Interestingly, if you visit the Microsoft Dynamics web-pages you will find a wealth of marketing blurb on the suite of Dynamics products, including how they compare to competitors. What you won’t find is how they compare to each other. When it comes to deciding which Microsoft Dynamics product is right for you, Microsoft leaves you largely on your own.
This article positions the four ERP (Enterprise Resource Planning) solutions and aims to provide useful advice on how to choose the one that is right for you. At the end of the day, we do need to agree with Microsoft, when it comes to determining which system is best for your business, you are the experts.
Why Microsoft Dynamics Anyway?
You’ve already made a great choice by looking at Microsoft Dynamics. The irrefutable facts are that Microsoft invests more in Research and Development than any of the competitors, in fact at $9,000,000,000 that’s more than most turnover. Microsoft provides more information on product strategy than any competitor, including long-term roadmaps for each product that help customers and partners plan their investments. If you’re looking for a system that integrates with other Microsoft products such as Microsoft Office and Windows SharePoint Services, what better than a Microsoft system?
If in the future your business changes and you decide that one of the other ERP solutions would be a better fit, Microsoft will credit your original investment against any of the other Dynamics ERP products. The partner network means you can choose not only the best product but also the best partner for you. This means that choosing a Microsoft solution represents a reduced risk across the evaluation criteria from user acceptance to future support and development.
Why four Microsoft ERP Solutions?
Microsoft offers four ERP solutions partly by accident and partly by design; when Microsoft decided to enter the business solutions market in 2000 they started out by acquiring the market-leader for mid-range ERP in the US, followed by the market-leader for Europe. Acquired in 2000 for $1.1 billion, Great Plains was the US solution that had previously merged with professional services software provider Solomon; these became Microsoft Dynamics GP and Microsoft Dynamics SL. Acquired in 2002 for $1.4 billion (the largest acquisition ever made by Microsoft), Navision was the Danish solution that had previously merged with Damgaard, a fellow Danish company who developed the Concorde XAL and Axapta products; Concorde XAL was already on retirement plan so the products that were taken forward into the Microsoft fold became Microsoft Dynamics NAV and Microsoft Dynamics AX.
The Microsoft Effect
A couple of curious things started to happen after the formation of Microsoft Business Solutions (the division responsible for the Microsoft Dynamics products). Firstly, where Navision had always had a US presence, the Microsoft badge meant that it became more appealing to North American companies and sales began to soar. Secondly (and to the joy of competitors), industry commentators watched as Microsoft struggled to find a cohesive strategy for the products with initial plans to rewrite a new ERP solution from the ground up and migrate the customer base (Project Green) quickly abandoned, thankfully.
These days the Microsoft strategy is clear, sensible and practical:
“All products lead to the future,” Steve Ballmer
Microsoft is gradually standardising all aspects of the ERP solutions. All parts that were proprietary (or reliant on a proprietary product), such as database, report writer, user interface and development language are being moved to standard such as SQL database (making use of SQL Server Reporting Services), .NET development language and user interfaces in line with the Office products. Some of this was already in place when Microsoft acquired the products; ERP vendors have long seen the benefit of emulating the Microsoft look and feel and leveraging technologies such as SQL. However, those outside of Microsoft are developing products in catch up mode; Microsoft develops the products in tandem. The aim for customers is to have systems that are easy to use, easy to support and that leverage existing investments in technology.
We predict that in future, the differences between the four products will become functionality only. Whether they will continue to be marketed as four different products remains to be seen but our view is that as and when Microsoft gets to the point when it is difficult to differentiate between the products in terms of technology, scale and functionality, the transition for customers will be imperceptible.
What is the difference between the four ERP solutions?
Back to the original aim and this is where it gets difficult. For every one thing we say about the products there is likely to be a live customer example that refutes it. For example, it used to be true to say that NAV was benchmarked to support 300 concurrent users but we know that customer sites exist that support 700+ and anyway, with the three tier technology launched with NAV 2009 that scalability becomes unlimited.
One approach would be to look at the patterns of existing customers.
