Santiago R. Morales is a Partner at Pangea Group. He has worked with GP, NAV, and AX and is now working with clients to help them take full advantage of the Microsoft Dynamics 365 Suite of solutions
Cloud and Cloud Migration
Well, not exactly. GP will have a very long life as it is still one of the most popular Enterprise Resource Planner’s (ERP) in the US with a large install base, however, the writing is on the wall.
Microsoft stated in their October 2018 release notes that: “This is a convergence point for Dynamics SMB products—going forward, they are all considered customers of Business Central, in the cloud or on-premises, even if they are running differently branded products such as Dynamics SL, Dynamics GP, and older versions of Dynamics NAV.”
But first, a little bit of background. Microsoft decided to enter the ERP space in the late ’90s with the acquisition of Great Plains, Solomon, Navision and Axapta.
At the time Solomon was owned by Great Plains and Axapta was owned by Navision and so were included in the total purchase. In one fell swoop, Microsoft now owned the number 1 ERP in the US (Great Plains) as well as the number 1 ERP in the world based on user count, Navision.
Microsoft now had to support 4 ERP’s as well as multiple versions of these. In addition, Microsoft enhancement revenue was predicated on users seeing value in upgrading their existing ERP to the latest version. If customers did not see value, they would not pay the enhancement fee.
The cost of supporting 4 ERP’s that share similar functionality was extremely high.
In order to help minimize costs and increase revenue, Microsoft decided to work on a “1 ERP to rule them all” approach in which Microsoft would offer 1 application that would work for both SMB and Enterprise. The approach would be that Microsoft would offer the 1 ERP and either add or remove functionality depending on the client size and requirement.
As you can imagine this approach had some serious flaws as those who have worked with SMB’s and Enterprise understand that they are fundamentally different beasts. SMB’s want simple applications at a low cost. Enterprise users want full functionality and flexibility and while costs are important, they are not the determining factor for the client.
Microsoft realized that if they had their ERP’s in the cloud, they could:
1) Ensure they only needed to support 1 version of the ERP
2) Receive recurring monthly revenue as clients would pay a monthly subscription.
This would reduce the need to support multiple versions of their ERP’s and ensure clients received long-term value by always being on the latest version.
Microsoft decided to go back to the drawing board and review its existing ERP’s and decide which ones would move to the cloud, there was no need to move all of them as most share basic functionality. Microsoft knew they needed both an SMB and Enterprise product so decided to migrate NAVISION (Business Central) and AXAPTA (Finance & Operations) due to their install base, code design and general flexibility to the cloud.
Cloud-based solutions turned out to be a win-win for the client and Microsoft. The client pays a monthly transparent fee that includes all upgrades and back office hardware they need, and Microsoft received recurring subscription revenue AND does not need to maintain multiple versions of a solution thus reducing operating costs.
So where does that leave GP and SL? As I mentioned earlier, neither GP nor SL are going away anytime soon, however, if you review new product releases for both you will notice that new features are dramatically less than in the past. In addition, with the new Intelligent Edge approach in which you connect your on-premise GP to Dynamics 365 Business Central in the cloud, you see that Microsoft is doing everything in its power to migrate users from on-premise to cloud and is working to simplify the process. In short, Microsoft wants to move you to the cloud so they can EVENTUALLY sunset GP and SL.
You do not need to do that now or maybe even ever, especially if you have unique 3rd parties that are business critical, however, if you want the latest functionality and reduced operating costs then you should start investigating and learning more about the Dynamics 365 Cloud-based ERP’s.
If you are interested in learning more, feel free to reach out to us to help you plan your digital transformation.