One of our clients is a manufacturer of complex, advanced machinery. Each product is unique—researched, developed, and manufactured to meet each customer’s specific needs. The company also provides installation and maintenance services. In this specialized industry niche, where intellectual property and state-of-the-art production processes are competitive assets, software systems and other technologies are also considered critical distinctions that are not discussed publicly.
The manufacturer ran its operations on a lightly customized version of Microsoft Dynamics AX 2009, an ERP solution that is still in use in many businesses. However, when Microsoft announced that mainstream support for the software would end in April of 2018, the company realized it was time to explore the available options for its business-critical ERP capabilities. The end of mainstream support would mean no more security updates and hotfixes from Microsoft, and, in general, no forthcoming product enhancements.
Avoiding Legacy ERP by Moving to the Cloud
Extended support from Microsoft for Dynamics AX 2009 was available, but there were two drawbacks. One, the cost was substantial, and could be as high as $150,000 per year. Two, extended support, too, was going to expire—in 2021. Extended support would have stretched the lifespan of Dynamics AX 2009 for just a few years and allowed hundreds of users to carry on working temporarily with software tools they knew. But its scheduled demise would be coming up quickly.
The manufacturer’s CIO said, “Our Microsoft Dynamics AX 2009 was soon to become unsupported by Microsoft. We needed to decide on a strategy that would take us into the future, not just help us get by a little longer.”
The company contacted Sikich to provide expert insight and guidance in identifying a direction for ERP that would support current and projected functional requirements and that could scale as the organization grew. Leadership anticipated growth in terms of customers and revenue, and also through acquisitions.
Sikich consultants determined that, if the client were to continue using on-premise ERP, server and networking hardware needed to be upgraded. It also quickly became clear that neither business nor IT leadership was ready to accept the risk, cost, and disruption of transitioning to a different technology platform. That left one promising, practical option.
“We realized that upgrading to Microsoft Dynamics 365 would give us continuity in a familiar software environment and enable us to grow on the Azure cloud platform,” the CIO said.
Strategic Realignment for ERP With Process Improvements and Cost Savings
Working through a variety of usage scenarios with Sikich, business and IT executives felt comfortable with the functionality of Dynamics 365, whose manufacturing capabilities were similar to those of AX 2009. While adopting Microsoft Dynamics 365 looked like it would likely be a smooth transition, the client wanted to verify that the performance and robustness of cloud ERP would satisfy its needs.
“Sikich performed a proof-of-concept project that explored what some of our procurement planning and production could look like in Dynamics 365,” the CIO explained. “That helped us gain confidence that the solution did not just meet our requirements for functionality, but also would enable a higher level of agility and responsiveness to our customers’ changing needs.”
The company collaborated with Sikich to prepare the transition to Dynamics 365 cloud ERP. Our discovery process identified process improvements that would be implemented at the same time. The reason some business groups were not making full use of Dynamics AX 2009 was that they felt the system was restricting some of their activities. Part of this assessment was based on misinformation, but in moving up to Dynamics 365, those users had an opportunity to voice their concerns, so they could be heeded in planning the new implementation.
The cloud economics of Dynamics 365 helped the manufacturer reduce software costs by moving to a subscription model that did not require large, one-time investments for new product versions or annual support. Server upgrades that had already been planned lost their urgency and were rescheduled in successive stages over a longer time.
The CIO noted, “We treated this ERP upgrade project much like a new implementation, when you take stock of your business and realign processes and technologies with your goals. Sikich helped us build a strong business case that met all stakeholders’ interests, projected a realistic ROI, and prioritized the productivity enhancements we wanted to accomplish.”
Smooth Upgrade Enabled by Best-Practice Expertise
The implementation was guided by Sikich and completed together with the manufacturer’s IT team.
“In Dynamics 365, some of our workflows became faster and more transparent,” the CIO said. “By using the advanced business analytics available on Azure, it has become easier for our engineers to design, test, and optimize our products and the materials and components that they comprise. That directly reflects on the quality we can deliver to customers.”
Finance managers were pleased with more advanced capabilities they found in Dynamics 365. “Dynamics AX 2009 had a finite number of accounting dimensions, and in Dynamics 365 that limit was removed, which means our financial reporting can be more accurate and versatile,” he added.
Deeply familiar with the code in Dynamics 365, Sikich technologists performed some of the data migrations and integrations that would have been challenging for the client’s IT team. They also found ways to replace customizations with standard software, which will make long-term ERP management and upgrades less complex and costly.
Initial apprehensiveness by some client stakeholders regarding the potential disturbance a large software project could entail turned out to be unwarranted. The manufacturer’s CIO commented, “The ERP and project management experience on the Sikich team helped us complete our ERP upgrade without disrupting productivity. Sikich helped us steer clear of some errors and shortcuts that would have resulted in unwelcome surprises.”