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Dynamics 365 Community / Blogs / Learn Business Central with Dr. Gomathi / Introducing MCP Server for ...

Introducing MCP Server for Microsoft Dynamics 365 Business Central

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Dr Gomathi MVP, MCT Community lead, MLE Profile Picture Dr Gomathi MVP, MCT... 395 Moderator
A New Era of AI-Driven Integration and Automation
The evolution of AI is reshaping enterprise applications. Microsoft Dynamics 365 Business Central is no exception. With the introduction of the Model Context Protocol (MCP) Server, Business Central is stepping into a new era where AI systems don’t just retrieve data, they interact, reason, and act.
This article explains:
  • What MCP Server is
  • Why it matters for Business Central
  • How it works
  • Setup considerations
  • Real-world use cases
  • Architectural implications
  • Future outlook
1. What is MCP (Model Context Protocol)?
Model Context Protocol (MCP) is a structured communication layer that allows AI systems (like copilots, agents, and LLM-based tools) to securely interact with enterprise systems.
In simple terms:
MCP acts as a standardized bridge between AI models and Business Central.
Instead of AI scraping data or using brittle APIs, MCP provides:
  • Context-aware access
  • Secure communication
  • Structured interaction
  • Action-based capabilities (not just read-only)
2. Why MCP Server Matters for Business Central
Business Central already provides:
  • OData APIs
  • Web Services
  • Custom APIs
  • AL extensions
So why MCP?
Because traditional APIs are data endpoints, while MCP is an intelligence interaction layer.
Traditional API Model
App → API → Data
MCP Model
AI Agent → MCP Server → Business Logic → Contextual Action
This changes everything.
With MCP:
  • AI understands metadata
  • AI respects business rules
  • AI triggers actions safely
  • AI operates within context
3. Core Capabilities of MCP in Business Central
a. Context-Aware Data Access
MCP exposes structured metadata about:
  • Tables
  • Pages
  • Business entities
  • Relationships
This allows AI systems to understand:
  • What data exists
  • How it relates
  • What actions are valid
b. Action Execution
MCP allows:
  • Creating sales orders
  • Posting journals
  • Updating records
  • Running processes
Instead of just reading data, AI can perform controlled operations.
c. Secure AI Integration
Security respects:
  • User permissions
  • Role-based access
  • Tenant isolation
  • Audit logging
AI does not bypass Business Central security.
d. AI Agent Enablement
MCP enables:
  • Autonomous agents
  • Copilot-style assistants
  • Workflow automation bots
  • External AI orchestration
This aligns perfectly with the era of Agentic AI.
4. Architecture Overview
Here’s how MCP fits into Business Central:
AI Model (Copilot / Agent)
        ↓
Model Context Protocol
        ↓
MCP Server
        ↓
Business Central Services Tier
        ↓
Application Layer (AL)
        ↓
Database
The MCP server acts as a structured gateway.
5. Technical Setup Considerations
While specific setup steps may vary depending on environment, here are common considerations:
🔹 Prerequisites
  • Compatible Business Central version
  • Proper licensing
  • Admin permissions
  • Developer environment (VS Code + AL)
🔹 Configuration Areas
  • Enable MCP service
  • Configure authentication
  • Define accessible entities
  • Set permission scopes
🔹 Authentication
Typically supports:
  • OAuth
  • Entra ID (Azure AD)
  • Token-based authentication
Security is enterprise-grade.
6. Real-World Use Cases
Now let’s move from theory to practice.
a. AI Sales Assistant
An AI agent:
  • Reads customer history
  • Suggests upsell products
  • Creates draft sales orders
  • Sends quotes
All through MCP interaction.
b. Financial Copilot
An AI assistant:
  • Analyzes cash flow
  • Identifies overdue invoices
  • Generates reminder emails
  • Creates follow-up tasks
c. Inventory Optimization Agent
An autonomous agent:
  • Monitors stock levels
  • Predicts demand
  • Creates purchase orders
  • Sends approval requests
d. Management Decision Intelligence
AI can:
  • Query KPIs
  • Trigger report generation
  • Suggest actions based on trends
7. How MCP Differs from APIs
FeatureTraditional APIMCP Server
Data AccessYesYes
Metadata AwarenessLimitedStructured
Action ExecutionYesYes
AI Context UnderstandingNoYes
Agent SupportNoYes
Secure Action LayerBasicAdvanced
MCP is built for AI-native workflows.
8. Business Impact
For organizations, MCP unlocks:
Productivity
  • Reduce manual data entry
  • Automate repetitive workflows
Intelligence
  • AI-driven decisions
  • Context-aware automation
Governance
  • Secure AI operations
  • Auditability
  • Compliance
Innovation
  • Build custom AI agents
  • Integrate Copilot Studio
  • Create AI-powered extensions
9. Developer Perspective (AL + AI Future)
For developers, MCP means:
  • Designing AI-aware extensions
  • Structuring entities clearly
  • Exposing meaningful actions
  • Thinking in “agent-first” architecture
Future BC apps may include:
  • AI triggers
  • Event-driven AI flows
  • Agent-based business logic
This shifts development from:
UI-centric → Intelligence-centric

10. Challenges & Considerations
While powerful, organizations must consider:
Governance
  • Who can allow AI to act?
  • Approval workflows?
Data Exposure
  • What entities should AI access?
  • Masking sensitive data?
AI Hallucination Risk
  • Validate actions
  • Implement confirmation checkpoints
Future Outlook
MCP aligns perfectly with Microsoft’s vision of:
  • Copilot-first experiences
  • Agentic AI
  • Autonomous enterprise systems
  • Responsible AI governance
In the near future, we can expect:
  • Deep Copilot integration
  • AI orchestration frameworks
  • Prebuilt AI agents for Business Central
  • Low-code AI configuration options
Business Central is moving from:
ERP System → AI-Augmented ERP Platform
Conclusion
The introduction of MCP Server in Business Central is not just another integration feature.
It represents:
  • A strategic shift toward AI-native enterprise systems
  • A secure way to enable AI agents
  • A bridge between business logic and intelligent automation
For Business Central professionals, this is a major opportunity:
  • Functional consultants can design AI use cases
  • Developers can build AI-enabled extensions
  • Architects can design agent-driven ERP systems
The question is no longer:
“Can we integrate AI with Business Central?”
The real question is:
“How intelligently can we design it?”

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