Microsoft Dynamics NAV: Upgrade or re-implementation

There are more than 100.000 companies worldwide using Microsoft Dynamics NAV. Based on our experience over 90% of these businesses are still running older versions of Microsoft Dynamics NAV. This is despite the fact that some older versions are not supported by Microsoft, and that newer versions work much faster, have richer functionality and a more user-friendly interface enabling end users become more productive and effective in doing their job.

The reason for the slow adoption of new releases is usually due to the long and complex process of upgrading. When Partners are asked to upgrade a customer, they often face challenges such as capacity (lack of dedicated resources), efficiency (no available upgrade tools or methodologies to speed up upgrades), and upgrade justification (difficulties in justifying the value of an upgrade).

Re-implementation may appear to be a simpler and less time-consuming approach. However, upgrading can also be simple and fast, especially when performed by specialists with the needed upgrade experience.

In this blog, I want to start the discussion about upgrades versus re-implementations. I have been challenging myself with these questions:

• If NAV upgrades were easy, would I ever consider a re-implementation?
• Will a partner with an upgrade center always suggest an upgrade project?
• Can an end user upgrade without partner assistance. Can the end user re-implement?
• Is it partners or end users that are pushing for one or the other approach – what are the arguments for selecting one model over the other?

Let us start by looking at the differences between an upgrade and a re-implementation.

After an upgrade, a customer will have all historical data in the new version together with any already developed customizations. On the other hand, after re-implementation, the new version contains only master data. In order to carry over required customizations from the older version, they need to be developed from scratch. Of course, customizations from the older version are not always needed, since standard functionalities in the latest version might meet a customer’s needs. In general, a comparison of an upgrade vs. re-implementation reveals that:

• An upgrade is usually faster and less expensive than re-implementation, unless the current solution carries heavy customizations that are outdated, poorly designed or replaced by standard functionality in the newer version.
• Re-implementation requires more customer engagement, but the solution is more flexible, and it is an opportunity to implement a new business vision.

A third option can be to combine an upgrade with a re-implementation.

When choosing the upgrade and re-implementation combination, all data and data models are upgraded to the new version, and then standard functionality is used or customizations are redesigned and developed if needed.

A deep analysis of each specific case should be performed to determine which option is best. Choosing the most cost and time effective option will usually depend on what data and customizations the customer has in the older NAV version, and what needs to be transferred to the newer version. Before making any decisions, the customer should take into consideration a variety of factors, such as:

• System Upgrade path
• Database size & quality
• Customizations & new functionality
• ISV solutions
• Integrations with third party applications
• Budget
• Timeline & downtime limitation for a cutover
• Resources

Based on the factors above, the questions you should ask yourself before making the decision could be:

• What is the version of the source system and is there a clear upgrade path?
• How big is the database, and how good is its quality? Is there a need to purge or archive historical data?
• Are there many customizations, and do we need them?
• Would you like to benefit from new standard functionality instead of upgrading old customizations?
• Are there any ISV solutions or integrations with third party applications, and do they support the target version?

The answers to these questions can enable you to make an informed decision on whether to upgrade or re-implement.

UPGRADE

During an upgrade project, it is very important to understand each party’s role. You can start with a verification workshop to analyze the solution and define the project’s scope and plan. When the upgrade starts, typically a partner does the code and data upgrade. The code upgrade includes various tasks such as merging, fixing compilation errors, re-implementing functionality, upgrading forms’ user interface, and transforming old reports.

The scope of the code upgrade depends on what is decided in the verification workshop. Data upgrade includes performing a test upgrade using a standard Microsoft data upgrade framework and extending the framework by writing various scripts for custom data upgrade. After the code and data upgrade is complete, the upgrade partner does simple testing, including compilation testing, data upgrade testing, and basic functional testing. However, most of the functional testing is usually performed by the end user, but if test scripts are provided, it may be included in the external project’s scope.

RE-IMPLEMENTATION

Re-implementation projects are in reality very similar to upgrades. The diagram above shows an example of how a re-implementation could be organized. Please note that there are many different way to meet an implementation target, so I have included the illustrations just to compare and identify typical differences.

Once requirements are collected and fit-gap analysis is performed, the end users will be busy with the verification workshop where they define the scope and plan the project, split tasks, and define responsibilities.

The partner’s major involvement is in redesigning and developing customizations, as well as data migration and data migration testing unless you have an internal team that does this. The development team, followed by user acceptance testing, does functional tests. Once everything is tested, the test go-live procedure starts. I recommend performing at least two test runs before going live. The partner or your internal business application team completes user documentation and end user training.

SUMMARY

A decision to upgrade or re-implement is always a challenge. There’s a list of critical issues to address, and there is not a single or simple answer to the question of whether to upgrade or re-implement. The decision depends on various criteria; not only those mentioned in this document but also based on a customer’s or partner’s resources, time, and budget available for the project. It is not an easy decision, and the project must be carefully conceived and skilfully executed. That is why it is important to have experienced specialists on your side. You benefit from an experienced upgrade team including consultations, tools to speed up the project, a fixed price to make sure you stay on budget, and the peace of mind knowing that your project is in good hands.

Differences between Microsoft Dynamics NAV and AX

From time to time, I face questions from clients about which ERP system to choose: Microsoft Dynamics NAV or Microsoft Dynamics AX. This question has become more topical in the last six months. So I decided to talk to our specialists who have worked with both the products and get more comprehensive information on this topic. Opinions and interpretations differ. Nevertheless, we have finally arrived at a common opinion, which I will share in this blog post, together with small examples of the different features of each type of software.

The information available on the Internet about the differences between Dynamics AX and Dynamics NAV is mostly formulated as follows: if a customer is large (the so-called enterprise level), the best choice is Dynamics AX, while Dynamics NAV is suitable for a smaller customer (or SMB – small and medium business). However, this categorical assertion cannot be accepted as the ultimate truth. There are examples where Dynamics NAV is used with success in companies with 100, 200, 500 and even a couple of thousands of users. By contrast, Dynamics AX is also used in companies with five users. Therefore, it is not correct to state firmly that the choice of the system mainly depends on the company’s size and the number of users of the software.

Functionality

I believe that the key criterion of the choice of the system lies at the junction between the company size (including the amount of data) and the industry represented, as well as between the complex management of processes in the company and the need for an easy-to-use and simple, customizable interface. For example, Dynamics AX is more powerful in the management of complex processes such as production, offering greater functionality. Therefore, manufacturing companies which implement complex processes in their operation should definitely choose Dynamics AX. And the fact whether the company has five or 1,005 users is not so important here. Conversely, if the company operates, for example, in the wholesale sector, where the primary goal is the possibility for the users to easily and quickly process data, Dynamics NAV would probably be a much better option. User customized and simple data display will provide higher efficiency, because less time will be needed to get to the information required. For example, by entering the customer name in the customer number field, the system will be able to filter out the necessary information immediately.

When analyzing the size of the company, in our case we refer to the amount of data (how effectively the system is able to process large amounts of data) and their complexity (the complexity of the processes). The key lies in the functionality delivered by both systems. In this case, I am reviewing the standard functionality ensured by Microsoft in the standard versions of the systems. Dynamics AX is definitely functionally richer in terms of management of a variety of processes, such as processes related to project management, the public sector or manufacturing (in this area, Dynamics NAV is capable of displaying only discrete manufacturing, whereas Dynamics AX can also reflect lean and process manufacturing. Moreover, Dynamics AX has a ready built-in barcode scanner interface for mobile devices (handheld) specially designed for warehouses). By contrast, in sectors such as wholesale, Dynamics AX loses its functional advantages over Dynamics NAV, which provides the same full functionality and is easier to use. Dynamics AX, likewise, cannot be considered to have all the functionality of Dynamics NAV, while Dynamics NAV cannot be considered to lack something: Dynamics NAV also offers features that are not present in the basic version of Dynamics AX, such as the breakdown of additional costs by goods. Unlike Dynamics AX, Dynamics NAV can do this work automatically.

Looking at the data display and modulation functionality, it must be said that although the Dynamics NAV solution offers possibilities of an extensive and advanced analysis by dimensions, these possibilities in the Dynamics AX solution are broader with more control options.

• Conclusion: when choosing a system, it is important to take into account not only the number of users or amount of data, but also the business processes
• Conclusion: the standard functionally of Dynamics AX is richer than that of Dynamics NAV in areas such as manufacturing or the public sector
• Both systems have functional differences that can determine the choice of the system for a particular customer

Performance

The performance of these systems is largely determined by the service infrastructure or the so-called hardware. An important factor is the choice of servers where the system will be installed. By saving on this item, performance will be low regardless of the selected Microsoft Dynamics software. When choosing the Dynamics AX system, greater investment in the server infrastructure is required, because the system is demanding of this item. In Dynamics NAV, these investments will be lower, as the system itself is less demanding of the hardware. At the same time, the performance decreases along with the increase in the amount of data in Dynamics NAV, so the hardware configuration should be designed in a way to make the system run smoothly even after several years. This feature is less pronounced in Dynamics AX. It should be noted that Dynamics NAV is fitted with a variety of free tools for data compression and archiving, which can be used freely by the customer to improve performance. This is all a matter of administration.

• Conclusion: no funds should be spared on hardware for the system to perform properly
• Conclusion: infrastructure costs will be higher for Dynamics AX than Dynamics NAV

Interface

It is important to understand that Dynamics NAV essentially sums up the data in different locations. This way, the system provides a more convenient user interface (the needed data, such as the customer’s balance on the card, is quicker to be displayed), while Dynamics AX does not add up the data, but the system works on demand. For example, in order to view the customer’s balance, the Dynamics AX user has to make more clicks to send a request to the server for this information, which is then compiled and displayed.

The interface of the Dynamics NAV system is significantly more convenient and easily readable for the user; it also enables the user go through the data quickly. And here comes the question of what is more important for the company: a functionally richer system or a more convenient user interface of the system? The interface of Dynamics NAV is similar to the standard Microsoft Office products with almost identical screen adjustment functions (opening and closing fields in cards, catalogues or tables, as well as easily customizable toolbars and screen for the user’s needs). I believe that it is much more convenient for an ordinary accountant to work in Dynamics NAV, while a financial analyst will have more ample opportunities when working with Dynamics AX.

• Conclusion: Dynamics NAV sums up the data during processing so that the user has to make fewer mouse clicks for viewing the daily data
• Conclusion: from the user’s point of view, the interface of Dynamics NAV is more intuitive and more easily readable than the interface of Dynamics AX

Costs

Another important thing to compare is the cost of the two products. As the Dynamics AX solution has much more extensive settings when configuring (adjusting) and using the system (user training), the final implementation costs of the system are on average at least 1.5 times higher than those of Dynamics NAV. If the company has no need for the rich manufacturing and project functionality of Dynamics AX, this aspect should definitely be taken into account for the investments made in the implementation of the system to be cost-effective.

Differences also exist in the licensing costs which are higher in the case of Dynamics AX. Based on the Microsoft RSP (recommended sales price), the minimum functionality licence with 3 Enterprise users of Dynamics AX (equivalent to Dynamics NAV – Full User) is about 290% more expensive than exactly the same Dynamics NAV licence. The same licence with 30 users of Dynamics AX costs 48+% more than that of Dynamics NAV. Also, the cost per each additional user will be over 33% higher in the Dynamics AX system.

Summing up the costs of consultations and licensing, as well as future maintenance, the TCO (total cost of ownership – the long-term costs) for the Dynamics AX solution will be more expensive than for the Dynamics NAV solution. It should be noted that Microsoft regularly offers special conditions in particular for the purchase of Dynamics NAV, which further increases the Price/Performance benefits of choosing the Dynamics NAV products. The campaigns available in 2015 include Give me 5 or On Azure in O365 (a special offer for Dynamics NAV cloud service in combination with Office 365 licences). The licences of the two systems are available both through licensing the software to be kept on the company’s own infrastructure and as a cloud service (rent per user per month).

• Conclusion: implementation of the standard Dynamics NAV solution is less expensive
• Conclusion: Dynamics NAV has lower overall long-term costs
• Conclusion: both products are available for renting and by buying licenses

Shifting towards cloud services

An important modern trend is observed in connection with Dynamics NAV: a much more rapid shift towards the cloud is going on. At present, this system is basically a completely cloud-oriented product with fully-fledged web and mobile (including tablets) users. By contrast, the Dynamics AX system currently has no web client (a possibility to connect to the system through a web browser and use almost 100% of the system functionality) or tablet client (functionality available through an interface specially customized for tablets). It is likely that Microsoft is implementing a strategy aimed at making the Dynamics NAV solution a pure cloud solution suitable for the SMB segment in the future.

Currently, the standard Dynamics NAV is available with Office 365 integration, including one authorization for all programs, integration with Outlook mail server, the opportunity to create individual document templates in Microsoft Word by making available some space for the data from the system and other options. By contrast, this integration is currently not as complete in Dynamics AX, although the data can also be exported to Excel, .pdf, etc., and there is also Outlook integration and a possibility to create documents with a Microsoft Word template.

• Conclusion: Dynamics NAV demonstrates a more rapid shift towards the cloud
• Conclusion: Dynamics NAV is available with Office 356 integration, while in Dynamics AX this functionality is limited

Additional solutions

In addition to the standard functions provided by Microsoft in the Dynamics AX and Dynamics NAV software, the two systems have a very wide range of solutions developed by partners (the so-called add-ons), which are designed both for a specific industry and for certain general functionality. A good example here is the payroll module that is not part of the standard version of the systems, but is always provided by the leading Microsoft Dynamics partners of the region. In areas such as equipment rental, leasing and factoring, real estate management and other sectors, it is the Microsoft ISV (independent software vendor) partners who provide software modules. One of the examples is the Elva DMS solutiondesigned for car dealers and workshops on the Dynamics NAV platform. Having regard to the historical partner network structure and the fact that the number of Dynamics NAV partners is much higher than that of Dynamics AX, the Dynamics NAV platform offers a wider choice of solutions for industries.

In parallel, it should be mentioned that in very many countries Microsoft has not released local versions of the Dynamics NAV solution, but instead it signs contracts with local partners on the localization of Dynamics NAV for a particular region. Also, the official availability of Dynamics NAV is limited in some countries, such as Japan.

Conclusions

If someone asked me to select three main advantages and differences of the two products from all the arguments, my choice would probably be as follows:

Dynamics NAV

• Ease of use (a comfortable user interface)
• A successful benefit-cost ratio
• Orientation towards cloud services

Dynamics AX

• Rich manufacturing and project management functionality
• Excellent operation with large data volumes
• Extensive options for analysis

Therefore, the fact that the company is big does not mean that it necessarily has to use Dynamics AX, and, vice versa, small businesses do not necessarily have to choose Dynamics NAV. This may be just one of several preconditions. More important is the industry represented by the company or organization and the structure of the operational processes.

Taking into account the plans published by Microsoft, it is clear that both of these products will be developed dynamically. The question is about the focus of direction. Recent events show that the important innovations, such as a web client or RTC (a role tailored client) are initially included in the Dynamics NAV solution and their later versions also appear in the Dynamics AX solution. Also, Dynamics NAV is the first system to be integrated in the cloud with Office 365, which clearly shows the future focus of this solution.

Do You Need a Two Comma MES?

I love the show Silicon Valley on HBO. It’s raw, open and makes fun of the software industry. Even with the absurd situations and characters, I recognize a grain of truth. There are times I cringe – some humor is misplaced, the language can be foul, and there are inappropriate things happening all the time. Yet, even when the show seems to make no sense at all, (like, why you would be obsessed with sesame seeds on burgers from “The Bur-gur King”?) I recognize… something true. It’s this recognition of reality in absurdity that makes Silicon Valley so entertaining. 

Take, for instance, the latest investor in Pied Piper. Russ Hanneman (some say he’s a take-off on Mark Cuban) is wealthy beyond measure for bringing “Radio to the Internet,” but is self-obsessed and has no concept of real life. There is a painting that hangs in his house - a modern, Jackson Pollock-style work dominated by three large commas. Russ considers himself a three comma – the three commas found in a billion ($1,000,000,000). The third comma is the differentiator, separating the elite such as Russ from everyone else. At one point, he loses money on an investment and ends up with only $960 or $970 million. He becomes a mere two comma and is distraught beyond belief, thinking the world has ended.  

 THE TWO COMMA MES

It seems absurd to focus so heavily on the difference between a two comma and a three comma, but many perceive manufacturing software solutions the same way. Some believe the only “viable” MES solution MUST cost two commas, and anything less won’t work. They believe their company needs a complex, wildly over-priced and over-developed piece of manufacturing software. It must be crafted specifically for their shop floor in incredibly specific and costly configurations yielding the “best” solution. Any software meeting these criteria must cost (at least) two commas or it’s just not good enough.  

I know why they think that way. For many years, the industry built this vision of MES with complex integrations and layers and layers of modules, functions and intricate software widgets with multifarious forms and menus. It’s a vision partially based in reality. Fact is, not all MES vendors actually provide a MESA-style, comprehensive system. Vendors that do subscribe to this comprehensize and complex model provide systems that take years to install and configure (which they call an “off-the-shelf” solution), and cost more than two commas ($1,000,000+) when they’re done. 
 
Two commas?!? Think about the percentage of your overall revenue represented by those two commas. Can you throw away two commas without a clear vision of the return? If your total spend on infrastructure and software is going to be more than US$25M+ this year, then you may have the resources for a two comma MES. Otherwise, you may be spending too much. Consider what you actually need.   

THE PAPERLESS MANUFACTURING SOLUTION

 As the manufacturing software industry began embracing the two comma vision of MES, we introduced “paperless manufacturing.” Paperless manufacturing provides all the functionality and production control of MES without the unnecessary complexity and “service”-driven escalation of price. If you want a digital shop floor with paperless operations, and need the ability to know what’s going on real-time in your operations with total connectivity to your internal business systems and processes, then paperless operations will deliver without the pain some MES software demands. 

Paperless manufacturing focuses on supporting manufacturing operations with software tools – eliminating errors as operators access the information they need at their workstation, using the instructions, photos, drawings, videos and attachments you provide. The software gives you tools to create better instructions and deliver them efficiently, without having to create them in a costly and inefficient desktop template. Paperless operations increase efficiency, as the correct work instructions are prioritized and delivered directly to the operator. When problems come up, you can quickly make corrections before production issues cause scrap. Paperless manufacturing gives you manufacturing control, without forcing you to adjust your processes or creating other problems.
 
Sure, a two comma MES MIGHT be able to do all this, but justifying the cost with unnecessary complexity, a massive project team and software developed decades ago doesn’t make any sense to me. The focus of the project should be improving production, solving problems, and ensuring an ROI. When you buy an operations efficiency engine like an MES, you are investing in your business and should know what the return is. A two comma MES doesn’t provide a suitable return because the cost for functionality is so high. Unnecessary complexity not focused on productivity is a sunk cost for manufacturing.   

A MANUFACTURING SOLUTION THAT MAKES SENSE

We encourage customers develop a strong ROI with an efficient path to their organizational goals. If the project doesn’t provide an adequate ROI, we suggest the prospect look for a different solution. Also, keep in mind the more complex the software, the heavier the burden on the organization to implement the system. The subsequent cost savings must make up for all the overhead carried by the additional complexity.  

