent rather clear, and therefore, early adopters and those wanting access to the full capabilities of Dynamics 365 will find the cloud deployment option to be an obvious choice.

Having considered these reasons for a cloud deployment, the last one this paper will discuss is the power of the cloud. Business intelligence is increasingly becoming a critical element to competing in an ever-changing market, and cloud deployments benefit from the full functionality of Dynamics 365 and integrated business applications with minimal development costs, compared to an on-premises deployment. These applications, including Power BI, can be game changers allowing organizations to predict inventory levels, staffing needs, cash flow, and more. What’s more: it’s all scalable without extra cost.

As the business grows and finds itself needing additional hardware and server usage, the costs don’t increase. While additional users may be added increasing license costs, the costly upfront expenses of maintaining an on-premises deployment don’t exist. These considerations come together to make a strong case for an online, cloud-based deployment.

What’s the Right Answer for Deployment?

Having presented the ups and downs to consider with each deployment option, one thing should be clear: there’s no best deployment option.

A good partner will be able to accurately assess what option may be necessary or better suited for an organization. Each organization has different needs. Whether it’s the employee skillsets available, the willingness to adopt new technology, the laws impacting the organization, or the availability of reliable internet connections, each organization will have to consider which option is best suited for their current needs.

Despite there being no correct answer, it is clear organizations which are able to choose cloud-based deployment will likely find themselves with the most powerful and efficient ERP solution. The flexibility and extensibility of Dynamics 365’s Finance and Operations workload exists across all deployment options, but the functionality is most efficiently maximized via the Microsoft Azure Cloud.

Organizations opting for cloud-based deployments will be the first to benefit from changes and feature enhancements to the extended platform which go beyond the core platform functionality available to everyone. Likewise, these organizations will have an ERP system which is setup to be scaled with ease as the organization grows. Without the additional hardware maintenance and costs, organizations can instead turn their focus towards looking for ways to scale their business, aided by the cloud-based business intelligence tools which are integrated with the platform.

At the end of the day, the world is moving towards the cloud for a reason. The cloud offers secure and redundant storage, and it’s more readily available across devices and geographies. In an increasingly mobile world, businesses are learning the most effective ways to take advantage of this newfound mobility to remain competitive while reducing overall costs.

Despite this push for the cloud, organizations which have legal or other reasons to remain fully or partly on-premises should feel comfortable knowing that they aren’t alone in this decision. ERP solutions in particular are incredibly new to the option of cloud deployments, and it’s not a decision which should be made lightly.

ERP systems frequently serve as the backbone to an organization’s operations. Upgrading or initiating a new implementation should be done with careful planning and risk assessments. As referenced earlier, ERP projects have notoriously suffered high rates of failure. This failure isn’t necessarily implying complete disaster or costly mistakes, but rather, the measurement refers to delayed project timelines, budget overruns, failed user adoption, and more

“As Microsoft and others in the technology and software industries continue to push more towards cloud-based software and applications, businesses joining them in the cloud are likely to be among the first to see new features and functionality.”

Get More with Any Deployment

Regardless of the deployment option chosen, Dynamics 365 remains a leading contender for any organization wishing to upgrade from a previous version of Microsoft AX or for those wishing to implement a new ERP solution.

Choice in deployment is just one of the many ways in which Dynamics 365 is doing ERP differently. The deployment options simply underscore the attention Microsoft has given to providing more flexibility and control in their software solutions. Acting as the backbone to the business, an ERP solution should be able to support an organization’s needs, and it should be able to adjust accordingly to get them to the next step. Regardless of the deployment mechanism, Dynamics 365 is ready to propel any organization – no matter how unique – to the next level.

Part of avoiding this fate in an ERP implementation is selecting a deployment option based upon the needs of the business. For this reason: there can be no wrong deployment option. If a business doesn’t have the capacity or the willingness to move to a cloud-based solution, it’s not right for them and should be avoided. However, for those who have the capacity and willingness, a move to the cloud may just be the next competitive edge to grow their organization.

A final word on making the right choice: one key benefit Microsoft has worked into the Dynamics 365 platform is the ability to more easily transition into an online instance. Suppose an organization wants to be online, but their recent investment in expensive hardware makes the transition less sensical from a fiscal standpoint. With Dynamics 365, this company may opt to deploy a hybrid option until they’ve recovered the costs of the hardware. As the time comes to upgrade their hardware, the company may then choose to instead begin the migration to a fully online deployment. In this way, Dynamics 365 is truly setup to meet businesses where they’re at, but it doesn’t stop there. It then takes them to the next step in their journey, growing and changing as the organization does.

PowerObjects is a leader in delivering Microsoft Dynamics 365 solutions through unparalleled offerings of service, support, education and add-ons. PowerObjects has built an unmatched team of Dynamics 365 experts that help organizations increase productivity, streamline business processes, and build better relationships.

For more information on Dynamics 365 deployment options, including choosing the appropriate choice for your organization, checkout the PowerObjects website.

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