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Dynamics 365

The right cloud option for your business

Update May 7, 2021: For the latest information on Microsoft Dynamics 365 Supply Chain Management, please check out our latest blogs: Enhance visibility and scale operations without interruptions for your supply chain, Boost supply chain resilience with cloud and edge scale units in Supply Chain Management, and Robust warehouse execution with Dynamics 365 Supply Chain Management.

Wow! Nearly twelve months into the availability of Microsoft’s cloud ERP service, Microsoft Dynamics 365 for Operations, and we’re seeing an unprecedented global adoption of cloud business applications by mid-sized and large organizations. Our new enterprise customers are increasingly choosing our cloud solutions, with four out of five selecting Dynamics 365. It’s interesting to see organizations shifting paradigms with respect to business applications, preferring shorter implementations, fewer customizations, repeatable industry or domain solutions, and continuous updates. Most noticeable is the shift from systems of record to systems of intelligence. ERP is becoming cool again!

In my last blog post, I emphasized the importance of our cloud-first approach in business applications and I shared planned investments in cloud capabilities including the new onboarding service FastTrack, business application marketplace AppSource, and support of Azure ExpressRoute. FastTrack, our customer success service to help organizations onboard onto the cloud service, has led to predictable fast implementations. As part of this program, we’re noticing a strong desire among our customers to go live in a short time period, sometimes in 90 days or less, with few customizations to the service. As part of these short implementations, partner solutions are being deployed to enrich and expand business processes. In the last year, many partners have curated their industry or domain solution and published these on the biz app market place. You can discover and explore more than 250 Dynamics 365 solutions on AppSource.

There is no doubt that the future of business processes lies in the cloud and that we can provide our customers with the best value with our cloud services. Helping you choose the right cloud deployment for your organization is imperative.

Ensuring business continuity by distributing compute resources closer to the edge

Businesses require uninterrupted execution of some of their mission critical business processes. A retailer who is helping a customer checkout and keeping queues to a minimum. A manufacturing facility where workers need to keep the production line humming and avoid production delays, especially in lean manufacturing scenarios. Industries rely on expensive machines to produce goods; these machines are highly automated, working on inputs from the ERP systems and provide critical output signals that are used for overall management of the production facility. 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.

At the Summit ’16 in Tampa, Florida, we announced the plans for a hybrid cloud deployment meant to accommodate these specific scenarios, so that organizations can combine the best of both worlds. 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.

The Microsoft cloud connection ensures data aggregation, financial reporting, intelligence, and more. The cloud instance also provides the local installation with data failover in the Microsoft cloud, automated deployment and continuous updates, and elastic compute capacity to infuse “intelligence” into the business process when needed. This hybrid cloud deployment model scales out through federation of the on-premises nodes (My Workplaces), federated in the Microsoft cloud for a single, global enterprise view, which is a first for business applications.  By Summer 2017, we will support a single “My Workplace”, followed by federation of “My Workplace” instances in releases beyond. We are excited to offer this deployment option, “cloud and edge”, a true differentiated option that combines the power of cloud and on-premises in a unique way to offer scale, continuity, and intelligence.

Keeping business data local

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. In these cases, the typical replication of business data in the Microsoft cloud (referenced in the cloud and edge scenario) is simply switched off. Cloud synchronization of data enables us to embed intelligence into business processes – embedded analytics, machine learning, and a vast range of capabilities are best served from the Microsoft cloud. With this option, customers now have choice – an option to turn ON or turn OFF cloud synchronization of their business data. If customers turn OFF cloud synchronization, no business data leaves their trustee’s boundaries. Also, functions like, embedded Power BI, Aggregated Views and Azure Machine Learning services based efficiencies are not available when Cloud Data synchronization is turned OFF. Customers can choose to take advantage of the embedded intelligence functions by simply turning ON data synchronization to the cloud.

Our cloud-based Application Lifecycle Management (ALM) functions, including diagnostics, monitoring, usage telemetry, and production updates, are provided through Microsoft Dynamics Lifecycle Services (LCS). LCS is required for efficient upkeep and operation of your Dynamics 365 for Operations solutions in all our deployment options. In nearly a year of operating the cloud service, we have seen that LCS based management leads to more predictable deployments and provides customers with a much better support and service experience.  All deployment options for Dynamics 365 for Operations require LCS for their operation.

For the “local business data” deployment scenario, the application servers and SQL database will run in a customer’s (or its partner’s) data center. Customers and partners will manage the application lifecycle through LCS in the Microsoft Cloud, including designing the business processes, creating and deploying the software image to deploy onto the on-premises nodes, monitoring the on-premises nodes in a system health dashboard, and keeping up with innovation from Microsoft.

Choosing the right deployment option

We want organizations to be able to select the deployment scenario that makes sense now but also have the flexibility to change later, with choices ranging from full cloud to cloud and edge to local business data. You can move in either direction depending on your business needs. For example, you might start with a local data center and move to the cloud when it’s time for your hardware refresh.

From both a technology and licensing perspective, we strive to provide choice and flexibility. Some guidance on how we are offering these deployment choices:

  • New and existing customers will have paths forward to license both local business data and cloud and edge deployments. Existing investments will continue to be accounted for in our licensing.
  • Customers can license local business data deployments via a Dynamics 365 for Operations license with Software Assurance/Enhancement Plan or a subscription model.
  • Customers with active Microsoft Dynamics Enhancement Plans or Software Assurance, may upgrade to local business data as they remain entitled to access new versions and updates.
  • Transitions to Dynamics 365 cloud subscriptions are available to customers with active Microsoft Dynamics Enhancement Plans or Software Assurance.
  • Cloud and edge software and services will be licensed under the existing Dynamics 365 cloud subscription licensing model.


The following table shows a side-by-side comparison of the planned scenarios, including use cases, components, and strengths:


The scenarios “cloud and edge” and “local business data” are planned for release in the summer of 2017. While we are working on these new deployment scenarios, we plan to disclose more details about them at the Technical Conference scheduled for March 12 through 15th at WSSC, Seattle, Washington. We look forward to meeting you at this conference. Please register here. You can read further details about our exciting plans for Dynamics 365 for Operations on our roadmap site.

To learn more Join Us at the Dynamics 365 Tech Conference!



All dates and features are preliminary and subject to change without notice.  Use of the word “partner” refers solely to marketing relationships and do not refer to or imply a partnership or any other legal relationship.