What’s worthwhile about two comma MES? Why do people buy it? Many times, I think companies fall into a Russ Hanneman mindset, and believe ONLY a two comma solution could possibly meet their needs. They never bother to investigate anything else, or they assume two comma solutions are more robust or sustainable (this is blatantly untrue). Corporately, they’ve settled on the solution, even if it doesn’t work perfectly. They’ve made their decision and expect everyone else to make it work. 

Russ might claim that if you have two commas to spend, you shouldn’t have to ask the true cost (I’d argue Mark Cuban wouldn’t say the same). But in our experience,total cost of ownership is one of the predetermined deciding factors in MES selection, and traditional two comma MES vendors just can’t size projects accurately. To quote a customer, these systems are “painfully configurable,” and focused on increasing service costs. 

And finally, back to Mark Cuban…even he doesn’t believe in perfection, he said in a recent interview, “Some people work so hard to get it absolutely right that they don’t have the bandwidth to do all the other things that go into making a business successful.” Does this same concept apply to your selection of an MES vendor?  Have you gotten so focused on building the perfect requirement list that you lose sight of the usability of the final product, and the cost and time you need to make it work? 

Cloud-Based Technology Adoption in Manufacturing to Quadruple by 2024

In the late 1960’s the marketing slogan targeted at young professional women, to make smoking cigarettes seem appealing, was “You’ve come a long way baby.”

Imagine just ten years ago when manufacturing software solutions first introduced cloud-based software.

Now, think about just five years ago, when the market share of these solutions increased to almost 4% of the total global manufacturing technology market.

Now 2015, that percentage has doubled again, with more than one-in-twelve manufacturers running a cloud-based solution (often a derivative of ERP, enterprise resource planning).

Industry analysts’ cumulative assessment is that more than half of all Manufacturing Operations worldwide will be in a cloud-based platform by 2024.

Manufacturing.net reported the popularity of cloud software for manufacturing operations management is growing based on an LNS Manufacturing Operations Management Survey of more than 100 manufacturing executives, only 7 percent of respondents said they use cloud technology. The LNS analysts reported, “Despite this low number, more decision makers are considering switching over to Software as a Service (SaaS) for their manufacturing operations management. In the survey, 17 percent of executives indicated they were planning to use SaaS to improve their operations. Manufacturers are more likely to see more cloud-based solutions as 90 percent of companies that offer manufacturing operations management software currently have or plan to adopt cloud technology.”

A recent study titled, “Disrupt, Collapse, Transform: The Role of the Cloud in Industry Transformation,” sponsored by NetSuite and conducted by global industry analyst firm Frost & Sullivan, surveyed 1,500 senior executives across multiple industry sectors in seven countries the US, Australia, Singapore, the UK, Japan, Hong Kong, and the Philippines. Two-hundred of the surveyed participants were from the US. The study was conducted to examine the drivers for disruption across all industries and how modern businesses are responding to that disruption.

Among respondents, 81 percent of US cloud-based software users told Frost & Sullivan that the cloud has provided them with a competitive advantage over their rivals particularly with regard to entering new markets and has helped them react more quickly and effectively to change.

Global Supply Chains Driving Cloud-based Manufacturing Solutions

Developing global business metrics is commonplace among multi-national manufacturers and this trend will continue.

Having developed a “proof of concept,” manufacturers now must replicate the best-practice supply chain process; the supply chain is for the entire enterprise, not merely the four walls of a manufacturing plant. It is absolutely requisite that manufacturers extend their enterprise resource planning (ERP) technology investment to both leverage and collaborate with suppliers and customers.

Inventory reduction across all market segments drives better margins, particularly in automotive, consumer packaged goods (CPG), and medical device companies.

All the sales and marketing efforts do not matter if customers are lost due to poor performance, poor on-time delivery, or poor product quality.

The cloud-based inventory resized inventory levels based on consumer demand which improved the number of turns across finished goods, work-in-process (WIP), and raw materials. Ultimately it drives customer retention.