Back in mid-September, Microsoft threw the Partner community into a lather at the NAV Directions conference.
After specifically stating that “The Business Edition is no more,” (with reference to Dynamics 365 Business Edition, aka Financials, aka Project Madeira), the Microsoft reps spent the rest of the conference clarifying and walking back that statement.Knowing Microsoft, I figured that there would be more clarification to come in the following weeks, so I refrained from writing about it right away. Now that the dust is settling, we have a better idea of what they meant, and where Dynamics 365 is headed in the next year.
Tenerife – Two for One
The biggest change to come out of Directions is that Dynamics 365 Financials will no longer be sold as a single, complete software package. Rather, it will be combined with the next version of Dynamics NAV, and separated into apps that users can purchase on an as-needed basis. For example, let’s say that you needed some solid GL/AR/AP functionality to keep track of the books, but you didn’t really need any project-oriented functionality. You could purchase the base Financials and Operations app, without having to pay for the additional Sales & Marketing app.
This new, combined software offering is currently known as “Tenerife”, continuing with the theme of eastern Atlantic islands. Microsoft has indicated that they are exploring the possibility of having partners customize and white-label this software and sell it as their own solution, meaning that instead of “Dynamics 365”, you would have “KTL’s Super-Awesome Accounting Package, powered by Dynamics 365”. If Microsoft goes forward with this plan, this means that no two partners would be alike in the solution that they sell, and that there would be no such thing as a “vanilla” Dynamics 365 system.
In a recent blog post, Microsoft further clarified the plan for the Dynamics line going forward, including the fact that they are continuing to offer Dynamics NAV, GP, and SL. To echo the words of Microsoft Product Marketing Director Errol Schoenfish at last September’s reIMAGINE conference, “Dynamics GP goes forward!” Take heart: so, too, does the rest of the SMB Dynamics line.
Dynamics 365 Updates
Another piece of news that came out of the conference is that Dynamics Tenerife will also be available on-premise, in addition to the cloud offering. This is good news, especially for clients who, for whatever reason, are currently unable to move to the cloud but still need to upgrade their existing ERP. This was stressed by Marko Perisic, Dynamics 365 R&D general manager, when he stated that “…we recognize you have installations on your own hardware and we will continue to support that. And because of that we’re not a cloud-only company, we’re a cloud-first company. Make investments there first and mirror those for customers who are on-premises. We see it as an advantage to provide that choice.”[1]
Microsoft clarified that the cloud version will still receive updates first. Updates are one area where the cloud really shines, because instead of scheduling downtime for your existing system, the updates are done behind the scenes and then cut over (usually after business hours) in a process that typically takes minutes instead of weeks. In addition, the cloud offers an extremely high uptime guarantee that most on-prem systems can’t match. Nonetheless, if a business prefers on-premises for other reasons, this is still an option.
This new approach mirrors what Microsoft CEO Satya Nadella recently stated at the Microsoft Ignite conference in September: “Every business process is being digitized, from relationship sales, talent and people processes, operations, customer service, field service and more. For this evolution to be successful, we must move from monolithic suites and disconnected data silos to modern, modular apps with a common data model. You need a platform approach.”[2] What this means is that the approach will now be more modular – if you need Dynamics 365 Finance & Operations, and you also need the Customer Insights (CRM) piece as well, but you really like the capabilities of the Marketing app (scheduled for GA Spring 2018), you can purchase your required number of seats for all three of these solutions and have them all snap in together neatly and cohesively due to the Common Data Service that is the backbone of all of the apps.
ERP
What you will now have is a collection of Dynamics 365-branded apps that plug in together to form entire solutions. When you consider the investments, they’ve been making in other areas, such as Marketing, Talent (HR), and Customer Relationship SaaS, it only makes sense that their ERP solutions follow suit.
From a strictly ERP-oriented perspective, I think the one piece of this news that generates the most excitement is the fact that Dynamics 365 Finance & Operations, Business Edition (also known as D365 Business Edition and D365 Financials) will now have the full functionality of Dynamics NAV. This means that clients will now be able to take advantage of a full-fledged SMB ERP system without artificial constraints. Having gone through my first several Dynamics 365 Business Edition implementations, there have unfortunately been certain shortcomings here and there in the system that are a result of the product being designed for the smaller end of the SMB market.
Now that it will have the full functionality of the well-established NAV product, D365 users can pay for only the technology that fits their business requirements, and the functionality will be there if they need it. This will prevent some of the awkward workarounds to accommodate certain business processes that just weren’t built in to the original product, and will make for a stronger, more mature offering altogether.
A Better All-Around Product
In the end, only time will tell if Project Tenerife has what it takes to provide a full-featured ERP that customers will use. I see Tenerife as being what Microsoft should have done the first time around with D365 Financials – rather than having a bare-bones, low-functionality ERP that appeals to a tiny segment of the market, to make something modular that does have those extra features to fill out functionality as needed from day one. It is my hope that Microsoft takes the time and effort to truly make this into a complete solution. If they do, it looks more and more like this may be the wave of the future for ERP.
If you have any questions about the information in this article, or if you’d like to discuss whether Dynamics 365 would be a good fit for your organization, please don’t hesitate to contact me at jnorberg@ktlsolutions.com.
[1] https://msdynamicsworld.com/story/summit-2017-microsoft-assures-dynamics-nav-customers-their-place-roadmap-nav-2018-dynamics-365
[2] https://news.microsoft.com/features/nadella-ignite-collectively-opportunity-lead-transformation/
