Microsoft's Dynamics 365 Business Central: What IT pros need to know

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  • Mary Jo Foley
    Mary Jo Foley

    Our next MJFChat, scheduled for Monday September 30, is between me and Microsoft Business Applications MVP Erik Hougaard. The general topic of our chat is what IT pros need to know about Microsoft’s Dynamics 365 Business Central offering.

    What questions do you have for Erik about the Business Central ERP product for SMBs and/or Microsoft’s Dynamics 365 strategy and line-up? No question is too big or too trivial. I’ll be chatting with him on September 30, and will ask some of your best questions directly to him. Just add your questions below and maybe you’ll be mentioned during our next audio chat.

    Brad Sams
    Brad Sams

    You can find the audio version of the podcast, here.

    Mary Jo Foley: 00:00 Hi, you’re listening to MJFChat show. I am Mary Jo Foley, AKA your community magnet. I’m here to interview tech industry experts about various topics that you, our readers and listeners want to know about. Today’s MJFChat is going to be all about what IT pros need to know about Dynamics 365 Business Central. And my guest today is Erik Hougaard, Microsoft Business Applications MVP. Thanks for joining me, Erik.

    Erik Hougaard: 00:39 You’re welcome.

    Mary Jo Foley: 00:40 I want to give a little introduction to what business central is, but I’m going to let you definitely do a lot more explaining beyond what I’m going to say. So let me do a little high level set here. When I think of Business Central, I think of it as an ERP system from Microsoft and the successor to Dynamics Nav, which quite a few years ago was called Navision.

    Mary Jo Foley: 01:05 It’s primarily targeted at small and midsize businesses and meant to help them manage their business. That’s why it’s an ERP system. I know you know a lot about this because you just finished writing a book about this, “All About Implementing Business Central, Your Field Guide for Dynamics 365 Business Central” is the name of it. So let’s start at a really high level and then zoom down into product specifics. Let’s talk about just dynamics in general, and kind of where Business Central fits in from your perspective and how Microsoft is evolving its Dynamics vision.

    Erik Hougaard: 01:48 So Dynamics kind of have been the label that Microsoft has put on all the business offerings. From my perspective, perhaps a bit more confusing than helping. So there was a bunch of applications that are all named Dynamics Business Central is of course one of them. The one that’s close to my heart. Business Central is just the next version of Nav. So Dynamics Nav, the last version we had that was Dynamic Nav 2018 instead of getting Dynamics Nav 2019, we’ve got Dynamic 365 business central. I think that the primary reason for the name change was the fact that this was now both a cloud offering and a on-premise offering. The dynamics moniker is kind of confusing because we used to have so briefly, Business Central was also known as Microsoft Dynamics 365 for finance and operation business edition, the longest products name you can imagine.

    Erik Hougaard: 03:05 And other products, the old Dynamics AX was known as Microsoft Dynamics 365 Business for Finance on operation enterprise edition. Two completely different products with almost the same name. On top of that, there are the other members of the dynamic family does the one that’s often just gets to use the just Dynamics, which is the, the Dynamic CRM product now called, Customer Experience Dynamics 365 for Customers Experience, which is the old CRM product. And the old CRM product has kind of been split into different areas. So hence the new naming scheme. Still also part of the Dynamics family, even though they’re from a technology perspective, none of these are really connected at the lower level. We have Dynamics GP, which is the great plains product. And we have Dynamics SL, which is the old Solomon product.

    Erik Hougaard: 04:19 No body talks about the last one ever. But GP is out there getting new versions and is still thriving. So the landscape is very confusing and for the longest time, people would just say Dynamics and you have to figure out, okay that guy used to be an AX guys, so he’s talking about it’s a price division and this guy girl was in a CRM. So that’s why she’s probably talking about CRM and so on. But now, especially when we would business sense or we don’t no longer say Dynamics, just say business central. The dynamics 365 for finance on operation business. Oh, sorry. Enterprise edition is now just called FNO, financing operation. So the Dynamics name is kind of taking a back seat suddenly.

    Mary Jo Foley: 05:18 Yeah. You know, it’s interesting because I was saying this to someone recently. I’ve covered Microsoft almost 30 years and of all the product lines at the company right now, the one I have the hardest time keeping up with is Dynamics. And I think part of the reason is because the names do keep changing and the licensing is changing and the pricing is changing. But Microsoft seems to want to kind of gloss over that because they always say, you know these are products for business decision makers and they don’t need to know all these things that you’re very obsessed with in terms of, you know, how we’re doing something in a product line and how we’re not doing it in this other product line. But I dunno, I talked to partners and I talked to people like you, and I’m glad to see, I’m not alone in being very confused.

