This guide walks you through every step of setting up Microsoft's Unified Development Environment (UDE) for Dynamics 365 Finance & Operations. By the end, you will have a fully functional X++ development environment running locally on Visual Studio 2022, connected to a cloud-hosted Power Platform sandbox — with zero Azure VM costs.
If you are still running Cloud-Hosted Environments (CHEs) for your D365 F&O development, you are paying for Azure compute that you no longer need. Microsoft's Unified Development Environment replaces the legacy VM-based workflow with a modern, cost-effective alternative.
A traditional CHE requires a dedicated Azure VM running continuously. For a UK-based team, that typically costs between £150 and £400 per developer per month. A UDE runs on a Power Platform sandbox — included with most D365 F&O licences — which means your Azure VM costs drop to zero.
With UDE, there are no virtual machines to provision, manage, patch, or decommission. You provision your environment entirely through the Power Platform Admin Center and develop locally using Visual Studio 2022.
UDE environments sit natively within the Power Platform, giving you seamless access to Dataverse, Power Apps, and Power Automate alongside your X++ development. This enables cross-platform solutions without switching between separate tools or environments.
Code deploys directly from Visual Studio to the cloud environment via managed Dataverse solutions — the same ALM pattern used in D365 CE. No more manual deployable packages or LCS-style uploads.
New developers can be productive within hours, not days. Install Visual Studio 2022, add the Power Platform Tools extension, connect to the environment, and start coding. There is no wait for VM provisioning or complex environment setup.
UDE projects are version-controlled with full Azure DevOps or GitHub integration from the start. Every X++ customisation lives in source control, enabling proper branching, pull requests, and CI/CD pipeline workflows.
Click the + New button in the top toolbar to open the environment creation wizard. You will need to configure five settings:
Environment Name — Choose a unique name under 20 characters. This name becomes part of your F&O URL, so pick something descriptive like dev-ude or adria-dev. Avoid spaces and special characters.
Region — Select United Kingdom. For UK-based development teams, this ensures the lowest latency. If your developers are spread across regions, select the region closest to the majority of your team.
Type — This must be set to Sandbox. Production-type environments do not support F&O developer tools. UDE requires a sandbox environment specifically.
Add a Dataverse Data Store — Set this to Yes. The Dataverse data store is mandatory for UDE. Without it, you cannot install the F&O Provisioning App or connect Visual Studio.
Click Next to proceed to the second configuration page.
On the second page of the wizard, configure the following:
Currency — Set to GBP (£) for UK deployments. All reports and financial data in this environment will use this currency.
Enable Dynamics 365 Apps — This must be set to Yes. This is the single most critical setting on this page. Without it, you cannot install the F&O Provisioning App, and this decision is irreversible — you cannot enable Dynamics 365 apps after environment creation.
Automatically Deploy These Apps — Select Select Now (not "Select Later"). This lets you manually install the Finance and Operations Provisioning App in the next step rather than waiting for automatic deployment.
Click Save to create the environment. The initial provisioning takes a few minutes. You will see the environment appear in your list with a "Provisioning" status that changes to "Ready" once complete.
Once you click Save, the Power Platform begins provisioning your sandbox environment. This typically takes 5 to 10 minutes. You can monitor the status by clicking on the environment name in the list.
When the status shows Ready with a green indicator, your environment has been created successfully. You should see the environment details including the Organisation ID, Environment URL, and region confirmation.
Tip: While waiting for provisioning, you can begin installing Visual Studio 2022 and the required components (covered in Step 7) to save time.
From the environment details page, navigate to Dynamics 365 Apps in the top navigation. Locate the Dynamics 365 Finance and Operations Provisioning App in the list and click on it.
You will see a configuration page with several options:
Enable Developer Tools for Finance and Operations — Tick this checkbox. This is mandatory. Without it, you cannot connect Visual Studio 2022 to develop X++ code on this environment. This is the most critical setting in the entire setup process.
Enable Demo Data for Finance and Operations — This is optional. Tick it if you want the Contoso demo data pre-loaded for a clean development environment. For production-like development, leave it unchecked — demo data can always be added later.
Select the version of the product — Choose the D365 F&O version you want to install from the dropdown. This typically shows the latest available PQU (Platform and Quality Update) for each supported version.
Agree to Terms of Service — Tick the "I agree to the terms of service" checkbox. The Install button remains greyed out until this is checked.
Click Install. The provisioning process begins and takes approximately 1 to 2 hours to complete. You will receive a notification when the installation finishes.
Once the installation notification arrives, return to your environment in Power Platform Admin Center. Open the environment details and verify that:
You should also see a confirmation that the Dataverse provisioning has succeeded. If any errors appeared during installation, check that your Dynamics 365 licence is correctly assigned and that the "Enable Developer Tools" checkbox was ticked during installation.
If you do not already have Visual Studio 2022 installed, download it from visualstudio.microsoft.com. You need the Enterprise or Professional edition — Community edition does not support X++ development.
During installation (or via the Visual Studio Installer for existing installations), go to the Individual Components tab and ensure the following are selected:
These components are required for the X++ compiler and Power Platform Tools to function correctly. The installation will be approximately 2 GB depending on your existing Visual Studio configuration.
Open Visual Studio 2022. From the top menu bar, go to Extensions and then click Manage Extensions to open the Extension Manager.
In the search bar, type Power Platform and locate Power Platform Tools for VS 2022 published by Microsoft. Click Download (or Install if the download completes inline).
You may need to close and reopen Visual Studio for the extension to activate. Once installed, you will see a new Power Platform option in the Visual Studio Tools menu and a Finance Explorer panel available in the View menu.
Note: The Power Platform Tools extension is similar in appearance and functionality to the Developer Toolkit for Microsoft Dynamics CRM 2013. If you have experience with that tool, the workflow will feel familiar — but with significantly expanded capabilities for F&O development.
In Visual Studio, go to Tools and then click Connect to Dataverse. This opens a connection dialog. Enter your Power Platform environment URL (the one shown in the Admin Center details page) and authenticate with your admin credentials.
Once connected, open the Finance Explorer from the View menu. This panel shows your Dynamics 365 Finance and Operations objects — models, packages, classes, forms, and other X++ artefacts.
You can now:
The connection is persistent — Visual Studio will remember your environment and reconnect automatically on future launches.
With your UDE environment fully provisioned and Visual Studio connected, you are ready to begin X++ development. Here are some recommended next steps:
Set up source control — Connect your project to Azure DevOps or GitHub to enable version control, branching, and CI/CD pipelines for your X++ customisations.
Configure your build pipeline — Set up automated builds using Azure DevOps Pipelines to compile and validate your X++ code on every commit.
Invite your team — Add other developers to the Power Platform environment with appropriate security roles so they can connect their own Visual Studio instances.
Explore the Veriland UDE Tutorial Series — This guide is part of our D365 F&O UDE Tutorial Series. Follow along as we cover advanced topics including ALM configuration, multi-developer workflows, and deployment to production environments.
Our ex-Microsoft consultants can set up your UDE, configure your ALM pipeline, and get your development team productive in days, not weeks.
Or call us directly: 01625 569 777
