Updated November, 2026. This article was originally published in April 2024 and has been refreshed with Microsoft’s latest on-premise licensing changes, current support deadlines for Dynamics NAV and Dynamics GP, and 2026 cloud ERP adoption data.
If your current on-premise ERP system has reached the end of life or is no longer supported by the publisher (like Microsoft Dynamics NAV, or Microsoft Dynamics GP), it’s time to move to the cloud.
If you’re experiencing increased IT expenses, performance issues, or downtime, it’s time to move to the cloud.
If your technology infrastructure is outdated and needs overhauling, it’s time to move to the cloud.
If you’re having compatibility and integration issues with your other core business systems, it’s time to move to the cloud.
You may hesitate and delay the inevitable, but the benefits of moving to the cloud significantly outweigh any reasons to stay with an on-premise ERP. In this blog post, we’ll look at where on-premise ERP stands today, the phasing out of perpetual licensing, and the risks your business will face by keeping your servers, storage, databases, and business applications 100% on-premise.
From there, we’ll provide our top reasons to consider embracing and moving to a cloud this year.
Perpetual Licensing is Dead
It’s the end of an era. Most software and technology publishers, including Microsoft, have already phased out perpetual licenses in favor of subscription and consumption models.
For Microsoft Dynamics customers, this is no longer a future change. As of April 1, 2025, new customers can no longer buy perpetual licenses for Dynamics 365 Business Central on-premises. On-premise deployment is still possible through a subscription, but the pay-once option is gone. Staying on-premise has also gotten more expensive. Microsoft raised on-premise license prices for Business Central, NAV, and GP in October 2025 and increased the annual Enhancement Plan rate from 19% to 20%.
Perpetual licensing is considered the “traditional method of purchasing software.” You pay once to license the software indefinitely and then often pay a small percentage of the initial licensing cost yearly to have access to software updates.
ERP software has traditionally been delivered in an on-premise structure. An organization buys the software, pays for the one-time perpetual licensing fee and tailored implementation services, and then must invest in servers and an IT team to manage, maintain, and update their systems and data until the end. The responsibility was put on the shoulders of companies to find the expert resources, expertise, and budget to manage their data, storage, security, and software updates, often employing specialized implementation partners for significant upgrades and customizations.
As a result, investing in on-premise ERP software required extensive up-front costs and an enormous amount of resources to keep your systems running properly, which is why, not long ago, sophisticated ERP software was often reserved for the budgets of large corporations.
The advent of cloud and subscription pricing models has opened up new opportunities for small to midsized growing businesses that could previously not afford the high upfront fees and costly maintenance. Gone are the days of having to make an enormous commitment to a solution and invest your hard-earned cash and resources into maintaining it.
Instead, subscription models offer the opportunity to rent robust, cloud-based ERP software licenses on a monthly, quarterly, or yearly basis and get access to a fully up-to-date business application with the latest functionality and security features.
And everyone wins. Software publishers can expand their market reach and serve practical, scalable ERP solutions to a more diverse range of business sizes and industries. Growing SMBs can alleviate the cost, infrastructure, and resource burdens with the ability to license and pay for only the ERP functionality they need at the time.
So, is on-premise ERP software completely dead?
If you ask anyone in the tech field today, they will probably say “mostly yes.” All the early adopters have been running in the cloud for years, and now the laggards are finally getting off their feet and moving to the cloud, too. Gartner forecasts public cloud spending will grow 21.3%, fueled by ongoing migration and modernization efforts. And of the ERP systems tracked by ERP Research, 89% now offer a cloud deployment and 41% no longer offer anything else.
Spending on cloud infrastructure has long exceeded on-premise software. Even large government agencies have moved their most sensitive systems to the cloud.
However, according to a recent Forbes article, on-premise software is not dead but is being “redefined.” Software still runs on servers. The difference now is that companies don’t need to physically house and maintain the hardware themselves. Instead, they pay for hosting services and platforms, like Microsoft Azure, to do the heavy lifting and lease the storage and software they need. That tracks with the broader market, where more than half of ERP vendors still sell an on-premise option, mostly for regulated industries and data sovereignty needs.
So, yes, business owners no longer have to worry about managing and maintaining on-premise servers, but they’re not entirely off the hook. Cloud service providers are only providing the service and storage, and there is still an ongoing effort required to right-size and manage your cloud environments. Luckily, there really is an option for everyone. Software as a service (SaaS) and multi-cloud options have created endless opportunities for every business size, budget, and security tolerance, which we will discuss in the next section.
Is Your On-Premise ERP Still Supported?
If you’re running Microsoft Dynamics on-premise, the more urgent question isn’t whether on-premise ERP is going away. It’s whether your version is still supported. Here’s where Microsoft’s on-premise ERP products stand.
| Product | Key date | What it means |
|---|---|---|
| Dynamics NAV 2015 and earlier | January 14, 2025 or earlier | No security updates or Microsoft support |
| Dynamics NAV 2016 | April 14, 2026 | Extended support (security updates) ends |
| Dynamics NAV 2017 | January 11, 2027 | Extended support ends (what that means for NAV 2017 users) |
| Dynamics NAV 2018 | January 11, 2028 | Extended support ends for the final NAV release |
| Dynamics GP | April 1, 2026 | No new customer sales |
| Dynamics GP | December 31, 2029 | Product enhancements, tax updates, and technical support end |
| Dynamics GP | April 30, 2031 | Security patches end |
| Business Central on-premise | Every release | Each version is supported for about 18 months, so regular upgrades are required to stay supported |
Running unsupported ERP on-premise means no security patches, no tax or regulatory updates, and no help from Microsoft when something breaks. And the longer you wait, the harder the move gets. Moving off NAV or GP is a legacy software migration, not a simple update, so it needs to start well before your support date. Even Business Central on-premise customers carry more overhead than cloud users, from regular version upgrades to license keys that now have to be refreshed on a schedule.
If you’re weighing your options, our guide to Business Central hosting compares cloud, on-premise, and third-party hosting side by side. And if you’re on NAV, our team can help you map out your upgrade to Business Central.
Why It’s Time to Move Your On-Premise ERP to the Cloud
Let’s face it, the time to move to the cloud was yesterday. Over the past decade, cloud computing has taken over how we work and do business. Better performance, accessibility, scalability, and savings have all driven the adoption of cloud technology, and companies today either run in the cloud or are in the process of moving to the cloud.
Cloud ERP is the most modern version of ERP deployment, and it offers significant advantages in the cost savings and scalability department. Depending on your needs, you can decide how much control you have over your cloud services and solutions with several public, private, and hybrid cloud deployment options.
Unlike on-premise ERP software, cloud ERP requires significantly less up-front investment and more flexibility based on your budgets and needs. So, if you are still running most of your business on physical servers, here are some compelling reasons why we think you should consider embracing a move to the cloud this year:
- Lack of Support for On-Prem
This is the first reason you must consider transitioning from on-premise to the cloud. When your ERP software has reached its end of life or mainstream maintenance, every issue or problem with your system is now up to you (and your wallet). Microsoft has already set end dates for every version of Dynamics NAV and for Dynamics GP (see the table above), and SAP’s mainstream support for ECC ends in 2027. Once support ends, that means no more new features or functionality, no more patches or security updates, and no more mainstream publisher support. - Missed Opportunities
When you are on the latest version of a cloud ERP solution, you have access to more data and analytics at your fingertips. Your salespeople can connect with customers from anywhere, your operations folk will have more functionality than ever, and your executives can finally view the whole picture they need to make faster, strategic decisions that impact the business. You also get access to AI. Business Central online now includes Copilot and AI agents that can take on work like processing vendor invoices and sales orders. - Unnecessary Costs
There is a cost to being reactive and not proactive. Dragging your feet to move to the cloud will eventually have costly repercussions. If you’re running an older (and no longer supported) version of Dynamics NAV, for example, you may be unable to follow the upgrade path to Business Central. Instead, moving your operations and systems to the cloud will cost you a full reimplementation. - Modern Advancements
There are many advantages to moving to the cloud. However, two of the most considerable enhancements you don’t get with on-premise software are the advanced multi-layered security provided by the world’s largest cloud companies and the seamless integration capabilities that allow you to extend your industry or process-driven functionality easily.
How One Manufacturer Left On-Premise ERP Behind
Merrick Hardwood Floors runs six interconnected businesses, including a pellet mill that’s its most profitable division. Its on-premise infrastructure was hit by ransomware three times in four years, and a single IT manager was stuck firefighting across all six companies. After Tigunia moved Merrick to Business Central in the cloud, the company has had no ransomware incidents, workflow improvements prevented up to $100,000 in potential lost revenue, and all six businesses still run with just one in-house IT manager.
