Is there such a thing as Hybrid deployment for Dynamics 365 Customer Engagement?

One common question when embracing Cloud is the ability to have a hybrid scenario. And with Dynamics 365, the question translates into “Is there a hybrid deployment model?”

The short and dry answer is NO. But, there are some aspects to consider that can make it an overall hybrid solution.

Let’s first look at the supported deployment models for Customer Engagement.

Dynamics 365 Customer Engagement Online

In an online model, Microsoft hosts the application, and provides it as a service in a SaaS model. Thus, the infrastructure layer and the application are the responsibility of Microsoft. Updates/upgrades and backups are done my Microsoft (you do have the ability to schedule some upgrades). In addition, the support is provided by Microsoft.

Licensing play a role here in what you get, with a user based licensing model provided. The minimum requirement of licenses stipulated varies depending on the license type, and what you can access. For details on the licensing, start from the licensing guide available HERE.

3rd Party Hosted

This model allows hosting responsibilities to be provided by a 3rd party organization. This model, while not as popular any more, allows for more flexibility in customizations, and still leverages the infrastructure and application hosting, as well as support. Some providers either offer this model in a Managed Service scenario, or provide add-on services to sweeten the deal.

You should carefully negotiate the requirements to get the best value for your deployment. Note that in this scenario, there is usually an upfront cost for the environment setup.

On-premise / Self Hosted

In this model, the customer is responsible for all maintenance of the infrastructure and the platform. While you do get the maximum amount of control, you take on all the responsibility of your environment maintenance.

This model comes with the highest upfront cost, but it could result in the lowest cost spread over time. In THIS article I’m touching on some of the scenarios where this model might make sense.

What is Hybrid then?

While the actual Dynamics 365 Customer Engagement deployment does not support a Hybrid model, the actual ecosystem around a typical deployment can in fact leverage a hybrid model. How is that you might ask?

Let’s look at some examples.

On-premise deployment leveraging cloud services

In this model, we can have a typical on-premise deployment that can leverage Exchange Online. This model is documented by Microsoft. In fact, all 4 possible models are supported and documented:

  • Dynamics 365 on-premise to Exchange Online HERE
  • Dynamics 365 on-premise to Exchange on-premise HERE
  • Dynamics 365 online to Exchange on-premise HERE
  • Dynamics 365 online to Exchange online HERE

In another model, while we have a typical on-premise deployment, we can integrate the local Active Directory (AD) with Azure Active Directory (AAD). This can give us the ability to leverage either a Single Sign-On (SSO) scenario, or at the very least a Password Sync scenario. I’ve written an article a while back on this, and you can find it HERE.

Similarly, you can have an on-premise deployment that leverages SharePoint Online for document management.

Online deployment leveraging on-premise services

Going the opposite way, you can have your typical Online deployment, and integrate with on-premise services.

You can refer back to the authentication model presented above, where your user management can be integrated, as well as the Exchange integration links provided above.


While Dynamics 365 Customer Engagement does not support a hybrid platform deployment, your solution does include multiple services, and you can take a Hybrid approach to the entire deployment model.

In most circumstances, this Hybrid approach is typically the first step towards moving to Cloud. Taking smaller steps safeguards you against a a big-bang approach and reduces risks. It also allows you to split the project into more manageable chunks, and allows you to contract various partners for each of their strengths.

Typically you would do an Office 365/Infrastructure, followed by possibly SharePoint and then Dynamics 365 Customer Engagement.

How far are you in the process to migrate to Cloud? Are you taking a multi-step approach? Leave a note in the comments below.

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