What a crazy concept! Pay once for an ERP system and never pay again for upgrades? You still need to pay for the online users, but all future upgrades could be FREE.
Microsoft is still hard at work ironing out the kinks, but we have had some Dynamics 365 Business Central online customers go through two major upgrades in 2018 without paying a cent for database upgrade services. In addition to the two semi-annual automatic updates, Microsoft can and does implement minor version upgrades and fixes during other times of the year. Consistent, incremental improvement is now the plan, not massive change every three to five years.
Besides the savings on the service dollars, the company saves considerably as users find incremental change much easier to deal with than significant changes in user interface and business processes that may happen by delaying upgrades. In some cases, leaving upgrades to an ERP system for several years may mean the upgrade costs more than the original implementation. In some cases, it has been easier to re-implement the software on the new version rather than trying to upgrade the existing software. That is especially true for Business Central, which has a different development language than its predecessor, Dynamics NAV. Any customizations done in the original C/side development toolkit will eventually have to be discarded or re-done in the new Visual Studio AL (Application Language) toolkit.
Simple upgrade process
Free ERP system upgrades are only possible because of the new multi-tenant design where all customers share the same basic source code. As shown below, enhancements and customizations are done by adding apps from Microsoft AppSource or custom code extensions, which layer on top of the core system to present a single user experience.
When Microsoft upgrades the system, they simply un-apply the top two layers, update the Business Central layer in seconds or minutes, update any apps (if available), and re-apply the apps and customer code extensions. Unless the code extensions create some type of conflict with the new core system, they do not have to be re-visited. If the code extensions are carefully executed, this should rarely be a problem as the code extensions either create their own new objects, such as tables or pages, or create table or page extensions, which generally won’t be in conflict with anything Microsoft does. If you created custom posting logic to replace the standard logic, this becomes more of a factor.
The result of the upgrade is shown below with version 2 of the core layer and the most up-to-date version of any apps.
Return On Investment
So back to the ROI question. The calculation of the ROI isn’t as important as realizing the impact of this example. In a mid-market ERP system an average cost used to be around $100,000 for software and $100,000 or more for implementation services. Then every three to five years an upgrade would happen for around 50% or more of the original cost. That means after three upgrades, you have invested another $150,000, plus the cost of the annual software enhancement. While paying for monthly user licenses may seem expensive, the annual enhancement is often 30-35% of the cost of the licenses alone, without considering the cost of upgrades.
You might need a bit of help here and there with the automatic upgrades, such as dealing with new features where you may need some training or changes to a formatted report such as invoices. But overall, you gain significantly from the upgrade savings and on less disruption to your organization.