For organizations already on one of the on-premise (or hosted) Microsoft solutions, Microsoft Dynamics GP, SL, NAV or AX, you have a choice on where you go next. The right next step for you will depend on several factors including the nature and size of your business, your future growth plans, the complexity of your requirements, and your investment appetite.
The default move for GP and NAV clients is to go to Microsoft Dynamics 365 Business Central (BC). The default move for those on AX is to go to Microsoft Dynamics 365 Finance & Supply Chain Management (F&SCM, formerly F&O). Under what circumstances might you want to consider an option other than the default?
Microsoft positions F&SCM for organizations that have one or more of the following general characteristics:
Microsoft positions BC for organizations that have one or more of the following general characteristics:
These classifications are useful but can leave you with more questions than answers. Microsoft does not typically publish strong recommendations either way, preferring to leave this decision making to their customers. Sikich, with hundreds of clients spanning all four legacy on premises products, can provide more clarity around the question of “Where Next?”
Sikich has clients on AX that have moved to BC, and clients on GP and SL and NAV that have moved to F&SCM. Our NAV clients are moving to both BC as Software as a Service (SaaS) and BC On-Premise. The decision-making criteria our clients typically use, fall into the following categories:
Revenue is a somewhat arbitrary criteria as it does not consider the complexity of operations. It does however indicate how an organization might view the relative affordability of each choice, as Finance & Supply Chain Management typically requires a larger investment than Business Central.
Revenue can be a reasonable indicator of the level of complexity around financial management and reporting. F&SCM offers features like Month-End Close management, Revenue Recognition Support, Purchase Requisitioning, Budgeting and Forecast Management, Expense Claim Management and Segregation of Duties – all typically required by larger organizations.
Clients with revenues of over $150M and growing typically assess both Microsoft solutions before making a decision on where to move to next. Either BC or F&SCM may be more suitable depending on the situation.
Companies with revenues of $50 – $150M typically decide on Business Central, but also tend to consider the on-premise version as a valid alternative to the SAAS solution, depending on the complexity of their requirements and factors such as the ISV’s they need, the number of modifications required and planned, and transaction volumes.
Companies under $50M generally opt for Business Central SAAS.
Budget is often the criteria that drives organizations directly to one or other solution. Affordability is critical as a short-funded project can represents a real business risk. Not allowing enough budget is like planning a road trip with no stops allowed and only just enough gas to reach your destination.
Both BC and F&SCM subscription costs are available on the Microsoft website.
The BC SAAS application that includes Manufacturing and Service Management is $100*/user/month for all features/functions. The solution without these functions is $70*/user/month. A Team user is available for read only and basic transactions, and a Device user is available for shared devices like scanners and POS terminals.
The BC on-premise option uses the traditional up-front purchase + annual maintenance model for software licensing. Full users are $2000* each and maintenance currently remains at 16%. For an on-premises installation, budgets also need to include the infrastructure including hardware and platform (operating systems, databases etc.) Almost all of our clients install on the Azure cloud rather than hosting their own systems in house.
F&SCM is $210*/user/month for all features/functions of both Finance and Supply Chain suites. Finance and Supply Chain can be purchased separately, with base and attach pricing. A lower function Activity user is also available, as is a read only license and a device user.
Implementation costs vary widely depending on the scope and complexity of the project. Typically, BC projects for clients upgrading from GP or NAV start at about $50k, average around $300k and can then run up to the millions for large projects with many users, many ISV’s, and many functions.
Full service F&SCM projects typically start at around $400k for Financials migrations and can extend to the multi millions, again, depending on the size and scale of the project, and whether you’re upgrading from the latest on-premises version or your coming from an older version of AX or another solution entirely.
* Current at time of writing. Please refer to Microsoft Pricing online to verify
The Microsoft SAAS solutions are both architected for volume and scalability. F&SCM is a single tenant solution which means it runs on an environment dedicated to each client. The environment is architected specifically based on reported transaction volumes and user counts. There is no stated limit to the volumes F&SCM can support. Clients work with Microsoft architects to ensure the environment will be sized to meet their needs.
BC is a multi tenant solution which means an environment is shared across multiple companies. BC SaaS clients take advantage of the preferential pricing this affords, and at low to medium transaction volumes a SaaS model work well. This multi-tenant environment does create some limitations in high volume environments however BC clients do have the option to do an on-premise install (hosted on Azure is our recommendation) where the partner can custom size the right environment for the volume.
F&SCM has a minimum named user count of 20. BC’s minimum user count is 1.
Building on the criteria already mentioned, if your current business applications are supplemented by many (5+) add on products, or if you’re solution is highly modified, you will likely be able to take advantage of the additional scope or features that either BC or F&SCM offer. GP and NAV clients who have considerable investment in add-on products to support core business functions may be able to use the upgrade as a way to rationalize and reduce the number of apps or integrations needed.
F&SCM, for example, supports the requirements of process manufacturers. BC does not support process manufacturing. A NAV client using a third party add on to support their process manufacturing might find that the integrated solution from F&SCM may be more attractive.
A larger GP, NAV or SL client who is growing rapidly and whose business model or industry is going through swift changes may benefit from considering F&SCM as the next logical step for their business applications.
Consider this; The ERP you are choosing now steps you up onto a platform that is going to continuously develop into the foreseeable future. Is BC going to be where you need it to be in 3 years time? In 5 years time? The idea behind these new modern business applications is that upgrades are a thing of the past.
Is now the time to make the leap to F&SCM, or BC the one that makes sense for you?
According to Gartner, 75% of ERP projects fail. But with good planning and strong process organization, the most common pitfalls can be avoided.
Contact us today to discover which Dynamics 365 version from our guide is right for your business!
