Replacing RMS with Microsoft Dynamics 365: The beginning of one retailer's cloud journey

February 28 2019

A regional retailer with dozens of US locations recently replaced their fifteen year old POS system, Microsoft Dynamics RMS, with a new Dynamics 365 for Retail cloud-based solution. In the process they  overcame early Azure performance challenges, re-affirmed their belief in the value of using out of the box features, and developed a roadmap focused on the Microsoft cloud that will broaden their use of Dynamics 365 ERP functions.

This retailer, which did not want to be identified, has faced some typical and some unique challenges over the course of their D365 for Retail rollout, their IT director and CTO told MSDW in an interview. But they credit a few factors with their success so far, including the discipline to avoid most customizations and the choice to use a phased deployment that  started with POS before tackling other ERP, customer loyalty, and data management requirements.

Unique requirements

Despite the organization's history with Microsoft retail solutions, they say they embarked on a full RFP process to choose their replacement for RMS. One key decision was whether to pick a new point solution for POS, of which there are many, or to look for a solution that could cover a much broader set of business goals. With that question in mind, they discarded the POS-focused systems. From among the platform-based options under consideration, they made the decision to go with Dynamics 365 for Retail because it could address not just POS but inventory, finance, pricing, promotions, and other elements of traditional ERP and customer engagement.

The organization worked with a Microsoft partner on an implementation project over eight months and they are now using D365 for Retail's in-store tools, including the cloud POS. They credit their success thus far with their commitment to staying with standard features other than some carefully selected customizations.

The organization began with a pilot in two stores. But before the pilot was done, they were forced to deploy the D365 POS in a high pressure situation: a new store opening that was sure to drive high traffic and transaction volumes. Though it wasn't part of the plan, the team made it through that trial by fire and proceeded to do a rapid rollout of the cloud POS to its dozens of other stores at a rate of about 20 per week, working with outside contractors to enable the systems.

One customization of the D365 for Retail system was the integration of a custom barcoding solution that is specific to the way they receive inventory. That data goes to a data warehouse for analytics that enables the organization to figure out such things as optimal pricing and demand for different categories of products.

The second customization gave sales associates a custom prompt in the POS terminal to remind customers of special offers unique to their business.  Without the prompt, it was easy for associates to forget to ask the customer or to present the offer incorrectly.

“Aside from two specific value-added modifications specific to [us], it was a vanilla system,” said the IT director.

Start with POS, then expand

The company has focused on their in-store sales, but is taking a longer view on Dynamics 365, too. One of the key considerations was the eventual migration from Dynamics GP. And because they had selected Dynamics 365, they plan to embrace capabilities in HR, finance, merchandizing, customer loyalty, and supply chain that can be added incrementally.

The company also has to contend with its legacy IT infrastructure, which includes an on-premises data warehouse. Bringing the retail data on-premises from Azure is doable, but represented one more hurdle in the short term.  Long term, they say, a cloud-hosted data warehouse will replace it and hopefully reduce some of the related inefficiencies.

The goal, their IT director says, is providing the business with systems that will not only improve current operations but enable revenue diversification. They are aiming for a better view of what sells (and what doesn't), who is buying, which customers return and for what items, and any other ways to optimize in-store performance.

What they need from Microsoft

Retailers tend to position commerce-related systems in terms of performance benchmarks and thresholds. For this organization, customer transactions peak at about 10,000 per hour on some days, meaning they need to know Microsoft's cloud-hosted solution can ramp up as needed. With the implementation now live for a few months, the system can handle that load. But it has been a journey.

“The performance has improved over time,” their IT director told us. “We’ve been working with the Microsoft FastTrack Team and they were able to support us, even giving us more CPU and RAM based on a phone call and looking at the analytics from their standpoint. They had no idea how much we were going to do in that timeframe.” Moving forward, Microsoft will need to take note of the increasingly complicated demands of retailers for options more diverse and powerful than traditional POS systems.

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Photo by Fabio Bracht on Unsplash

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About Jason Gumpert

As the editor of MSDynamicsWorld.com, Jason oversees all editorial content on the site and at our events, as well as providing site management and strategy. He can be reached at jgumpert@msdynamicsworld.com.

Prior to co-founding MSDynamicsWorld.com, Jason was a Principal Software Consultant at Parametric Technology Corporation (PTC), where he implemented solutions, trained customers, managed software development, and spent some time in the pre-sales engineering organization. He has also held consulting positions at CSC Consulting and Monitor Group.

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