Battle of the Microsoft ERP solutions

You’ve already (we hope) made the right decision to choose a Microsoft ERPEnterprise Resource Planning software is used by businesses to manage day-to-day activities. solution – congratulations!

Both Microsoft Dynamics 365 Business Central (D365 BC) and Microsoft Dynamics 365 Finance & Operations (D365 F&O) bring similar benefits in terms of playing nicely with the wider Microsoft ecosystem, which leads the world in OSOperating System, e.g. Microsoft Windows, MacOS, Linux, ChromeOS, Cloud, xRM(Anything) Relationship Management extends CRM to manage relationships beyond customers, e.g. assets, facilities, or equipment., Office, AIArtificial Intelligence is a field of computer science dedicated to creating systems that mimic human intelligence., and modern workplace tools.

These two ERPEnterprise Resource Planning software is used by businesses to manage day-to-day activities. systems cater to different business needs, and understanding their distinctions can help organisations make an informed decision. Let’s dive in…

Purpose and Target Audience

Companies House defines a small business as employing <50 people with <£6.5 million turnover and a medium business with <250 employees and turnover <£25.9 million. These figures help us to understand the target markets for each product:

• D365 BC: Designed for small to medium-sized businesses, D365 BC offers a comprehensive solution for managing finances, sales, and customer service. It’s an all-in-one platform that streamlines operations and provides crucial insights.
• D365 F&O: Geared toward medium to large organizations, D365 F&O is Microsoft’s most advanced ERPEnterprise Resource Planning software is used by businesses to manage day-to-day activities. solution. Its focus is on steady business process transformation across various market segments, making it more attractive to businesses: in growth mode (organically or through M&A), and/or with large international operations, and/or seeking to diversify.

Competition

To help understand the different offerings, it is useful to compare with other platforms in the same tier, especially for those with experience of other platforms besides Microsoft:

• D365 BC: Comparable in cost and functionality to:
  • Oracle NetSuite
  • SAP Business One
  • UNIT4 Business World
• D365 F&O: Comparable in cost and functionality to:
  • Oracle ERPEnterprise Resource Planning software is used by businesses to manage day-to-day activities. Cloud
  • SAP S/4HANA
  • Infor CloudSuite Industrial

General Functionality

• D365 BC: While robust, it lacks some of the enterprise-level features found in D365 F&O. However, for smaller businesses with less complicated needs, this might be an advantage.
• D365 F&O: Offers deep and comprehensive functionality, with multiple levels of configuration, making it suitable for companies that require an extensive ERPEnterprise Resource Planning software is used by businesses to manage day-to-day activities. solution. It handles complex processes efficiently.

Scalability

• D365 BC: Ideal for businesses with limited scalability requirements. It’s easier to implement and maintain.
• D365 F&O: Scales well to handle hundreds of thousands of transactions. If your organisation anticipates significant growth, this might be the better choice.

Licensing¹

Unsurprisingly, D365 BC is ~3 times cheaper than D365 F&O to license, commensurate with its tier and indicative of the depth of functionality:

• D365 BC: Plans start at GBP 57.50 per user/month for the Essentials plan or GBP 82.20 per user /month for Premium. There is no minimum licensing requirement.
• D365 F&O: Starts at GBP 147.90 per user /month for a full D365 Finance. D365 Finance Premium is GBP 246.60 per user /month. A separate D365 SCMSupply Chain Management (SCM) is the centralised process of managing the flow of goods, services, and information, from production to consumption. licence is also GBP 147.90 per user /month, or can be “attached” to a D365 Finance licence for GBP 24.70 per user /month. Additional activity and team member licences are available for roles that need less functionality, but a minimum of 20 full licences is required.

Localisation support

• D365 BC: Supports multiple companies (aka legal entities), but requires an additional database for each localisation, i.e. country.
• D365 F&O: Supports hundreds of legal entities within one environment, with each able to be localised differently. This allows for global settings, automated intercompany transactions, and the ability to natively consolidate across any number of constituent legal entities, as required. This makes it better suited to clients with complex structures.

Human Resources

• D365 BC: Allows for employee records, including contracts, qualifications, and recording absences.
• D365 F&O: Includes full workforce management, leave & absence, performance management, skills and learning, and compensation & benefits, and more.

Implementation costs

We’ve covered licensing above, which gives a good indication of cost, but how about the cost of implementing?

• D365 BC: Easier to self-implement, but partner implementation costs could range from as little as GBP 40k to GBP 2m; the former representing a simple client with basic finance needs, and the latter in the case of larger businesses, perhaps with an international presence, implementing multiple instances with extensive customisation.
• D365 F&O: Rarely self-implemented, partner implementation would typically range from GBP 250k to GBP 30m. The former might be indicative of a general ledger setup and minimal additional features configured, which is arguably under-utilising the platform. The latter would represent a deployment to hundreds of countries, and would likely take place over five or more years.

Adopt vs adapt

I talked about the principle of adopt vs adapt recently. It’s a worthwhile consideration when comparing platforms, since maintaining customisations come with an additional overhead:

• D365 BC: Cheaper and with less out-of-the-box functionality, complex requirements are more likely to involve more customisation (i.e. bespoke development) or ISVsAn Independent Software Vendor is a partner that builds, deploys, and sells industry-specific solutions.. For this reason, the D365 BC recruitment market sees much higher demand for technical resources, and there are almost 5,000 ISV products in Microsoft AppSource for D365 BC.
• D365 F&O: Whilst more expensive, the deeper functionality means comparatively less customisation work; additional implementation time is instead spent on documentation, configuration, and testing that long list of recorded requirements has been met. For this reason, the D365 F&O recruitment market sees much higher demand for functional resources, and there are only a little over 600 ISV products in Microsoft AppSource for D365 F&O.

Conclusion

Ultimately, your choice depends on your business needs, objectives, and future vision.

If you are seeking a comprehensive ERPEnterprise Resource Planning software is used by businesses to manage day-to-day activities. solution, D365 F&O is the way to go. For smaller businesses with simpler requirements and smaller budget, D365 BC is a super product. If in doubt, reach out to experts in both platforms to properly assess which system aligns best with your organisation’s needs.

D365 BC and D365 F&O are powerful tools that can transform your business processes, but choose wisely, else you may buy cheap, buy twice, or either way, spend more than you need to!

P.S. My gut tells me this topic needs more coverage in future, so please share your thoughts below and stay tuned.

1. Licence prices are RRPRecommended Retail Price and are understood to be correct at the time of writing (March 2024). Please note that CSPCloud Service Provider and EAEnterprise Agreements are signed directly with Microsoft licensing models differ, and discounts may be available for bulk orders, or different bodies, e.g. educational, government, or charity. ↩︎