Microsoft has led development with a "cloud first" approach under the leadership of CEO Satya Nadella, but that doesn't mean it has abandoned support for on-premises deployments going forward. To that end, Microsoft will soon offer an on-premises version of Dynamics 365 for Operations, the cloud ERP and CRM system it launched in November.
GM Sri Srinivasan describes the upcoming launch in a blog post:
Businesses require uninterrupted execution of some of their mission critical business processes. ... A manufacturing facility where workers need to keep the production line humming and avoid production delays, especially in lean manufacturing scenarios. ... In such scenarios, it is desirable to run these processes locally while leveraging the power of the cloud to maximize efficiency. Also, some geographies require that transactions and personal information be captured and stored locally.
Dynamics 365 for Operations plans to enable organizations to run their business processes from application servers at the edges, meaning that transactions are supported by local application services and business data is stored locally. Each such facility running at the edge is called “My Workplace”. The central cloud node provides a single view of the business across distributed ”My Workplace” instances while utilizing the power of the Microsoft cloud for embedded intelligence in business processes.
Microsoft is calling this model "cloud and edge." By mid-year, Microsoft will offer capabilites for a single "My Workplace" with federation to follow. Microsoft is going further, however, with another option called "local business data":
Meanwhile, some organizations simply are not ready to store their company’s mission critical data in the cloud. This requirement, in many cases, is due to industry regulations, country or geographic cloud adoption, recent data center investments, or an organization’s enterprise standards. For these customers, we are excited to announce a new deployment option that will not require their business data to be stored in the cloud. This deployment option, “local business data,” will support running your business processes on-premises, supporting local transactions and storage of local business data, without replication of your business data to the Microsoft cloud.
There's a tradeoff Dynamics customers that choose this option should understand, namely that the lack of data replication to Microsoft's cloud means that advanced functionality such as Azure Machine Learning services and Power BI won't be available, the blog notes.
Even with the local business data option, wherein the software will run in a customer or partner data center, the use of cloud-based Dynamics Lifecycle Services will still be required for maintenance and upkeep.
The "cloud and edge" and "local business data" options will be available by mid-year.
"Giving customers choice is always good, and Microsoft is following to a certain point the Oracle playbook, where customers are free to use products where they need or want to use them," says Constellation Research VP and principal analyst Holger Mueller.
Meanwhile, "data privacy and residency rules often give enterprises no choice but to consider local, on-premises installs," he adds. "Avaialbility of in-country data centers may also be a point, as well as performance."
Microsoft also may have succumbed to pressure from its customer base and partner community—which still serves as the primary conduit for Dynamics business—for a fully on-premises option. Those partners want to give every option to prospects and existing clients, and the vast majority of ERP installations from any vendor remain on-premises deployments. While there are many indications that interest in cloud ERP is growing, the broader cultural shift simply hasn't happened yet and may not for years.
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