Cloud Vs Perpetual (Rent or Buy)

December 16, 2016 11:30 am Published by Paul White, senior director at Microsoft responsible for the Dynamics products, launched NAV 2013 R2 with the message of “IN” Office 365 and “ON” Azure. NAV is unlike other ERP solutions: Netsuite et al have been designed for public cloud and do not have a perpetual option, other traditional ERP solutions that have been designed for perpetual offer a hosted solution through tools such as terminal services and Citrix. Only NAV offers true cloud architecture in a solution that can also be deployed “on premise”, giving the choice of where to start and the flexibility to change your strategy. NAV 2013 R2 has been designed for the cloud, not just pushed up there. Microsoft Dynamics NAV 2013 R2 supports cloud ambitions either as a perpetual licence in a hosted environment or on a pure subscription basis. This has been stated with previous versions of NAV where it was possible to achieve this but not without challenges. NAV 2013 R2 has been fine tuned for cloud deployment and ready to take on solutions that were born in the cloud. The fine tuning required to achieve this includes improvements to performance in terms of both latency and resource consumption (a major consideration as resource-heavy solutions become expensive in the cloud, think of it as improving MPG in cars without compromising speed!); multi-tenancy to ensure the solution scales from a partner perspective and addresses authentication and security concerns.

The Jargon

On premise: On premise typically refers to the traditional deployment of software; you buy a licence for perpetual use and install it on your own hardware. On premise can be a misnomer as the server on which the software is installed may not necessarily be in your office, it may be in a data centre looked after by a “managed service provider” (i.e. hosted). This model of owning the software but renting the hardware has been around for years; now it is known as “private cloud” (see below) Public Cloud: Public cloud refers to Software as a Service (SaaS) where the software application resides in a data centre and users pay subscription fees, typically based on a “per named user per month” Private Cloud: Whilst “hosted” solutions have been around for a while with organisations choosing to outsource the management of servers (improved performance, maintenance and disaster recovery all managed by the service provider) the mechanism for accessing the solutions is improved through cloud technology. Private cloud provides a “best of both worlds” for organisations preferring a capex model of paying for technology and yet wanting the user experience of cloud deployment. Hybrid: Hybrid is mixing up applications between public cloud, private cloud and on premise. An example might be an on premise solution holding sensitive client information (where the business may decide that strategically this should not be in the cloud), providing selected data to a cloud based business intelligence tool. Many NAV solutions have been hybrid for years with on premise ERP making calls via web services to cloud-based exchange rates, postcode look-ups and product information. “Cloud-bursting” is term used to describe a private cloud making use of public cloud for temporary increases e.g. in user numbers.

Concerns about Cloud

There have been a number of concerns about Cloud deployment that has meant a slow adoption. These concerns have now been addressed but it is important to understand them when helping to decide whether Cloud is the best option for your company. Security and Performance: Frankly the hardware and security set-up in a Microsoft data centre is probably a million times more sophisticated than most organisations could imagine. However, where sensitive data is held may be a specific issue for some companies. Performance does rely on internet connections and Microsoft does require down-time for routine maintenance (there are options to load-bear and move systems between data centres, all at a price) Cost: The monthly subscription fees will add up over time and by around month 36 you would have spent about the same as on a perpetual licence. However, costs in this area are decreasing and this figure does not take into account additional costs of hardware, maintenance and any reliance on your IT team. “One size only”: Despite desires to run standard software all businesses are different and often it is advantageous to build that difference into your ERP solution. Cloud deployments for NAV can be as bespoked as a perpetual solution; however, that tends to contradict the rational for a cloud strategy as it involves significant set-up investment. Financing: Microsoft Finance currently only caters for perpetual licence projects. There are other finance companies who can provide funds to cover the first year costs of a Cloud deployment.


All the analysts agree that Cloud consumption will increase, which means prices should decrease too. Not all companies will push all processes into the Cloud; most will have some.