Microsoft Dynamics 365 for Finance and Operations (D365FO) is Microsoft’s latest iteration of their flagship ERP system that used to be called Dynamics AX (and before that Axapta). Over all those years of software evolution, the ongoing goal has been to build a modern ERP system that is easier to support, maintain, and innovate on with new types of application development.
With D365FO, Microsoft has introduced many important changes that modernize the ERP experience and make it more attractive to customers. Key differences from the AX era include a new model for development, a One-Version policy for periodic updates, and an evolving approach to adding features to the ERP system.
For those of you who are already using D365FO, you have probably noticed feature management, where new features appear after updating to the latest version. Most new features represent new or improved capabilities that are based on what was already in the product, but sometimes a large new feature appears that provides a significant new tool or something that has been totally rebuilt from scratch.
When Microsoft create these large changes, they are probably thinking (I do not work for Microsoft so I cannot be sure) “Should this really become part of the core product?”. There are some historic examples of this type of decision making from the product team: The retail components in Dynamics AX 2012, integrations in AX moved to an external integration platform, and using SSRS instead of a built-in reporting engine.
Today, Microsoft are continuing to move traditional features out of D365FO and deploy modernized versions of them as cloud services that are accessible from the core ERP with APIs. The first one that became available was resource planning. The built-in MRP functionality has been deprecated and completely removed from the core product and it is instead available as a plugin to install from LCS. Another example is the configuration of exports to Data Lake (which will replace the Entity Store). In fact, Data Lake and Dataverse are an integral part in other microservice integrations.
A lot of these services are in preview now and will soon be available. A few other examples include Finance Insights, Tax Calculation, Electronic Invoicing, and Expense Management. I suspect we will be seeing a lot more of these in the future.
There are many reasons to why this change is happening right now. When Microsoft “moved” AX to the cloud, “AX7” was mostly Dynamics AX 2012 R3 with a web interface. In the five or so years since then, we have seen a lot of change. The entire architecture has changed from a traditional on-prem software stack with a database and a Win32 frontend to a containerized solution with near zero-downtime maintenance. In order to improve the product even more, reduce the complexity, increase performance, and improve resilience to developing customizations, Microsoft are building a more modularized solution that scales better and does not affect the speed of the core product. We see this clearly in MRP where a resource planning job that used to take multiple hours now finishes in 15 minutes.
Another upside of this design is that these services can be updated without having to “respect” customizations made by customers and partners outside of Microsoft’s control. With just a lightweight interface for all parties to respect, Microsoft is free to iterate even faster than the monthly cadence of One-Version.
We are also seeing customers and ISV vendors using the same methodology when building code… “If it doesn’t need to be in the ERP system, we should probably move it out”. If you look in Microsoft Azure, you will also notice that there is a whole slew of services available for building these modular solutions.
If you want to learn more about these services, why they exist, how to use them and whether you can build your own; please register for DynamicsCon and see my session called “Why Micro Services in Dynamics 365 for Finance and Operations”. I will be there for the session and of course to answer all your questions.
The article was originally posted in MSDynamicsWorld on Aug 20:th 2021