Dynamics 365 Questions & Answers, Part II

In April, I published a post answering some of the more common Dynamics 365 questions asked by SBS Group customers and other partners.  I have received over 30 responses to that post in as many days so I think it is safe to assume that this is a worthwhile topic.

In this post, I will focus on questions related to Microsoft’s announcement that Dynamics 365 for Operations will be available as an on-premise solution in the second half of 2017, most likely June.  Although I believe that the advantages of a cloud-only ERP deployment almost always outweigh any disadvantages, I recognize that for some companies this just isn’t the right option.

In keeping with the question/answer format, I’ll expand on this below.

What does an On-Premise deployment of Dynamics 365 for Operations mean?

On-Premise is typically defined as software that is installed and runs on computers that are physically on the premises (in the building) of the person or organization using the software, rather than at a remote facility such as a server farm or cloud. Because the software runs on computers locally, the related data does as well. In the last 10 or so years, I have heard the on-premise term used for any deployment that is fully managed by the person or organization using the software. This means that “on-premise” deployments could also be referring to installations in a company owned or rented data center.

When Dynamics 365 for Operations was released, it was basically the next step for AX7 which was designed exclusively for a cloud-only deployment.  In November 2016 and again in February 2017, Microsoft indicated that they would be releasing on-premise options as well. In fact, they are expected to offer two more options for deploying Dynamics 365 for Operations as follows:

Cloud and Edge (Hybrid)

In this deployment scenario, the business process and transactions will be allowed to run “at the edges” with data being stored locally (on-premise).  The edges, referred to as “My Workplaces” will be managed by the customer while the cloud components will be managed by Microsoft.  This helps the customer to scale and take advantage of cloud-related services while keeping components like master data management private.  In some instances, this will help with integration to applications that can’t or shouldn’t be managed in the cloud.

The central cloud node can provide a singular view of operations across multiple “My Workplace” instances and still leverage the cloud for better business intelligence.  Cortana Intelligence will most likely not be accessible to full potential in this model if at all, but other BI tools can still be leveraged.

Local Business Data (LBD)

An LBD, local business data, deployment allows a customer to run all business processes on-premise, to support local transactions and store business data without replicating to the public cloud (Azure).

Replication of business data into the cloud no longer occurs so while data and processes are more private, the customer will lose access to many of the bells and whistles that come with Dynamics 365.  Cortana Intelligence, PowerBI and Azure Machine Learning services are all included in the list of items missing from the action in an LBD deployment.

Ultimately, customers will be able to leverage a federation of My Workplace instances under a single My Workplace to take provide better visibility and intelligence throughout the company.

Should I Implement Dynamics 365 for Operations in the Cloud or On-Premise?

The answer … at least if going live today … is quite simple.  In the cloud.  Microsoft has not released an on-premise version of Dynamics 365 for Operations yet.  They have indicated their intention to do so in the latter half of 2017, but have not provided an exact date to the public.

When they do release an on-premise version, it will be up to you and your partner to weigh the options around each and determine which is the best fit for your environment.  We can speculate on this today, but some of the details are still private and will continue to evolve right up to the public release expected in June/July of 2017.

Is there a clear comparison of these options?

It is almost impossible to compare them at this time as they have not been formally released and new information is coming available regularly.  Detail shared along the way through formal posts and reseller meetings provide enough information to facilitate good conversation, but I would caution anyone not to wrap up their due diligence until after general release.  The table below has some help information that I’ve seen shared by others from various partner conferences hosted by Microsoft:

Table-D365-OnPremise

Why would a Dynamics 365 Customer Choose to Implement On-Premise?

When looking from the outside, it isn’t obvious why any company would choose to take on the responsibility of directly managing the hardware, connectivity, security and administration of their own ERP data center.  Most companies are thrilled with the idea of avoiding upfront costs for infrastructure and related IT support services, not to mention traditional license software costs.  Most companies find the security, speed, and dependability of modern cloud providers is nearly impossible to duplicate in an in-house environment. But, many do … so why?

