Am I Too Big for Microsoft Dynamics NAV?

May 4 2008

Microsoft is very clear about the target market for its award-winning Microsoft Dynamics NAV (previously known as Navision) enterprise resource planning (ERP) system. If you just check the Microsoft Dynamics NAV Product Overview web page, it states: “Microsoft Dynamics NAV is a business management solution for small and mid-sized organizations.” Can it get any more specific?

Well, as a matter of fact, it probably could. If you take a look at the Microsoft Dynamics NAV public reference list at Microsoft’s Case Studies website, you immediately see that there is really no pattern as to what kinds of companies implement Microsoft Dynamics NAV. Businesses ranging from home-based ventures with just a handful of employees all the way to global enterprises with tens of thousands of employees have successfully implemented Microsoft Dynamics NAV all over the globe, a reality that clearly demonstrates that a one-size-fits-all approach doesn’t apply to this specific ERP product.

Obviously, deciding to go for or against a product, just based on the vendor marketing classification, wouldn’t be too fair either to the product, or to oneself.

However, when deciding on implementing an ERP system, the choice of whether to go or not to go with Microsoft Dynamics NAV is sometimes influenced by certain myths, which I tried to debunk last week at Croatian Microsoft WinDays 2008 conference.

Myth #1: Only small and mid-size organizations can use NAV.

What exactly is a small or mid-size organization? A large organization in Europe, at least according to the European Commission’s official standpoint, may be defined as a mid-size organization in United States. While European Commission sets the limit for a mid-size enterprise at 250, and declares anything larger than that a large enterprise, the United States typically classifies anything smaller than 500 employees as a smaller enterprise.

Another factor can also be the IT vendor sphere of influence. If you do a lot of business with Cisco, you would probably go along its definition, which sets the limit at 250 employees. If you are mainly an IBM customer, at the limit is 1,000 employees, while an SAP’s definition would climb as high as 2,500 employees. Analysts such as Gartner and Forrester typically agree that the upper limit for an organization to be considered a small or mid-sized one is at 1,000 employees.

The ultimate authority on what one should consider a small or mid-sized organization when thinking about Microsoft Dynamics NAV is definitely Microsoft. By its terms, the upper limit of small and mid-sized organization would be at 1,000 employees.

However, there are dozens of examples of large enterprises, even by Microsoft’s definition, implementing Microsoft Dynamics NAV successfully. BMW in Belgium and Luxemburg, BP in Australia, Konica Minolta in Denmark and Fossil in Australia are a few notable examples.

Myth #2: The number of employees determines which ERP system you should select.

Classifying an organization based on the number of employees would be as wrong as judging a country based on its surface area. When choosing an ERP system, the total number of employees can sometimes be as insignificant a factor as the total number of, for example, staplers.

Depending on industry, the majority of your workforce may never come near a computer screen. If you are a 50-employee accounting consultancy, you might put more pressure on your ERP system than a 500-employee road constructor. In any organization, a number of employees will never be users of the system. All those truck drivers, fork-lifter operators, machine-workers, janitors, and sometimes even secretaries, might never need to hover the cursor over the ERP desktop icon, let alone double-click it.

There are a significant number of those who access the system only occasionally, and when they do, they hardly put any real pressure on it. Executives might only need access to an occasional fancy report, while sales people are usually on the move, and are merely accessing the system to feed some more opportunity information, update a price list, or enter an order or two. All of these factors considerably distill the total number of employees to a truly important factor: number of concurrent users.

Even then, the impact of concurrent users depends on what kind of work these users do. Twenty users maintaining purchase price lists do not affect system concurrency the same way twenty users posting sales invoices do.

Myth #3: NAV can't scale.

Microsoft Dynamics NAV is notorious for its inability to scale. Or is it? Originally, it came with a single database server option, the C/SIDE Database Server, traditionally called the “Native Database” option. As I wrote on my blog, the native database server used the Indexed Sequential Access Method (ISAM) approach to handling data, which has its advantages in transactional systems with lots of sequential reads or writes. Microsoft Dynamics NAV, back in the days it was called Navision, was optimized to leverage exactly on this feature. However, this did come at a price, and with native database server it was next to impossible to get more than about fifty to sixty users to work comfortably at the same time. A hundred concurrent users, in most scenarios, was science fiction.

