Cloud vs on premises: comparing Business Central deployment options
Business Central cloud vs on premises is a choice about who runs the system. Online, Microsoft hosts the application, the database and the updates, and you sign in through a browser. On premises, you or a hosting firm run the same application on your own servers. Most new customers choose online, but on premises still fits some firms.
Last updated
Business Central cloud vs on premises: what is the same
Both options run the same application. The chart of accounts, posting logic, sales and purchase documents, inventory, projects and manufacturing work the same way. Users see the same web client. Essentials and Premium exist in both. We write extensions in AL for both, so skills and guides carry across.
What differs is everything around the application. Online, Microsoft runs the servers, the SQL database, security patches, backups and monitoring as a service. On premises, your firm installs Business Central Server, a SQL Server database and the web server parts. Then your team keeps each of them healthy.
Talk about deployment →
- ✓Core application logic
- ✓Web client experience
- ✓AL extension model
- ✓Essentials and Premium
- ✓Role centers and permissions
Hosting and updates: Microsoft or your IT team
Business Central online gets two major release waves a year and smaller monthly updates. Admins set an update window. They can also pick a date for a major update inside the period Microsoft allows. They create, copy and restore production and sandbox environments from the admin center, and point-in-time restore comes with the service.
On premises, you decide when to apply cumulative updates and when to move to a newer major version. Each of those is a task for IT or a partner. Your team also builds test environments by hand. This suits firms that must freeze change at certain times and have the staff to run servers.
Plan your update approach →- ✓Infrastructure and scaling
- ✓Security patching
- ✓Database backups
- ✓Version updates
- ✓Service health monitoring
Features that differ between online and on premises
Microsoft builds new features for the online service first. Some of them need cloud services that a local install cannot reach in the same way. Copilot features work online only. The admin center, built-in telemetry setup and the easiest links to Power BI, Power Automate and Dataverse also belong to the online side. So the two are not a tie on features.
On premises offers a few things the service does not. Admins get direct access to the SQL database. They can run their own upkeep and reports against it, and keep the system on an isolated network. For a few firms with strict rules on where data sits, those points decide the matter.
Check feature availability →- ✓Copilot assistance
- ✓Admin center tools
- ✓Power Platform connectors
- ✓Sandbox copies on demand
- ✓Automatic feature updates
Custom code rules in each deployment
Online, all custom work comes as AL extensions. They arrive either as AppSource apps or as per-tenant extensions that we upload to your environment. You cannot change the base application directly. That rule lets Microsoft update every tenant on schedule, and it keeps custom work small and clearly apart.
On premises, extensions are also the best route, but the rules are looser. Code can use .NET parts and other tools that the online service blocks. That freedom helps with odd links to local machines or files. But it also makes a later move online harder. So we advise cloud-ready code from the start.
Assess your custom code →- ✓Use extensions only
- ✓Avoid direct SQL dependence
- ✓Prefer APIs for integration
- ✓Test on each update
- ✓Document every extension
Which deployment fits your company
Choose online when you want low running effort, remote access without a VPN and quick access to new features. It also suits firms with a small IT team. It fits most of the firms we speak to, including those that move from Dynamics GP or NAV with Microsoft's cloud migration tool.
Choose on premises when rules, contracts or connectivity demand it. Examples are a site with weak internet, or data that must stay on a closed network. If you run on premises today, we can check how ready your setup is for online. As your Business Central consultant, we then plan the move in stages, with rehearsals in a sandbox first.
Request a readiness check →- ✓Unreliable site connectivity
- ✓Closed network requirement
- ✓Contractual hosting terms
- ✓Direct database access needed
- ✓Legacy local integrations
Cloud and on-premises questions we hear
Is Business Central online less secure than a server in our office?
For most firms it is more secure. Microsoft runs the service in its own data centers, with encryption, patching and monitoring handled by dedicated teams. Sign-in uses Microsoft Entra ID with multifactor authentication. Few small IT teams can match that on a local server. The risk we see most often is weak user access, not the hosting, so we also check roles and permissions in either setup.
Can we move from on premises to the cloud later?
Yes. Microsoft provides a cloud migration tool that copies data from a supported on-premises version into an online environment. Your custom code must exist as extensions first. We check the current system and convert what we need. Then we rehearse the move in a sandbox and run the final cutover. That way the business cloud vs on premises question gets settled by a tested plan, not a guess.
Can an online environment be moved back on premises?
It is possible to export the data and rebuild it on a local install. But it is not a routine job, and you would lose online-only features. Firms rarely do it. It is better to settle the question of where to run the system before go-live, so you do not pay for the same move twice.
Are the licenses the same for cloud vs on premises?
The license names are alike, with Essentials, Premium and Team Members in both. But they come under different terms. Online is a per-user subscription. On-premises licensing has its own options through Microsoft partners. Current details are on Microsoft's site. We do not quote figures on this site, so contact us for anything about money and we will route it to the right person.
Does Business Central online work if the internet goes down?
No, the online service needs a connection. Most offices cope with a second internet line or a mobile hotspot as backup. A site with poor links and no fallback is one of the real cases where a private or on-premises install is worth a look. In short, check your connection first, then pick the deployment that suits it.
Book a discovery call
Let's talk through your move to Business Central.
A focused call with a senior consultant. We learn how your business runs today, give you an honest view on whether Business Central fits, and outline scope and next steps before you commit to anything.
What happens after you send the form