- Model: Monthly subscription through a CSP partner (like SK Consulting)
- Access licenses: Subscription Access Licenses (SALs) — per user or per device
- Deployment: Self-managed on your own servers, or partner-managed hosting
- Flexibility: Scale users up or down monthly — cancel at end of term
- Updates: Subscription entitles you to the latest on-premises version at all times
- Existing perpetual holders: Can continue using their licenses and may qualify for Bridge to Cloud (BTC3) promotional pricing
On-Premises Guide
Business Central On-Premises
What you manage, what you miss, what it costs. Infrastructure, licensing, system requirements, and the honest trade-offs.
Your responsibility
What running on-premises means
On-premises gives you full control — but also full responsibility. Here is what you manage versus what Microsoft handles in the cloud.
Your responsibility on-premises
- Windows Server — patching, updates, security
- SQL Server — installation, tuning, licensing
- Business Central Server — installation, configuration
- Web Server (IIS) for the Web Client
- Backups — database, configuration, disaster recovery
- Updates — monthly cumulative updates (manual install)
- Major upgrades — twice per year, planned as projects
- Security — firewalls, SSL certificates, access control
- High availability and failover (if required)
- Antivirus and endpoint protection on all servers
Microsoft handles in the cloud
- All server infrastructure on Azure
- Automatic updates — major + monthly, zero-touch
- 28-day automatic backups with point-in-time restore
- Geo-redundant disaster recovery
- 99.9% uptime SLA with service credits
- SQL Server — provisioning, tuning, scaling
- Security patching before public disclosure
- SSL, encryption at rest, Customer Lockbox
- Monitoring, performance scaling, autoscaling
- Sandbox environments (1 prod + 3 sandboxes included)
What you miss
Features only available in the cloud
Business Central Online receives features that cannot run on-premises because they depend on Azure services, Microsoft Entra ID, or the SaaS infrastructure.
AI Copilot & Agents
Copilot chat, bank reconciliation AI, sales line suggestions, payables agent, sales order agent — all cloud-only.
Microsoft 365 read-only access
M365 users viewing BC data in Teams without a BC license — not available on-premises.
Power Automate management
Built-in Power Automate flows and approvals within BC require Entra ID and cloud connectivity.
Excel add-in (read/write)
The full Excel add-in with write-back capability requires Entra ID authentication.
Built-in Power BI reports
Auto-deployed Power BI reports and embedded dashboards are cloud-only. On-prem needs manual Power BI setup.
Sales & inventory forecast
Requires Azure Machine Learning — not available on-premises.
Standard REST API
On-premises cannot use Microsoft Graph or the common API endpoint. Custom API pages work, but the standard integration layer is limited.
Outlook add-in
The full Outlook integration (view/create documents from emails) requires Entra ID.
Automatic updates
You apply updates yourself. Monthly cumulative updates and major upgrades are manual projects.
Source: Microsoft Learn — Features not implemented in on-premises deployments
System requirements
What you need to run it
Windows
Server OS
2019 or 2022
SQL
Database
2019 or 2022
.NET
Runtime
.NET 8.0+
IIS
Web Server
For Web Client
SQL Server configuration
- Database Engine Services (required)
- Full-Text and Semantic Search (v25+)
- MAXDOP set to 1 as baseline for OLTP
- 64 KB block size for data disk formatting
- TempDB files = number of cores (max 8 to start)
- Autogrow enabled, grow by 10–25% off-peak
BC Server components
- Business Central Server (NST)
- Web Server (IIS with ASP.NET Core)
- Administration Shell (PowerShell)
- Development environment (VS Code + AL)
- Separate disks for OS, data, logs, TempDB
- Antivirus on all server machines
Client requirements
- Modern browser (Edge, Chrome, Safari, Firefox)
- No desktop client since v20 (Web Client only)
- Mobile apps for iOS and Android
- Screen resolution: 1280 x 1024 minimum
- Excel integration via OData (limited vs cloud)
- Power BI Desktop for report authoring
Source: Microsoft Learn — System Requirements for Business Central
Licensing
On-premises subscription
Business Central on-premises is licensed through a monthly subscription via a CSP partner. Perpetual licensing has been discontinued for new purchases.
User licenses
Full users and additional users
At least one Essentials or Premium full-user license is required. You cannot mix Essentials and Premium — all full users must be on the same tier.
FULL USER
Essentials
Financial management, sales and opportunity management, supply chain and inventory, project management, warehouse management, CRM, and human resources.
FULL USER
Premium
Everything in Essentials plus manufacturing (production orders, BOMs, capacity planning, demand forecasting) and service order management (contracts, dispatching, pricing).
ADDITIONAL
Team Member
Read access to all data plus write access to a maximum of 3 table objects (beyond an extensive list of included tables). Sales quotes, purchase orders, timesheets, and approval workflows.
DEVICE
Device CAL/SAL
Licensed per device. Multiple users can share one device. Covers point-of-sale, store manager, shop floor, and warehouse terminals. Compatible with v16 and later.
INCLUDED
External Accountant
1 free license per tenant for professional accounting or bookkeeping services related to auditing. Cannot be used by internal staff.
INCLUDED
System Administrator
1 free license for your Microsoft Dynamics partner employee to manage the application and provide support.