  • Existing Data Center Investments:  Quite often, companies have already sunk considerable investments into their hardware, physical location and IT support personnel.  Walking away from that investment can be difficult to do emotionally and financially.  Many companies compare the costs of maintaining existing data centers, or even riding it out for a few years, to the cost of moving to the cloud and find it more cost-effective to continue in-house.  This is a decision that each company needs to make based on their unique situation.
  • Not Cost-Effective Due to Other On-Premise Requirements: I’ve spoken with customers that would prefer to move their ERP to the cloud, but feel that the ROI expectations can’t be met unless they are able to move a more significant portion of their applications to the cloud.  Just moving ERP doesn’t allow them to significantly trim support staff or reduce costs associated with their physical data center.  When they are able to move the lion’s share to the cloud, they plan to switch (and many do).
  • Regulatory Requirements:  Some companies prefer to keep data and processing local to avoid the possibility of not being compliant with regulatory requirements related to their business.  Whether looking at a SaaS application (like ERP in the cloud) or data storage, your company must be confident that their customer and other information is protected.  Your cloud provider should be compliant with your industry’s privacy and security compliance needs, like HIPPA and PCI.  There are standards for companies with financial data and government, government contractors and a variety of industries where data integrity is considered hyper-critical.
  • We’ve always done it this way: If it isn’t broke, don’t fix it. Right?  One might argue that the very nature of technology is smart, measured change for cost and efficiency gains, but I often speak with clients that just can’t get comfortable with having applications and data move outside their walls.  Sometimes it isn’t as a result of due diligence, but more of a gut reaction.  Personally, I believe that the cloud offers far more value than on-premise deployments, but I would never pressure a company to operate in a way that they aren’t comfortable with.  Not everything is a math problem.
  • Heavy Customizations: Many SaaS ERP solutions do not provide an architecture that allows for heavy customizations.  In many cases, like with Microsoft Dynamics 365, a company can customize their solution and integrate other products with little issue.  However, if a customer has made substantial customizations over time, it may be that some of those customizations or integrations will not survive a move to the cloud.  We’ve become very adept at making this work for our customers, but in some cases, they opt to stick with their current solution until some of the more difficult customizations can be migrated to their satisfaction.

As more information comes to light regarding Dynamics 365 for Operations on-premise deployments, I’ll share it with you here.  We are excited to see Microsoft making this option available and helping our customers determine the best option for their business.

If you would like to discuss this in person, please feel free to reach out to me directly at rmorrison@sbsgroupusa.com.

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Best regards,

Robbie Morrison
Chief Solution Strategist, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions.  From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and products helps SBS Group customers maximize ROI on technology investments.  Robbie

Today, Robbie serves SBS Group customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions.  Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison

Making the Business Case for PSA in a Project-Centric Company

I’m often asked about PSA (Professional Services Automation) solutions by potential buyers. Is it critical to success?  Is it more of a luxury solution to make things easier?  Will it pay for itself in the long-run? Short-run?  What they’re really asking, in most cases, is: “How do I sell it to our executive team?”

For the longest time, I was confused by this.  In my experience, it is often the executive team that drives the pursuit of a PSA solution.  Their need for more accurate reporting, project profitability and overall visibility of operational effectiveness in a professional services firm leads right to PSA.  So why the sell? I’ve come to the conclusion that overselling features of other solutions by those in the software market are often the problem.  Overzealous sales and marketing people pitch every ERP, CRM, Office productivity and project management solution as the end-all, be-all answer for professional services.

While each of these application families can deliver tremendous value to a services company, it is often an over-reach.  However, a PSA solution not integrated with core ERP or CRM systems is never as effective as those which are.  That’s why we love working with Microsoft Dynamics, and especially the Dynamics 365 suite.  But…my appreciation for Microsoft Dynamics is not the focus of today’s post.  Rather, how to help you share the potential value of an enterprise PSA solution with your executive team.  Let’s get started.

dynamics-psa-dashboard

Understanding PSA (Professional Services Automation)

PSA solutions are designed to assist project-centric companies with project management and resource management for client projects. This is accomplished by developing metrics to quantify and qualify basic business processes that can then be used to streamline and improve those processes.  Typical PSA functions include project management and documentation, time recording, billing, reporting and labor utilization. These features are often integrated with accounting, Customer Relationship Management (CRM) systems, and payroll systems in order to improve the efficiency of overall operations. In addition to better managing client projects, the right PSA can prevent lost revenue and lagging billing cycles thereby improving cash flow.

Ultimately PSA software suites allow users to integrate industry-appropriate metrics in order to better understand operations and, in turn, improve efficiency and profitability. As businesses grow, the size and complexity of their projects tend to increase and with it, their investment in PSA software.

microsoft-dynamics-365-psa

Making the Business Case

Generalizations about the value of leveraging software to improve project and services delivery are enough to get started, but here are some more specific points you can add to your pitch.

