Buoyed by the resounding success of cloud-based applications such as Microsoft 365, Microsoft has now directed its attention to cloud based ERP solutions. Microsoft’s new cloud enabled ERP applications, Dynamics 365 Business Central and Dynamics 365 Finance & Operations, leverage the strong legacy ERP capabilities of Dynamics NAV and Dynamics AX along with cloud-based technologies. For the whole story of how Microsoft got to this point, check out our blog series about the history and future of Microsoft ERP.
Because these applications share the Dynamics 365 name, people are frequently confused when researching Microsoft ERP system capabilities. In short Dynamics 365 is the branding for a portfolio of Microsoft business applications, including:
D365 Finance and Operations (formerly Dynamics AX): Microsoft’s enterprise ERP system, including three products:
Finance: General Ledger, Accounts Receivable, Accounts Payable, Fixed Assets, and Cash Management
Supply Chain: Inventory Management and Manufacturing
Project Operations: Project Management and Project Accounting
D365 Business Central (formerly Dynamics NAV): Microsoft’s mid-market ERP system, including two products:
Business Central Essentials: General Ledger, Accounts Receivable, Accounts Payable, Fixed Assets, Cash Management, Inventory Management, Project Management, and Project Accounting
Business Central Premium: Includes all Essentials features plus Manufacturing and Field Service Management
D365 Sales, Marketing, and Service (formerly Dynamics CRM): Microsoft’s Customer Relationship Management system, including four products: Sales (sales funnel management), Marketing, Customer Service, and Field Service
D365 HR: Microsoft’s Human Resource Management solution
In this blog we’ll walk through the primary differences between Finance and Operations (“F&O”) and Business Central (“BC”), including the legacy systems they are based on, their target company size, their competition, and time to deployment. We also share licensing costs and functionality differences and similarities.
The code base of a system is the source code used to build out the application. In other words, the code base is the framework or building blocks of a system. Dynamics 365 Business Central and Dynamics 365 Finance and Operations are both built from the code base of powerful legacy Dynamics ERP applications. Business Central is built on the code base of Dynamics NAV, and F&O is built on the codebase of Dynamics AX. Dynamics NAV has been a strong player in the ERP mid-market for years, while Dynamics AX played in the enterprise space.
Target Company Size
Back when Microsoft first introduced its cloud ERP products in 2017, it noted that BC was targeted toward companies with 10 to 250 employees, while F&O was targeted to companies with over 250 employees. Interestingly, Microsoft no longer publishes this guideline, as company size is not a good indicator regarding which application should be used. Business Central is well equipped to handle operations of organizations way beyond 250 users. At Syvantis we work with companies with hundreds of millions to billions of dollars in revenue that use Business Central. On the other hand, F&O can be used by mid-size companies that need extensive customizations and international localizations. If you are considering the two systems, your decision should be based on the level of complexity and customization needed in your business operations, not company size.
Here’s what we know after implementing both systems internally – revenue or company size should not dictate which system you select.
Who are the primary competitors for Business Central and F&O? Dynamics 365 Finance and Operations competes directly with Oracle and SAP Enterprise. Implementations of these systems and Dynamics 365 Finance and Operations can cost upwards of a million dollars.
Meanwhile, Business Central competes directly with mid-market ERP applications like NetSuite, Epicor, and SAP Business One. The market for these types of ERP applications is very wide. A basic implementation of Business Central can start at as little as $20,000 whereas a fully customized system can easily run into the hundreds of thousands of dollars.
Deployment of an ERP application greatly depends on the system itself and the complexity of operations within an organization. For Dynamics 365 Finance and Operations, implementation projects run anywhere from 6 to 36 months. This speaks to the customization needed to successfully implement Dynamics 365 Finance and the sheer size of the organizations that are implementing it.
On the other hand, Business Central implementations typically span only 2 to 8 months. These projects typically run shorter because of the ability to utilize the core features of Business Central somewhat out-of-the-box. While BC is extremely customizable, there is no question that it is easier to get started on Business Central than Dynamics 365 Finance.
Here is how licensing works for both applications.
Dynamics 365 Finance & Operations (requires 20 user minimum):
Finance and Supply Chain Full License: $210 user/month
Device License: $75 user/month
Team License: $8 user/month
Dynamics 365 Business Central (no license minimum):
Essentials Full License: $70 user/month (Supply Chain)
Premium Full License: $100 user/month (Manufacturing)
Device License: $40 user/month
Team License: $8 user/month
Based upon implementation pricing alone, you get an idea of the market spaces that these applications live in. From a functionality standpoint, things get a bit muddy. Although F&O has a few features that are not available in Business Central out of the box, the vast majority of those features are easily met in Business Central with customization or add-on apps.
An example of this is how the two systems handle product configuration. D365 F&O has a built in Product Configurator while Business Central does not. However, there are multiple configurator apps that can be added on to Business Central. Other examples of Dynamics 365 Finance functionality that can be accomplished in Business Central using add-ons include Continia for document capture, Charge Logic for credit card integration, and Binary Stream for multi entity management. In fact, there are very few features that F&O contains where Business Central doesn’t have a readily available app. These add-ons in conjunction with BC customizations lead to the same functionality at far less cost.
What’s the same?
Both Dynamics 365 Business Central and Dynamics 365 Finance are Microsoft’s pick for the future of the Dynamics ERP space. This means that they share many similarities in how they are built. The most eye-catching feature is the modern interface. Both applications utilize a modern interface methodology that is noticeable right away.
With both applications, Microsoft has allowed multiple deployment options. Both applications can easily be hosted on the cloud (private or public) as well as on-premises or in a hybrid model. Microsoft likes to keep the door open to organizations who need to keep their systems hosted on-premises, understanding that the cloud is the wave of the future.
Other similarities include their integration to Microsoft 365, power platform capabilities, and dedication to a strong mobile experience. Both systems have mobile apps released on the Google Play Store and iOS App Store, and the experience is surprisingly good. You may not regularly complete accounting processes on your phone, but you would be surprised how nice it is to check on something in your accounting system while on the go.
What’s the takeaway?
While Dynamics 365 Finance works well for enterprise level organizations, Dynamics 365 Business Central is a flexible solution for organizations at all levels with a lower cost of entry. If you’re still unsure of which direction to take, or need confirmation that one system is the best fit for you, we’d be happy to talk through your situation and provide recommendations free of charge. Get in touch with us to schedule a call with our Dynamics 365 team today.
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