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Microsoft AX: Upgrade to D365 or Re-implementation?

An active debate is ongoing in ERP community about Dynamics 365 Upgrade. This discussion involves a critical decision between migrating the existing system or opting for a reimplementation. Each approach offers distinct advantages and addresses different business needs. In this article we will explore the reasons you might want to select one or the other option for you business. moreover when to choose migration for minimal disruption and when reimplementation is necessary for evolving needs.

When do you need Migration?

Migration is often selected option when the current system faces risks of obsolescence due to lack of support and updates from Microsoft. Businesses relying on systems that are no longer being upgraded, like Microsoft AX, risk system failure and potential business disruptions. Migration resolves these problems by preserving existing functionalities and minimizing operational disruptions, moreover, it maintains the core functionalities of the existing system and adds newer functions that are continually updated.  It also reduces the need for extensive retraining of staff since the system’s interface and operations remain familiar. Additionally, migration usually involves lower upfront costs compared to a full reimplementation. A typical scenario includes an AX 2012 upgrade to Dynamics 365, where businesses benefit from maintaining existing processes while gaining improved performance. There are 3 main points that you should keep in mind when migrating that we will discuss later in this article.

Photo of a man working on a laptop in a server room

When to consider Re-implementation?

Businesses often hesitate to consider reimplementation due to concerns about complexity and operational disruption. However, with good preparation and strategy, these issues can be minimized. A major advantage of reimplementation is the familiarity both the customer and partner already have with the system and operations, potentially reducing consulting efforts.

When comparing reimplementation to a full system migration, it’s crucial to note that any significant system modification requires extensive effort to understand necessary process changes. This includes installation, testing, and training. Full benefits of a new system often emerge only after it has been operational for some time.

Persuading CEOs and department leaders can be challenging, but reimplementation evaluations should be part of active system management every 6-10 years. This helps avoid outdated configurations and extends the value of initial investments. Regular upgrades alone may not ensure customers fully benefit from new functions without changes to basic configurations, leading to underutilized opportunities and diminished benefits from annual fees. Reimplementation enhances previous investments and reduces the need for future complex system changes.

Comparison of Full system migration vs Re-implementation

Aspect

Migration Approach

Re-Implementation Approach

Strategic Focus

Ideal for a technical migration to Dynamics 365 without focusing on new features.

Best when aiming to get new and desperately needed functionalities to an old system to improve system utilization, and achieve a significant ROI

Customization Needs

Suitable if there are many existing Dynamics AX customizations that need to be retained.

Appropriate when existing customizations are minimal and can be replaced by standard Dynamics 365 features.

Data Migration

Necessary to use Microsoft data migration tools.

Optimal if planning to load initial data into Dynamics 365 without relying on Microsoft's data upgrade tools.

Code Quality

Suitable if the original Dynamics AX implementation is well-documented and follows best practices.

Needed when prior customizations lack clear documentation and adherence to best practices.

Integration Requirements

Best when the number of external integrations is minimal.

Required if there is a substantial dependency on deprecated tools.

Documentation Quality

Ideal if functional, technical, and user documentation is high-quality and reliable.

Important when documentation is poor and reliance on informal knowledge is high.

Feature Adoption

When the new Dynamics 365 system is similar in scope to the original Dynamics AX implementation.

Required when there is significant reliance on deprecated features or major updates that alter the ERP landscape.

3 most important aspects of Microsoft AX upgrade to Dynamics 365

When considering an Dynamics 365 upgrade, there are three critical technical areas to focus on: Code, Data, and Licensing. Here’s a breakdown of each:

  1. Code Upgrade: When upgrading Dynamics 365 for Finance & Supply Chain Management, it’s essential to work with a trusted partner. Previous code modifications must be re-written as extensions. A conflict report will help identify where your current modifications clash with the new Dynamics 365 features and decide which modifications to keep. Even if Dynamics AX was minimally altered, expect thousands of code conflicts, which are typically resolved by developers. The functional team may need to intervene for some decisions about customizations. Dynamics Lifecycle Services (LCS) tools aid in assessing these modifications, though automated estimates should be approached with caution.

  2. Data Upgrade: Transitioning your database from AX 2012 to Dynamics 365, including historical data, is now possible for users on R2 and R3. The upgrade process encompasses both master data (like Partner, Customer, and Item tables) and open transactional data. Given its complexity and cost, utilizing a data warehouse is often recommended for managing historical transactional data, as it allows continued access without direct inclusion in the upgrade. Although tools are available to integrate historical data, they are generally costly and time-consuming.

  3. Licensing Upgrade: The process of upgrading licenses for Dynamics 365 for Finance and Operations might initially seem complex, but Microsoft offers various incentives to ease this transition. Collaborating closely with a partner is essential to ensure you receive any applicable discounts. Importantly, purchasing Dynamics 365 also grants dual-use rights for Dynamics AX 2012, providing flexibility in how quickly you need to switch systems. For customers transitioning from AX 2009, the shift from a concurrent user model to a named user model has been made less daunting with favorable conversion options provided by Microsoft.

Advantages of Dynamics 365 Cloud Migration

When thinking about upgrading Dynamics 365 it is important to consider cloud option, which offers numerous advantages for modern businesses. Though there are alternatives, but cloud solution ensures access to the most current features and improvements without the need for manual upgrades. This approach eliminates the need for significant hardware investments and reduce IT support costs. Moreover, the cloud provides space for growth to meet changing business demands and supports remote access, for better productivity. Read more about cloud solutions.

Benefits of Cloud Migration:

  • Always up-to-date features.
  • Reduced need for hardware investments.
  • Lower IT support costs.
  • Enhanced scalability and remote.

In summary, migration or ax 2012 to d365 upgrade is ideal for maintaining existing system functionalities with minimal disruption and reconnecting with Microsoft updates and ecosystem, while reimplementation suits evolving business needs aiming to optimize and scale operations. The cloud ensures access to the latest features, cost efficiency, and flexibility, and Microsoft provides security, support and upgradability.

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