Since October 2022
Universal Code requirement
Microsoft encourages cloud-compatible code in on-premises customizations. New implementations (first registered after October 3, 2022) that use non-universal code must license additional modules.
Module: "Code is not in extensions"
Required if your customization includes base application modifications that are not provided within extensions. Licensed per full user, charged monthly as part of the subscription.
Module: "Code is not cloud-optimized"
Required if your extension's target is set to "OnPrem" instead of "Cloud". Extensions supporting both on-premises and online should set target to "Cloud" to avoid this fee.
Exempt: Implementations registered before October 3, 2022 are not subject to Universal Code licensing requirements. Contact your partner to verify your registration date.Learn more at aka.ms/BCUniversalCode
Customization
Configuration components
Essentials and Premium licenses include a set of configuration objects for customization. Additional objects can be purchased in packs from the Dynamics Price List.
| Object type | Assignable (IDs 50,000–99,999) | Pre-assigned (IDs 50,000–50,099) |
|---|---|---|
| Codeunits | 10 (Essentials) / 20 (Premium) | 100 * |
| Pages | 100 | 100 |
| Reports | 100 | 100 |
| Tables | 10 | 10 |
| Queries | 100 | 100 |
| XMLports | 100 | 100 |
* Pre-assigned codeunits not included for subscription customers.
Deployment options
IaaS, hosting, and license mobility
License mobility to Azure
Customers with an active Enhancement Plan can deploy in IaaS environments (e.g. Microsoft Azure). Licenses can be reassigned between Server Farms, but not on a short-term basis (90-day restriction).
SQL Server licensing
SQL Server Runtime licenses received via Order Central do not qualify for license mobility. For IaaS deployments, you need to license SQL Server separately through Microsoft Volume Licensing.
Multi-tenant hosting
On-premises can be deployed in multi-tenant environments where the OS is not dedicated to one customer. In this case, the license key is installed in the tenant database.
Good to know
Additional licensing considerations
External users
Your customers (external users) can access BC without individual licenses, as long as they don't use any BC client (web, mobile, Windows) and aren't contractors or agents providing business process services on your behalf.
Multiplexing
Using hardware or software to pool connections does not reduce license requirements. Every user or device that accesses BC data — directly or indirectly through middleware, portals, or APIs — must be properly licensed.
Dual Use Rights
Cloud subscribers get on-premises deployment rights. But the reverse is not true: on-premises CALs do not grant cloud access. Cloud customers considering on-prem deployment should check the cloud licensing guide.
Additional software
Licenses for Windows Server, SQL Server, SharePoint Server, and Power BI are not included with Business Central. These must be acquired separately under their own licensing terms.
License reassignment
Licenses cannot be temporarily reassigned within 90 days, except to cover absence or an out-of-service device. Permanent reassignment is allowed at any time.
Power BI
On-premises users are not provided with Power BI licenses. BC includes embedded Power BI as a feature, but users need a separate Power BI subscription to configure it.
FAQ
Common on-premises licensing questions
What infrastructure do I need?
At minimum: Windows Server (2019/2022), SQL Server (2019/2022) with Database Engine and Full-Text Search, the Business Central Server component, and IIS for the Web Client. You also need to plan for backups, disaster recovery, patching, and performance monitoring.
What features do I lose compared to cloud?
AI Copilot and autonomous agents, Microsoft 365 read-only access via Teams, Power Automate management, built-in Power BI auto-deployed reports, the full Excel add-in, Outlook add-in, and sales/inventory forecast with Azure AI. On-premises still covers all core ERP functionality.
How often do I need to update?
Microsoft releases monthly cumulative updates and two major updates per year (April and October). You must stay on a supported version at all times — each version is supported for approximately 18 months. You choose when to apply updates within that window.
Is there a minimum license purchase requirement?
No. There is no minimum number of licenses required. However, you must license at least one Essentials or Premium full user, and you cannot mix the two tiers.
Can I mix user CALs and device CALs?
Yes. You can mix user CALs and device CALs. If a user has a named CAL, their device does not need a device CAL, and vice versa. Only the user or the device needs to be licensed, not both.
What can Team Members actually do?
Team Members get read access to all data plus write access to 3 table objects beyond an extensive included table list. They can create sales quotes and orders, purchase orders, fill in timesheets, manage contacts and opportunities, and approve workflows. They cannot write to the General Ledger or permission tables.
Do I need the Universal Code modules?
Only if your implementation was first registered after October 3, 2022 and uses base application modifications (not in extensions) or extensions with target set to "OnPrem". Pre-existing implementations are exempt.
Can I still buy perpetual licenses for Business Central?
No. Perpetual licensing for Business Central on-premises has been discontinued. New on-premises deployments use subscription licensing (SALs) through a CSP partner. Existing perpetual license holders can continue using their licenses and may qualify for the Bridge to Cloud promotion.
What happens to my Enhancement Plan?
An active Enhancement Plan is required for license mobility (IaaS deployment) and for eligibility to Bridge to Cloud promotional pricing if you decide to migrate to Business Central Online later.
Considering a move to the cloud?
Most new Business Central deployments today are cloud-based. If you are on on-premises and considering migration, we can assess your eligibility for Microsoft incentive programs.
Source: Microsoft Dynamics On-Premises Licensing Guide (Nov 2025) · Universal Code FAQ · Features not on-prem
