Online On Premise
Hardware Microsoft handles the hardware – no buying a server or paying for server licenses. This can be a large up-front savings. You need to provide the hardware and server licensing. Your IT team needs to maintain the system.
Software Updates Microsoft handles the software updates – Microsoft keeps CRM up-to-date. After a new CRM release it can take a month or two before you get the update, but it will get there. Microsoft also pushes out smaller hotfixes the same way. You control when software updates are applied. Your IT team needs to apply the updates. For some firms this is beneficial to know exactly when CRM will be getting updated. Microsoft does not guarantee that On Premise updates are kept up with CRM online. It can take awhile until updates that are on CRM online make it to the On Premise version.
Authentication / Login Authentication uses the Microsoft Azure Active Directory security which has many features to lock down access as needed. Has features like IP white listing and 2 factor authentication. You can keep CRM inside your local intranet network or make it publicly available. You can use authentication through either Microsoft Azure Active Directory or use only your own local Active Directory. You need to enforce any additional security requirements.
Data Recovery / Backups Microsoft handles backups – backups are done nightly on production environments. To restore you have to request MS to do it through a support ticket. You can only restore back to the last night’s backup. You control backup schedules – you can have a more refined backup. You need the resources to both store the backups and the IT team with knowledge to restore them.
Reporting CRM reports must run using FetchXML which has limits on number of entities (tables) included and total records. Works well for small reports but not for large aggregation type reports. Does not work well with bringing in data from non-CRM sources. You can use Power BI to accomplish this or another common workaround is to use a 3rd party tool to copy the CRM data down to local SQL server so you can use the reporting solution of choice. CRM reports can run using FetchXML or SQL queries. Because you have direct access to the database you have more flexibility on the reports. The reports shown in CRM need to be SSRS based but because you have the CRM database locally, you can connect to it with any reporting solution externally that supports ODBC.
Power BI Supported. Data is available as part of the power platform and Power BI reports can be embedded into CRM in dashboards. Supported indirectly. Data is available through SQL connection (using tool to move data to online). Cannot as easily embed Power BI reports in the CRM dashboards.
Storage Amount of database storage is based on licensing. Typically the amount is sufficient for data until you start storing file attachments from emails or adding files to notes. Pricing on storage is much more expensive than SharePoint so a common work-around is to implement the SharePoint integration. No imposed limit. The amount of storage is limited by your own hardware.
Workflows & Power Automate Built-in CRM workflows are supported as well as Power Automate flows. However Power Automate may require additional licensing. Built-in CRM workflows are supported. Power Automate is not directly supported.
Licensing This is ever changing and could be its own article. You need to find a Microsoft partner to get a proper estimate. This is typically a per user per month fee. Simpler but I still recommend finding a Microsoft partner to get a proper estimate. You will need to handle licensing for your own servers as well.
Accessibility A good internet connection is required. Server is run locally and can be used on the local network if internet is down. Public access would require internet connection.
Data Security CRM data is stored in a Microsoft datacenter being protected by Microsoft engineers. Microsoft does a great job on its security but for some companies this is still some risk that their data could be stolen en-mass should a vulnerability be found. The data is located on your own server so it is yours to protect.
Email / Exchange Easy support for Exchange hosted in the same tenant. Does support both online and on premise Exchange servers. Supports both online and on premise Exchange servers. Some configuration required.

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