ROI: Running Cost of Onpremise systems (NAV) VS Business Central Public Cloud subcscription

I want to dispel myth about the fact that a cloud is more expensive than on-premise environments. Nowadays when I talk to business owners about possible cloud journey, I sometimes feel a bit of hesitancy about all new available technologies. To me one of the main reasons is that everything is changing so drastically fast (not just IT) that to get your head around about all new terminology and possibilities in constantly evolving world of IT is nearly impossible. That surely applies to us IT professional too. I will leave aside constant changing of the product names by Microsoft for the same product (recently Yammer > Viva Engage; MS Azure Active Directory > MS Entra ID; I get the reason, right? But it doesn’t help too 😊)

In this blog post I will shed light on basic terminology related to today options and calculate ROI for medium size UK business if you save all your ERP (Enterprise Resource Planning) data in the Microsoft Cloud. My scenario is what I have seen recently where customer with Microsoft Dynamics NAV initially started with servers within company facility (on-Premise) then moved servers to IT provider facility (private hosted cloud outside of Microsoft Data Centre) and now with my help is in process of moving his IT infrastructure to Business Central Public Cloud and Microsoft Azure platform using latest available features.

On Premise?

When I started in IT in 2008, you couldn’t just fill in your credit card number on the website and spin up environments all around the world in literally few minutes.

Around 2010 when I was implementing MES systems one of my first pre-installation questions was: do we have ethernet cables on required places in manufacturing plant? Wi-fi wasn’t accessible to most around 2010 and what we classified as quite cool thing was POE (Power over ethernet) where ethernet cables could supply electricity to the MES devices, we didn’t need electricity plug there. Wow! The projects one or two decades ago didn’t have technical possibilities as we have today. You must have known somebody who understood servers to buy one to your facility, then install it all, connect client pcs and then never-ending maintenance, backups, problems with UPS (alternate power sources), security, updates etc. Very often you must have to built ethernet cables infrastructure within your buildings. For non-it company, that could be real “nightmare” to make sure that your environments are running on high users expectations level. You literally needed person internally or externally to handle this. Not a cheap thing.

If you have server onsite your facility, the IT calls it as on-premise. You as an organisation is fully responsible for all aspects of having IT equipment in your facility.

Some of the companies, they will still use this model nowadays (and for some of them it can still turn out to be cheaper; but in general it should turn out to be cheaper. especially if we all adopt this) but again this is not always black or white. You have places within operations where the internet might not be well available, law and regulatory requirements, business data, patent data, military data etc. Do you really want to expose it to somebody else? I think mindset around this has rapidly changed over last decade as majority of business (incl. banks and governments) rely on cloud providers like Microsoft. I don’t think it can be more secure rather than with them. The best experts are at Microsoft, I wouldn’t reinvent the wheel again and again.

Private Cloud or Platform as a service (PaaS)

This is where you leverage your IT servers etc. to your IT partners Data Centre (or the one they are using or have space rented there). The IT provider might buy hardware for you and place it for your there. You rely on Internet connectivity to your data centre to have your system up and running. In on-premise environment you might even not need internet at all.

You can then install Business Central on-Premise version (and any other sofrware you need) on it and maintain this using internal or external IT services.

Example of private cloud is also Microsoft Azure. You can rent there your hardware resources in few minutes from registration. This is what nowadays is preferred option as it’s scalable, secure and reliable on high SLAs.

Any implementations of Dynamics NAV or Business Central using Microsoft Azure or private clouds should immediatelly adapt strategy to move to….

Public Cloud – Software as a Services (SaaS)

In this case you are not renting particular server or group of servers but just renting service within them in remote Data Centre (you choose yourself which MS Azure region). Business Central cloud is a good example of that. You have no RDP server to connect to, you literally get URL link like: https://businesscentral.dynamics.com/71xxxx80c-2zz3-43d4-9x90-4ew31b7516 which is linked to your O365.

Where the 71* is your ‘Microsoft Azure Tenant ID’, basically your company’s address. If you add /admin to your URL you will get to Admin Console (as long as you are privileged to have permissions in o365; oh what is this shortcut I hear all the time O365? The successor of the old known Microsoft Office; cloud based Office family of products where nowadays you don’t need to have anything installed – it’s software as a service which you pay monthly though your Microsoft Cloud Service Provider (CSP) Reseller or directly to Microsoft):

This is really cool. All you need. Things like list of active sessions, available updates to your installed app, set up upgrade window etc. Back up/restore available. I read recently something like “oh come on, you could do this 20 years ago on SQL”, but not securely on mobile phone by non-technical person in “two clicks” on the beach during holiday!

So how does NAV On-Premise system costs stand against Cloud price wise:

I will compare for Company which bought NAV before pay per named user has been introduced:

Company: 40 users

Typical hardware lifecycle: 3 years

On-premise old Perpetual Licensing module (you buy license and then 16% of value yearly - Microsoft calls it BREP)

It’s literally 32% cheaper long term to host Business Central in cloud in 3 years horizon. Please don’t get me wrong. This is not accurate calculation, but just show the complexity before and simplicity today. There is nothing such as ROI in this case, you get only benefits: you didn’t need initial investment, you pay predictible cost monthly, there is no 16% bulk fee yearly to Microsoft, no hardware servers to maintain (=less internal/external IT service you need). It’s all managed through one portal: o365. You can scale up and down as you wish (unless you sign for multiyear deal which can get you up to 40% discount; ask MB365 how to get this). The potential downside is pay per data scheme, but with right Business Central/Microsoft CSP partner, it’s not a limit. There are available data storages and clever integration with MS Azure that’s it is literally no brainer to stay on on premise or public non microsoft PaaS platforms.

One potential investment you need to make (if you not there already) is to get your company onto Business Central Public Cloud platform. MB365 offers packaged solutions which can get you live in 6 or 10 months on this amazing platform.

The key difference you will get is up-to-date system against the static system. The cost above is for Microsoft subscription. Obviously with Business Central Extension Marketplace and power of PTE (per tenant extension – basically your own intellectual property business logic – few apps) the price can get a bit higher, but everybody wants to drive Tesla instead of Ford Fiesta, right? I will evaluate on this topic in separate blog post.

It’s critical business decision to change your IT strategy for the future. My recommendation would go SaaS as much as you can with Microsoft. MB365 are leading by example and have 100% of the data in the cloud. Who is next? Please share your cloud journey in comment on Linkedin.