Business Central in the cloud or on your own servers: how to choose

When a company decides to move to Business Central, sooner or later the question comes up: do we use it in the cloud or install it on our own servers? There is no answer that suits everyone. It depends on how you work, what infrastructure you have today, who looks after it and how much of the technical side you want to handle yourself.

Let’s look at both routes, with their strengths and limits, followed by a short list of questions to help you decide.

Business Central in the cloud

In the SaaS version, Business Central runs on Microsoft’s infrastructure. You access it from a browser or the apps, with no servers to buy, install or maintain.

Automatic updates

Microsoft releases updates regularly, with major versions and smaller updates throughout the year. In the cloud they are applied by Microsoft within time windows you can manage from the admin centre. That means always running a recent, supported version, without having to plan an upgrade project each time.

The flip side is that you need to keep up: custom extensions have to stay compatible with new versions, and it’s wise to try updates in a sandbox environment before they reach production.

Managed infrastructure

Servers, backups, service availability and infrastructure security are Microsoft’s responsibility. For a small or mid-sized business without a dedicated IT department this is often a major advantage: less hardware on site, less maintenance and less reliance on the one person who “knows how the server works”.

Access from anywhere

All you need is an internet connection to work from the office, from home, from a site or from a branch, including on tablets and smartphones. For companies with sales reps, multiple locations or people working remotely, that is a real convenience.

New features

New capabilities, including those built around Copilot and AI, usually arrive first, or only, in the cloud version. Many integrations with the rest of the Microsoft ecosystem, such as Power Platform, Teams and Outlook, are also designed mainly with the cloud in mind. Feature availability can still differ between the two versions and change over time: if a particular feature is decisive for you, always check Microsoft’s official documentation.

Business Central on-premises

With the on-premises version you install Business Central on your own servers, either on site or with a hosting provider of your choice.

More control

You decide where the servers are, how they are configured and when to update. For some companies this control is a requirement, for example because of internal policies, customer contracts or strong in-house IT expertise.

More responsibility

Control comes at a price: servers, supporting system licences, backups, security, monitoring and updates become your job or your IT provider’s. Putting off updates for too long makes every later upgrade harder and keeps you further away from what’s new in the product.

Customisations

In both versions the modern development model is based on AL extensions. On-premises gives you a little more room, for example in access to the database or to local components, but that freedom should be used carefully: customisations that move away from the extension model make updates harder, as well as any future move to the cloud.

Where your data lives

This is one of the most common questions, especially with GDPR in mind. In the cloud, Microsoft offers data centres in several geographic regions, including Europe, and publishes documentation on security, data protection and compliance. On-premises your data lives wherever you decide, but the responsibility for protecting it is entirely yours.

Either way, GDPR isn’t settled by the choice of infrastructure alone: what matters is who can access the data, with which permissions, how long you keep it and how you handle requests from data subjects. For contractual details and data residency, refer to Microsoft’s documentation and, if needed, your privacy adviser.

Connectivity

With the cloud, your internet connection becomes critical. Before choosing, check the stability and bandwidth at your sites, and consider a backup line if daily work depends on the ERP. On-premises, the local network shields you from problems with the external line, but anyone working off site will still need secure remote access.

On-site devices and integrations

Label printers, barcode scanners, scales, production machinery, shared network folders: if Business Central needs to talk to physical devices on your premises, you have to design how. In the cloud these integrations are usually handled through bridging components, Azure services or Power Automate. They can be done, but they need to be planned from the start, not discovered at go-live.

A short checklist to decide

Before choosing, try answering these questions:

• do you have in-house IT staff who can manage servers, backups and updates?
• do your sites have a stable, reliable internet connection?
• are there specific contractual or regulatory constraints on where your data must be stored?
• how much do Copilot and new features matter to you as they are released?
• how many people work out of the office or across several sites?
• which local devices or software need to talk to the ERP?
• have you recently invested in server infrastructure you want to make use of?

For many small and mid-sized businesses the cloud is the simplest option to manage. But the right answer comes from these questions, not from a general rule.

Let’s talk

If you are weighing up the two options and want to understand which suits your company, your infrastructure and your processes best, get in touch: we’ll look at your situation together.