    Erik Hougaard: 06:09 I understand that, but there are of course great integration between them. So When I’m inside Business Central, I can read and write data from the CRM product as if it was my own database. There are great ways of doing a integration. One of the more publicized ways is, well it has many names right now. It’s called the CDS, the common data service.

    Mary Jo Foley: 06:50 Let’s come hold on that one. Let’s hold, cause that’s a topic I’ve also been trying to make sure I understand. CDM CDs. So hold on to that thought. Let’s stay high level first. So you, you talked about the names. I know as of tomorrow, October 1st Microsoft’s changing yet again. Some things around the Dynamics 365 licensing. They’re doing away with some of the plans, quote unquote, that they have been selling and it seems like they’re moving from this one size fits all approach to more individual app based licensing. How does that affect business central? Does it at all?

    Erik Hougaard: 07:32 No, not really. It looks like our license model is more or less the same. They have recently added a new license side, which is a device license. So the foundation in Dynamics licensing now is basically Office 365.So, just like you, you get a license to run Office or Visio or any of these things, you also get Dynamics licenses through the same portal. That means of course, that uses our, what in in the technical terms are unnamed users, which is a change from when, when in in NAB where we worked with concurrent users. So you will license your system to 25 users and that will mean 25 concurrent users no matter how many people you created in the user table. Now it’s named users. That has been a challenge in certain scenarios like a point of sale, shop floors and stuff like that where you have a machine that will get operated by multiple people.

    Mary Jo Foley: 08:58 Sorry, does that mean that’s device model based?

    Erik Hougaard: 09:02 Exactly. So you can get a device license for, for Business Central for the point of sale market, which is actually quite big. Nobody really knows that. But one of the most successful add ons created for business centrals are actually point of sale systems.

    Mary Jo Foley: 09:27 Okay. Huh. I didn’t know that. Alright, interesting. One other high level question, when you think of who is Microsoft’s biggest set of competitors right now for business central, who do you consider to be in that group? I mean, whenever I think of who competes with Dynamics, I always think of Salesforce. But I know in the SMB space there may be some additional players too, right? Like maybe NetSuite is in there.

    Erik Hougaard: 10:01 Netsweet is certainly in there. Sometimes the Dynamics products also just competed with themselves, I guess the old IBM marketing model, right. But of course the offerings in the very low end, like a QuickBooks and stuff like that. We see them. It’s interesting because every big company usually starts out as being small. So when you’re just one or two people and you’re starting your new business these ERP, enterprise resource planning, might not be the right fit for a small business. So at some point you need to upgrade your ERP system, the system that basically controls your company. Of course QuickBooks and other offerings in that area will try to keep the customers because Hey, now they’re getting more users and more complicated. So now they are actually become very good customers or have so that they are trying to retain users on that level.

    Mary Jo Foley: 11:33 Yeah. That’s funny. It’s funny you say they compete mostly with themselves because for people who, listening to the chat who may not know the history, which Eric knows better than me, Microsoft bought all these, he was referencing earlier in the chat, all these different ERP and CRM companies, they bought exact and division. I’m Solomon. And then at one point, I forget how many years ago this was, everyone thought they were trying to kind of mix them all together and made it make a common platform, but continued to sell the four different lines. It was this thing called project green that Microsoft was trying. Yeah. Do you remember that?

    Erik Hougaard: 12:08 So Microsoft bought Navison in 2002. Navision Had two products. They had the product cultivation and the Axapta and those two turned into Nav and AX. My strange accent is because I’m actually Danish. But going back to that time in Denmark, just before Microsoft, bought Navision, Navision was actually the product of a merger between the old organization and a company called Danguard who created Acceptor. And Navision and Acceptor used to be the fierce competitors. Those were basically the two ERP offerings in Denmark. They had together, they had almost entire market, and you know, suddenly they emerge, and I could start making quotes from Ghostbusters and stuff like that, but it was really, really strange. But of course, the intention was to be attracted to getting bought by one of the big players and it turned out to be Microsoft.

    Mary Jo Foley: 13:28 Yeah.

    Erik Hougaard: 13:29 And then they bought Great Plains at the same time almost and project green started with, okay, let’s, let’s take all the things that we have, merge them together and create one product to rule them all. But it doesn’t really work that way. So in the end they could not create something that was better than the individual offerings, right. Because the different products cater to different types of customers. So different scenarios and I don’t think we see that very often now in the IT industry that the one solution to cover everything doesn’t really work anymore.

    Mary Jo Foley: 14:16 That’s right, that’s true.

    Erik Hougaard: 14:17 People are much more, they rather have the right solution for solving one problem. Then do integration and data exchanges and stuff like that. And rather, than trying to get one solution to all problems, it doesn’t exist.

    Mary Jo Foley: 14:36 That’s true. The old days, I think people did think that was a better idea, you know, just have one overarching solution. Then you could update the code base thing one time. I agree with you that people have, maybe they’ve become more sophisticated or the is, I don’t know.

    Mary Jo Foley: 15:27 But anyway, we were talking about the history, just the whole mess around that and, and such, but I think we’re good on that topic. Now I want to get a little more specific into Business Central. We know it’s an ERP suite. We know it’s mostly geared toward SMBs. I’m curious about some of the bigger parts that Microsoft is trying to work into the Dynamic Suite and how they apply or don’t to Business Central. So one of them is something that you raised at the start of the chat, which is the Common Data Model, Common Data Service. I wonder if you could explain that a little because I have a terrible time explaining it and um, whether and how it applies to business central.

    Erik Hougaard: 16:54 The easiest explanation is to give it a different label and call it a data warehouse.

    Mary Jo Foley: 17:01 Okay.

    Erik Hougaard: 17:02 So this common database that goes across certain offerings, you can use that to replicate data from one system to another. And you can use that to as a basis for creating reports that goes across systems and so on. Business Central is not a very active participant in the CDS.

    Mary Jo Foley: 17:35 Do you think it will be? Or is it not the right product for being part of that?

    Erik Hougaard: 17:42 I’m certain that it will be, but, but maybe reality has also caught up with the whole need to app actually replicate the data because if I power up Power BI today, I can grab data from Business Central and I can grow up data from CRM and I can grab data from a ton of the third party applications and Power BI will do the magic behind the scene without actually the need for this data warehouse concept. So all the things that we want to do, we can already do them without actually being I would say a first class member of the CDs.

    Mary Jo Foley: 18:35 Okay. Do you think at some point Microsoft will make changes to try to encourage more of the Business Central users to use CDs?

    Erik Hougaard: 18:46 Certainly, certainly because there’s a lot of, there’s a lot of intriguing options here that actually has nothing to do with your P or CRM, but has to do with the rest of the Microsoft stack. Meaning that when you in Excel to be able to just, Hey, I want to grab our employee list, I want to grab our items or if you are in Word and want to do a merge mail merge thing or if you’re in Outlook andyou need the email address of a certain customer and so on. So the CDs is, I think it’s a very interesting offering to enrich the rest of the ecosystem with all the knowledge because that’s one of the things that, that ERP systems has often been being looked down upon. That is it usually very close. So there’s lots of information inside the ERP system, but sometime it can be really hard to get to it. I think the CDs has the promise of liberating a lot of data and making it available broadly. I can see a lot of a neat solutions based on that.

    Mary Jo Foley: 20:14 What about Power Platform? You know, Power apps and flow and Power BI, do those have direct connections to Business Central the way they do some of the other Dynamics apps?

    Erik Hougaard: 20:25 Yeah. So the Power Platform is fully integrated with Business Central. Well Power BI is not only integrated that way, but actually inside Business Central we have power BI reports directly available. So when you start up, if you sign up for a trial version of business central, and first time you log in on the, the front screen there’s actually a report right in the face. So it’s really well integrated. Two or three years ago at Built they announced the Power BI embedded edition, which Microsoft is certainly using themselves a lot. So the fact that you can, you can embed power BI into our products that’s being heavily used now.

    Mary Jo Foley: 21:22 Okay, that’s good to know.

    Erik Hougaard: 21:24 The very neat thing about the power platform is that they have separated what they call the connectors out to be a kind of a common thing. So as long as there was a connector to a certain data source, that connector can be used both by Power BI and Power Apps and Flow. It just works. It’s really neat.