Improving Collaboration, Reporting, and Visibility into Project Profitability

While PSA is best known for improving resource and project management, the most significant impact is providing real-time visibility into all aspects of delivery. Delivery resources can simultaneously see the status of current and forecasted projects, historical or projected costs and revenue, the supply and demand for key resources, and issues that could impact a successful project outcome. With real-time visibility, executives can more efficiently and effectively run the business.  Organizations with high levels of real-time visibility grow more rapidly and face less employee attrition and fewer projects go south.

Clearing the Bench and Improving Human Capital Contribution

Every services organization struggles with the almighty utilization target.  Keep everyone working 100% of the time and you print cash.  Keep them sitting on the bench and the business fails.  Finding a balance of resources that works for your customers as well as your business is the key to success.  A well-implemented PSA solution helps you identify and work towards that optimal service model as the business fluctuates.  It can help you determine the best mix between full-time and contract employees, training requirements needed, etc.  Most importantly, your entire management team will have a better understanding of backlog and ability to meet demand at any given point during the year.

Improving Billing Accuracy and Shortening Billing Cycles

Without a PSA solution in place, time and expense data is usually captured through standard payroll or financial systems.  This data is ultimately sent to the project team, but not in real time.  Sometimes, there is a considerable gap of days or weeks.  The extra processing time and the potential for mistakes can be a negative impact on the customer relationship and internal project management.

PSA systems allow time card information to be entered through apps or even calendar plugins to improve efficiency and cut down on errors.  Allocations, project success, cash-flow, and billing frequency are all positively impacted.

Compliance with ASC 606 and IFRS 2015 Guidelines

Ensuring that project doers and project planners stay aligned is extremely important.  How you bill, when you bill and how you recognize revenue are often tied to performance milestones, as outlined in ASC 606 and IFRS 2015 guidelines.

Many companies, even those with enterprise ERP and high-end forecasting tools, will need to build a plan to implement process updates and retool the development of complex contracts.  Firms relying entirely on Excel or outdated planning and project management solutions may find the need to purchase and implement new software even before other processes can be adapted.  It will take a comprehensive, collaborative effort to realign business planning and budgeting as your back office team adapts to these new accounting standards.

solution integration

Dynamics 365 Integration with Microsoft Office 365

SBS Group has deployed PSA solutions for hundreds of companies over the last 30 years.  Today, we focus on Microsoft solutions, including Dynamics 365.  Within the Dynamics Suite, there are different options available for companies of varying sizes and needs, but all benefit from the sweeping integration across the Microsoft stack.

Dynamics 365 unifies the best of Microsoft’s customer relationship management (CRM) and enterprise resource planning (ERP) solutions into one fully integrated cloud service.  It offers deep integration with Office 365 and allows you to tailor your implementation with sophisticated productivity apps to support crucial business processes, including sales, customer service, finance, field service, operations, marketing and project service automation.  It utilizes one common set of data across CRM, ERP and Office 365, simplifying data management and allowing for seamless integration across apps and business processes.  Tools like PowerBI, Microsoft Flow, PowerApps and Cortana Business Intelligence work seamlessly with Dynamics 365 operations and PSA to create one of the most comprehensive solutions for professional services companies in the market today.

Sometimes Seeing is Believing

If they’re not connecting the value of the right PSA to business results, you may need to show them.  I know that most CFOs and CEOs either don’t have the time or interest in sitting through a software demonstration.  However, a focused discussion on business value can be much more impactful when the software solution is used as a backdrop to the conversation.  Discuss the benefits you’re expecting and follow with a 5-minute peek into how the system works.

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Also, remember that there is more than one way to deploy a PSA solution.  Obvious questions, like in the cloud or on-premises will always come up for discussion.  Be ready to discuss cost, risk and operational pros and cons of each.  Grounding your solution in the up-front bid process and WBS vs an ERP-based PSA solution to manage project accounting will factor heavily into product selection.  Many questions, but all should result in a solution that drives genuine bottom-line benefits to the company.

If you would like to explore this further, please feel free to reach out to me directly at rmorrison@sbsgroupusa.com.

Best regards,

Robbie Morrison
Chief Solution Strategist, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions.  From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and products helps SBS Group customers maximize ROI on technology investments.  Robbie

Today, Robbie serves SBS Group customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions.  Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison

What is the Point of AXIO Core Financials with Dynamics 365 for Operations?

