So, you’ve decided to jump into the digital world of customer relations management (CRM) and you are torn between purchasing Microsoft Dynamics CRM Online or On-Premise…

Broadly the trend we are seeing in the market is that on-line is the default choice for most organisations, which will only be ruled out if there are specific non-functional requirements which prevent the adoption of cloud solutions. Typically these are concerns around data sovereignty, privacy, access and storage; but we would encourage organisations to continuously challenge existing requirements.

You should take comfort that you are not alone in making this decision. Organisations with significant data security concerns have assessed these in light of both the pro’s and con’s of a cloud deployment and still chosen CRM online.

Lets review the key considerations that organisations should assess prior to making an online or on-premise decision.

TOTAL COST OF OWNERSHIP

The total cost of ownership for an online or on premise CRM instance should consider the following costs:

• Capex license cost of the on-premise solution including CALs and Server licences versus the Opex per user pricing of CRM online
• CRM Online customers benefit from predictable monthly subscription costs, there are no upfront licence costs and future CRM updates are all included
• Cost of providing infrastructure, application support and necessary redundancy & security measures for an on-premise solution
• Cost of performing application upgrades, patching and other maintenance activities for on-premise solution

Looking at these calculations in detail there will be a breakeven point for a given number of users where it will be more cost effective for organisations to move CRM on-premise. While the exact calculations for this breakeven point will vary on an organisation by organisation basis considering the number of large users bases that are now being moved to CRM online this breakeven point is, and will we believe, continue to move ever higher in terms of number of users.

Key thought: For organisations whose user base will number in the hundreds then an online model is almost certainly cheaper.

DATA SOVEREIGNTY

Just as with SharePoint hosting the primary consideration here is data sovereignty. If a customer has restrictions as to the location and handling of their data, then they should ensure that the assurances and certifications made by Microsoft in the Office365 Trust Centre are sufficient to satisfy their data handling rules. If not, then unfortunately a cloud-based solution is unlikely to be appropriate.

With CRM Online your data is stored on Microsoft Servers, typically for CRM Online EMEA this will be Data Centres in Ireland and the Netherlands.  However customer data is always replicated to geographically distinct data centres for failover purposes so you will need to ensure storing data in these locations won’t present issues for the business.

When using on-premise you retain complete ownership of your data and control its geographical location but likewise also have to design and implement remote data storage and redundancy into your solution.

CLOUD FIRST

Microsoft has adopted a ‘Cloud and Mobile First’ strategy – the effect of this is that features and functions are rolled out more quickly to Microsoft cloud platforms and CRM online is no exception. Indeed some features are currently being exclusively rolled out to the cloud – examples being Microsoft Marketing and Social Listening. For organisations who want to innovative through the use of technology this would suggest that they too should adopt a cloud first strategy.

DATA SECURITY 

Data in the Microsoft Cloud is protected by 5 security layers with a disaster recovery service and included ISO27001 & EU standards compliance and support for EU Model clauses.  The data centres and application itself is subject to rigorous and regular security testing.

CRM Online can be accessed via a Microsoft Organisation account or a federated account, however it is difficult (if not impossible) to restrict access to the CRM environment from different locations or devices – for some organisations this can prove to be a stumbling block.

On-premises Dynamics CRM deployments can use Active Directory Federation Services (ADFS), claims based authentication and through this be flexibly configured using a variety of firewalls or perimeter security products. Broadly you can achieve a degree of security flexibility that cannot be achieved with the on-line version.

Key thought: For us there is a trade-off between the flexibility of security mechanisms with an on-premise hosted solution against the reassurance of your CRM solution running in a dedicated facility which is being continuously tested.

DISASTER RECOVERY & AVAILABILITY

With CRM Online, Microsoft host the database, this means there are certain restrictions.  You cannot create point-in-time backups with CRM Online, this is easily achievable on-premises.  Restores are possible although you would need to engage Microsoft Support in order to restore to one of their nightly database backups. This is rarely a concern however in terms of redundancy but more often one for deployments.

In contrast whilst you have control over your data recoverability in an on-premise solution you do not have DR “baked” into the solution in the same way. Instead you must design this capabilities yourself with the not inconsiderable costs associated with it.

Finally there is the question of maintenance, hardware expenses and uptime.   With CRM Online there are no additional IT and hardware expenses which are required for on-premises CRM deployments.  Microsoft guarantee 99.9% uptime and back this SLA financially.

FLEXIBILITY

Both CRM on-premise and online are highly customisable however there are some differences.

CRM Online has some restrictions with the customisations you can include as part of your organisation, there is a limit of 200 workflows and 300 entities.  There are no limits of this kind with on-premises, however in the real world you are not likely to get anywhere close to these limits if working with CRM Online.  Plug-ins can only run in sandbox mode Online and can only make requests to the same CRM tenant or external web services but again this is not something that has had any negative impact on systems we have implemented.  Similar restrictions exist in terms of implementing custom workflow activities but again these you can typically work around these constraints.

Broadly speaking you should, as much as possible, limit your CRM customisations to make future upgrades as seamless as possible. Given that these upgrades are provided semi-automatically (see later point) on CRM online then for us, the fact that your customisation opportunities are slightly limited is no bad thing.

Perhaps more limiting is your reporting and data extraction capabilities online. Because CRM Online does not allow direct access to the SQL data (Data is accessed via FetchXML based queries.  FetchXML based queries have limited functionality (see appendix)) this means you cannot develop custom reports based on SQL queries or run “traditional” ETL style processes. Naturally there are work arounds for this. In terms of reporting Microsoft’s direction is Power BI and this will access CRM data (reasonably) seamlessly via odata style feeds.

UPGRADES

CRM on-premises provides the customer with complete control over when patches, updates and new feature upgrades are applied to the system. However you have to apply these upgrades yourself.

With CRM online it’s a completely different story. Certain, typically minor, Microsoft updates will be applied automatically and for us this is a good thing. For significant upgrades or new features releases you typically can select a date within a timeframe for upgrade or install the products yourself when you are ready.   This can be an issue but there is always plenty of notice and by upgrading or applying updates to test environments first you can normally circumvent any surprises. You should be aware that there is an element of “forcing the upgrade” here – the upgrades can only be delayed for so long. For us this has both pro’s and con’s – plainly keeping up to date with the latest version has significant advantages – give the amount of investment that Microsoft is making into the online platform, new features are being released all the time and this can only benefit your user base. However with each upgrade, should you have applied significant customisations there is a risk that these can “break” functionality and plainly a testing cycle needs to be performed.

The key point here is similar to that of the previous section. If you wish to customise your CRM environment to the nth degree then CRM online is probably not for you. Likewise it could also be said that perhaps you shouldn’t be making such customisations to CRM on-premise either but should instead be looking for a bespoke solution or add-on to CRM – but that’s the subject for another blog!

DATA STORAGE

Another key consideration is data storage.  CRM Online, with a standard subscription you will have a database size of 5GB.  If you have a system which stores email attachments or other documents, or is processing large volumes of record data this can quickly disappear.  There is then an extra subscription cost for more space.

To address this issue for CRM Online customers in the past we would usually integrate and use SharePoint for document storage and as such keep the CRM database size to a minimum (we’ve got some pre-built components to expedite this).   With on-premises the amount of storage you have depends on how much you choose to allocate to the database on the SQL Server.

If you are evaluating these choices for Dynamics CRM, slicedbread can help you decide what is best for your organisation today and into the future.  Contact us at mail@slicedbread.co.uk for more information.