Understanding Dynamics 365 BC Licensing: Integrating Business Systems, IoT Devices, and the Related Multiplexing Considerations

Manufacturers and distributors using Dynamics 365 Business Central often want to leverage the power of IoT devices to generate billing, service orders, purchase orders, or warehouse movements, just to name a few. Third parties may even use these systems, including subcontractors, vendors, or any other agents of the company. The question is, how do these external IoT devices and systems work with Business Central? More specifically, does it require extra licensing when integrated?

We posed this question to Microsoft directly, and they said, “External IoT devices and systems would be considered internal users.” In other words, yes, these devices need licenses.

Here’s why, and what that means for your business.

Business Central Licensing for IoT Devices

A recent update to the Business Central added additional language to the user/device licensing requirements and clarification related to multiplexing rules.

Multiplexing means using hardware and/or software to pool connections, reroute information, or reduce the number of devices/users that directly access Dynamics 365. However, multiplexing does not reduce the required number of licenses of any type. Therefore, any user or device that accesses Business Central, whether directly or indirectly, must have a proper license.

How do you know if a device or external system needs a proper license? If a device, system, or user does or needs to do any of the following, they will need a proper Business Central license:

• directly input, query, or view data from D365;
• input, query, or view data from D365 through a pooling device;
• access D365 data indirectly through a portal or via an API to a separate service, such as Outlook; and
• Power Apps users and devices that create, update, or delete data in D365 restricted tables.

For example, a trucking company that uses a mileage tracking device in its trucks will need a separate license for this device if it needs to be integrated with the ERP. When it comes to warehouses, the workers will also need additional licenses to access Business Central.

Avoiding Complex Licensing

The next question that usually arises is if there are workarounds with multiplexing that could help avoid needing these extra license purchases. Microsoft has built a massive telemetry into Business Central, and as such, it wouldn’t take them long to figure out if such workarounds were occurring. However, this doesn’t mean that your company should be buying a license for every potential instance.

It’s really important to put the licensing costs into perspective. Let’s go back to the trucking company example. If the trucking company is bemoaning that a mileage tracking device in a truck that is part of a Transportation Management System requires a license, consider about how much the $40 license really costs per month in the context of the monthly cost of the truck. That company will spend more on tires, brakes, fluids, daily fuel, than what that license costs. The same thing applies to warehouse workers; their labor costs on a daily basis far outweigh the cost of a monthly device license.

With these clarifications on Business Central licensing, it’s important to figure out the appropriate blend of licenses BEFORE purchasing any licensing. We at Sikich include license purchase planning as part of our Discovery and Design process for all Business Central implementation projects.