At first glance, it just doesn’t make sense that SBS Group (or anyone for that matter) would create a third-party solution to enhance financial management for one of the world’s most noted financial management solutions.  I’ve had several potential clients ask about this and my answer is always the same:  It is about helping our customers realize business value faster.

When a business invests in technology, they expect tangible results.  Whether they’re aspiring to enhance operational performance, improve the customer experience or capitalize on new opportunities, the goal is to provide genuine business value in the least amount of time.  The days of waiting for smart technologists to reverse engineer generalized solutions to the needs of individual companies over the course of months and years has been put to pasture by the advent of cloud computing.

We’ve implemented ERP solutions for thousands of companies and have learned a thing or two about the kind of configurations, enhancements and customizations that different types of buyers will need.  We put that knowledge to use with every engagement, and in the case of AXIO Core Financials, we start well in advance of the engagement.

After all, Microsoft did their part. They created Dynamics 365 for Operations which is arguably the most robust ERP platform on the market today.   It is an extremely flexible, scalable Cloud ERP platform that takes advantage of the entire Microsoft Office and server stack.  It is up to our team to bend, balance and bedazzle the solution so that it operates as if it were created exclusively for each customer…and to do it quickly and efficiently.

“Bedazzling Dynamics 365 for Operations” with AXIO Core Financials

So how exactly do you bedazzle financials?  Well, you begin by understanding who you’re bedazzling it for.  AXIO Core Financials is designed to help larger, enterprise-level organizations who require universal integration of finance across any number of countries, companies and other entities. We often work with professional services firms who have operations and projects around the world and distribution companies with complex ownership and revenue management structures.  Complex operations require special attention to the setup of even the most fundamental system components.  AXIO Core Financials includes:

  • Multi-company, multi-currency management.
  • Accounts Receivable
  • Accounts Payable
  • General Ledger
  • Fixed Assets
  • Procurement and Sourcing
  • Product, Inventory and Warehouse Management
  • Banking and Advanced Credit Management.
  • Regulatory support
  • Human Resource Management
  • Advanced commissions management.
  • Excel Budget Importing
  • Master Data Management Import Templates
  • Pre-Defined Business Process Flows w/ Swim-Lane Diagrams
  • On-Screen and In-App Task Guides
  • Content-Sensitive Help and Training Material

AXIO Core Financials enhances global scalability, compliance with GAAP, IFRS, Sarbanes-Oxley, and DCAA requirements and spans all the important back-office processes in your firm to give you unparalleled insight and control of all critical financial functions.

Sample Screen-Shot of Bank Management Workspace

AXIO Core Financials Bank Workspace with Dynamics 365 for Operations

Sample Screen-Shot of Credit and Collections Workspace

AXIO Core Financials Credit and Collection Workspace with Dynamics 365 for Operations

Faster Time to Value

By leveraging best practices and lessons learned over more than 30 years to create AXIO Core Financials, our team has been able to decrease the related Dynamics 365 for Operations implementation by an average 30-45%. And, our clients get a much-improved experience with fewer frustrations and confidence knowing that their solution has been vetted and approved by the Microsoft AppSource Team.

AXIO Core Financials on Microsoft AppSource

Learn more about AXIO Core Financials on our website or see it in Microsoft’s AppSource along with other SBS Group solutions like AXIO Professional Services for Project-Oriented firms.

Best regards,

Robbie Morrison
Chief Solution Strategist, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions.  From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and products helps SBS Group customers maximize ROI on technology investments.  Robbie

Today, Robbie serves SBS Group customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions.  Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison

Dynamics 365 For Operations Tip: Now you can use Position based hierarchies in all workflows

Using a Reporting manager hierarchy for routing workflow documents has always been possible in Microsoft Dynamics AX and Dynamics 365 For Operations. This worked great in cases where you were required to route all of an employee’s workflow documents, such as timesheets, expense reports, purchase requisitions and more, to the manager they report to.

Now in Dynamics 365 For Operations, you can use Custom configured position hierarchies to route workflow documents. So, let’s say  you have a scenario where you need to route timesheets of an employee to the reporting manager, but route the expense reports to a manager they report to in a specific project hierarchy, you can configure this in Dynamics 365 For Operations ! Let’s see how?

