Microsoft Dynamics AX 2012 has been a popular and viable ERP platform for the past five years. Following the release of the next generation Dynamics AX (initially known as AX 7, now named Dynamics 365 for Operations) in the fall of 2016, we started seeing an interesting trend in which a segment of Dynamics AX companies is opting to delay their migration to Dynamics 365 for Operations. Their hesitation – or perhaps watchfulness is a better word – comes from many angles.
Over the last several years there were a number of announcements about, and even early access to, what was known as AX 7. This new release generated a lot of excitement in the community, and appeared to be destined to meet a lot of desires for deployment options, functionality, cost and manageability. When rumors began that AX 7 would be delayed, the community thought, “There must be a lot of work going on, we’ll just wait and see.”
Then Microsoft announced a product named Dynamics 365 (now known as Dynamics 365 for Finance). It was not based on Dynamics AX, which raised the question, “What will happen to AX 7, and will it become part of this new Dynamics 365 portfolio?” This initial Dynamics 365 didn’t look like AX at all; it was more SaaS-like, without an on-premises option. Yet it had bundling and packaging similar to Office 365.
Then when Dynamics 365 for Operations was announced as the next generation of AX, it was initially defined as a SaaS platform, and as Azure-resident only. Some customers were OK with that because they were already moving toward SaaS or were leveraging Azure as a natural progression. After all, as they were following the AX 2012 trends and the AX 7 announcements, they were beginning to see this progression toward a “SaaS-first” model from Microsoft. However, those in industries where the business application needs to be very close to part of the business, like on a shop floor, in a warehouse or call center, were not sure they were ready for Azure, much less a SaaS model. Additionally, the first release of D365 for Operations was for new implementations only, leaving AX 2012 shops to wonder if they needed to re-implement or wait a couple of years.
The uncertainties just kept building. From the name change to the new suite, the deployment model trends and so forth. And for a long time, there was no statement from Microsoft saying, “Here’s how we’ll take care of you,” they just kept forging ahead. Even now, though Microsoft has provided clarity on the migration paths and deployment options, conservative companies are still being, well, conservative.
Customers will choose the most stable product path
The initial release of Dynamics 365 for Operations runs in Microsoft data centers, with administration and management of the product delivered by Microsoft. Most know Microsoft’s “managed services” from their Office 365 experience, but there is doubt that the same support model is sufficient for something as complex as ERP. So, a segment of customers is waiting for assurance of the product’s stability, delivery model and support structure.
At the same time, Microsoft has extended support timelines for AX 2012 to the 2020/2021 timeframe. They have also committed to producing updates, bug fixes, legal changes and tax code updates for several years, which leaves customers noting that, “Even Microsoft thinks it has to support AX 2012 for a while because Dynamics 365 has to stabilize. If they’re going to support AX 2012 until 2020/2021, why would I rush forward?”
It’s a fair question.
Waiting does not mean standing still: stability engagements and AX health checks
OneNeck has seen an uptick in what I would call stability engagements and health checks of Dynamics AX installs.
Many customers we talk with want to ensure that Dynamics AX 2012 will continue to last — and be solid — for three to four more years. These customers are often looking to ensure the longevity of their current ERP platform in order to allow the new D365 for Operations offering to stabilize. That has them asking, “Is my application environment tuned well enough? Is there an opportunity for me to invest in the underlying technology platform?” With the advances in technology, faster storage, a faster compute and faster networking, this is certainly a great question.
Those customers that are on the early releases of AX 2012 wonder if, because Dynamics 365 for Operations functionality is based on the later releases of AX 2012, they can leverage newer AX functionalities in the near term, such that the move to D365 for Operations is more of a purely a technical upgrade rather than a re-implementation or major change in functionality.
In either case, customers know that leveraging standard functionality and the core Microsoft code base, reducing their customizations, and doing what they can to perform data cleanup, will reduce the migration workload later. Many customers found the requirement to customize the early releases of AX 2012 to meet their business needs. Now, they are analyzing their environments and looking for opportunities to leverage standard “vanilla” functionality so they can minimize the possibility of code upgrades and customization re-writes.
Cloud & Azure Migrations
Regardless of what customers determine they need to do to stabilize or prepare their ERP environment for the future, the D365 for Operations release has renewed their need to understand and analyze potential deployment options.
These cloud options shouldn’t be new to AX users, but let’s review them quickly, and then explore the benefits and implications of each for Dynamics AX:
- A hosted private cloud, such as OneNeck’s ReliaCloud. We essentially take infrastructure that is very similar to what would be installed on-premises, install it in our data center, and provide administration and management of the platform. That’s a very popular model across ERP platforms, and has done well in the Microsoft space in particular.
- The Azure public cloud. One way to think of this model, is as a next generation hosted private cloud, in which you use a Microsoft data center and Microsoft hardware.
- A hybrid cloud, with some applications and modules on-premises and some hosted; or, that hosting split between two or more locations.
The OneNeck customer Sunny Delight Beverages is an example of a customer leveraging Dynamics AX in a hybrid cloud environment. They are also an example of a company who has teed itself up for a smooth migration to Dynamics 365.
Since 2004, OneNeck has hosted Sunny Delight’s Microsoft Dynamics AX 2009 implementation. More recently, Sunny Delight decided to implement Dynamics AX’s Warehouse Management module in place of a third-party application. But, they wanted the superior capabilities of the AX 2012 WMS over that of AX 2009.
Their options were either a full upgrade from AX 2009 to 2012, or implementing just the AX 2012 WMS functionality as a separate installation and then integrating the two. They had a tight project timeline (three weeks), and saw that second option as more expeditious.
They also wanted to take advantage of the public cloud, Azure specifically, but wanted the continuity of support from a single partner. Today, OneNeck is essentially leveraging Azure’s compute and storage capacity that Sunny Delight has provisioned. In addition, OneNeck provides Sunny Delight with the administration and management services for the implementation, as well as go-live support after.
Sunny Delight was motivated by improved WMS functionality in Dynamics AX 2012 over AX 2009, but also saw it as a launch pad for a D365 for Operations future migration. That should be an easy migration, as the 2012 WMS offers the same functionality of Dynamics 365, based on the information we have from Microsoft today.
Is there such a thing as “too customized” or “too many add-ons for the cloud?”
Customers with highly-tailored environments or ones with a lot of third-party extensions (or “shoulder applications”) tend to stay on-premises if they are OK with staying in the data center business and the resultant capital expenditure. Those customers are also very well suited for working with a partner like OneNeck for a hosted private installation, where we can run both AX and all of those complementary applications on one platform.
It’s when you get closer to Azure that the game changes. Where we’re leveraging Azure capacity, you have a decent amount of capability to run and tailor AX, but not all shoulder applications are Azure-friendly. If those shoulder applications are vital to you, then a hybrid environment of Azure and on-premises is certainly possible but more complex — performance, network and integration wise.
So, if your business is a highly-tailored Dynamics AX environment, on-premises and hosted private environments are very well-trodden paths. As you get closer to leveraging Azure data centers, as some companies have done, a lot of uncertainty still exists.
Dynamics AX users are simply not used to uncertainty. They depend upon AX to be highly reliable, and upon Microsoft to develop and support AX with vigor. Regardless of how confusing the roadmap to Dynamics 365 is, wise AX customers are taking charge of their own roadmaps, rather than waiting for the path ahead to clear on its own.