Microsoft Dynamics 365 Business Central is an agile ERP platform that allows small to medium-sized businesses (SMB) to enhance, grow, and scale their operations, allowing for enhanced user and end customer experience. A recent study by Forrester drilled deep into the numbers to report on the costs and benefits of Dynamics 365 Business Central - with an eye to helping SMBs make the proper choice for their business.
The Challenges SMBs Face with Aging, On-Premises ERP
Small to medium-sized businesses can face a wide variety of challenges when it comes to their ERP solutions. Companies operating on-premises ERP solutions are tasked with navigating issues pertaining not only to bottom-line costs but also non-quantifiable challenges, such as user and customer experience.
One of the key issues businesses using aging business management systems must deal with is the operating costs of utilizing on-premises ERP. Between the physical space required to house servers and other equipment, continual maintenance, and the need to pay for on-site training for employees, legacy systems costs can make up a large percentage of a company’s IT expenses. In addition, the costs of legacy systems often lead to businesses being unable to afford to equip their users with the top-of-line tools needed to achieve maximum functionality and efficiency, leading not only to frustration for users, but increased costs in time and effort.
In addition, businesses reported struggling with the inherently separate nature of legacy ERP. With different systems controlling different aspects of the business, interoperability is next to zero, and decision makers are often faced with incomplete, siloed information. This lack of interoperability also led to increased redundant work for users, as they could not access other systems containing the same data.
Scalability was another challenge reported by businesses using legacy systems. Businesses operating with on-site solutions faced difficulty in meeting the need to expand their user-base as the business grew, citing both cost in increased user access and training time, as well as the technical limitations of many legacy systems.
The Costs of Change
Upgrading to a new ERP platform is a sizable investment for any business. Upgrading from a legacy, on-premises solution to Business Central involves an initial expenditure, but one that is far outweighed by the benefits of an agile, modern ERP platform.
Key costs to consider:
- Licenses for users
- Training time
- Implementation costs
- Potential downtime
While implementation costs are largely one-time, recurring costs for subscriptions should be factored into any decision-making process. Dynamics 365 BC charges per-user per-month, a recurring cost that should therefore be planned for. While these costs can rise over time, they are linked to the scalability of the business, expanding as the need for more users grows.
The Bottom Line- Benefits and Return on Investment
With these challenges and costs in mind, the report concluded that Microsoft Dynamics 365 Business Central delivered impactful benefits in both quantifiable and non-quantifiable ways.
Cost Savings with Business Central
Cost savings were abundant across several departments. Thanks to BC’s all-in-one nature, users were able to do work across multiple departments, lowering the need for new hires as it scales. By allowing its current users to do more and operate more efficiently, businesses reported projected savings of close to 300k over the span of three years when compared to legacy ERP.
Businesses also saw significant savings by eliminating third-party fees, most often in the form of external reporting and consulting. Because of the siloed nature of legacy ERP systems, reporting capabilities on a business-wide scale were limited, if not non-existent, leading to outside organizations being needed to gather and present reports. Consultants are often retained by businesses in order to advise them on strategies to maximize efficiency and connectivity between disparate systems, as well as ongoing support and upkeep, and any upgrades required by the legacy platform. Thanks to Business Central’s status as a complete, agile ERP platform, the outside vendors are no longer needed for reporting or strategy, allowing businesses to save an estimated 86k over the three-year span projected in the report.
An additional savings of over 60k was estimated because of a reduced need for internal IT support.
Business Benefits of Business Central
In addition to cost savings, businesses reported both quantifiable and non-quantifiable benefits after switching to Dynamics 365 Business Central.
Employees reported a massive decrease in time spent reconciling data from disparate systems.
The ability to automate functions within BC also led to direct productivity increases across multiple departments, with one department estimating the increase at 30%. Another noted that automating label creation saved their company roughly twenty hours a week in what would have been manual labor while simultaneously lowering the chance of labeling error to near zero.
Other benefits were not directly quantifiable but were equally important to businesses.
Several organizations reported introducing new sales channels, such as online stores, thanks to the easy interoperability of Business Central.
Businesses also reported an increase in their ability to take on new customers beyond levels they could previously support, allowing for growth with no drop-off in customer service or user experience. Businesses also reported that having a modern, agile ERP platform with the power of Dynamics 365 BC was a draw for new customers in and of itself, allowing them to stand out to potential new customers in a crowded marketplace.
These cost savings and increases in revenue allowed businesses to repay the initial investment in the platform quickly, with the average reported timeframe for payback being seven months. Return on investment (ROI) was reported at 172% over a three-year period, a staggering number.
Important Numbers At A Glance
- $75k in implementation costs, with roughly $40k in subscription fees and maintenance yearly
- Average of 9-18% productivity increase across different departments
- Estimated cost savings of over $150k across the business over three years
- Emphasis on streamlining and automating systems, data visibility, and expanding sales channels
- Payback achieved in just seven months
- 172% ROI
Positioning Yourself for Success
Businesses have myriad choices when it comes to ERP platforms, and upgrading or switching is a sizable investment, both financially and in time. The numbers are clear, Microsoft Dynamics 365 Business Central offers SMBs the chance to increase savings, maximize efficiency, scale with the business, and generate increased revenue. Talk to an expert to get started today!
