Application Support

Dynamics 365 Online vs. On-Premise (Hosted)

We started to implement Microsoft Dynamics 365 when it was at version 4 in around 2007.  Back then, the Microsoft offering was very much an on-premise solution.  The only way for a business to take advantage of the cloud was to use it as a “hosted” solution.  This meant that instead of having 2 physical servers (one for CRM one for SQL) managed by your in-house IT team and having the expense of buying licenses with software assurance, you could have it hosted in servers managed off-site and could enjoy a per user per month fee.  In October 2013 Microsoft took Dynamics 365 for Sales and Customer Service (then named Microsoft Dynamics CRM 2013) to a true cloud, software as a service model.


By 2016 Microsoft started to add features to Microsoft Dynamics 365 online with planned later release dates of these new features to on-premise and indeed sometimes the release of these new features to on-premise was not on the roadmap.


Over the years the differences between Hosted / On-Premise Dynamics 365 for Sales and Customer Service sites has altered significantly, and with the new common data service, now renamed to the dataverse, the availability to tap into data stored there has offered a great deal of opportunity.


Let me qualify the dataverse more before we move onto the differences between Microsoft Dynamics 365 for Sales on-premise and cloud as this is a biggie.  The “dataverse” is an easy-to-use and manage, secure and scalable cloud-based data service.  Put simply, this empowers businesses to work with lots of data types across lots of data applications in order to bring it together to provide insights and reporting for action.  In short, the dataverse has provided the ability to connect applications, systems, and devices as software as a service offering (SaaS).


Please note, that the hosted version of Dynamics 365 for Sales and Customer Service mirrors the on-premise functionality.


What are the differences between Microsoft Dynamics 365 for Sales on Premise and Cloud?


There are some obvious benefits and differences between Microsoft Dynamics 365 for Sales on Premise and Cloud such as not needing infrastructure and servers managed by an IT team.  By having the solution truly in the cloud with Microsoft means that you do not require too much involvement from your internal IT team as backups and updates are managed by Microsoft as part of the service.


With on-premise or hosted sites, the upgrades need to be applied regularly and can cost the business to do the upgrade, the testing, and the push to new versions.  Additionally, if software assurance isn’t in place then you will need to repurchase the solution as you won’t have the rights to upgrade, or if you have software assurance in place and have not taken the upgrade you are not making the most of the licensing and the support available to you.


With Microsoft Dynamics 365 for Sales and Customer Service Online, the updates and versions are pushed via Microsoft.  As a Microsoft Gold partner, we recommend our clients opt into early releases to sandbox instances to ensure that time is allowed for testing before release to production.


For clarity, please see here a couple of examples of screenshots taken from an on-premise (hosted) 2016 version and a Dynamics 365 for Sales and Customer Service Online version:


Leads in Dynamics 365 2016 On-Premise (hosted) visual:

Microsoft Dynamics 365 Online vs. On-Premise or Hosted


Leads in Dynamics 365 Online visual (2021):

Microsoft Dynamics 365 Online vs. On-Premise or Hosted

Please see here the rich information available re. lead scoring, insights, and the active timeline as well as the central timeline with details to filter and search centrally.


Opportunities in Dynamics 365 (2016) On-Premise (Hosted):

Opportunities in MSDyn365 (2016) On-Premise (Hosted)


Opportunities in Dynamics 365 for Sales Online (2021):

Opportunities in MSDyn365 Online

There is a much more intuitive way to add activity to the records and the timeline is easier and faster to use.


Online Capabilities that are not available with Dynamics 365 (CRM) on-premise


Listed below are the capabilities that we understand at the time of writing are not available on the Dynamics 365 for sales and customer service on-premise sites, therefore highlighting the online opportunity:


  • Artificial intelligence capability across Customer Service and Sales. This video offers some scenarios and gives a brief snapshot of how AI creates actions making the data valuable.
  • Powerful relationship insights offering actions for users based on recent communications
  • Integrations with the online versions of Microsoft 365 applications such as Excel Online, Word Online and so on.
  • Mobile offline synchronisation.
  • Microsoft Teams integration enables access, sharing, and collaboration of data without switching apps. This video brings it to life here.
  • The Unified Interface provides an excellent way to use the solution with ease. Please see our blog from our sister company Caltech IT here, and also take a look at the Microsoft video demonstrating the benefits of the unified interface.
  • Playbooks are only available as a connection to Dynamics 365 Online. These are similar to process bars but can be used to trigger a set of repeatable processes for specific scenarios and are very powerful.  Here’s the blog describing how they can be used.
  • Whilst Power BI can be used for on-premise Dynamics 365 sites using internet-facing deployments (IFD) the online version is seamless.
  • Microsoft Dynamics Marketing (MDM) is only available for Dynamics 365 online providing native marketing activities and is powerful for event management.
  • There is an integrated survey solution in Microsoft Form usage rights.
  • Web portals are available for self-service. 
  • Customer Voice can be used to track customer perception of your solutions or services. This was formerly called voice of the customer.  
  • Improved SLAs in the Dynamics 365 Customer Service application which displays how much time is lapsed on an SLA to ensure agents meet their goals and help clients in the best way.


There are some immediate visual improvements we have noted after logging into a Dynamics 365 2016 Sales hosted site, compared to a Dynamics 365 Online site, which are listed here below as a point of reference:


  • Navigation has moved down the left-hand pane (whilst on-premise and hosted the navigation is on the top bar).
  • Introduction of ‘Apps’ i.e Customer Service Hub, or Sales Application meaning you only see the information you need for that user’s role.
  • Assistant – on Dashboards, Accounts, etc. (The assistant offers insights such as “you have this task due today” to help ensure you never miss an action or the sentiment of the action).
  • Business Card Scanner on Quick Create form which is a great feature to quickly capture data.
  • Interactive Dashboards – as standard Tier 1 and Tier 2 Dashboards available in the Customer Service Hub whilst on-premise the dashboards are custom.
  • Editable Subgrids. These are useful to ensure that the users can simply edit these fields from the view so you don’t have to open the record which means the users can work quickly.  Our sister company wrote about this when they were released: click here to read more about editable subgrids.
  • Changes on forms. There are boxes around fields and tabs are horizontal across the top of the screen (which is more user-friendly than scrolling).
  • Opportunity process bar now shows time at each stage which is useful for users to navigate and report the stage where opportunities are up to.
  • Introduction of multi-select option sets. There was a great deal of excitement back in 2018 when the multi-select option sets were released to Dynamics 365 Online (check out why here). The multi-selection option sets are great for the users and the business so they can be more concise on a screen when collecting necessary data.  These save so much room and are great for reporting.


In a nutshell, Microsoft has enhanced the Dynamics 365 for sales and customer service experience over the years in the Online environment.  The on-premise option is still available and Microsoft continues to ensure that this is still an element to their business, however with the affordability of Online, the rich features, and the added benefit of the dataverse, the Online offering is a very attractive one for scalable growing businesses.


Next Steps

If you would like to find out more about migrating a hosted Dynamics CRM or Dynamics 365 environment to the cloud, please contact us.  We have been working with Microsoft Dynamics 365 Online since its release in 2013.


Take a look at our case study following migration to the cloud for Document Network Services


Online vs On Premise Dynamics 365