The Total Economic Impact Of Microsoft Dynamics 365 Business Central

Cost Savings And Business Benefits Enabled By Dynamics 365 Business Central

Microsoft Dynamics 365 Business Central allows small to medium sized organizations to modernize ERP capabilities and scale in the cloud. This yields productivity improvements to finance and operations staff, better decision-making based on real-time information, and opportunities for more profitable operations — all while avoiding costs associated with on-premises infrastructure.

Microsoft Dynamics 365 Business Central is a cloudbased business management solution for small to medium-sized businesses. Microsoft commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Dynamics 365 Business Central.

The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Business Central on their organizations. To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed five representatives with experience using Business Central. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization with revenue of $15 million per year and 150 employees.

Interviewees noted that prior to using Business Central, their organizations struggled to scale enterprise resource planning (ERP) capabilities with the ever-increasing demands of their business. The organizations’ ERP stacks often consisted of several disparate on-premises solutions with limited interoperability, which obscured information required for optimal decision-making and forced manual work in finance and supply-chain operations processes.

After the investment in Business Central, the interviewees described improvements to staff productivity, cost avoidance on third-party reporting and consulting fees, and greatly simplified and less costly ERP deployments in the cloud. Interviewees also detailed ways in which Business Central allowed their organizations to unlock additional revenue that was not possible with their legacy solutions.

KEY FINDINGS

Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:

• A 9% to 18% improvement to productivity for finance and operations staff. Deploying Business Central allows the composite organization’s finance and operations staff to reduce the amount of time they spend on manual reporting and information reconciliation while also providing improved visibility and tools to accelerate and improve the quality of decisionmaking. This reclaimed personnel capacity is worth a PV of $116,000 to the composite.
• Avoided hires amid organizational growth. As the organization grows, finance and operations responsibilities grow as well. Business Central enables the composite’s finance and operations staff to operate more effectively in the present, which offsets subsequent hires the organization requires as it grows.
• Avoided third-party fees of nearly $30,000 annually. The organization previously paid for external reporting on a quarterly basis because finance staff were working at capacity. It also engaged third-party consulting services to work on customizations and integrations amid the complexity of the legacy ERP deployment. After implementing Dynamics 365, the composite eliminates third-party reporting costs because IT staff can internally manage integration and customization work.
• Avoided costs of legacy ERP solutions and support worth $50,600. The composite was paying several vendors across its ERP stack while incurring the costs typical to on-premises solutions including infrastructure, maintenance personnel costs, and upgrade fees. By consolidating ERP functionality on Business Central, the organization avoids these costs.

Unquantified benefits. Benefits that provide value for the composite organization but are not quantified in this study include:

• Net profit from Business Central-enabled revenue. Business Central enables organizations to undertake projects and onboard customers. This leads directly to additional revenue and profit.
• Improved business outcomes from more informed decision-making. Interviewees said day-to-day decision-making for finance and operations personnel improves with Business Central due to having visibility into real-time information.
• Improved employee experience. With Business Central, finance and operations personnel are less burdened by manual effort and reconciliation tasks mandated by a disparate set of ERP solutions.
• Works with Microsoft solutions. Business Central natively integrates with other Microsoft solutions, which drives additional value from these solutions.

Costs. Three-year, risk-adjusted PV costs for the composite organization include:

• Subscription fees paid to Microsoft totaling $51,500 over three years. The composite organization pays a monthly subscription fee per user for Business Central access.
• Implementation, ongoing management, and training personnel costs of $126,000 over three years. The composite organization leverages internal personnel resources to deploy Business Central over a four-month period. Once deployed, part-time staff work to maintain and upgrade the solution (e.g., making customizations and integrations).

The representative interviews and financial analysis found that a composite organization experiences benefits of $484,000 over three years versus costs of $178,000, adding up to a net present value (NPV) of $306,000 and an ROI of 172%

to be continued

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