Microsoft is number four and the biggest R & D spender as reported in Fortune magazine’s November 2014 article ‘The Biggest R & D Spenders Worldwide’. This amounts to 10.4 billion dollars annually. . Microsoft employs over 1,000 doctorate holding researchers and countless developers and thus Microsoft is constantly improving their products to help companies drive more business value by running processes efficiently, managing change easily, and competing globally. In the context of enterprise resource planning, Dynamics AX is considered the flagship of the Microsoft Dynamics family.
Microsoft Dynamics AX 7 (also known as “Rainier”) will be released by the end of 2015, and the release will bring a change in paradigm from on-premises hosting to the cloud. The product strategy followed for Microsoft Dynamics AX 7 will be mobile first – cloud first.
• Mobile first – the new enhancements ensure that the application experience, regardless of the device platform it’s accessed on, remains the same for the user.
• Cloud first – is focused on AX 7’s new optimized platform which is suitable for both public and private cloud deployments with a “what you need, when you need it” approach on Windows Azure.
Now that we’re in the second half of the year, it’s the right time to start thinking about how to prepare for this new version.
How you should prepare for AX 7 depends on from where you are starting – whether you are currently an AX R3 user, an AX user on an older version, or are not an AX user but are thinking of implementing in the near future.
Scenario 1: You are an AX 2012 R3 user.
You can upgrade to AX 7! There are several things to consider: upgrade needs, cost, and cloud readiness.
Implementation: Right now, your AX ERP is hosted on-premises on your server. If you stay on premise then you may need to update your server, and your operating system, database version, bowser etc. As you use more of the software and move to later versions then the underlying platform also has to be considered. For many that is a reasons to move to the cloud. Should your company’s data need to be migrated to the cloud then all applications and customizations will also need to shift to the cloud.
So consider which applications and third party solutions are already integrated with AX.
Understand how you will connect those applications with your cloud AX and whether they are compatible with the latest releases of operating system, database , browser etc.
Selecting the right partner who can help move the existing application and customize from on-premises to cloud is critical. The upgrade process will take a few months.
As an R3 user, you paid a one-time license fee and pay an annual BREP as % of the license value you have purchased for on-going software enhancement. Going forward, you will have subscription-based user licenses for cloud access. For many industries this will offer advantages for several reasons. If your business is seasonal, and you have high users for only a few months, then there is no need to pay for the entire year anymore. For example ice cream and cold drinks in the summer, harvest time, retail Christmas sales, or Thanksgiving Eve and Super Bowl Sunday. It doesn’t make sense to purchase a huge number of servers just for two days’ worth of traffic. But with everything on the cloud, such companies can pay for just what they need when they need. The same holds true as you scale up and down for any reason.
Some users will have intense data processing perhaps only at month end- whether for reforecasting, scheduling, budget updates, month end close, consolidation, BI etc. However through the month there may be a more even workload.
Cloud Readiness: If you are a global AX user, identify where your AX 7 access will occur. You can purchase more than one access point to avoid any time delays or access issues. You should also review infrastructure needs. If you have a large number of users that you think will be on the ERP, then you may need to increase infrastructure bandwidth for speed and data usage, to connect to the cloud. The bottom line for R3 users is that you are well-positioned for an AX 7 upgrade, as long as you pay attention to a few issues along the way. The first of which is to get upgraded to CU or 9. The second is to ensure you have configured the new Warehouse module correctly. The third is to understand the license changes.
Scenario 2: You are an AX user, but do not have R3.
If you have not upgraded to or implemented AX 2012 R3, then you cannot go to AX 7 right away. The first step is to upgrade your current system, whether it’s AX 2009 or AX 2012 R2, to AX 2012 R3. Depending on which AX version you currently have, and how complex your system is, there will be different timeline implications.
You will also need to pay for the upgrade work and to consider your own testing time. Once all of this is complete, you’ll find yourself in “Scenario 1” and migration to AX 7 can happen immediately after.
