Microsoft Dynamics CRM and the Private Cloud

We applaud what has to be described as a major level of commitment on the part of Microsoft to use the accumulated 30 or so years of clout to embrace, inform, and lead the multitude that is their customer base to the concept of “Cloud Computing.”  Between Azure and Office365 it would seem that they have just about all the bases covered.

Well, almost. For those of us who are on the front lines every day, providing solutions for organization of all sizes, we run into compelling reasons for alternative architectures.  I’m referring to the concept of “Private Cloud,” and being a Microsoft Dynamics CRM partner, the context of this discussion will be that product.

Deployment Models and the Power of Choice

But we should back up a couple of steps here and explain some things. With all of the press and discussion these days about the success of the Office365 family, which includes Microsoft Dynamics CRM Online, we notice that we don’t hear about the “Power of Choice” much anymore, when it comes to deployment of Microsoft Dynamics CRM, and when it comes to Microsoft Dynamics CRM Online vs. Microsoft Dynamics On-Premise.  The intention of this next section is to explain fully the various choices of deploying Microsoft Dynamics CRM:

Microsoft Dynamics CRM Online – this is the cloud-based version, hosted by Microsoft, and if you didn’t dig a little, you might walk away thinking this is the ONLY version out there.  But it’s not.  This version, incidentally, is a perfectly fine, and perhaps even the best choice for a certain set of needs:

  • Data stored in a secure cloud hosted by Microsoft.
  • The latest and greatest in terms of updates and new functionality.
  • No requirements for complex home-grown solutions built on top of CRM, or tricky integrations with other systems.
  • A company that needs 5 or more CRM users. (Five users at $65/month, at the time of this writing, is the minimum monthly investment, unless you have Office365 E3+, then it’s $50/user.)

It’s no wonder why this (relatively speaking) “turn-key solution” is wildly popular with most of the companies who require little in terms of complexity and who have just the right number of users.

Microsoft Dynamics CRM On-Premises – this means that your company will purchase the licenses to run Microsoft Dynamics CRM Server, plus the Client Access Licenses required for each user. This is a one-time fee, and you can optionally purchase Software Assurance to ensure that you would get the inevitable updates and new versions as they are released from Microsoft. You would also need to supply the hardware to run the CRM Server software, one way or another, though a lease option, or through outright purchase. You would also need to install the software, and also install software ancillary and supporting software if you don’t already have it, such as SQL Server, Windows Server, etc.

Needless to say, this could potentially be a daunting task, and it can be expensive (you must get official pricing from a “Large Account Reseller”, but roughly figure about $7,500 or more for the server license plus about $1,500 or more for each client (CRM User) license, plus somewhat less expensive licenses for SQL Server, etc.  And finally the hardware to make it run.  Figure about $15,000 in hardware costs for a relatively small company that has to buy all hardware. So as you can see this only really makes sense if at least most of the following is true about your company:

  • You like to “own” software – that is, you are adverse to “leasing” or paying indefinitely on a per-user basis.
  • Your company has the budget.
  • Your company either has the knowledge or doesn’t mind hiring the knowledge to install and configure the initial deployment.
  • You are committed to the software, such that you will receive the full ROI over time.
  • You have special needs, such as the ability to directly access the SQL database.
  • You need to deploy code that is not “sandboxed.” (This is because Microsoft Dynamics CRM Online only supports plugins that run in “Sandbox” mode, which prevents certain types of programmatic calls to the API.)

Trust us, there are many, many On-Premises instances of Microsoft Dynamics CRM out there – it’s just that because of the barriers to entry, we tend to see this for larger organizations. This is especially true because of the unique method of deployment shown below.

The Sweet Spot – Private Cloud, Dedicated Hosting

Microsoft Dynamics CRM Private Cloud Hosting – this is a rather interesting deployment model in that it allows for all of the benefits of the On-Premise model, such as:

  • Direct SQL Access and control over the CRM SQL Database
  • Full administrative management (RDP Access) of the Windows CRM application server
  • Complete control over the ability to run code in Sandbox mode or not.

The reason for this is that at a technical level, this is an On-Premises deployment.

And yet – and here is the very interesting part – there are none of the On-Premise costs for server software or hardware! In fact, this licensing model, if provided by a certain type of Microsoft Partner, can in some cases match the $65/user/month that CRM Online provides.

How is this possible?  Because of a relatively little-known Microsoft type of Partnership called “Service Provider Licensing Agreement.”  This allows companies like ours to offer monthly licensing on on-premise deployments of software like Microsoft Dynamics CRM, SQL Server, etc.

The level of this type of service depends largely on the attitude of the service provider.  In our case, we take a very customized and service-oriented approach.  Every one of our Private Cloud customers are special, and we treat them that way. Thus, we are able to assist companies with just a few users who have interesting needs, as well as large enterprise companies that would rather farm out the server and application management because they have enough going on already. And of course, the large number of companies that lie between those extremes. Wherever you go next, please take the time to investigate thoroughly plans like the ones we offer, so you have a full picture of what is available.

The key to determining whether you are one of those companies that requires this level of service is to ask yourself some of the questions represented by those bullet points above, and then educate yourself as to what is available by reading articles like this one, and visiting sites like ours.


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Dedicated Hosted Environments, the OTHER Cloud

Dedicated hosted environments allow organizations to enjoy many of the benefits of the cloud, while providing improved security and greater flexibility.