Dynamics AX (formerly Axapta)
AX (formerly Axapta) was traditionally strongest in Scandinavia meeting the needs of complex manufacturing and distribution. The advanced technology of the AX product meant that it had the capability of scaling to support thousands of users (this technology has now been adapted by the other Dynamics ERP solutions and so the differentiator has been removed). Aimed at large organisations, AX is a heavy-weight solution that will take longer to implement than the other three ERP solutions but will provide control and strict process conformity across the organisation. AX is a very powerful platform, there is less out of the box and therefore more process work required to implement. It is generally targeted at enterprise accounts also considering SAP or Oracle. It can do almost anything but the customer should be aware of the resources necessary to implement. Most often, AX sites have full-time development resources and a broad IT group that has ERP, business analysis and change management capabilities.
As the ‘baby’ of the group (although sources suggest AX was conceived in 1983 it was 1996 before it began to gain recognition), AX has the smallest number of users; however, these tend to be significantly sized projects. Microsoft will tend to suggest AX to companies with a high number of users (200+ typically), this has more to do with how big they think your budget is rather than the suitability of the product and shouldn’t short-cut a process based evaluation. To add to the confusion, due to the constraints of the AX market-place, partners often focus on smaller projects. It may be flattering to think you’re getting a “big boy’s toy” but the likelihood is smaller companies will struggle to find the resource (time and money) required to successfully implement with absolutely no benefit from a business process point of view.
Dynamics GP (formerly Great Plains)
GP (formerly Great Plains) is mostly used by North American and Australian companies, typically small to medium companies requiring an accounting system. GP is the “horizontal” product and as such it is a good first step for a company leaving an entry level accounting system for more advanced capabilities. Although it is deployed in manufacturing and retail environments, it does not have the same out-of-the-box fit for these customers. Great Plains authorised Independent Software Vendors (ISVs) to create bolt-ons for the product (unlike NAV and AX add-ons that are truly built within the applications). Although the ISVs were accredited, the bolt-ons themselves weren’t subject to accreditation. These bolt-ons mean that you may find customers who have extended their GP system to manage distribution, manufacturing and service management. Even sales order processing in GP is managed with one of many bolt-ons. Typically your GP partner will select the bolt-ons for you to build up a system that meets your needs. GP has failed to make impact in Continental Europe, largely due to historic weakness of its multi-currency functionality and strength of competitors like Navision. GP is the second most popular Dynamics ERP solution in terms of numbers of users.
Dynamics NAV (formerly Navision)
NAV (formerly Navision) has presence in over 140 countries world-wide. Typically it is used by mid-market companies and divisions of corporations requiring a flexible ERP solution. Early versions of the product offered basic finance and stock control, Navision a/s empowered partners and users to access the source code of the product in order to make changes and extend the solution. Many of these additions have been incorporated back into the core product so that NAV today is a fully featured ERP solution offering distribution, job control, manufacturing, service management and sales and marketing (CRM). Further functionality is available through a wide range of add-ons, whether generic such as local payroll or industry specific. As with AX and unlike GP (and most competitive solutions), these add-ons reside within the database rather than being bolted-on and interfaced. NAV is the most popular Dynamics ERP solution boasting well over a million users.
Dynamics SL (formerly Solomon)
SL (formerly Solomon) has, rightly or wrongly, become very much a niche product with focus on project accounting. In the UK, it has enjoyed particular success in the media industry. With the original company founded in 1980, SL is the old man of the group.
Cost Comparisons / Value to your Business
Licence-wise AX is the most expensive, reflecting its positioning at the upper Corporate level; it is also more complex and therefore will take longer to implement. GP, NAV and SL licences are very similar in price with the price per user identical (it is only choice of optional functionality that may affect the overall licence value); Microsoft are determined that the GP and NAV products should not compete on price.
More important is value to your business. If you are looking to implement a new system it is going to cost; so you want to make sure that you don’t just end up with a shinier version of what you’ve already got.
If you are in a specific industry, such as recruitment or wine distribution, where an industry configured solution exists in one of the products this makes it easier to decide which of the four you should look at. Hopefully the thumb-nail profiles above have also helped you determine which of the four you could eliminate. You may well be left with a couple of Dynamics ERP options and this is where you need to evaluate them yourself, matching the product’s functionality to your business processes and calculating the value they could add to your business. Equally as important is deciding on the right partner for you.
Resolve Immix offers all four ERP solutions. Please contact email@example.com for a consultation.
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