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Model-Driven, Canvas, and Microsoft 365 Apps: An Overview and Core Licensing Differences

Wednesday, May 28, 2025
Reading time: 15 minutes

As organisations continue to explore the capabilities of Microsoft’s Power Platform, understanding the distinctions between different types of apps, be they Model-Driven, Canvas, or Microsoft 365 (M365) Apps is essential. Each of them offers different unique strengths and has licensing considerations that can significantly impact solution design, scalability, and cost. This article is designed to help build on the Going Beyond Business Central Extensions with Power Apps article and provides a clearer overview of different app types, use cases, and licensing models that support them.

What Are Model-Driven, Canvas, and Microsoft 365 Apps?

Model-Driven Apps

Model-Driven Apps are built on Microsoft Dataverse and are driven by the underlying data model. They offer a component-based approach to app development, where the user experience is largely determined by the data structure and relationships. These apps are ideal for complex business scenarios that require robust data management, security roles, and process automation.

Key Features:

  • Built on Dataverse
  • Strong integration with Dynamics 365 (same user experience)
  • Ideal for structured, data-centric applications

Canvas Apps

Canvas Apps provide a highly customizable, pixel-perfect design experience. Developers start with a blank canvas and drag-and-drop elements to create tailored user interfaces. These apps can connect to over 1,000 data sources, including Business Central, SharePoint, SQL, and third-party APIs.

Key Features:

  • Flexible UI design
  • Connects to multiple data sources
  • Ideal for task-based or mobile-first applications
  • Can be embedded in Teams, SharePoint, or Power Pages (with limitations)

Microsoft 365 (M365) Apps

M365 Apps refer to solutions built using Power Apps within the Microsoft 365 ecosystem, particularly within Microsoft Teams. These apps often leverage Dataverse for Teams, a lightweight version of Dataverse, and are designed for collaboration and productivity scenarios.

Key Features:

  • Built and run within Teams
  • Uses Dataverse for Teams (limited capacity and features)
  • No additional licensing required beyond M365
  • Best for lightweight, team-centric solutions

Benefits of Each App Type

Feature/Need Model-Driven Apps Canvas Apps M365 Apps (Dataverse for Teams)

Data Complexity

High

Medium

Low

UI Customization

Low

High

Medium

Integration Flexibility

Medium

High

Low

Offline Access

Yes

Yes

No

Licensing
Requires Licence

Requires Licence

Included with M365

Ideal Use Case

Enterprise CRM/ERP

Mobile/task apps

Team collaboration tools

Licensing Differences

Understanding licensing is crucial when choosing the right app type. Here’s a breakdown of the core differences:

Model-Driven and Canvas Apps (Power Apps Licensing)

These apps require a Power Apps licence, either Per App or, Premium (formerly per User.) They both include access to Dataverse and premium connectors. The Premium plan allows for unlimited app usage across an organisation whilst the per app plan allows access to one app or Power Pages site per app pass. The Premium licence also comes with a small amount of base Dataverse capacity per licence, refer to the licencing guide for up to date details on allowances.

M365 Apps (Dataverse for Teams Licensing)

Apps built within Teams using Dataverse for Teams are included with most Microsoft 365 licenses (e.g., E3, E5, Business Premium.)

  • No additional cost for app usage within Teams
  • Limited Dataverse capabilities (e.g., no API access, limited storage, no PCF components, no access to custom or premium connections for Power Automate integration.)
  • One environment per Team

Dynamics 365 Licensing

If you’re using Dynamics 365 apps like Sales or Customer Service, you already have access to Dataverse and can build Model-Driven or Canvas Apps without additional Power Apps licenses provided the apps are within the scope of the licensed Dynamics 365 application.

Scenarios for Choosing the Right App Type

  • Model-Driven App: Use when you need structured data, complex relationships, and role-based security (e.g., CRM systems.)
  • Canvas App: Ideal for mobile-first or task-specific apps with custom UI (e.g., field service checklists.)
  • M365 App: Best for lightweight, collaborative tools within Teams (e.g., vacation request forms.)

Commercial Opportunities for Partners

Each app type opens up different commercial avenues:

  • Model-Driven Apps: Enterprise-grade solutions with high value and complexity.
  • Canvas Apps: Rapid development for niche business needs, especially in mobile or hybrid environments.
  • M365 Apps: Low-cost, high-volume solutions for internal productivity and collaboration.

Partners can leverage these options to tailor solutions based on customer size, budget, and digital maturity, unlocking new revenue streams and long-term engagements.

Conclusion

Choosing between Model-Driven Apps, Canvas Apps, and M365 Apps depends on the business scenario, technical requirements, and licensing constraints. By understanding the strengths and limitations of each, Microsoft partners and customers can make informed decisions that align with their strategic goals. Whether you’re building enterprise-grade solutions or lightweight team tools, Power Platform offers the flexibility to innovate beyond the boundaries of Business Central and traditional ERP customisation into the broader Dynamics and Business Applications ecosystem.

Chris Parkes
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