Originally posted on Technology Evaluation Centers (TEC)

 

After a hiatus of several years, we attended Microsoft’s annual user conference dedicated to enterprise software—what used to be called the Microsoft Convergence Conference. Held in Atlanta, the recent Microsoft Business Applications Summit was the second one to feature the new name (the first conference under the new name occurred a year ago).

This year’s event was attended by about 5,000 professionals. According to Microsoft’s executives during their keynote presentations (see Figure 1), the enterprise software realm (part of Microsoft’s Cloud and Enterprise Division) is doing quite well with 43% year-over-year new revenue growth for Dynamics 365.

 

Figure 1. Alysa Taylor, Corporate Vice President of Microsoft Business Applications and Global Industry

 

The Microsoft Dynamics business is expected to be over $2.5 billion in FY19, with the cloud enterprise software mix exceeding 50%. There is strong growth in enterprise resource planning (ERP) software billings and customer deployments. There is also the Microsoft AppSource marketplace with over 6,000 solutions from about 3,500 independent software vendor (ISV) partners.

Dynamics ERP Software Current State of Affairs

Microsoft Dynamics 365 for Finance & Operations is a cloud-native evolution of Dynamics AX 2012, Similarly, Microsoft Dynamics 365 Business Central brings Microsoft Dynamics NAV to the cloud. Like their progenitors, the two new ERP software solutions continue to target larger enterprises and small to midsize businesses (SMBs), respectively.

Some important new prospective customers might be accommodated with on-premises ERP software deployments (if they really insist on that), but Microsoft’s emphasis is on cloud ERP software deployments. To that end, the vendor now offers Microsoft FastTrack methodology, with a set of best practices, tools, resources, and experts committed to making migrations to the Microsoft Cloud easier. FastTrack is also Microsoft’s new post-sales support program for those customers that have had large and complex projects, and may need an ongoing support.

Microsoft Dynamics 365 for Finance & Operations is largely based on the flexible platform formerly known as the Axapta ERP platform, which has since been rebuilt as a cloud native solution, ensuring that it’s a true software as a service (SaaS) solution and taking full advantage of all of the capabilities (scale, database, intelligence etc.) that Azure can offer.. In addition, the users interface (UI) has a new modern look and feel as well (see Figure 2). The situation seems to be quite different in the case of Microsoft Dynamics 365 Business Central, which will soon have a completely new web client (instead of the traditional thick or rich client, stemming from the erstwhile two tier client-server architecture of the former Microsoft Dynamics NAV).

The new SMB ERP product will also soon have a completely new development platform (rather than using the proprietary NAV C/SIDE), which is being developed on GitHub. A new developer language for Business Central will be AL, which is currently only being used for system customizations.

 

Figure 2. Microsoft Dynamics 365 for Finance & Operations look and feel

 

Microsoft Dynamics 365 for Finance & Operations is in its third year of existence, and is much more mature than its SMB counterpart Business Central, which is currently still in its first year. As mentioned earlier, the ERP business is growing at a healthy pace, and new capabilities keep coming as well, some of which will be listed below.

The Finance & Operations product’s vertical focus is primarily manufacturing, distribution, professional services automation (PSA), and retail, whereas the secondary (supporting) functions are financial management and human capital management (HCM). About 90% of Microsoft Dynamics 365 for Finance & Operations users use the system for supply chain management (SCM) and manufacturing, 68% for warehousing management, and 48% for retail.

Microsoft Dynamics 365 for Finance & Operations has been growing 200% annually in terms of monthly average users (MAU). About 9 out 10 new customers reportedly chose to deploy it in the cloud, whereas one out of four 4 organizations migrated from existing on-premises ERP software solutions. In addition, about 80% of Microsoft Dynamics 365 for Finance & Operations customers are operating on the One Version program. This means that the customers reserve the right to pause (or skip) up to three continual (mostly monthly) systems updates (or service packs), whereby Microsoft services and supports only the current version and one previous version release. (Given the rapid pace of updates—currently about eight releases per year—the One Version program gives flexibility to customers.) But the point of OneVersion is that it’s a true multitenant SaaS solution. Customers are always on the latest version rather than making expensive and time-intensive upgrades every few years.

The current Microsoft Dynamics 365 for Finance & Operations Release Wave has reportedly added over 180 enhancements. Those new features were grouped into the following themes:

  • Modern—clienteling (wherein retailers use data about customers’ preferences, behaviors, and purchases to build long-term relationships with key customers), an expenses capturing screen, time entry mobile app, personalization (saved views)
  • Intelligent—planning optimization, asset management, the Internet of Things (IoT)intelligence in manufacturing, artificial intelligence (AI) in finance (payment prediction), omnichannel payments and deliveries (see Figure 3), advanced warehouse management system (WMS), revenue recognition (recurring, subscriptions, etc.), and distributed order management (DOM)
  • Unified—ERP data in Microsoft CDS (common data services), embedded Power BI, configurable business documents, entity store to Azure Data Lake Storage Gen2, Microsoft Flow, Business Events, AI Builder
  • Adaptable—geographical expansion, self-service capabilities, feature management, retail cloud scale unit, regulatory updates, enhanced lifecycle services (LCS) capabilities, regression suite automation tool

 

Figure 3. Microsoft Dynamics 365 for Finance & Operations for omnichannel retail

 

The question remains as to what the options are for legacy Microsoft Dynamics GP and Dynamics SL customers. Microsoft’s recommendation for the legacy GP (or even older Great Plains) ERP users who would like a cloud solution is to go the Business Central route. One should note that this means a brand new ERP software implementation as well as learning new software development technologies, which gives a chance to the likes of Acumatica, Oracle NetSuite, Infor SyteLine, SYSPRO, or Epicor to jump in to the software selection fray. Microsoft does state that it will continue to provide updates to on premises GP customers. Microsoft also offers a licensing option for on premises GP customers to benefit from some cloud-only Business Central features (e.g. advanced analytics) as an extension of the on premises system.

As for the legacy SL (or even older Solomon) ERP users, depending on whether they are more PSA, manufacturing, or distribution focused, a possible path would be to Microsoft Dynamics 365 for Finance & Operations. Yet, some might opine that Acumatica could be a more natural solution, given Acumatica’s origins as former Solomon ERP software resellers (over 20 years ago).

The full article on Microsoft Business Applications Summit 2019—Microsoft Dynamics 365 Business Update is available here on the TEC website.