Why Microsoft Dynamics NAV Upgrades Need a Subscription Option

By early 2011 it was already clear that the SMB software market was moving toward a subscription model for software licensing. As an upgrade partner, we concluded that an upgrade subscription offering that would support that trend for both customers and partners deploying the latest ERP solutions.

In 2013, when Microsoft released their first subscription license model for Dynamics NAV, it reinforced that direction. Today, more and more partners can offer Dynamics NAV licenses on subscription. It became a powerful opportunity for Microsoft and its partners to add new customers that are looking for cloud or subscription-based ERP.

The subscription model, especially in combination with cloud hosted ERP, also has certain implications and expectations around upgrades. Customers that have committed to a subscription model may find a large, one-time upgrade project to be incongruous with their approach to IT and information systems investments. They may also come to expect that upgraded software should be part of the deal - or at least handled in a way that is complementary to their ERP spending.

Much like a software subscription, a software upgrade can, in fact, be structured to offer subscription benefits by relying on technological advances and shorter, lower risk upgrade cycles.

What is an upgrade subscription and how can it complement a Dynamics solution subscription? At the most basic level, an upgrade subscription, as offered by a Dynamics partner, is a means to fix the price for maintaining their customers' solutions into the future.

Typically, for customers on a perpetual license, a NAV upgrade price has two components:

1. Technical Upgrade
2. Implementation of the Upgrade

The technical upgrade is the area where a NAV partner should have the latest tools to help prepare the ...