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There are three categories of environments for Dynamics 365 Finance: development, test, and production. These functional uses are mapped onto two architectural environment classes: Tier 1 one-box style environments, and Tier 2-5 production-like environments.

D365 Finance provides a Tier 2 environment and a production environment. Extra environments incur Azure costs or require product licenses.

The below table outlines the key differences between the environment tiers, and you can review further details in the official product documentation.

Tier 1 Tier 2+
Used for development purposes Always used for non-development purposes
Combines all system architecture onto a single static VM image Based on the multi-server production architecture
Performance is determined by the selected Azure VM series Performance is determined by the tier (2, 3, 4, 5)
Back-end is accessible Back-end is locked
Microsoft provides no free Tier 1 environments Microsoft provides one free Tier 2 environment


We recommend a 5-environment configuration:

  • Development: Tier 1 environment dedicated to active development. Ideally each developer will own their own environment, but technically environments can be shared as long as the separate developers are working asynchronously.
  • Build: This Tier 1 environment is dedicated to code compilation and automated testing. Technically code compilation can be accomplished without a build machine, but automated testing requires a dedicated VM.
  • Test: Tier 2+ environment used for functional validation. Due to the lengthy functional validation timeline for Dynamics 365 Finance customizations, the code in this environment will rarely match the code in Production.
  • Production Mirror: Tier 2+ environment dedicated to software package deployment testing and production troubleshooting. Code debugging is not supported on Tier 2+ environments. Azure SQL is available, however, which makes it helpful to have a regularly updated production mirror for rapid production troubleshooting. The production mirror environment is optional.
  • Production: Live production environment for the D365 Finance system. It is technically an environment type that is unique from the Tier environments, but Tier 2+ environments closely mirror production architecture. There is no back-end access to this system.

Below is a diagram outlining a typical minimal D365 Finance environment infrastructure. It includes the typical flow of code between each environment.

graph LR
    A(Development) --> B(Test)
    B(Test) --> C(Production Mirror)
    B(Test) --> D(Production)

Figure 1. Typical environment configuration.

For more information on D365 Finance environments, review the official product documentation.

For more information on how these environments relate to the branches you configure in version control, review our branching guidance.