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For further reference.
To configure workspace databases using Desktop Settings.
For this, we need to create a Desktop Settings within the Domino Administrator using below steps.
Open the Domino Administrator.
Go to the People & Groups tab.
Click Settings and select Add Settings.
Choose Desktop Settings from the list.
In the Desktop Settings, navigate to the Applications tab and then go to Database Links section under it.
You can then specify the applications to add to the user's workspace by dragging and dropping links.
Create new replicas on the user's machine: Create a link for each database you want to add as a new replica to the user's workspace.
Arrange the links in the order you want them to appear in the workspace.
Save the Settings.
It will listed in Desktop Settings on Settings Page.
Using newly created Desktop Settings, you need to add new policy using Add Policy under Policies -> Dynamic Policies.
In Add Policy page, give policy name and select newly created settings from Desktop Settings list.
Then in Policy Assignment, select appropriate users and groups to whom you want to apply this policy.
Save the policy.
If you login to Nomad-Web then you will see the replica of given databases on Workspace.
Refer the below link of product documentation:
Specifying Application settings for a desktop policy
If you don't want local replica but want databases from server on workspace, then you can use below option.
Open the Domino Administrator.
Go to the People & Groups tab.
Click Settings and select Add Settings.
Choose Setup Settings from the list.
In the Setup Settings, navigate to the Databases tab and then go to Database Links section under it.
You can then specify the applications to add to the user's workspace by dragging and dropping links.
In ‘Default databases added to bookmarks’, you can drag databases which you want it on workspace from server.
In ‘Create As new replicas on user’s machine’, you can drag databases whose local replica to be added on workspace.
Arrange the links in the order you want them to appear in the workspace.
Save the Settings.
It will listed in Setup Settings on Settings Page.
Using newly created Setup Settings, you need to add new policy using Add Policy under Policies -> Dynamic Policies.
In Add Policy page, give policy name and select newly created settings from Setup Settings list.
Then in Policy Assignment, select appropriate users and groups to whom you want to apply this policy.
Save the policy.
Following image shows the databases added using Setup Policy.

We are investigating as this should already work. Stay tuned for more updates.
Tim C
This is a major pain point, and we need a workaround!