However for many customers a reimplementation will be a better option – faster, cheaper and less business disruption because they can then take advantage of new features without being constrained by legacy data. For example the new COA dimensions at Ax 2012 may lead you to change your COA structure for enhanced analysis and reporting. In a new implementation that change will new straightforward, however if you want to migrate legacy data then the task will be significantly more complex and costly and will take at least 2 to 3 times as long. To validate and reconcile the data conversions
Licensing
An important consideration is licensing. In older versions many modules had to be purchased separately, and user licenses were concurrent. At Ax 2012 all modules are provided within one AOS license. Ax 2012 and Ax 7 are both licensed as named users. There are different levels of user at Ax 2012. License type needed is based on system use and is tied to role based security and actual tasks undertaken. Microsoft licensing does not restrict your use or the number of users-which gives flexibility if users adopt more functionality over time. However, you are expected to pay for what you use and to update your license when needed and Microsoft like other erp vendors has the right to audit the use of its licensed software and to require that you become compliant. This is similar to the approach adopted for other Microsoft products like SQl for those on an EA (Enterprise Agreement). It is likely that at Ax 7 Microsoft will further align licensing of its solutions and introduce the option of Ax 7 on azure within a package of e.g, Office 365, Exchange, ADFS, CRM, Skype Business etc..
Scenario 3: You are evaluating ERPs but currently are not an AX user.
Whether you have another ERP, are planning to implement an ERP for the first time, or want to go from NAV or GP or other ERP system to AX, then you can consider going straight to the cloud and AX 7.
Identify a proven implementation partner and complete the usual business process study, fit-gap analysis, and lay down the implementation blueprint. It’s also worth doing a price comparison of the price per user per month cost of SAP, Oracle, or any other ERP vs AX 7. Understand what the price covers, and consider how a fully cloud-hosted solution will work to your advantage. Even if your current ERP is on the cloud, inquire where it is hosted and how efficient is the hosted solution. Bear in mind your initial usage, (and thus the cloud resources needed), while loading data will be quite different than when there are active users and live transactions and processes like payroll or mrp, or month end, or BI and it may take a year or more to ramp up to full system use for a multi-site operation. ‘
A question that people evaluating Microsoft Dynamics ERP often ask is, “How many companies are using Microsoft Dynamics?” These are the recently updated numbers from Convergence 2015 provided by Jim Desler, Director, Corporate Communications at Microsoft.
2015 Breakdown of the Microsoft Dynamics customer numbers worldwide by product:
Microsoft Dynamics® AX 20,000 companies
Microsoft Dynamics® GP 47,000 companies
Microsoft Dynamics® NAV 110,000 companies
Microsoft Dynamics® SL 13,500 companies
Microsoft Dynamics® CRM 40,000+ companies 4.4 million users
Also:
Microsoft Dynamics Retail: 46,500
Microsoft Dynamics C5: 85,000
Microsoft XAL,C4/Apertum: 30,000
Cloud or on premise?‘
When you estimate the sizing and costs, consider how many backs up you will take? Don’t forget the need for separate development test /training environments, and maybe to run both old and new versions during upgrade. If you want your implementation partner to access your system for data load, or for support, then also consider the cost of those licenses. The different environment may have different sizing and user numbers.
As you can see, dependent upon which category you find yourself in, there will be different ways to prepare for the AX 7 release, which will be initially offered on the Azure cloud, and with an on-premises version offered shortly after.
Also keep in mind that AX 7 is a new product release; as with any new release, there may be some initial issues. The issues will definitely get resolved, but for some may make sense to plan to go live a little later. One reason for this is that the Microsoft road map indicates there some features that may not be available in the initial release so it depends whether those features are needed. The fewer the modules you use, and the more standard i.e out of the box your system the sooner you can plan to move to Ax 7. For many customers on legacy versions they may find that complex customisations are no longer needed because of the significant product enhancements introduced at Ax 2012, and Ax 7.For others those new features may be a compelling reason to reimplement.
Whether or not to go on premise or on the cloud again has many pros and cons depending on the company. The cloud can reduce initial cash flow and investment and lead to faster deployment. Whether a company has a large IT department, or finds it difficult to recruit and retain such resources, and whether it has multiple interfaces to other solutions, or whether it uses Office 365 will influence the technical decision.
For example a company with a mobile workforce e.g. one that does international contracts may value the new web client for ‘anytime anywhere/ access more than any other feature. If internet connections are a problem in the country where the company operates, then on-premise may be a more sensible option.
Whether to move to the cloud is often seen as a cost or a cash flow issue. This will make sense for many however this is not so clear cut an assessment as it may seem. More important is the management philosophy of whether they want to vertically integrate operations, and see IT as a strategic competitive weapon, or whether they want to outsource back office functions to concentrate on the core business.
Knowing how to prepare for the soon-to-be-released AX 7 will help plan and make the upgrade or implementation a much smoother process. Besides the points stated above, how else are you preparing for AX 7? Do you have any other questions about what it will take to get ready, either from a technology or business point of view?
Budget now and take time to understand the issues and to evaluate and to plan appropriately.
