Which is what I do.

I used to have an on-prem TFS app-tier/data-tier and an on-prem build tier. 
 When I initially evaluated TFS Service I had difficulty keeping the 
on-prem build tier registered with the service.  I stopped using it for 
about a year and when I reevaluated it they had fixed those problems and 
added the hosted build server option.

The hosted build option really isn't an option IMO.  The only way it has of 
getting binaries back to you is to check them into source control.  I can't 
believe they don't even have some kind of Sky Drive integration so the 
builds replicate down to your machine.  Also the servers only have a basic 
set of software with zero rights.  If you need to build MSI's using WiX or 
InstallShield you are stuck.  I can't believe they didn't even atleast put 
the InstallShield Stand Alone Build Engine on there since they partnered 
with Flexera on InstallShield Limited Edition.

Hosting your own build server where you have full rights and local storage 
is pretty much the only way to go.

As an aside, I evaluated the cloud service at my day job and it's just not 
suitable.  They have federated authentication but they only have a 
Microsoft Live provider.  They don't have Active Directory capabilities.   
Also there is no Analysis Services / Reporting so I'd have a huge feature 
gap to pass onto the development teams.

TFS Service is good right now for a small shop who can host their own build 
servers but it currently isn't enterprise ready.

----------------------------------------
 From: "Neil Sleightholm" <n...@x2systems.com>
Sent: Friday, March 01, 2013 1:49 AM
To: "General discussion for Windows Installer XML toolset." 
<wix-users@lists.sourceforge.net>
Subject: Re: [WiX-users] using WiX with team foundation service

We use WiX with TFS but installed WiX on the build servers.

Neil

>
>
> If there is a NuGet package for WiX, that's news to me.  The one time I
>played with WiX on the TFS Hosted Build Agent I had to check all the WiX
>binaries into source control and tweak the a few things in the targets
>file 
>or something (don't fully remember ) to get it to all line up.  And I had
>to disable ICE validation because the windows installer service was
>disabled and it wasn't working.
>
>In other words,  the hosted build service was not suited to my needs.  I
>have a hyper-v server at home that runs my build agent (pointed to my
>cloud 
>instance) quite nicely.
>
>----------------------------------------
> From: "Sean Farrow" <sean.far...@seanfarrow.co.uk>
>Sent: Thursday, February 28, 2013 6:23 PM
>To: "wix-users@lists.sourceforge.net" <wix-users@lists.sourceforge.net>
>Subject: [WiX-users] using WiX with team foundation service
>
>Hi,
>
>I am looking at using Wix for an installer. We are using Team foundation
>service for this.
>Can I just install the NuGet package in to my project and go from there
>or 
>is there other things I need to do?
>Any help appreciated.
>Regards
>Sean.
>--------------------------------------------------------------------------


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