Logically speaking, workflows can be classified as follows:

• Out-of-box workflows: Out-of-box components are provided by default in Dynamics CRM. Out-of-box workflows provide a wide range of options for CRM events such as Create, Update, and Delete, or they can be run on demand. This workflow can be configured by using the customization option without the need for writing code.
• Custom workflows: Custom workflows allow other workflows to be extended using .NET and write more complex automation to be done because of triggering the workflow. The component is termed as Custom Workflow activity.

Another classification of workflow has been existing since the launch of Microsoft Dynamics CRM's 2013 version. This is based on whether a workflow will be executed immediately or will be processed a bit later in the background:

• Background workflows: Background workflows are not triggered immediately because of some action in Dynamics CRM. They have rather triggered asynchronously and are processed by an asynchronous processing service in CRM.
• Real-time workflows: Synchronous workflows were introduced first in the Microsoft Dynamics CRM 2013 version. Synchronous workflows trigger immediately as soon as the particular event is triggered in Dynamics CRM.

Please note that real-time workflows can be converted to background workflows and vice versa. It is recommended that you carefully select this choice, as it has impacts on the system performance and usability. By default, workflows are created as background workflows unless specified during creation.

Workflows and plugins can both be utilized to accomplish the same functionality, as both essentially run on the server side to do automation or processing. Recommended usage of workflows or plugins for a scenario is mostly decided by the following factors: