Selecting a new ERP solution is a tricky balancing act.
The right solution supports your current needs, but also, offers the flexibility and advanced features necessary to accommodate future growth and ever-changing strategies.
For many organizations, choosing between an SMB solution like Business Central and the more robust Dynamics 365 Finance and Operations (F&O) is a tough call.
Generally, Dynamics BC is best for companies that have fewer than 500 employees and operate out of a single location.
Dynamics Finance and Supply Chain Management are designed for large enterprises (500+ employees). These solutions help them rise to the challenges of managing multiple locations, complex business models, or a stable of subsidiaries.
But–there’s a lot more to consider.
Your growth strategy, for example. The clients you work with. Your product or service offerings. Your supply chain needs. Whether there’s clear a business case for an enterprise ERP.
All of these things (and more) must be factored into your evaluation process.
Below, we’ll share our top five qualifiers for determining if Microsoft Dynamics 365 for Finance or Supply Change Management is the right fit for your organization.
How Big is Your Organization?
Size isn’t everything. But, it is a good place to start narrowing your options.
For larger organizations, things like employee counts or number of locations immediately disqualifies all ERP options that can’t meet their demands.
For example, Dynamics Business Central is best for companies with fewer than 500 employees working from a single location. That said, companies below that threshold may still “qualify” for Dynamics 365 Finance or Dynamics Supply Chain Management (though they do have a 25-user minimum).
So, beyond the number of users your new ERP needs to support, you’ll want to look at other factors that impact the size and scale of your business.
- Do you have any satellite offices, warehouses, or brick-and-mortar stores?
- Any portfolio brands or M&A deals in the works?
- Do you have an international presence?
- What does your client roster look like?
- Do you have vendors or partners that need access to your system?
The point is, you want to evaluate everything connected to your broader business ecosystem and use that information to guide your decision.
2. How Complex is Your Organization?
Complexity is one of the biggest qualifying factors for Dynamics 365 Finance & Operations — or any enterprise ERP.
Complexity often gets lumped in with size. The logic there is, as you grow, more moving parts enter the mix, thus introducing a whole slew of new challenges.
It checks out, but SMBs can be complicated, too – due to factors such as regulatory requirements, production processes, or how they generate value.
Dynamics 365 Finance helps companies use their financial data to enhance decision-making and drive growth. Inside, you’ll find features that allow you to accurately forecast cash flow, instantly generate budget proposals, and use AI to run through a whole range of “what-if” scenarios.
Users can use built-in no-code/low-code tools and predictive insights to create rule-based automations that can improve on-time payments, reduce fraud and errors, simplify tax calculation, electronic invoicing, regulatory reporting, and global payments.
D365 Finance makes the most sense for companies that deal in services, insights, or digital products, rather than physical products. Think—private equity and professional services firms, digital agencies, SaaS companies, IT providers, etc.
Dynamics 365 Supply Chain Management builds on the capabilities of D365 Finance. You’ll get the same advanced financial features, but also a whole suite of tools aimed at creating an “intelligent, adaptable supply chain.”
Orgs can use real-time insights from IoT-enabled equipment to optimize asset performance. Or—plan production runs around things like open POs, inventory counts, and incoming orders to avoid delays and take advantage of volume-based discounts and bundled shipments.
Say you’re a smaller firm that specializes in complex consulting projects. Or, maybe you’re running a growing direct-to-consumer brand. In those cases, you’ll need to determine whether you need the advanced features and baked-in intelligence across your entire business.
You may be better off adding a couple of D365 modules–i.e. Customer Insights, Commerce, or Project Management—or exploring the ISV solutions in AppSource to fill functionality gaps.
But before you commit, you’ll want to look at the big picture to identify hidden “complexities” that could benefit from a more robust solution.
For example, organizations with high transaction volumes–regardless of size–should prioritize finding a solution with generous (ideally unlimited) capacity limits.
BC runs on a multi-tenant environment, where multiple companies work from the same hosting environment.
This keeps costs low for SMBs, but there’s a trade-off: BC can’t support high transaction volumes (we’re talking no more than a few hundred per day). Dynamics F&O runs in a single tenant environment, so each account comes with a dedicated environment and no capacity limits.
3. Do You Need an Enterprise ERP to Support Growth Projections?
The third qualifier for Microsoft Dynamics 365 Finance and Supply Chain Management is projected growth.
You may not have the business requirements for D365 Finance and Supply Chain Management today but investing in an enterprise ERP may serve you better in the long run. You’ll avoid potential growth barriers, missed opportunities, and the need to re-implement a whole new system within a couple of years.
As a point of reference, an ERP should last at least ten years. F&O may be with you even longer, due to its automatic updates and upgrades. Though, ultimately, it depends on what the next-generation infrastructure looks like–and when it becomes widely available. This one’s a bit tricky given that growth projections are less tangible than, say, company size or the demands of manufacturing your own products. But you can start by looking at historical growth trends to get a sense of how fast you’re growing.
A good example comes from GN Group, a company that makes audio devices like hearing aids, speakers, and earbuds. The company grew by 42% in 2020. Then in just the first quarter of 2021, achieved 82% growth. Investing in D365 Finance and Supply Chain Management allowed GN Group to bring together data from previously disconnected parts of the business. This provided a deeper understanding of each customer segment: medical, professional, and consumer and enabled them to move faster and improve the quality of service.
We’ve migrated multiple clients from Quickbooks (an incomplete, entry-level solution) to Dynamics 365 Finance based on this type of rapid growth and “hockey stick-like” projections. A company may not yet need the advanced capabilities of Dynamics F&O. But because they’re on the cusp of explosive growth, they need to prepare for new demands.
You might also look toward Dynamics 365 Finance or SCM if you’re coming up on a significant milestone. For example, pharmaceutical companies might upgrade when a medication receives FDA approval and they’re ready to start taking orders.
The catalyst for an emerging tech startup might be a successful Series A round, while landing a major contract could seal the deal for a professional services firm.
We’ve also seen organizations upgrade in order to unify all subsidiaries under one platform (while also maintaining a separation between each brand).
Note that some milestones – like launching a product — are riskier than others, due to a lack of historical data. In those instances, you’ll want to gather as many insights as possible about your target market, competitors, and individual users.
And, you’ll need to make sure your sales and marketing strategies are ready to go.
4. Is Dynamics 365 Finance & Operations Essential to Core Business Processes?
Capabilities that are directly linked to value creation/your core business model are only available in F&O.
In a 2020 white paper, Microsoft advises organizations to take a business-case-first approach to ERP selection. That means, first identifying specific use cases/requirements within each business unit.
From there, you’ll want to look for the platform that directly addresses the highest number of business cases on your list–out-of-the-box. This will make it easier to avoid extra costs and get the system up and running.
Dynamics Business Central users can easily upgrade critical features or customize the platform around specific needs.
Dynamics 365 Finance and Supply Chain Management come with deeper integrations and built-in intelligence that can streamline processes BC users may have to do manually.
A few examples:
- Automated billing saves companies with subscription-based services a ton of time, while automated vendor payments prevent invoices from falling through the cracks.
- AI-driven predictive modeling can improve cash flow projections by looking at customer payment histories, recurring expenses, and historical sales trends. It can also be used to model hypothetical scenarios, so you can prepare for multiple futures.
Consider potential productivity gains and cost savings F&O brings to the table. Do they outweigh the costs and commitment of taking on an implementation project?
What about long-term maintenance costs? Or the ongoing effort involved in optimizing system performance?
5. Are You Ready for an ERP Project of this Magnitude?
Dynamics 365 Finance and Supply Chain Management are advanced ERP systems with the power to really change the game for your business.
But only if you’re up for the challenge. Things like data literacy, a cloud-first mentality, and cultural stuff like org-wide buy-in and strategies for training and managing change need to be in place before moving forward.
Note that “readiness” is an essential prerequisite for any cloud-based ERP implementation.
It’s just that implementing Dynamics F&O is far more complex than Business Central.
It also demands a lot more time and resources.
Compared to Dynamics BC, Finance and Supply Change Management offer a lot more flexibility to build an ERP around your unique needs.
There’s more choice in terms of which modules are part of your plan and how business processes and data flows are configured.
While that flexibility means more opportunities to improve your business, it also means there’s a lot more that can go wrong.
You’ll need to start with high-level goals, feedback from end-users, a deep understanding of all business processes and how they fit together.
In the last section, we talked about defining the what and the why behind each business case. And from there, identifying a solution that best meets your requirements.
Here, it’s about understanding the how. How you’ll use specific capabilities to move the needle closer to those high-level goals, as well as how you might coordinate those efforts across different business units and processes.
This is where things get complicated.
See, out-of-the-box, D365 gets the job done. But, the platform becomes far more powerful when you take advantage of other Microsoft tools like Azure, Office 365, and the Power Platform. It’s when combine capabilities and adapt them around your business processes that you can start carving out a competitive edge.
Microsoft Dynamics 365 Finance and Microsoft Dynamics 365 Supply Chain Management are powerful solutions with huge transformation benefits.
But Dynamics F&O isn’t right for every business.
Companies that don’t have the scale, complexity, or growth projections that demand an enterprise ERP will likely be better off with Dynamics Business Central. They can incorporate add-ons and ISV apps to high-impact areas, if needed.
Velosio is a certified Microsoft implementation partner with an extensive portfolio of services — all aimed at helping clients get the most from their ERP.
Our experts can walk you through each option and make the right decision by assessing business needs, pain points, and growth opportunities on the horizon.
Contact us today to learn more about ERP selection, evaluation, and implementation–and how to set the stage for lasting success.