Understand what each deployment option includes

Cloud ERP is a broad term. A software-as-a-service (SaaS) product is operated by the software provider and accessed through an online service. The provider manages the underlying platform, while your business still manages users, permissions, processes and its own data practices.

On-premises ERP runs on infrastructure managed by your business or a contracted provider. The servers may be in your building or hosted elsewhere. Moving an existing application to a hosted server does not automatically make it a vendor-operated SaaS product.

Microsoft’s Business Central online responsibilities describe the infrastructure and service operations Microsoft manages. Use the proposed product’s documentation to establish the division of work; another cloud service may allocate responsibilities differently.

Ask for the exact product, edition, hosting arrangement and support agreement in each proposal. Labels such as “cloud” and “managed hosting” are not enough to tell you who handles patches, backups, application updates or recovery.

Compare how each option supports daily work

Walk through the tasks that keep the business running: entering orders, receiving inventory, posting invoices, approving payments and preparing reports. Include warehouse devices, scanners, printers and any specialist equipment employees use.

A browser-based service may suit employees working across offices or from home, but confirm how the proposed product handles each task. Test access from your actual locations and devices. Consider permissions, sign-in requirements and the steps users need to complete.

For an on-premises system, ask how remote employees will connect and who maintains that access. Include the cost and support effort in the comparison. A system working well on the office network may behave differently over a remote connection.

Use the same demonstration scenarios for both options. Record differences that affect working time or accuracy, rather than assuming that either deployment model will automatically make a process easier.

Compare the full cost over the same period

Look beyond the first invoice. Cloud proposals often include recurring subscriptions, while on-premises arrangements may combine software licensing, maintenance and infrastructure costs. Actual terms vary, so compare written proposals over the same planning period, such as three or five years.

State the assumptions behind the totals. These include user numbers, annual price changes, additional environments and expected growth. Confirm whether amounts are in Canadian dollars and how taxes and foreign-currency charges are handled in the quotation.

A lower subscription price does not necessarily mean a lower total cost. Equally, owning servers does not make their use free: consider replacement, maintenance and the people needed to operate them. Compare future spending separately from money already spent.

Write down who will manage the system

List the recurring jobs required to keep the ERP running. Assign a named team or provider to each one, including user administration, access reviews, incident handling, monitoring, updates and recovery. Identify who employees should contact when work stops.

With SaaS, the vendor may handle much of the infrastructure, but your business still needs people who understand its setup and working processes. Someone must approve access, maintain records, review application changes and coordinate support.

With on-premises ERP, determine who manages the operating system, database, network and application. Some work may sit with an IT provider and some with an ERP partner. Make sure the agreements cover the gaps between those roles.

Ask what support hours apply, how urgent issues are escalated and what is included in the fee. A clear division of responsibility is more useful than a general promise that the system is fully managed.

Assess security controls and data handling

Compare specific controls: sign-in protection, user permissions, approval separation, logging and the process for removing access when employees leave. Ask who configures each control and who checks that it continues to work.

Security depends on the product, configuration and operating practices. A cloud deployment does not remove the risk of excessive permissions or compromised accounts. An on-premises deployment does not become secure simply because the servers are inside the office.

For Canadian operations, identify any requirements concerning data location, access and processing. Microsoft provides data residency information for Dynamics 365. Check the details for the exact service and environment, including any connected applications, rather than assuming every part of the setup follows the same arrangement.

Have the appropriate privacy, legal or contractual adviser review obligations that affect your choice. Ask providers for evidence addressing those obligations. The location of a server is only one part of that assessment.

Understand how updates will affect your team

Updates need planning in either model. Ask how releases are scheduled, how much notice you receive and what happens if an extension or integration needs changes. Identify who tests your important processes before employees use an updated version.

For Business Central online, Microsoft manages application and platform updates, with administration tools for scheduling within the service’s update policy. Its update management documentation explains the available controls. This differs from having an unrestricted choice to stay on one version indefinitely.

On-premises deployments may provide more discretion over when an application upgrade takes place. That also means someone must plan and complete the work, keep supporting components current and check the product’s support policy.

When comparing proposals, include testing and update support. Review month-end reporting, warehouse tasks, approvals and connected applications after relevant changes. Assign time for employees to learn any differences in their daily work.

Check integrations and changes to standard functions

List the connections your ERP needs, including CRM, payroll, e-commerce, shipping and banking. Ask which interfaces are available in each deployment option and whether the proposed connector supports your exact product version.

Review existing custom work individually. Some changes may still be essential; others may no longer be necessary. Ask whether the proposed system can meet the requirement through standard functions, configuration or an extension before agreeing to rebuild it.

Do not assume that a connection used with an on-premises database will work unchanged with SaaS. Ask how information will be exchanged, who monitors failures and whether the approach is supported. Include development, testing and ongoing maintenance in the estimate.

Plan for outages and recovery

Consider several interruptions: loss of internet at a branch, unavailable servers, a service outage and an employee accidentally deleting information. Each situation may need a different response. Decide which activities can pause and which need a temporary working process.

For cloud ERP, test connectivity at every location and consider a backup connection where the business impact justifies it. Ask what happens to scanning, printing and integrations if access is interrupted. Do not assume normal ERP functions will remain available offline.

For on-premises ERP, review power, hardware, network access and off-site recovery arrangements. Local access may continue during some internet interruptions, but connected services can still be affected. Ask the IT team to test the relevant failure scenarios.

Clarify backup retention and the recovery process in either model. Microsoft’s Business Central online restoration guidance describes environment recovery. Ask how the proposed service would handle your scenario, including which later transactions might need to be checked or re-entered after restoration.

Use business constraints to make the decision

Include the transition itself in your assessment. A move to either model may require data cleanup, rewritten reports, new connections and employee training. Ask what can be transferred, what must be rebuilt and how long the old system needs to remain available. Agree on how opening balances and unfinished transactions will be checked.

Also consider what happens if your needs change. Ask how you would add a branch, increase user numbers or change an important application. Confirm how you can export your records and what access remains when a subscription or hosting agreement ends. Include extraction fees, notice periods and help with leaving the service in your review.

These questions do not require you to predict every future change. They help you recognise commitments that would be expensive or difficult to reverse. Record the answers beside the operating costs and responsibilities so that decision-makers can see the trade-offs.

Start with requirements that could rule out an option. These might include a critical application that is not compatible, a contractual restriction, unreliable connectivity or insufficient capacity to manage infrastructure. Confirm the facts before treating an assumption as a barrier.

Cloud ERP may suit a business that wants the vendor to operate the underlying service and can work within its policies. On-premises ERP may merit consideration where specific technical requirements justify the additional operating responsibilities. The better fit depends on evidence from your processes, people and contracts.