The new Microsoft Dynamics AX (AX7) and the Cloud

Earlier this year, Microsoft released the new Microsoft Dynamics AX, the most current version of their Enterprise Resource Planning (ERP) software. The new Microsoft Dynamics AX (which we’ll call AX7 for brevity) is a major release for Microsoft, as it is the first time its marquee ERP software is not just cloud-enabled, but cloud-first.  While Microsoft is scheduled release an on-premises version of AX7 some time next year, now is a good time to discuss why a cloud-based ERP is worth serious consideration. To ensure you have the tools you need to make an informed decision about the future of your ERP, we’ll break down into four key areas: security, scalability, availability, and cost.

But first, a brief explanation of what we mean by “the cloud”.  Since we’re focusing on the new AX7, we’ll only discuss Microsoft’s implementation of their cloud infrastructure, Azure. Azure encompasses a whole suite of services that vary from the simple “turn on a server in Microsoft’s datacenter”, to services as specialized as stream analytics for sensors in manufacturing plants.  The central line through Azure is that you use Microsoft’s hardware resources on the back-end, and you only pay for what you need.  This continues through with AX7, where Microsoft has leveraged Azure’s strengths to provide a seamless ERP solution online.

Security

The biggest question every business has when considering moving to the cloud is “will my data be secure?” This goes double when discussing critical financial and customer data that gets stored in ERP systems.  To make sure they’re more than equal to the task of securing your key data, Microsoft works with a myriad of partners to certify their security stack from physical access to their datacenters all the way to how data is stored at rest on their systems and who can access it. Microsoft’s compliance page has full details on its certifications and a deep dive into exactly how they secure every layer of Azure:   And Microsoft’s page specific to securing Dynamics AX in the cloud

But it doesn’t stop there.  Microsoft is working with FedRAMP, the US government’s cloud risk management agency, to validate Azure for even high impact government operations.

“The creation of the FedRAMP High-Security Baseline is essential in allowing agencies to migrate more high-impact level data to the cloud. Microsoft Azure Government’s Provisional Authority to Operate (P-ATO) from the FedRAMP JAB is a testament to Microsoft’s ability to meet the government’s rigorous security requirements.”

Beyond simple security, Microsoft has also made contractual privacy commitments with the EU and ISO/IEC 27018 to ensure that data is kept where it needs to be, and to help their customers comply with international law.

Scalability

Truly, one of the cloud’s biggest strengths is ease of scaling.  In a traditional IT department, scaling systems frequently mean buying more servers, provisioning space in your data center, migrating existing applications to new systems, and trying to minimise the negative impact on end users while managing all this.  And this is before we discuss the possibility of outgrowing a data center itself and having to go through the difficulty and expense of building another.

Compare that with Azure, where you simply purchase more of what you need, and it’s there almost immediately.  If you require more storage, open Azure, choose your storage, and buy more.  If you prefer, you can even allow Azure to scale automatically, so you don’t have to manage manually adding storage and time for your needs.  And this scales to user applications like AX7 as well.  Simply add a user to enable them.  Don’t worry about whether or not the server has enough RAM and CPU overhead to support more users on a system; Azure already handles that when you add them.  There simply isn’t a point where your company would ever have to worry about moving servers due to growth when you’re in the cloud.

Availability

While security questions tend to get the most attention when discussing moving to the cloud, availability tends to cause the most heartache.  Nobody wants to be in a position where their key systems are down, and there’s no recourse. There’s comfort in knowing that you have a “throat to choke” if something goes down, and you can access IT directly.  While this is a comforting concept, it doesn’t solve the problem of downtime.

The reality of the situation is that most internal IT groups have worse uptime than enterprise-class clouds, such as Azure.  Many internal IT organizations are underfunded and overworked, making truly reliable uptime something hoped for, instead of something planned for.  When uptimes of greater than 99% are needed, that frequently means multiple redundancy levels inside a datacenter, from hot-swap servers all the way to full off-site disaster recovery.  When many companies balk at the cost of a single server for an application, purchasing three or more becomes an impossibility.