    Mary Jo Foley: 21:55 Hmm. Nice. Okay, that’s good to know about. Let’s delve into some of the topics you talk about in your new book about Business Central. I was looking through your table of contents and I saw one that was very interesting to me. It said, how do you customize Business Central the right way? And I assume that means there’s a wrong way too, what would you suggest to people thinking about that?

    Erik Hougaard: 22:22 That’s a loaded headline. Navs role to fame has been its ability to be customized. Any software can fit a company that is really operating textbook, but as soon as soon as somebody is doing something unusual, then they need software support to support unusual. That means customization somehow. And Nav, because the way Nav is constructed is actually that Nav at the lowest level is just a development environment. That was one compiler and all the development features and Nav is then actually written in itself. And so, so is Business Central is just a new version of nav. So we as consultants and developers, we had have the ability to change everything in Nav.You could say that it’s open source, but that’s really not the right term.

    Erik Hougaard: 23:37 Although there are actually now with this central moving to a lot of the stuff, are open source. But we change anything and we did, there are customers out there running Nav with a totally customized system that is so different from what Microsoft offers that, it’s hard to imagine. The problem with that is that it’s very very difficult to operate, right? Because if you have customized the system really, really heavily and then you need to apply all those customizations to a new version, which is expensive and takes time. And so a lot of customers have been stocked on old versions, you cannot take that concept into the cloud because when you’re in the cloud, you need to update regularly to just, you know, security fixes and competitive things and you need to keep all your cloud tenants more or less the same for you.

    Erik Hougaard: 24:44 You’re not really supporting 25 versions in the cloud. You need to support one or two. Right. So Microsoft came up with a new way of doing customizations in business central that would allow operating without breaking customizations. And the other way around would allow customization that will not break the base system. But there are some unique differences that you need to think about when, when you’re actually doing customization. You need to work with the system, not against the system. But the new development environment, which is now actually based on Visual Studio Code and it’s very modern compared to what we used to have is really really good. I have yet to see something that cannot be done in the new system that we can do in the old system of things, we should do because there are a lot of stuff that, that we did in the old versions that we shouldn’t do. In reality that was a bad mojo.That was not good.

    Erik Hougaard: 25:58 I guess it’s evolution. The book covers that. Also there’s a bunch of things that customers can do before actually turning to a developer and consultant and getting real customizations. The system is highly customizable just from a customer perspective.

    Mary Jo Foley: 26:31 Ah, interesting. Okay. Then you also have a chapter in there I saw about whether to deploy Business Central in the cloud or on prem. I wouldn’t have even, I guess I wouldn’t have even considered the possibility of putting Biz Central on prem only. But I guess there must be some reasons you still might want to do that.

    Erik Hougaard: 26:52 Well first of all it’s the same product, that’s quite unique. I don’t think there’s actually any other offering , I know of, where the cloud offering and the on prem offering is the same piece of software, the exact same bits that will power and an on-premise, is also what powers Microsoft’s cloud, which that’s quite unique. From a technical perspective, Microsoft offers the existing Nav installations that are running on prem have a operate path so they can just upgrade to Business Central on prem and continue to work the way they used to. And at some point they can move to the cloud when they’re ready, if they want and all that. But there are, there are still some scenarios where cloud is just not an option.

    Erik Hougaard: 27:54 Cloud needs connectivity. So there are still a lot of places where connectivity is not that great.

    Mary Jo Foley: 28:02 True.

    Erik Hougaard: 28:02 I know of several nav installations running on cruise ships. Just an interesting, interesting example, where there’s no connectivity. There’s also still people who believe that it’s safer for them to run the system offline.

    Mary Jo Foley: 28:31 They may have certain compliant requirements.

    Erik Hougaard: 28:31 Yeah. Yeah. There are certain things that we cannot do in the cloud, that we are allowed to do on premise installation. So when we’re running in the cloud, we are of course not administrators on Microsoft server in the cloud. So we have those certain things that we cannot do, from a technology perspective that we allow to do on-premise.

    Erik Hougaard: 29:09 Because Hey, we can, we can write a file to a server if we’re running on-prem, we cannot write a file to a server in Microsoft cloud because that’s not our disc system. And if so there are certain technical scenarios where, okay, on-premise actually smarter, but I think with the release in the spring, the April release, cloud became default. So cloud is default. What would be the reason to go on-prem? I think the question flipped at that point where people before they were thinking, okay, on-premise default, what could be the reason to go and into the cloud?

    Mary Jo Foley: 29:55 Yeah.I see.