“With Tigunia, I can take a vacation for the first time in three years and know operations will keep running smoothly.”
John White, IT Manager, Merrick Hardwood Floors
How to Select the Right Cloud ERP for Your Business
We’ve established that the cloud is the path forward for a business looking to evolve. But there are many options out there, and we want to ensure you are equipped with the information you need to make the right decision for your business.
As passionate nerds about the cloud and all things IT for growing small to medium-sized organizations, we don’t want you to select an ERP solution that is too big for your business or your budget. No company needs to pay for a slew of unnecessary features or licenses they won’t use, which will only complicate adoption and ERP projects, driving up the costs. We have seen that go sideways and have helped many customers right-size their technology to fit their needs.
This is why we most often recommend a look at Dynamics 365 Business Central, Microsoft’s trusted and preferred cloud ERP solution for growing companies who need and require more than a bookkeeping solution like QuickBooks but don’t require a mid-six-figure or multi-million dollar Tier 1 ERP.
Not only is Business Central an intuitive, practical, modern cloud ERP that is affordable, infinitely scalable, and easily adaptable to nearly any industry, but it’s also a proven and widely trusted platform. As of 2026, more than 55,000 businesses run on Business Central online, up from 15,000 in 2021.
So you can learn all the details about Business Central’s cloud ERP inclusions, licensing, and benefits to evaluate its fit for your organization, the seasoned experts at Tigunia have created this free comprehensive guide.
Decoding Dynamics: A Buyer’s Guide to Microsoft Dynamics 365 Business Central Cloud ERP
DOWNLOAD NOW
Ready to Move Your ERP to the Cloud?
As we’ve established, every Microsoft on-premise ERP has an expiration date, and the closer you get to it, the fewer options you have.
Whether you’re running NAV, GP, or Business Central on-premise, Tigunia can help you plan a cloud migration that fits your timeline and budget. We’ll assess your current system, map the right path forward, and handle everything from data migration to training so your team keeps running without disruption.
Not ready for full cloud? We’ll also walk you through hosted options that take the servers off your plate.
On-Premise ERP FAQ
What is on-premise ERP?
On-premise ERP is enterprise resource planning software installed on servers your company owns and manages, either in your office or your own data center. Your team is responsible for the hardware, security, backups, and upgrades, rather than a cloud provider.
What’s the difference between on-premise and cloud ERP?
On-premise ERP typically requires a large upfront investment in licenses and servers, plus an IT team to maintain them. Cloud ERP is licensed by subscription and hosted by the provider, so updates, security, and infrastructure are handled for you. Cloud ERP also gives you access to new features, like AI, as soon as they’re released.
Can you still run Business Central on-premise?
Yes. However, Microsoft stopped selling perpetual Business Central on-premise licenses to new customers on April 1, 2025, so new on-premise deployments now require a subscription. On-premise customers also need to upgrade to a new version regularly to stay supported.
Can you still buy Microsoft Dynamics GP?
Not as a new customer. Microsoft ended new GP sales on April 1, 2026. Existing customers can still add users and modules, but product support and tax updates end December 31, 2029, and security patches end April 30, 2031.
What happens when Dynamics NAV support ends?
Your system keeps running, but Microsoft stops releasing security updates and no longer provides support. That leaves your business exposed to security risks and compliance gaps. Learn more about running NAV after support ends.
Is cloud ERP more secure than on-premise ERP?
For most small and midsized businesses, yes. Providers like Microsoft invest far more in security, monitoring, and compliance than a single company can on its own. Read more about why the cloud is secure.
Is there a middle ground between on-premise and cloud ERP?
Yes. Hosted ERP lets you keep control of your environment while a provider manages the servers in a secure data center. It’s a good fit for companies with heavy customizations or specific compliance needs. Compare your options in our guide to Business Central hosting.
How long does it take to move from on-premise ERP to the cloud?
It all depends on your current system, how customized it is, and how much data you’re bringing over. Many small and midsized businesses complete the move in a few months, while companies with multiple entities or complex customizations should plan for longer. A partner assessment is the best way to get a realistic timeline.
