Microsoft Dynamics 365 Operations ERP Review

An Independent ERP Evaluation of Microsoft Dynamics 365 Operations

Since its acquisition by Microsoft in 2002, Dynamics AX has evolved to become the ERP software leader in the midmarket and a strong contender in the enterprise market. Microsoft's more recent product name change — from Dynamics AX to Dynamics 365 Operations — signals the company's intent to continue to penetrate the enterprise ERP software market.

Dynamics 365 Operations ERP software is a cloud-first solution that no longer uses a version number naming sequence (i.e. AX 4, AX 2009, AX 2012, AX7). This ERP product offers online, on premise or hybrid delivery, however, the company clearly pushes the cloud version. Perhaps that's because cloud ERP software offers new benefits for both customers and the company. Here's a summary of the strengths and weaknesses for Microsoft's top ERP software system.

Dynamics 365 Operations Strengths:

• The Dynamics 365 user interface is a big step up from prior versions. The desktop client has been replaced with an HTML5 web client that is mobile-first and touch screen friendly. The web client has replaced (modeless) pop-up dialogues with docket panels and uses native browser-based techniques such as multiple tabs and side by side dynamic viewing. The ERP software design is arguably the best user interface in the industry.
• The user experience is also improved. While the UI is focused on the visual presentation, the User Experience is designed for utility and achieving user objectives in ways that satisfy user centered design. Dynamics 365 Operations makes extensive use of Dashboards, composable workloads and task replays. It has also introduced Workspaces to facilitate role-based tasks and business processes. You can think of Workspaces as single windows designed to guide users on what's most important right now. Workspaces reduce keystrokes and make navigation more intuitive. Commands and menus are also context-sensitive which reduces training and aids productivity.
• Software delivery now permits cloud ERP. Dynamics 365 grants choice in delivery, including cloud, on-premise or hybrid. The on-premise or hybrid options can support private cloud deployments for companies still cautious with online ERP. Cloud deployments for production, sandboxes and disaster recovery are provisioned on Azure with Lifecycle Services (LCS) and can generally be completed in less than 60 minutes. The on-premise version runs on Azure Pack and Windows server technology, and without any significant differences in functionality compared to the cloud ERP.
• Choice in software delivery also facilitates 2 tier ERP strategies. This may be a welcome option for multi-national companies that run Oracle or SAP at headquarters, but desire a more lightweight and agile ERP application for geographically remote or decentralized lines of business.
• Dynamics 365 Operations in the cloud also introduced telemetry in order to improve customer service and software quality. Microsoft uses an internally developed telemetry system called Kusto Query that can track and report individual tenant performance and deliver proactive warnings by monitoring conditions across the larger set of customer tenants.
• Microsoft Lifecycle Services (LCS) accelerates time to value and reduces system administration. LCS is a Microsoft Azure-based administration and collaboration portal that facilitates application lifecycle management. It includes tools such as a data uploader, integrates with commonly used services such as Visual Studio Team Services (VSTS) and supports multiple environments (i.e. Dev, QA, UAT, Production).
• Business Intelligence is integrated into Workspaces and now near real time using Data Stores, Data Entities, Aggregate Data Entities and improved integration with Power BI. Power BI integration also improves mobility and offers a path toward big data.
• When compared to Infor, Oracle and SAP, Dynamics 365 is a significantly more configurable and agile ERP solution. This is particularly powerful as industries converge, new competitors emerge and rapidly evolving market forces require businesses to adopt more agile business strategies.
• The ERP software workflow tool uses the Windows Workflow Foundation (WWF). On the plus side this is a mature and strong workflow engine. On the flip side it doesn't compete well with best of breed Business Process Management (BPM) suites.
• 365 Operations inherits Microsoft platform benefits due to the tight integration between the ERP software and the Microsoft stack, including Office 365, SharePoint, Dynamics CRM and SQL Server stack services (i.e. SSAS, SSRS, SSIS, etc.) The power of the stack is a top cited benefit by IT professionals.
• The Dynamics 365 release moved the development environment to Visual Studio and the .NET framework. This technology improvement opens up the ERP application to more skilled resources, facilitates more third party tools and makes the application more extensible.
• Relative to Oracle and SAP, Dynamics 365 delivers an attractive Total Cost of Ownership (TCO). Software license cost among Microsoft, Oracle and SAP is not materially different; particularly after ERP software discounts. In fact, in many ERP software sales, Oracle and SAP can provide deeper discounts as they are sold direct while Microsoft ERP may be sold through an indirect channel. However, the Microsoft ERP implementation period is often significantly shorter which drives down deployment costs and accelerates time to value.
• Microsoft's stability suggests Dynamics 365 Operations is a viable long-term solution. While Microsoft does struggle to deliver clear messaging which delineates its four ERP systems – Dynamics SL, Dynamics GP, Dynamics Nav and Dynamics AX – and even separation between its Dynamics 365 Business Edition suite and the Dynamics 365 Enterprise suite, it's clear among industry insiders that Dynamics 365 Operations is the favored child in the ERP software family. This ERP application gets the most executive sponsorship, R&D and marketing.

