You want to implement your ERP with Microsoft Dynamics 365 Business Central but don’t yet know what to choose between Business Central Online(SaaS – Software as a Service) and On-Prem (local or IaaS).

In these cases, the only way to make a decision that actually meets your company’s needs is to evaluate the technical and management characteristics of the two options and the costs to be considered.

You can rest assured that both modes offer significant benefits and can be properly customized, but only one is perfect for your business. Let’s find out which one is!

Technology aspects: differences between Business Central Online or On Premise?

Microsoft Dynamics 365 Business Central is a system ERP (Enterprise Resource Planning) powerful, scalable and flexible designed to help organizations of all sizes easily manage key processes such as accounting, management control, logistics, human resources and more.

With Dynamics 365 Business Central integration, you can get a complete overview of business processes and better understand their workflows, analyze data in real time, and make informed decisions.

But let’s cut to the chase: what is the first difference between On-Premise and Online?

• With On-Premise, you can more easily and less expensively integrate dated software and hardware, including the various devices found in the production units of manufacturing companies.
• With Online SaaS, you can natively integrate the entire ecosystem of Microsoft 365 applications, and most importantly, you will benefit in the future from all that Microsoft will offer that is technologically advanced.

In fact, do not forget that to date Microsoft’s vision is exclusively oriented to the Online and Cloud world.

Saas and On Premise: what are the costs of the two solutions?

To best evaluate the two solutions economically, you need to understand the upfront costs and hidden costs that accumulate over a longer period.

In particular you will need to consider:

• the implementation costs of the solution
• The costs of running the software after implementation
• and, for On-Premise mode, the eventual purchase, management and maintenance of both local and possibly external infrastructure (IaaS)

Microsoft Dynamics 365 Business Central SaaS management costs.

Let us now get to the heart of our article. In the case of the Business Central Online (SaaS) solution, the monthly subscription fee is the largest expense.

Don’t be misled, however. It does indeed cost more than buying or paying license fees for the local solution but, in the monthly subscription fee, all hosting, server maintenance, security and backup expenses are included because they are paid for by Microsoft.

So in the SaaS solution you will have no hidden costs:

• No personnel costs for infrastructure maintenance.
• No investment to be made and managed in hardware etc.
• no cost for the purchase of “BC objects (tables, pages, …)” necessary for the implementation of local customizations (extensions) (Per Tenant Extensions).

The only expenses (which are actually identical to those of On-Premise), are:

• the time required to implement and launch the solution, and user training on the implemented management processes.
• The subscription fee, if any, for the maintenance of local extensions, i.e., customized solutions.

The cost of managing Microsoft Dynamics 365 Business Central On-Premise.

Unlike SaaS, migrating to an On-Premise solution from Business Central can lead to additional “hidden” costs, such as:

• The continuation of infrastructure management
• basic and middleware software licensing costs (SQL Server – adding a new user involves the concurrent purchase of a SQL Server CAL)
• IT personnel costs for maintenance (training and operations)
• The management and maintenance of customizations that may be incompatible with new Microsoft releases

In summary, if you decide to switch to Business Central On-Prem you will have to pay (in the long run) more than Business Central Online.

Pros and Cons of Business Central On-Premise and Online SaaS

We have listed all the pros and cons of the two solutions in this table. But if you still have doubts and do not know what to choose our Velika team is ready to support you, analyzing your business needs and finding the best solution for you.

Let’s see the table now!

	Pro	Against
On-Prem	Sometimes easier integration withdepartmental and Industry-Specific software Better integration with “dated” software and pre-existing reporting systems	More complex integration with the Microsoft 365 ecosystem Less functionality available compared to Online Maintenance and licensing costs of basic s/w (operating systems, SQL, backup, …) not included Possible personnel costs for maintaining a local infrastructure or IaaS Personnel training costs (configurations, installations, and solution management) More expensive external accessibility
Online (SaaS)	Native and full integration with all applications available in the Microsoft 365 ecosystem More features available than On-Prem Accessibility from any device in any location Hosting, server maintenance, security and backup fees included in the fee	Requires a stable internet connection Difficult integration with dated software