Microsoft Dynamics AX to D365 Upgrades: 'AXSMBs' Stuck in the Middle

June 5 2019

ERP from SMB to Enterprise
The typical lifecycle of a business typically sees it implement three ERP systems. This is at least one, if not two systems too many!

Over the last decade “AXSMB” was the term used for that special class of company that had “champagne requirements but a beer budget.” These were companies that would have loved to be on QuickBooks or Dynamics GP based on their budget, but because of sophisticated business requirements that could only be met with an enterprise-level ERP solution, bit the bullet and made the investment to step up to Microsoft Dynamics AX.

My favorite quote from such a client was, “We did not make this investment for who we are as a company today but who we plan to be in the future.”

From a strategic standpoint I always talk to my clients about the real cost of a software implementation.

The typical reason for following the traditional ERP system trajectory is cost. However, I see that approach as shortsighted and self-defeating for individual companies as well as an industry. The direct costs of ERP software and the implementation services are only the tip of the iceberg. The real cost also includes the time and effort to implement—and then re-implement the system later. That does not consider the lost opportunity costs of systems that restrict growth and provide poor information in the meantime.

A typical ERP implementation is a long and exhausting effort that no one undergoes for fun or vanity. There is a predictable lifecycle for ERP that any growing company recognizes:

  • The Startup or QuickBooks phase
  • The "we are torturing QuickBooks" phase, a.k.a. "Let’s move to a midmarket solution such as Dynamics GP"
  • The "we went from being a 'company' to an 'enterprise' and need an ERP platform like Dynamics AX" phase

While it may be true that the licensing cost for an enterprise-level ERP solution looks daunting to a growing company looking to upgrade from QuickBooks, the fact is that it may be dramatically more cost-effective if analyzed in terms of opportunity costs: