Not again, we're still recovering from the last one.

What does it mean to upgrade to D365 Finance and Operations?

Well you could go like for like and take advantage of the fact you are now part of the Microsoft Support structure again. You could then be concerned every time there is an update that it would potentially break your bespoke code, which by the way is now written in a slightly different language to what it was before. Maybe it's simply because the AX products are now in extended support and that comes with a cost, what does that really mean when there hasn't been a kernel release for an AX product for a number of years. Cannot help but think of Y2K when having Product End of Life conversations given the rhetoric through the industry at the moment has a similar ring to it. Guess we have to assume that a time stamp has been implanted in the kernel which means something which has been working well for the past 5 to 10 years will self implode in October 2021? Yes R3 is 2023 but it's the same in theory. Guess it's a risk to be considered, but how big is that risk?

Obviously the risk is huge. Read the posts. Look at the websites. Everyone who's anyone is pushing an upgrade, some will even do it for a fixed price. I've seen number of days quoted without any visibility of complexity, even seen actual dollar values put on the table. Does an upgrade without due diligence not pose a greater risk to Business Continuity than the perceived potential of the solution ceasing operational capabilities on a particular date?

There are distinct advantages to upgrading, not the least of which are the plethora of new and enhanced features available in the D365 F&O, the ease of integration to the capabilities available in the Power Platform as well as someone else now looks after the hardware. My business makes widgets, we're not experts in server infrastructure let alone having to deal with the operating system and database , someone else can worry about that.

Let us focus on how to take advantage of the new and enhanced product features. Can that be done with a like for like upgrade? Probably not as it's highly likely if this is a feature you are looking for you'll have had code created to cater for the capability at some stage in your initial implementation or as an ongoing system enhancement. Meaning that to take advantage of these features you're either reverse engineering something which has been created or simply not taking the modifications across and running your upgrade more as a data migration exercise.

Here we get back to the crux of this piece, to take full advantage of a number of the compelling reasons for upgrading you will not actually be performing an upgrade, as such, but a re-implementation. OK, given there is also a high level of commonality between the two products let's say half an implementation. And as we know an ERP implementation is not something you undertake for fun, it tends to cause a degree of upheaval in the business and not a small amount of change which needs to be addressed and controlled. There is also the potential of Change Fatigue, while we in the IT space are quite used to working with a constantly moving target with innovations and capabilities continually evolving. This is not the same for Business Users who tend to like their stability, want to know and lock down their repeatable processes and really just want their ERP solution to perform the tasks it was implemented for in the first place. Which begs the question, if the ERP is catering for the daily financial and operational needs of the business why bother to upgrade it?

There are a number of schools of thought about how often you should 'replace' your ERP. Numbers tend to range from 5 to 10 years. I tend to lean towards the upper end of that spectrum, maybe even beyond it. Guess it's time for a scenario to explain. Let's assume we have an AX2012 R3 implementation which began in 2014 (May 1st to be more precise as this was the date of General Availability). This is a relatively complex implementation, four countries, multi-currency, multi-timezone, staggered rollout. If we assume design, build, data migration and test are completed for an initial go-live July 1 2016. An aggressive timeline for a complex implementation but this is only an example after all. Additional rollouts will be each six months to fit into Financial reporting cycles so assuming smooth sailing regarding deployments the solution is fully live Jan 1 2018.

In my experience it'll generally take a couple of years to really bed down the ERP and the processes. Financially the first year end will be a little shambolic while the second one will be much smoother as we hopefully learnt our lessons from the first. It's now Jan 1 2020 and the solution is bedded down, the processes are known throughout the organisation and we are now seeing the full advantage in data and visibility as promised when we originally undertook this project.

Now this implementation was quite expensive, as many are, so finance will be depreciating the Asset over 10 Years, this depreciation started on Jan 1 2018. Assuming the project cost $5 million that's a direct cost to the business of $500K for each year before 2028 they complete an upgrade (sorry, re-implementation). This dynamic becomes a little more interesting as the move to D365 changes the model from CAPEX to OPEX and as such even if you do actually manage to upgrade there is no alternate asset value to 'reset' the depreciation cycle. Financially it'll be a full write off.

Which brings us full circle, an Upgrade is not really an Upgrade, we run the risk of causing Change Fatigue upon the business users by being in a cycle of constant change and our proposed cost savings could potentially be completely wiped out by the cost of the asset write off.

This dynamic creates the real decision point, is there any reason to once again go through the pain of an ERP implementation in such close proximity to the last time you did it? If your current solution, be it AX2012, AX2009 or even AX4 is performing it's functions as intended and helping you run your business there is no need to change it and there are other ways to get to the really shiny toys available in the Cloud. There are also ways to get your ERP to the cloud without the need for an Upgrade (sorry, Re-implementation)