The advent of SQL Server has changed a lot of things. For starters, SQL Server is a true Relational Database Management System (RDMBS), which provides out-of-the-box capability to scale up to several thousand or even tens of thousands of concurrent users.

In order to achieve these concurrency levels, you must design and architect your application to be able to do so. Microsoft Dynamics NAV, coming from an old-fashioned ISAM world, was initially not designed to actually take advantage of any scalability capabilities of SQL Server.

This was eight years ago, though. In the meantime, new versions of SQL Server were launched, bringing even more bang for the buck, and Microsoft Dynamics NAV has evolved as well. Every new version was better optimized to work in concert with SQL Server, having the SQL Server option outperform the native database by an order of magnitude. Today, having as many as 250 concurrent users with SQL Server option is not an uncommon scenario, if only some architectural considerations are applied.

However, these scenarios assume a single server to handle all those users. In practice, nothing prevents you from distributing the workload among several servers, and establishing a replication mechanism to synchronize data among them, to achieve even higher concurrency. Sure, you don’t get this out-of-the-box--you need to invest some time and effort to achieve it, but this can save you millions of dollars you might otherwise invest in implementing more complicated solutions, which would still require you to set up and maintain more than one server. A number of highly successful Microsoft Dynamics NAV implementations are successfully following this path.

Myth #4: NAV is an accounting package.

When purchasing Microsoft Dynamics NAV, small companies usually only need the accounting part of it. When they speak about their Microsoft Dynamics NAV system, they usually speak about their “accounting software”. An old name, Navision Financials, also suggests that this is basically an accounting package covering for financial management needs.

The truth is all but that. Microsoft Dynamics NAV is a true Enterprise Resource Planning (ERP) system, comprising financial management, manufacturing, Supply Chain Management, warehouse management, project management, service management, Customer Relationship Management, human resources (to an extent) and integrates out-of-the-box with Microsoft SQL Server Analysis Services for Business Intelligence capabilities, Microsoft BizTalk Server for business-to-business communication, and Microsoft Office SharePoint Server for web-client-based access. The list does not end here, because it also integrates with Microsoft Office applications such as Word and Excel for direct export, or Outlook for any type of content synchronization.

All of this functionality means that Microsoft Dynamics NAV offers much more to large companies that really need such advanced capabilities. The needs of smaller companies usually don’t extend beyond basic accounting functionality, but larger enterprises of several hundred concurrent users can really benefit from all the built-in ERP functionality, high customizability of Microsoft Dynamics NAV, and second-to-none integration capabilities.

The main difference between accounting software and Enterprise Resource Planning software is how the data is used. The main concern of accounting software is to alleviate the preparation of accounting reports and financial statements, for business management or tax reporting purposes. At the same time ERP systems are more aimed at planning, understanding and optimizing business processes. Again, something that is more likely to tickle the interest of larger enterprises.

To conclude, Microsoft Dynamics NAV is a system which is initially designed for small and mid-sized companies, but whose feature-rich functionality can easily match the needs of even larger organizations. With proper architecture considerations, any scalability issues can be overcome, which has been proven in practice. Discarding it when choosing an ERP system to implement just based on company size alone might prove to be a costly mistake.

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About Vjekoslav Babic

Vjekoslav Babić is an independent Microsoft Dynamics NAV consultant, trainer, author and blogger, with 10 years of experience in NAV and 16 years of experience in IT.

As a solutions architect and a project manager with a leading Microsoft Dynamics President's Club service provider company, as a Microsoft Dynamics NAV consultant with Microsoft Services, and as an independent consultant, he has been working on Microsoft Dynamics NAV implementations ranging from tiny one-man-bands to international mega-corporations, delivering services and trainings all over the world.

In 2008, Vjekoslav co-authored the acclaimed book "Implementing Microsoft Dynamics NAV 2009". Vjekoslav runs an active blog about NAV implementation, project management and development best practices, acts as a columnist and editorial advisory board member at MSDynamicsWorld.com, and as a columnist in a number of other web or printed periodicals in Croatia and worldwide. Vjekoslav is also a frequent speaker at Microsoft or Microsoft Dynamics conferences.

Since spring 2010, Vjekoslav has been awarded the prestigious Microsoft Most Valuable Professional (MVP) award for Microsoft Dynamics NAV.

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Comments

sreekanth_mp's picture

First entry.