Most people are now familiar with the concept of the public cloud. Indeed, when “the cloud” is mentioned in the media, it is invariably the public cloud that is referenced. In the public cloud, companies provide software and storage from remote servers that are shared across many users. The cloud delivers its services via a web browser or another client application; the user owns neither the server hardware nor the software itself but instead subscribes to the service as one would a magazine, accessing it for a monthly or yearly subscription fee.

Despite the media’s focus on the cloud as the future, security and compliance issues continue to raise concerns for IT decision makers. No other issue comes close. Although security in the cloud can be, and usually is, very good, questions linger about the ultimate safety of data on public servers. Sixty-two percent of executives surveyed ranked public cloud security as a “serious” or “extremely serious” issue1. The 2011 version of ISACA’s IT Risk/Reward Barometer—US Edition found that 41% of its respondents felt that the risks of cloud computing outweigh the benefits2.

Compliance is another major consideration for IT decision makers. In the United States, a combination of governmental and non-governmental organizations requires companies in industries such as health care and financial services to maintain strict segregation of personally identifiable information (PII). The regulations regarding PII complicate the decision to utilize the cloud. The Payment Card Industry Data Security Standard (PCI-DSS), Health Insurance Portability and Accountability Act (HIPAA), and Sarbanes-Oxley all serve to make cloud adoption more complicated for IT decision makers.

Recently, another type of cloud has made a splash in the media: the private cloud. Private clouds have never received the publicity of their celebrity public sibling, but have become an appealing option for many companies. Unlike in the public cloud, the servers and software in a private cloud are dedicated to one company. Private clouds address many of the concerns that IT decision makers have with the cloud, and IT decision makers prefer private clouds to public clouds for handling sensitive information about 8 to 1. Indeed, 57% of executives indicated that they believe a private cloud will be the best way to manage IT deployments even in three years’ time. Only 7% said the same about the public cloud3.

Private clouds take two basic forms—internally-managed private clouds and dedicated hosted environments.

An internally-managed private cloud is built by a company for its own use, and the company owns the hardware and software and manages the deployment. In the internally-managed private cloud, software and infrastructure is delivered as a service through the company’s network. Internally-managed private clouds differ from traditional on-premise deployments because they make use of several cloud characteristics, including machine virtualization, redundancy, automated provisioning, and an application programming interface (API).

Dedicated hosted environments, or partner-hosted private clouds, are the other form of private cloud. Although they function similarly to internally-managed private clouds, dedicated hosted environments differ from the internally-managed private clouds in a few key ways. First, an outside partner builds, hosts, and manages the dedicated hosted environment for the company that will use it (the subscriber). Second, in a dedicated hosted environment, the subscriber does not have to buy the hardware to build the private cloud or the software running in the environment. Instead, the company subscribes to the software and infrastructure as a service, just as it would in the public cloud. An additional benefit, explained further below, is that the subscriber has the option of deploying additional software in the dedicated hosting environment, not just the software to which the company is subscribing.

There are several reasons that IT decision makers are embracing dedicated hosted environments.

First, dedicated hosted environments provide a greater level of control over security and compliance than the public cloud. The system is not shared as it would be in a multi-tenant, public cloud deployment. Private clouds enable companies to maintain the necessary data segregation and control over privacy and security. In a private cloud, a firewall exists between the network and the Internet, and the user’s software and data is physically separated from other users’ software and data. Users of private clouds can maintain data encryption and restrict access to the system by IP address.

Second, dedicated hosted environments are much more flexible than their public cloud counterparts. Public cloud providers typically restrict the hosting of applications to the providers’ software or to a limited number of trusted partners, but in a dedicated hosted environment, subscribers are free to load any software that they wish onto the dedicated servers. Dedicated hosted environments offer the ability to host unmanaged code such as custom web applications, customer SQL reports, and other applications within the environment. Dedicated hosted environments are also particularly useful for integrating legacy line-of-business applications with CRM platforms such as Microsoft Dynamics CRM. Although the subscriber is responsible for the unmanaged code, the flexibility of being able to host it within the environment is a huge advantage over public cloud deployments.

Third, dedicated hosted environments are scalable. Companies can add server space to meet demand much more easily than is possible with traditional on-premises deployments. Also, machine virtualization allows the managers of private clouds to reallocate the resources in a private cloud as necessary. In a standard on-premises deployment, each individual server needs to have excess capacity in order to handle peak loads. In a private cloud, the virtualized machines within the private cloud share the capacity of the entire cloud. By sharing resources, private clouds are more efficient than traditional on-premises deployments, and less excess capacity is required to handle peak loads.

Fourth, dedicated hosted environments allow smaller companies to leverage the expertise of professional hosting companies, accessing experience and knowledge that they may not otherwise be able to afford in-house, while also enjoying the benefits of a cloud.

Fifth, dedicated hosted environments give the subscribing company access to the latest software while removing the burden of managing the hardware and software to which the company has subscribed. Dedicated hosted environments also give the company the freedom to add other unmanaged software if desired. Additionally, the pace of innovation in the software industry is increasingly making it unlikely that companies can continue to use software licenses long enough to make it more economical to buy software licenses and deploy them in an on-premises environment than to subscribe to software in a dedicated hosted environment.

Private clouds provide a slew of other benefits as well, including single sign on. Read more about the benefits of a dedicated environment hosted by

1 Lange, Larry. “The big dilemma: Security versus scalability”. 24 Oct. 2011. Web. 17 Nov. 2011. <>
2 “2011 ISACA IT Risk/Reward Barometer—US Edition”. 9 May 2011. Web. 17 Nov. 2011. <>
3 Lange, “The big dilemma: Security versus scalability”.

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