Dynamics 365 Operations Weaknesses:

• Dynamics 365 has a weak brand and messaging and therefore fails to favorably compete for market awareness with tier 1 ERP competitors such as Oracle and SAP.
• Despite achieving limited growth for Microsoft, Dynamics 365 is actually losing market share according to research from Panorama Consulting. The ERP consulting firm reports that Microsoft's ERP market share dipped from 11 to 9% over the last year. The research suggests this is in large part as the ERP market is becoming more fragmented and ERP vendors such as Epicor, IFS, Infor and Plex are gaining market share at the expense of Oracle and SAP.
• The Panorama research also noted that Microsoft's channel is fragmented, whereas Infor, Oracle and SAP have a "much tighter handle on channels" than Microsoft. This can challenge customers seeking reputable and high quality implementation firms or global system integrators.
• Analyst firm Gartner cites extremely limited support by global system integrators for Dynamics 365. While most global SIs have extremely large practices for Infor, Oracle and SAP, they do not have anywhere near the same dedication to the Microsoft ERP software. The lack of global SI support impacts global companies seeking industry expertise, business transformation or consistent global delivery across locations.
• Gartner also notes that Microsoft often struggles to deliver high quality deployments to large customers. According to the analyst firm, "Microsoft's biggest challenge remains its constrained ability to service new opportunities with experienced direct or partner resources, especially for larger customers that expect industry and process depth and comprise extensive and complex requirements." Unhappy customers and a lack of global SI adoption are contributing factors for Dynamics 365 Operations being excluded from the leadership quadrant (top right corner) of the ERP Magic Quadrant.
• In part because of a fragmented and indirect consulting channel, several analysts and partners cite a lack of standards, consistency and repeatable methods applied to Microsoft ERP implementations. Microsoft offers an implementation methodology called Sure Step, however, few partners truly adopt this framework. Further, Sure Step is dated and not particularly well suited for newer deployment methods such as agile, Scrum and DevOps.
• Dynamics 365 reporting is weak. The Operations ERP software reporting tools include Management Reporter, SQL Server Reporting Services (SSRS), SQL Server Analysis Services (SSAS), Dynamics Business Analyzer and Power BI. However, the most popular 365 reporting option remains Excel. A MSDynamicsWorld survey found 21 percent of Dynamics customers realize 50% or more of their expected benefits. Put another way, 4 out of 5 Dynamics customers are not meeting their reporting objectives. According to the MSDynamicsWorld research, "Customers are nowhere near fully satisfied with their current BI capabilities." Only 37% of Microsoft customers who responded say they are meeting "enough", "most", or "all" of their needs today. Only one third of Dynamics customers said their teams are empowered to develop or request the reports they need.
• Financial reporting is particularly weak. The Management Reporter is difficult to use, less than stable and without a clear product roadmap. This application was supposed to evolve into a Corporate Performance Management (CPM) data mart for both financial reporting and budgeting. However, years later the data mart is unstable and Microsoft discourages the direct connection option. The budgeting features were delayed until they were abandoned. Some customers turn to Forecaster as an alternative option, however, this is more of the same.
• Dynamics 365 Enterprise Suite includes Human Capital Management (HCM), which includes HR software, U.S. payroll and some talent management software. HCM is particularly weak. The HR software is extremely minimal, payroll software is minimal and for the U.S. only and talent management capabilities are almost non-existent.
• Dynamics 365 Operations built in CRM is also very weak. As an alternative to the 365 CRM module, Microsoft's Dynamics 365 push is promoting ERP integration with its flagship Dynamics CRM software, a separate and much stronger CRM suite. However, the Dynamics Connector integration service has a notoriously negative reputation and should be seriously vetted if CRM is an important component in your ERP software selection.
• While Dynamics 365 Operations is steadily moving up to the enterprise market, there are not a lot of references with proof of scale. This is in stark contrast to Infor, Oracle and SAP which have plentiful references at scale.
• There is a significant Dynamics 365 Operations consulting shortage, especially for large enterprises with complex needs.
• While software customization is a strength, it can quickly become a negative if needed to fill routine functionality. Missing features such EDI or weak features such as landed costs may require customization or third party products.

Best Fit and ERP Software Alternatives

Short list Dynamics 365 Operations for evaluation when:

• Your business is in one of the Microsoft ERP "core" industries, which include manufacturing, distribution, retail, professional services and public sector.
• You seek a relatively balanced ERP system with reasonable coverage in Finance, Procurement & Sourcing, Production and Supply Chain Management.
• You desire a native cloud ERP system.
• You want an ERP system with all the "multi's", such as multi-country, multi-language, multi-currency and multi-dimensional GL accounts and inventory items.

ERP software buyers may be best advised to consider alternative ERP systems when:

• You require a mature and feature rich ERP system.
• Your ERP system needs include HCM.
• You are a large or global company in need of a highly scalable solution.
• You are a large company that prefers to reduce risk by selecting a tier 1 ERP leader.
• You are a global company and your preferred global system integrator has a minimal relationship with Microsoft Dynamics 365.

Microsoft Dynamics ERP competitors include Infor, Oracle and SAP ERP in the enterprise market and Epicor, NetSuite (for cloud ERP), QAD, Sage and SAP BusinessOne in the middle market.