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The future for on premise Microsoft Dynamics software.

A new offer from Microsoft aims to draw customers of several on-premises (on-prem) Dynamics ERP solutions including NAV/Dynamics 365 Business Central, to the Cloud Solution Provider (CSP) programme,  with new monthly payment options for traditional enhancement plans and new subscription license discounts for Dynamics 365 Business Central SaaS.

The Status-quo

The enhancement plan has historically been an annual cost which along with the help desk support you get from your business partner represents the annual overhead to run your Dynamics ERP.

The Seeds of Change

The “CSP-Enhancement Plan Renewal Offer”, which was revealed by Microsoft recently, allows customers to renew their Dynamics GP, NAV, SL, or Business Central on-prem enhancement plan  (often referred to as “BREP”) through a CSP partner at a price equal to their annual enhancement plan renewal but, according to Microsoft, “instead of your annual Enhancement Plan payment, you pay for and license Dynamics 365 Business Central (Cloud) users on a monthly basis at the same total amount as your annual Enhancement Plan.

In summary – payments become monthly rather than annual.

Timing and background

Whilst stating this is a response to cashflow constraints that may be affecting some UK businesses as a result of the Covid-19 pandemic this offer completely supports the global Microsoft strategy of moving Dynamics users from on-prem licensing to the Microsoft Dynamics SaaS model launched in 2018.

The SaaS model has been extremely well received and returns impressive statistics on up time and performance.  As with on-prem, the SaaS model can be modified from within the programme using extensions to achieve industry specific functionality.

Microsoft is noting several customer selling points of the deal.

First, it offers customers the ability to spread capital spending out into monthly payments rather than a lump sum enhancement plan payment while still getting the same benefits.

For the same price it gives those on-prem customers Business Central cloud subscription while increasing seat numbers.  This means that concurrent (BREP) users move to a named user and can increase their user numbers for no additional cost as part of the move from BREP to CSP.

Offers have been as attractive as a ratio of 1:4.  Call Qi for an update on current incentives.

Business Central cloud subscription seats are currently priced at a 60% discount, on the usual Microsoft RRP.  Again, get in touch with Qi regarding  incentives and how these may benefit your business.

While the new offer is designed to entice on-premises Dynamics SMB ERP customers to the cloud, the offer also grants customers dual-use rights and downgrade rights.

Now is the time to assess what your business requires from Dynamics NAV and Business Central

All downgrades whether that be licensing type or numbers must be done prior to the move to the CSP model.  Once you have made the move you can increase licensing requirements but it is not possible to decrease them and realise a price reduction in monthly costs.

A CSP transition project therefore will include in an depth review of current business requirements and ensure that any changes to the business that have taken place since the initial implementation of Dynamics can be taken on board and be reflected in licensing moving forward.

That means customers can continue to use their current applications and get their enhancement plan benefits “while you transition to your Dynamics 365 Business Central (Cloud) solution”.

The current offer is available to June 30th 2021, and it is for a one year subscription with a two year auto renewal option.

Resisting Change

Customers can also continue to have the option to annually renew their enhancement plans through traditional methods ie: no change to the status quo.  However – businesses must be aware that ‘staying where your are’ can only be a short term status.

However, as a Microsoft business partner for over 20 years and thus included in Microsoft strategic updates, Qi can share that Microsoft intends to manage a shift from on-premise licensing to SaaS on what is currently a 3 year timeline.  Clearly this can change but as of 2020, this is the Microsoft goal.

 

Thought for the Day

Microsoft will move Dynamics to a wholly SaaS model within the next few years.  The three year goal might extend but the Microsoft wheels of change are already well in motion.

Qi will discuss and plan your transition with you, whether that be the ‘stepping stone’ of retaining on premise software but moving to a CSP model in readiness for a move to SaaS or a full migration from on premise NAV and Business Central to Dynamics 365 Business Central SaaS in its Essentials or Premium form.  Please get in touch with Qi at a convenient time.