Deployment options and environment types
The deployment choice and the environment plan are the first architecture decisions on a Finance and Supply Chain Management project. They drive cost, timelines and what you can test.
Cloud or on-premises
Dynamics 365 Finance and Dynamics 365 Supply Chain Management run by default in the Microsoft cloud, with continuous service updates. A self-service on-premises option exists for customers who cannot use the public cloud.
| Choose | When |
|---|---|
| Cloud | Default. You want Microsoft to run infrastructure, updates and disaster recovery |
| On-premises | Regulation or policy forces data on customer-owned servers, or the customer has a large infrastructure investment and accepts running it |
On-premises means the customer runs the servers and applies updates itself. Some cloud-only services, such as many Power Platform and AI features, are limited or unavailable.
Environment types
| Type | Purpose |
|---|---|
| Tier 1 (developer / build) | Development, code compile and build. Customer-managed VM, not for performance testing |
| Tier 2 (standard acceptance test) | UAT and integration testing. Microsoft-managed sandbox |
| Tier 3 to 5 | Larger sandboxes for performance, load and data-migration rehearsals |
| Production | Live use. Only one per geography unless there is a business reason |
Sandboxes are deployed and managed through Lifecycle Services (LCS), and Microsoft is moving environment management to the Power Platform admin center as unified environments, where a finance and operations environment is linked to a Dataverse environment.
Planning rules
- Plan at least a build environment, a test environment and a UAT sandbox, plus one for performance testing on a large project.
- Test integrations and performance in Tier 2+ sandboxes, never in production and never only in Tier 1.
- A production environment has one region. A second geography needs a second production environment.
- Data residency decides the region. Plan the region before deployment because moving later is a project.
- Refresh a sandbox from production when you need real data for testing, and from a golden (gold) configuration environment when you need clean configured data.
Exam traps
- On-premises is chosen for compliance or infrastructure reasons, not for better integration.
- Tier 1 is not a sandbox for load testing. It is for developers and build.
- One production environment cannot serve two Azure regions.
- LCS is the older management portal. The exam may still say LCS where newer material says Power Platform admin center.
Practice questions
Choose an answer, then review the explanation to check your understanding.
1. A customer must keep all data on its own servers because of a national regulation, and accepts running its own infrastructure. Which deployment fits?
Show answer
Answer: B.Regulatory or data-residency rules that prevent public cloud use are the main reason to choose on-premises. Cloud is the default for everything else.
2. Which environment type is used to deploy and test a solution with production-like data volumes before go-live, and is hosted and serviced by Microsoft?
Show answer
Answer: C.Tier 2+ sandboxes (standard acceptance test and above) are Microsoft-managed and are used for UAT and performance testing. Tier 1 is for development and build.
3. A customer wants a production environment in the United States and another in China for a separate legal presence. What should you plan?
Show answer
Answer: B.A production environment lives in one Azure region. Separate geographies need separate production environments, each with its own sandboxes.