Hosting your solution on-premises is still an option but chances of you picking it and actually being able to buy will become more of a challenge going forward.
Issue of Availability
We're not talking about technical availability... but purchase availability.
A few years ago, if your company had an enterprise agreement with Microsoft, you'd periodically have a conversation with your sales rep on whether you'll be upgrading to the latest version of the software, whatever you happen to be using.
You always had an option of not doing anything that year or investing in some sort of an upgrade.
Well, these kind of conversations are the thing of a past, as it seems, since pretty much every product hosted in the cloud is set for automated upgrade sooner or later.
Additionally, a recent announcement:
Microsoft is undergoing another huge reorganization to sell more cloud subscriptions and less software ... source: "Business Insider"
This means that programs/initiative helping small business and startups to get software packages will be completely geared towards the cloud. This will likely impact enterprise agreements as well.
Availability of New Features
Looking at Microsoft SharePoint in particular, even though some new features make it back to on-prem version via software updates, the majority of the slick new functionality remains "for the cloud only". We're talking:
-Modern Team Sites and Communication Sites
The question then becomes, not whether you want to have host your solution on-premises but, is there enough reason to design a solution that way.
More of our customers who require an on-prem solution today ask for it to be designed in such a way that it can be ported to the cloud with little to no changes in the near future. This isn't always the easiest since cloud providers constantly change features and API.
Take Delve API for example, it's been around for 2 years since release, then it has gone through rumors of significant new release, and now (literally less than 2 weeks at the time of writing this article) we know about it's API upgrade. This is just one specific example, many more follow this pattern.
The number of easy to use integration methods, microservices, webhooks, and serverless architecture has skyrocketed over the last year. Take Zapier for example; it's hard to begin estimating how much time would it take to build (by hand just 3 years ago) equivalent of integration that today will take 5-10 minutes using Zapier.
Same goes for Microsoft Flow, which is essentially Microsoft's version of Zapier, obviously mostly serving Microsoft products.
In both scenarios, almost all of the integrated solutions connect cloud services. If you're using on-prem version of Dynamics, on-prem PBX system, or a similar tool, you can't take advantage of these integration options. Once in the cloud, it's just a matter of providing authentication and a few connection options.
So do you really have an option?
Of course, but that option is likely to be in favor of a cloud solution whether now or in the next few years.
If you're considering to build a new solution, see how the landscape is changing and which parts should still reside on-prem and which ones should live in the cloud.
Not sure? Hire an expert, evaluate your options before proceeding too far ahead. In many cases it's not just technology but change management aspects and getting people trained. Just because someone in your company has been using the same accounting software for the past 20 years, doesn't mean they can't be trained on using a newer version with solid cloud integration.
As always, curious to hear your thoughts and comments!