Difference Between Microsoft Dynamics SL and Dynamics 365

Microsoft Dynamics SL vs Dynamics 365. Learn why migration must be a priority and why loyalty to on-prem SL can damage your business

Table of Content

    SL is an enterprise resource planning (ERP) solution for small to midsize businesses (SMBs). It’s been around for 40+ years—first as Solomon Software before Microsoft acquired the platform in 2000.

    SL’s frequent updates, advanced features, and customization options have kept the veteran app in the game for decades. Yet, while extended support doesn’t end until July 2028, Dynamics SL is at the end of the line.

    On-premises infrastructure limits the potential benefits those features bring to the table. It doesn’t matter how good the features are, fragmented, locally-hosted ERP systems are no longer cutting it.

    They might get the job done but are far from “transformational.”

    Business Leaders Guide to Dynamics 365Business Leaders Guide to Dynamics 365

    As such, orgs need to start planning their migration from SL to D365 in the cloud.

    Here, we’ll examine the core differences between Dynamics SL & Dynamics 365. We’ll explain why migration should be an urgent priority and why staying loyal to old on-premises SL can damage your business (sooner than you think).

    Key Differences Between Dynamics SL and Dynamics 365

    As promised, these next few sections compare Dynamics SL to Dynamics 365 across five critical areas. Here’s the breakdown:


    The biggest–or at least the most meaningful–difference between the two platforms is a matter of infrastructure. SL is hosted on-site, while Dynamics 365 is cloud-based.

    Dynamics SL integrates with a wide range of cloud-based solutions–including Microsoft Office, the Power Suite, and countless ISV and third-party solutions. So, users can generate Power BI reports from hundreds of connected data sources or build automated workflows in Microsoft Flow–but they’re missing out on the most transformative benefits only made possible when you’re working with an all-in-one, cloud ERP.

    Companies need to prioritize the cloud–not only for select bits and pieces of the business—but the whole organization.

    You can’t just move, say, sales and marketing to the cloud, and expect to unlock the full value of your business data. If finance and project teams are relying on middleware for updates from the cloud, they’re not getting an accurate picture of what’s happening inside the business.

    This leads to knowledge gaps, silos, duplicate work, and worst of all, bad data. And, in turn, you end up with inaccurate forecasts, client quotes, and major budgeting and capacity management challenges.

    Specialized Software vs. All-In-One Platform

    Dynamics SL is a specialized tool, made for project-based SMBs with complex business models. Think–professional services firms, construction companies, or government contractors.

    The platform covers a lot of ground–addressing the needs of half, maybe three-quarters of business functions, depending on the business with the following modules:

    • Financial management
    • Business intelligence & reporting
    • Project management
    • Payroll management
    • Manufacturing
    • Supply chain management
    • Field service management
    • Collaborative workspace
    • Customization/development tools

    SL easily integrates with existing tools. Think–CRM, support desk software, marketing automation platform, etc. So, you can essentially build your own tech stack based on your business needs.

    The problem is, piecemeal solutions create silos between departments and functions, knowledge gaps, and can undermine the integrity of your data. For example, different teams might use different data sets to inform their decisions and strategies. Then, when you zoom out to, say, forecast next quarter’s sales, you have no way of knowing which information is accurate–and end up basing projections on bad information.

    By contrast, Dynamics 365 goes broad–it’s an all-in-one solution that spans the entire business. So, marketing, sales, customer service, HR, etc., work from the same platform as finance, accounting, and supply chain teams.

    While those units may not need SL’s advanced management or financial features to do their work, they still need to share documents and data with the teams that do. All D365 modules connect to the same common data platform–offering a single source of truth for all reports, decisions, and strategies.

    Project-based firms can easily adapt Dynamics 365 to fit their unique specifications with custom code, ISV solutions, add-ons, and 3rd-party integrations. In other words, Microsoft Dynamics SL users aren’t losing the niche features they rely on when they migrate to the cloud.


    With SL, you’re licensing the software per device and are responsible for software updates, security patches, and ongoing maintenance.

    Moving to the cloud means you no longer need to deal with physical hardware, upgrades, and security. You’re outsourcing the effort and expense to Microsoft–opening up an opportunity to reallocate the IT funds to high-impact areas that drive growth.

    Dynamics 365 Buyers Guide for DistributionDynamics 365 Buyers Guide for Distribution

    But it’s important to note–cost savings are only possible if organizations take a measured, strategic approach with their cloud ERP investments.

    Microsoft Dynamics SL users may need to make some adjustments to their budget–particularly if they’re used to paying for maintenance, upgrades, and physical equipment. And on top of all that, an IT team to keep the whole thing going.

    Before the migration, you’ll need to come up with a plan for phasing out legacy infrastructure, investing in IT equipment that can support the new system, and deciding how to best utilize existing IT talent.

    Dynamics 365 also follows a different licensing structure than SL. Plans are charged on a per user, per month basis and there are different account types offering different access permissions.

    On top of making decisions about retiring assets and reallocating resources, you’ll need to consider several other factors that could increase monthly expenses. So, things like who needs access–and to what extent. Or, whether you’ll need to pay for add-ons or ISV solutions to cover all business needs. And–you’ll need to look for areas where features/functionality overlap, so you’re not paying for more than you need.


    SL and D365 are both highly customizable. Users can adapt existing features, create new ones, and incorporate Microsoft apps, add-ons, and ISV solutions.

    That said, the two platforms tackle customization in very different ways.

    As with other on-premises Dynamics products like NAV, GP, and AX, Dynamics SL data is stored in a SQL Server database.

    SL users can customize apps with the built-in Customization Manager. There, they can create customizations using different “screens:” maintenance, entry, process, and inquiry. While screens simplify the development process, users must first define tables in SQL Server before moving forward.

    Dynamics 365 democratizes the customization process with its no-code extensions.

    Instead of creating tables in the SQL Server, users work in Microsoft’s Visual Studio, an integrated development platform that supports a variety of tasks like software development, editing, debugging, and more. Users can create custom apps and workflows from scratch. Or, they can make changes to existing extensions sourced from the Visual Studio Marketplace.

    Non-technical users will likely still need training to get started. But they don’t need software development experience to build apps that solve everyday problems. It’s also worth noting that Extensions come with baked-in parameters, so citizen developers can’t mess anything up.

    While Extensions simplify the process of creating and managing customizations, migrating customizations from SL and learning to use Visual Studio takes some getting used to. You no longer need to create queries or define tables in SQL Server—but you’ll need to convert the old code so it’s compatible with the new format.

    Additionally, building customizations is easier and faster in D365 than SL, but many users feel that refining their creations is more difficult. The other issue is there’s a trade-off—increased simplicity means giving up some control. You can copy most SL functionality over to Business Central.

    But—you’ll need to spend some time figuring out how existing processes/apps translate to the new system. Or even if it makes sense to migrate them at all. The new ERP likely offers capabilities better equipped for solving today’s challenges, so it’s important to avoid getting caught up in the past.

    Final Thoughts

    Look, Microsoft Dynamics SL still has great features and granular reporting tools— made for the challenges of project-based SMBs. But those features don’t make up for the fact that on-premises infrastructure and fragmented systems hold businesses back. Today, the emphasis is on “hyper-integration,” agility, and flexibility—making legacy ERPs a liability.

    While migrating to Dynamics 365 is a significant undertaking—with many roadblocks and risks—it’s an essential step toward “future-proofing” your business, reducing expenses, and competing on a whole new level.

    Velosio experts can help you navigate this journey and avoid the pitfalls of ERP implementation. Ready to get started on your Digital Transformation? Learn more about the Digital NEXT Roadmap process.

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