    Erik Hougaard: 29:58 But these systems like one of the reasons that Office 365 rose to fame was the fact that exchange was becoming bigger and bigger and more and more complicated. So if you had a couple of hundred users, you will suddenly have 7, or 8 exchange servers running to cover the entire functionality. And they were really, really complicated. And if you have seven, eight servers, then you need to a guide to maintain them and all that. So with the pieces and it goes the same way that you have a bunch of things that need to be configured and kept running and so on. So it from purely from an IT Pro perspective, Hey, let somebody else handle this and I’ll just maintain my users and all that through the office admin, just like I basically maintain my exchange server that Microsoft is, is keeping running.

    Mary Jo Foley: 31:03 What, what about the wave two set of features that start rolling out in October for this next set of features coming to Dynamics 365? Is there anything specific or something you want to highlight? That’s about Business Central that people should be thinking about deploying over the next few months that they don’t have now.

    Erik Hougaard: 31:23 So, so Business Central wave two is interesting from a tech prospective that this is the first version where Microsoft has actually switched the development of the base product from the old development environment to this new one. But in the same time, they’re also actually, stop supporting the old windows clients are now the web client is declined. So from a tech basis, we’re getting rid of a lot of legacy staff and then it’s 100% full fueled by the new tech. That has been the biggest change in that we’ll see tomorrow in wave two. But an end user will not really see that because who cares? But compiler compiled the system from that aspect. What end users we’ll see tomorrow is a bunch of productivity changes, fixes, improvements. So the system is faster, the system is slicker, there are more keyboard shortcuts. The client experience has really been improved and, it’s just way more pleasant to work with. But, but from a feature perspective, looking at purely from the end user point of view, it’s not a big release. The effort from actual Microsoft’s side has really been on making this technology change.

    Mary Jo Foley: 33:16 Okay. So last question for you. What else, if anything that we haven’t talked about do you think is important for IT Pros specifically to know about Business Central?

    Erik Hougaard: 33:30 I think that the most important thing to know is a small website called AppSource. So, so the way it happened going back just a couple of years is that whenever you wanted something different in your system, you would contact me ‘oh Erik, I need the system to do this.’ And I would figure out if somebody else had a product that I could kind of use for that put onto the system or I would program that functionality and give it to the customer. Now we have AppSource and AppSource is basically as the noun suggest an app store for Business Central. It works just like on your phone. You click the marketplace and you scroll browse and then so that’s a nice app. You click on that, it will install it into your system and it’s there ready to go. If you don’t like it, you remove it again. So there’s a whole new way of getting features into your system, third party features, without all the hassle, without any technical operations. So on. And I really think that going forward, this will completely change the way that people look at their ERP system. Because, ‘Hey, I have a credit card processing feature in and I don’t like it. There’s another one in AppSource, let me try that out.’ That would never happen in the all old on prem world.

    Mary Jo Foley: 35:20 Right, right. The whole idea of using an app store to add things into ERP and CRM, it’s very different from like adding it onto your phone as a phone app. Right? I mean, at least conceptually it is different.

    Erik Hougaard: 35:33 People need to get the heads around that, that suddenly what they used to on the phone, they can actually now do in their business applications.

    Mary Jo Foley: 35:42 Right? Good point.

    Erik Hougaard: 35:45 So I think that’s the most, I really like it and what I’m doing and lots of other people are doing right now is of course that we’re either, it’s already there or we can only adding our IP to AppSource to make it available this way. This is only gonna accelerate just like the, the app store has done on, on most platforms.

    Mary Jo Foley: 36:16 Right, exactly. We won’t bring up the ones where it has not been great. Well thank you so much for doing this chat with me, Erik. I think it’s really great to have somebody who’s an expert on Business Central and Dynamics to join in and very much appreciated.

    Erik Hougaard: 36:32 Thanks for having me.

    Mary Jo Foley: 36:33 You’re welcome. So we’re gonna make this chat available very soon in audio form and the full transcript. Just go to and about. I’ll be posting the information on Petri and that will be your signal listeners to send in any questions you might want to ask before we do the chat. All you have to do is go to the MJFChat area in the forums on and submit your questions there. And in the meantime, if you or someone you know might be a good guest for an MJF chat, please do not hesitate to drop me a note. My contact information is available on Petri. Thanks again.

    • This reply was modified 5 months, 3 weeks ago by Brad Sams Brad Sams.
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