BC Hosting Cloud vs. On-Premises: Which should you choose?

June 14, 2022
News and Events
7 min read

This blog post is part-one of a series on Business Central hosting. If you haven’t already, catch up on our licensing and Tigunia vs. Microsoft blog posts.


Alright, so you’ve decided that you’re going to use Microsoft Dynamics 365 Business Central for all of your CRM and ERP needs.

Great choice.

But there’s another choice to be made: how do you want to host that data?

You read that, and if you’re a non-expert, you may not even know what that means. If you know what that means, you may not care about any difference beyond price and performance. But there’s a little more to it.

Generally speaking, there are three options to choose from: cloud-based, on-premises, and a hybrid of those two options. This is also affected by how you choose to license your Business Central application, but we’ll save that for our next blog.

Right now, let’s discuss our hosting options.


With on-premises hosting, you use your own physical servers and IT infrastructure to host and operate the ERP solution. You are responsible for your own server, and you own the data at all stages. On-premises hosting allows you to access that data from anywhere via the internet or directly from the server offline.


If you want to know your ongoing operating costs in advance, and not be surprised by sudden and unexpected costs, you can choose a SaaS (Software-as-a-Service) hosting solution. Essentially, you rent an ERP application from Microsoft, and the data can be hosted by Microsoft or a different IT supplier, such as Tigunia; the data lives on a server owned by that supplier. All costs in a SaaS solution are included in one single price, typically a monthly license per user. With cloud hosting, there is no direct, offline access.


This method is a mix of both on-premises and SaaS hosting. While its popularity and usefulness are expanding, it remains a pretty niche option. This option offers similar flexibility and ease as a SaaS solution but also a level of control and security as the on-premises solution. In this instance, the customer typically already owns an on-premises version of an application software and does not want to replace it. However, the customer wants to be able to access the software via the cloud, so it is installed through a hosting provider and given a web server front end. The software can reside on the customer’s hardware as an on-premises system typically would, or it can be hosted on a private provider. With this approach, the hosting provider takes on the responsibility of maintenance, updates, et cetera.

In any case, there is no “right” answer or solution, in a universal sense. The “right” hosting option is the one that works best for each specific customer. And since there is no default, there are a few questions you should ask yourself to make this easier.

Do you want/need complete control over your ERP?

The advantage for managing an on-premises deployment yourself is that you have full control over how the system is installed and optimized for your business.

Business Central is designed to meet the needs of many types and sizes of organizations and can be installed either on-premises or in the cloud. However, some companies may find they need increased performance to meet their needs.

For example, some businesses require many users, or process a large amount of data, or need additional functionality. These companies might want to consider choosing an on-premises solution so that can have full control over their hardware, servers, and data for performance purposes.

Do you need to optimize for your business?

The most important component of your ERP solution is making sure your system is deployed correctly to ensure that your database server is sized correctly, that you have enough processing power, that you have enough RAM, and that your disk subsystem is compiled and performing at its highest level.

You can do all that either on-premises with a physical server in your own server room or on Azure.

However, there are potential downsides. You are responsible for having the appropriate infrastructure, whether it is hosted locally or in the cloud. This requires a much larger upfront investment because you are not leasing the hardware. You are, instead, purchasing it.

You may also have to purchase sufficient capacity for seasonal fluctuations.

Another consideration is that you will be taking on the responsibility for backing up your data, applying service updates, ensuring network security, and maximizing your own availability in the event of system failure or service interruption.

Do you want/need to have control over upgrades?

With on-premises hosting, you can manage the upgrade and update schedule for Business Central yourself.

With a managed SaaS implementation, Microsoft enforces upgrades and updates on a defined schedule. Upgrades and updates require brief service interruptions, and Microsoft’s schedule may not work well for your business needs.

If you’re running Business Central on-premises, you have full control over when to apply the updates. This prioritizes your needs for availability.

The hybrid option is for when you fall between Cloud and On-Premises.

There is an in between – and this is where the hybrid solution can be useful.

For example, it is possible to deploy Business Central on-premises but use an Azure SQL database as a managed solution. In this case, the user is responsible for the administration of Business Central and the hosting provider is responsible for the configuration and management of the database server.

Using this model, the only things the user must manage are simply two other servers, the middle tier that sits between the client and the SQL server where the business processing takes place, and the front-end web server. This gives a cost-effective solution that allows users to hit their performance targets without the headaches of managing the database server itself.

And all your data remains accessible from anywhere…mostly.

While Business Central is a cloud-first service, businesses that need to run their workloads on-premises or on the intelligent edge connected to the cloud can do so. With Business Central, once you sign up for the service in the cloud, they have the option to deploy it locally to their choice of hardware. While you are running Business Central on your own hardware, you could have a tenant in the cloud where data from your hardware will be replicated to the cloud for intelligent cloud scenarios.

At all times, you are informed of their “replication success rate” so when you’re ready to transition completely to the cloud, it’s a simple step.

Your data is always uploaded to the cloud from on-premises to bring the intelligent cloud capabilities to the Business Central deployments on the intelligent edge, though you can opt out if desired. Business Central will be licensed through a Cloud Solution Provider, at the same price, regardless of where you (through a partner) deploy your solution.

Partners like Tigunia are still able to customize on-premises solutions through code customization. However, doing that may degrade your replication services, because increasing the number of code customizations reduces the percentage of tables that can be replicated to the cloud.

At all times, businesses will see a tile showing the replication percentage and a list of the tables with issues so they can work with their VAR to determine the appropriate resolution steps. This is an important way for customers to continue receiving value from the intelligent cloud and the intelligent edge, regardless of the changes made to Business Central on-premises.

While a cloud deployment of Business Central is ideal for many companies, there are times when an on-premises or hybrid deployment makes sense. It is important for you to consider your unique business needs and budget before selecting what works best for your company.

Luckily, you’re not on your own here. You have a partner like Tigunia to help you along the way so that you make the best decision. Contact Tigunia today to further explore your options.