Microsoft updates Dynamics 365 Operations (AX7) hybrid deployment plans: Azure Stack no longer required

October 12 2016

Sri Srinivasan and Christian Pedersen of Microsoft (Update: This article has been updated to reflect clarifying statements made by Microsoft about Dynamics 365 for Operations hybrid deployment plans. -Ed.)

Microsoft Dynamics AX 7 on Azure will officially become Dynamics 365 for Operations as of the suite's November 1 general availability. And speaking at AXUG Summit 2016 today, Dynamics AX executives revealed new plans to support Dynamics 365 for Operations both on Azure, as it is already available, and with new hybrid deployment plans that will not require Azure Stack.

"We are focusing on both cloud and on-premises in a way that brings them together in the best of both worlds," said Dynamics 365 general manager Christian Pedersen in a keynote address at the conference.

Hybrid scenarios with on-premises processes

We asked Microsoft about the current options for hybrid and on-premises options related to AX and Dynamics 365, and GM for Dynamics 365 for Operations Sri Srinivasan told us:

“For a pure disconnected on-premises option, customers have Microsoft Dynamics AX 2012 until 2021. Dynamics 365 for Operations will enable organizations to run all business processes on-premises connected to the cloud for a single view of the business across distributed on-premises environments, thereby providing on-premises support while leveraging the power of the cloud for intelligence in business processes. The cloud connection ensures data aggregation, financial reporting, intelligence, application lifecycle management capabilities, backup and disaster recovery and more.” 

Hybrid solutions with Dynamics 365 for Operations will begin to become available in over several quarters. Retail store on-premises capabilities will be available in November 2016, with shop floor and warehouse scenarios following in the first half of 2017. Other solution areas will follow in the second half of 2017.

Pedersen characterized the on-premises and cloud options for business solutions as a spectrum along which customers have expressed a desire to plan their ideal solution architecture. Dynamics AX 7 was released as an Azure-only service first, and Microsoft had previously advised that the only on-premises option would be through the use of Azure Stack in a local data center.

Azure Stack has experienced delays, along with recent plans to require certified hardware from a short list of manufacturers. The hardware decision riled the broader IT community and lent uncertainty to the future of AX 7 on premises.

Statements this week, across several customer sessions, clarified that Microsoft does not have plans to allow Dynamics 365 for Operations to be run as a traditional on-premises application that can run fully on customer hardware without Azure Stack. But components of an AX solution will be able to run on-premises. Christian Pedersen explained:

"It's clear we have considered using Azure Stack to run pure-Azure-based code in data centers. We've decide to allow you to adopt these components on premise without Azure Stack. If you decide to use Azure Stack, we will support that as well. We think that's important for data center investments you've made."

Pedersen and Srinivasan described a range of reasons why they recognized that AX users may have a feel a need to have on-premises scenarios, including data sovereignty, regulatory compliance, and existing data center investments. He explained:

"We want to bring the on-premises approach the benefits of the cloud. A benefit of the cloud is that updates are constant. And our cloud infrastructure will monitor many things and will discover and fix many things before anyone notices it. We want to bring the same services to deployments in your own data centers. And make anything running your data center an extension that works to a large degree as if it was running in the cloud."

Dynamics 365 for Operations investements in cloud and on-premises scenarios
A D365 Operations hybrid scenario with local and cloud workloads for retail, warehouse, manufacturing 

Srinivasan described scenarios that could be supported with the hybrid approach for Dynamics 365 for Operations, like on-premises servers running a shop floor or warehouse. In more complex hybrid scenarios, companies will be able to store data and manage processes on-site across multiple data centers - and rely on replication to Dynamics 365 on Azure for a range of possible needs including disaster recovery, BI, financial consolidation, corporate governance, and more.

The idea with the hybrid model, Srinivasan said, is to allow organizations to "transact locally and scale globally." He continued:

"With this on-prem model it is a scale out solution that has long eluded us. It allows us to answer tough questions like how do I deal with the idea of a global sku? How do I buy something in the US and service it at a retail location ? Today that scenario would require a data warehouse, but can handle that scenario. We can use the right mix of on-prem and cloud to meet your needs."

Lifecycle Services (LCS) will also support hybrid scenarios, Srinivasan said, through a unified experience that will understand any server design.

Despite this newly revealed approach to on-premises, Microsoft still sees pure cloud deployments as the ideal for AX 7 and Dynamics 365 for Operations. It is the "absolutely preferred deployment option," that will ensure the maximum access to product updates, interoperability with other services, from Power Apps to Office 365 tools, and benefits like better visibility from Microsoft engineering teams that monitor the Azure sites.

Microsoft pointed out well known corporations that have adopted the Azure-based solution already, like Husqvarna, Renault Sport (formerly Lotus F1), and AccuWeather. Two to three customers are going live on AX on Azure every week, said Srinivasan, and while that will likely slow around the end of the year, the company expects to see continued momentum with hundreds more already planning to go live in 2017.

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