On the Position Hierarchy Types, you can select the workflows which can use the selected position Hierarchy for outing documents. For example, in the screenshot below notice that the Matrix based hierarchy can be used by the expense report – USMF and Timesheet workflow.

dynamics365-position-hierarchy-types

NOTE: Note that a workflow can use only one custom hierarchy.

Additionally, you will notice that, on the workflow setup form, you can now view and manage the associated configurable hierarchies.

dynamics365-associate-hierarchy

On the workflow setup/configuration, you can select the steps to be assigned to a Configurable hierarchy. See screenshot below.

dynamics365-workflow-step-1

So, when an employee submits their expense report/timesheet, this workflow setup is going to look for the Matrix Position Hierarchy and assign the workflow document to the worker to whom the employee reports in the Matrix hierarchy instead of the managerial hierarchy.

dynamics365-position-hierarchy

dynamics365-ar-administrator

Small, but useful enhancement !! Hope this quick tip is useful.

Sandeep

Sandeep ChaudhurySandeep Chaudhury is a Dynamics 365 enthusiast with over 10 years of experience in functional consulting, Solutions architecture and systems integration, with expertise in the areas of Professional services automation(Project Management and accounting), Financials Management, Services Management, Sales and Marketing, Human resource management, Travel and Expenses Management and Procurement & Sourcing modules of Microsoft Dynamics 365 ERP. He has experience working with the Dynamics 365, AX 7, AX 2012 R3, AX 2012 R2, Dynamics 365 for Operations and more.

You Need to Prepare for the ASC 606 Accounting Changes Now

If you’re a business owner, an accountant or even just working in the accounting field, you’ve probably heard all the chatter about ASC 606 (also known as FASB Update #2014-09 or IFRS 15) – “Revenue From Contracts with Customers”. Beginning in 2018 – or earlier if you choose to be an early adopter – the way you recognize revenue is going to change, regardless of your business (with a few minor exceptions) or geography, since you either need to follow FASB or IFRS standards. Private company? Yup…it applies to you too, only one year later. For some companies, revenue recognition will be accelerated; if your contracts are not properly written, it could be seriously delayed! Both of these scenarios can have a major impact on your financial performance.

So, what do you need to do to get ready?  How do you know if your ERP will move you into the future? Are you confident of GAAP compliance?

One of the keys is to understand the five-step process involved in recognizing “revenue from contracts with customers”, and ensuring your ERP can do the proper calculations to ensure your compliance:

  1. Identify the “contracts” with your customers.
  2. Determine the contract “performance obligations”.
  3. Determine the transaction price (or “standalone selling price” – SSP) of each performance obligation.
  4. Allocate the contract revenue to each performance obligation based on relative SSPs.
  5. Recognize the revenue upon satisfaction of the performance obligation.

Some portions of the five steps are not “systems” or ERP steps – for example, your ERP cannot apply the tests necessary to determine if your customer relationships result in a contract under ASC 606, nor can your ERP determine if the performance obligation has been properly satisfied, nor can it determine the standalone selling price of each performance obligation. These steps require your judgment. However, being able to separate out the performance obligations and allocate the revenue appropriately across them based on their SSP, are definitely steps where you should be able to rely on your ERP.  If your ERP is unable to do these calculations and proper revenue recognition steps, prepare to enter an “Excel nightmare” – massive spreadsheets to reallocate the revenue, Excel-based waterfall recognition reports, and manual journal entries to ensure your GL is updated on a regular basis. Doesn’t sound like much fun, does it?!

asc 606 accounting changes

If you are using Dynamics GP, your standard out-of-the-box GP installation is going to need some help. While Dynamics GP can separate the performance obligations, which are basically line items on an SOP document, it cannot reallocate the revenue. So what is the solution?

Binary Stream Software’s products – Advanced Recurring Contract Billing, Advanced Revenue and Expense Deferrals and Multi-Element Revenue Allocation are designed with both today’s standards and ASC 606 in mind. Providing you with line level billing and pricing control, line level deferrals and proper revenue allocation, they allow your ERP to function as a fully integrated revenue recognition suite, giving you the peace of mind that you are in compliance with the latest revenue recognition standards.

To learn more about how Binary Stream can help support you in your compliance of ASC 606, register for our webcast on Wednesday, February 15 at 2 PM ET.

Prepare for ASC 606 with Binary Stream
Wednesday, February 15th
2 PM ET

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