There are different advantages in the total cost of ownership between an on-premise software versus cloud-hosted. While some may say that the cloud is less expensive, what we’ve seen is actually a shift in costs and where money is allocated for your ERP system. In this article, we’ll be breaking down the cost of Dynamics AX compared to Dynamics 365 Finance and Operations by looking at the different places where financial shifts are occurring for those moving from Dynamics AX on-premise to Dynamics 365 Finance and Supply Chain Management.
Nearly all businesses are used to the traditional pricing model in which a small percentage of a software solutions total cost is spent on licensing and the large majority is spent on hardware and IT resources. While the up-front cost to purchase software was low, underlying costs could easily amount to nearly 75% of the total cost of ownership.
With Dynamics 365 Finance and Supply Chain Management, businesses can expect to pay more for licensing and software fees, but considerably less on traditional hardware and IT costs.
If there’s one thing that remains consistent with licensing costs from Microsoft, it’s that they can be confusing to navigate. Make sure to have a good understanding of exactly how many and what type of licensing you need to avoid any unnecessary expenditures. A knowledgeable partner like Stoneridge Software can help you understand software licensing requirements before signing the check.
Infrastructure and Hardware
Dynamics 365 is hosted on Microsoft’s servers, cutting out your need to spend money purchasing, updating, and remaining compliant with your own internal servers and hardware. Companies will also see less capital infrastructure expenses with the reduction in physical space required to store large servers and other hardware.
Dynamics 365 brings a responsibility shift from in-house IT resources to Microsoft, reducing or eliminating maintenance, patches, security, and upgrades that need to be done in-house. With less requirements for your internal IT staff to maintain, they can focus on other business needs.
Fewer resources will be spent on training Dynamics 365 users due to the user-friendly interface and built-in support services.
The cloud software model of Dynamics 365 provides more visibility into the hard costs or operating expenses of your solution and a more predictable cost over time. Less time spent on maintenance and infrastructure frees up your workforce to do more.
Outside of more predictable costs, there are major benefits to a true cloud ERP solution.