Business continuity in the cloud: Microsoft invests in hybrid solutions for Dynamics 365

One word that comes to mind when thinking about Dynamics 365 is flexibility. I covered this in my previous post where I mentioned how Dynamics 365 is changing how we implement ERP and CRM systems. Adoption can be simpler and more efficient whilst enabling businesses to scale solutions at their own pace.

Building on this theme of flexibility, Microsoft is further investing in a hybrid solution that will enable business continuity across on-premises and cloud solutions. In the future, Microsoft plans to expand the model to enable organisations to run entire operations on-premises.


The impetus behind the hybrid model

Sri Srinivasan, who is the General Manager for Dynamics 365 for Operation R&D, in his blog “Best of both worlds: On-premises and Cloud”, highlights the key reasons why organisations would prefer on-premise or hybrid solutions over solutions fully hosted in the public cloud, including:  

  • Data localisation and dependency on high availability of service for business continuity are two key points.
  • A conservative attitude towards cloud computing, recent investments in local infrastructure
  • Concerns about not being able to re-configure the infrastructure
  • Choice of separating service operator from the service provider

To illustrate, last year I was speaking with a client, who had operations in Russia, and who wanted to understand their options considering the new Russian Data Localisation Laws which requires organisations to collect, store, maintain and retrieve citizen’s personal data only in database servers located in the Russian Federation. Similar trends have been growing across several jurisdictions in the world. This flags up as a compliance risk when organisations plan to move their systems to the public cloud.

Similarly, I was working with a client earlier this year who have recycling and disposal facilities all over the UK. Their concerns around moving to a public cloud-based solution was that many of their sites have poor internet connectivity and any downtime due to system unavailability, in what is a high transaction volume business, would result in long queues and massive backlogs being created.


How does the hybrid model work?

The hybrid solution for Dynamics 365 for Operations enables organisations to run business critical applications as local deployments.  The local on-premises deployment will be used to capture local transactions which are then synchronised with the cloud deployment to facilitate data aggregation, reporting and analytics.

Sri, in his blog, says, “The elastic compute power, artificial intelligence, and speed of innovation of the cloud enriches the on-premises systems in a way that would be very difficult to realise in a totally disconnected system.”

As such, the new hybrid model enables us to run multiple instances of Dynamics 365 applications unified as one solution providing a seamless user experience. Organisations will be able to manage this distributed architecture as one solution from Microsoft Dynamics Lifecycle Services.


Dynamics 365 Hybrid Model


This architecture will also enable organisations to federate to several sub-companies through one Dynamics 365 instance. For example, the global financial instance which caters for consolidations, general ledger, receivables, payables, compliance and governance, will be hosted in the cloud.

The sub-organisations for, say, warehousing, manufacturing, customer service, or geographically separated business units will have their local instances running on-premises or on local data centres. These unique federated companies can be hosted either entirely on their corresponding local instances, or they can have a copy on the cloud instance as well. However, whichever way we carve out the architecture, the cloud instance will always be the single source of truth and will provide a global view of the enterprise.


 Federated company structure Azure


So, to summarise the key points:

  1. The on-premises applications will be connected to the instance in the Cloud to facilitate Financials, Shared Services, Analytics and Cortana Intelligence.
  2. The hybrid model will support federated deployments.
  3. The application lifecycle will be centrally managed and therefore there will be a common solution, single code base, configuration and processes.
  4. The cloud instance will be the single source of truth.
  5. The cloud instance will also be the disaster recovery site.
  6. A single update through Lifecycle Services will update both the cloud instance and the on-premise instances.


The good thing is that these innovations are not just conceptual. The first set of on-premise applications is imminent with retail, shop floor and warehouse solutions expected to be released between now and the first half of 2017.

As I said in my last post, the pace of change is accelerating. We at KPMG Crimsonwing are making sure that our clients leverage the latest technologies, Microsoft’s innovations and our experience in managing complex IT transformations.