Compare this with Azure, which includes Service Level Agreements (SLA) to back their uptime guarantees.  Specific to AX7, Microsoft offers a 99.5% uptime guarantee, which refunds a sliding scale of the monthly subscription cost whenever they fall below these safeguards.  While there are limitations to these SLAs, as they only cover the cost of the subscription and not the direct impact to your business, it’s far better than nothing, which is generally what comes with internally hosted systems.

But let’s reverse this concept and look at it from the end-user perspective.  With the new Microsoft Dynamics AX, suddenly it becomes a lot more possible to do work from anywhere.  Working from home, or on mobile, are much more common than they were even a few years ago.  And while both were technically possible with on-premises deployments of Microsoft Dynamics AX 2012, they weren’t easy and required access to internal company systems.  That meant another potential point of failure, as if the office or data center network went out, they could not access those systems at all.  By bringing Microsoft Dynamics AX to the cloud, office connectivity no longer has to be possible weak link in the chain. And for your users on the go, things like time entry and expense tracking are that much simpler when they can simply input them from a mobile device.

Pricing 

And, of course, we have the “brass tacks” question, how much does this thing cost?  As there are various license offerings and types Microsoft has for their ERP software, we won’t get into exact prices here. eBECS does offer a “Microsoft Dynamics AX Pricing Guide“ download the report here. We will, however, discuss the fundamental differences in how an on-premises version of Microsoft Dynamics AX is licensed versus the new Microsoft Dynamics AX in the cloud.

The most obvious difference is that instead of requiring a capital expense of buying licenses (including user and server licenses) up front, cloud subscriptions provide the advantage of turning that investment into a monthly operational cost instead.  Combine that with the added flexibility of being able to turn users on and off freely, and already becomes easier to handle.  These differences are more obvious if your company deals with any kind of seasonal employment, too.  In a traditional licensing scheme, you essentially have to buy enough to handle your peak users.  This isn’t ideal, as some of your purchased licenses sit idle part of the year.  With the subscription model with AX7, you only pay for those annual subscriptions when you actually use them.

There is a less-obvious difference, though. We’ve touched on it a little above, but they’re the indirect costs of managing your servers.  From the cost of the physical servers themselves to the datacenter, to the power to run the servers, having the physical devices themselves becomes much like having licenses.  You have to buy for peak use, meaning your buy-out isn’t optimized, and you’re leaving money on the table.

And this translates to your IT people, as well.  Every hour spent fixing a server that’s down is an hour IT isn’t being proactive about helping business get done.  The IT division, at its best, is the technology enabler that brings improvements to the rest of the company.  But if your division is stuck fixing servers all day, and looks like nothing but a cost center to the business, it can never grow out of that reactive state.  Allowing IT to focus on services instead of just hardware means that money spent on them is an investment in company future, instead of simply a cost on where your company is now.

What’s My Takeaway?

In short, Microsoft’s Dynamics AX in the cloud provides an excellent opportunity to focus on what your business does and offload the rest.  Of course, this doesn’t mean moving to the cloud is the right answer for everyone.  A proper assessment is critical to determining if both your company and your data is ready to move online.

eBECS fully embraces this new cloud proposition for the new Microsoft Dynamics AX and is willing to help you take your business through this education process and journey.  We have put together a few offerings that help both existing Microsoft Dynamics AX customers and those interested in Microsoft Dynamics AX using a different platform today.

For those interested in upgrading to the AX7 from a previous version of Microsoft Dynamics AX, we offer a 2-day on-site assessment to work together with your team to understand your goals and come up with the best approach to an upgrade

For those new to Microsoft Dynamics AX, we offer a full proof of concept that shows you exactly what you would get with Microsoft Dynamics AX and eBECS as your implementation partner