Dynamics 365 Business Central vs Finance & Operations: How to choose between the two

Microsoft’s ever-popular Dynamics 365 (D365) platform brings ERP, CRM and BI (Enterprise Resource Planning, Customer Relationship Management and Business Intelligence, respectively) into one system. This means your people, processes and systems can be unified, giving you the visibility you need to drive your business forward.

Now, there are two ERP solutions within the D365 family: D365 Business Central (formerly NAV) and D365 Finance & Operations (formerly AX). What are the differences between the two? And how can you decide which solution is right for your business?

A quick note before we start comparing…

Let’s get two common misconceptions out of the way immediately. Though, if you’d like to skip past this and get to the comparison part of the blog, click here.

Are both D365 solutions compliant in my country?

Yes, both are absolutely safe and legally compliant in all the countries for which they have published “localization packs” and are currently providing tens of thousands of businesses with great service.

Dynamics 365 Finance and Operations (sometimes referred to within the industry as ‘D365FO’ or even just ‘FO’) has more localisations than D365 Business Central (‘D365BC’ or just ‘BC’). Here’s where you can find out more about D365FO’s localization features and this is where to read about D365BC’s localization features.

D365BC isn’t suitable for companies with more than 200 users

Myth. D365BC is absolutely fine with more than 200 users. Businesses who use D365FO are perceived as larger, more complex businesses than those who use BC. But actually, it’s the type of business requirements (functionality) that are more important in making a decision.

Not the size of the business.

D365BC can’t handle the volume

While we’re on the subject of scale, some people say D365BC cannot handle the volumes. At some point, that does become true and only then does the technical software design comes into play.

If you’re a very high transaction volume organization, it’s more likely that you’re also of a size that other business requirements will be needed long before D365BC gives up the ghost on volume grounds. Confused? Don’t worry, I’ll cover those later.

Now then, let’s get the pedigree question on the table…

Dynamics 365 Business Central vs Finance & Operations

Truthfully, there’s nothing in D365BC that D365FO cannot do too or do better than D365BC. This doesn’t mean BC isn’t perfectly able to provide great value service to thousands of businesses around the world.

So, what are the big-ticket differentiators leading you to one or the other choice? In my experience, I’ve seen two main things - features and budget.

1. Features

If your business requires the following, D365FO is likely to be the one for you…

• International inter-company trading
• Financial compliance (Country localisations available)
• Supply chain - functional differences involving:
  • complex:
    • Product and vendor management
  • Quality management
  • Intercompany stock transfers
  • Transportation management
• Manufacturing – process or mixed-mode manufacturing
  • If you use words like: Formulas, potency, co-product, bi-products, yield management, you are D365FO straight away

If you don’t have any of the above... you’re probably fine with D365BC. Happy days.

2. Budget

Let’s park all modifications and Integrations for the sake of like-for-like comparison and allow me to talk in terms of ‘vanilla’ product.

Implementation cost

In general, D365BC is about 30% of the cost of the implementation in comparison to D365FO. So, if you implement D365BC in a manufacturing organization and the estimate for BC is say, 250 man-days of Microsoft Partner resource, then D365FO is going to be about 750 man-days (rule of thumb).

Internal resources

That’s not all. You should also allow for your own internal resource effort (very important to take that into account!).

Like all ERPs, there’s at least 3-5 times more resource needed from the customer’s own resource pool to ensure success. Microsoft ERP is generally regarded, by the analyst companies (Gartner, Forrester etc), to need 3x where, by comparison, SAP is generally at the 5x multiplier end.

So, if BC needs 250 days from a partner, you need to allocate 750 man-days from your own internal resources and backfill some of those key roles. That maths also applies to D365FO and to be honest, also to all the other ERP vendors, so check on their ‘multiplier’.

Licensing

Licensing is a different issue. Surprisingly, if you’re operating legal entities in, say, 10 countries requiring 10 localisations packs for financial and tax compliance, D365BC can actually be more expensive in licenses that D365FO!

I know… I was surprised too when I did the maths over five years!

There’s much less to choose between the costs of BC and FO SaaS (Software-as-a-Service) charges, as the major cost is sitting in the services and the cost of your internal resources. So, I wouldn’t worry too much on this line item as it’s not the real differentiator.

So, your short-term budget and ability to resource such a project is a key consideration. But, if you’re essentially trading in one country with some international sales and purchases, BC is just fine and way cheaper than FO.

The conclusion: It depends on your business requirements

D365BC is generally perceived as more suitable to SMBs (Small Medium Businesses) and D365FO is more suited to ‘complex or larger’ organizations. This is because the two solutions have found their natural place evidenced by the profile of their respective installed bases which matches this perception.

In reality, the size of your business or number of users doesn’t really matter (there’s actually a large overlap in size of businesses using each product).

Instead, it’s about your unique business requirements. Take international trading, for example. If you’re trading internationally within a group of companies (no matter how small they are) and you need intercompany trading, stock transfers, eliminations, consolidation etc… then you are almost certainly heading into straight into D356FO territory.

Digitally transform your business the right way

Hopefully, you’ve got what you needed from this. I’ll be writing another article soon, looking at the functional differences between the two solutions, so keep an eye out for it.

In the meantime, we have a guide on digital business innovation which may interest you.

From futureproofing your supply chain to effectively executing change management, learn how you can pull off digital innovation by clicking the button below.