Microsoft Dynamics 365 for Finance and Operations
Microsoft Dynamics: Business Edition Software Overview
Microsoft Dynamics 365 for Finance and Operations, Business Edition is a cloud-based accounting system that’s easy to navigate and tightly integrated with Office 365 and other Microsoft cloud applications. It’s a solid offering but may lack features that some small and midsize businesses (SMBs) require.
Formally launched in November 2016 and still something of a work in progress, Microsoft Dynamics 365 for Finance and Operations, Business Edition (Dynamics 365) joins other current Microsoft Dynamics enterprise resource planning (ERP) applications, including Dynamics GP and Dynamics NAV, among others.
What Microsoft Dynamics 365 brings to the table is a focus on small and midsize enterprises (SME) and a cloud-only deployment model. Prices start at $40 per month per user, though each “Team Member” (users that only need to observe but not enter or change information) pays only $5 per month. As with most SME ERP and accounting systems, you’ll have to deal with a Microsoft Partner to obtain the app, so you’ll only get a final cost once that entity has added its charges.
While Dynamics 365 was a solid offering, its current lack of CRM, payroll, and project management (PM) capabilities keep it behind our current ERP Editors’ Choice winners Oracle NetSuite OneWorldLearn More at Netsuite and Syspro$199.00 at Syspro, at least for now.
Nice Landing There
Microsoft provided me with a full, autonomous test instance of Dynamics 365, hosted in Microsoft’s cloud like any other customer would have. The system initiated a landing page with tiles for a wide variety of integrated Microsoft cloud apps, including Microsoft Office 365 and several others. Clicking the “Dynamics 365” tile launches the app.
As with a number of other SME accounting systems I reviewed, the landing page has tiles that represent open items and key performance indicators (KPIs). Microsoft calls these “cues.” There’s also a chart on the right-hand side of the window where you can specify which KPIs, reminder cues, and chart information you want to be displayed. With the pie chart graphic in my test system, hovering over a slice brings up the financial data associated with that slice.
Clicking the segment brings up the customer, vendor, or other record associated with the part of the graphic. As with other items on the landing page, you can choose what items you want to be graphed and resize any or all items displayed. Also located on the landing page is a short summary trial balance, a useful feature that I appreciated. The customization capabilities mean that users can essentially design their own initial landing portals without much or even any assistance from IT.
Your main navigation mechanism is a menu on the left-hand side of the landing window. What’s displayed there depends on the role assigned to that particular user. Available roles include Accountant, Administrator, Business Manager, Project Manager, Sales Activities, Sales and Relationship Manager, Sales Order Processor, and Team Member. As mentioned earlier, a Team Member can only view data, not enter or edit it.
I performed this review in the role of Accountant. In this role, the initial left-hand side menu consisted of icons for Advanced Finance, Approvals, Finance, Home, Purchasing, and Sales. Each icon is accompanied by a short description of available functions. For example, clicking the Finance icon brings you to a window that lets you collect and make payments, prepare statements, and reconcile bank accounts. The Advanced Financials icon brings you to the window where you can manage budgets, analyze cash flows, perform fixed asset functions, and handle sales analysis.
These menus are enhanced by ribbon menus at the top of each screen that presents different sub-tasks you can perform depending on which menu window you’re currently in. Unlike some of the other ERP and accounting programs I have reviewed, such as QuickBooks Enterprise Solutions$900.00 at Intuit and Sage 300, Dynamics 365 doesn’t provide a process flowchart navigation option. Even so, it’s laid out intuitively enough that I quickly became familiar with the app’s navigation process. If you need to get to a specific function and aren’t sure where it’s located, then entering the desired function or report in the Search box immediately brings up various options, one of which is will bring you to the desired location.
Microsoft Dynamics 365 has corresponding mobile apps available for Android and iOS, and I tested them on an iPad Air and Lenovo Yoga tablet. The screens appear to be identical to the PC version, though somewhat truncated due to the smaller screen size of the tablet’s display, but still nicely designed within those constraints.
Dynamics 365’s robust Chart of Accounts structure can have up to 35 characters in total, 20 as the actual account number and the remainder is something Microsoft calls “dimensions.” These dimensions can be used to delineate things such as departments and function, somewhat similar to custom fields in other vendors’ accounting systems.
Reports are plentiful and easy to access. Dynamics 365 has the standard financial reports, including summary and detail general ledgers, trial balances, a Working Trial Balance and the standard financial statements of Balance Sheet, Income Statement, and Cash Flows. A nice side effect of the tight integration with the rest of the Microsoft Office and Office 365 suite is that creating custom reports is fairly easy using tools you likely already know.
Dynamics 365 also has excellent graphics and charting capabilities. These are greatly enhanced by letting you easily incorporate additional charts and graphics from Microsoft Excel and even more complex data visualizations from Microsoft Power BIFree at Microsoft. However, Microsoft Power BI wasn’t active on my review system so I didn’t directly test this capability, though the “Import from Microsoft Excel” feature worked well.
Solid Sales and Purchases
The Sales and Purchases capabilities of Dynamics 365 are fairly standard except for one standout. On the basic functionality side, you can create quotes and estimates and turn them into invoices. You can also easily create purchase orders. Both sales and purchases are closely tied to inventory so it’s easy to tell if you have sufficient stock to fill an order, or whether you have to back order some or all of an order and issue a purchase order to restock your inventory. However, Dynamics 365 isn’t quite an inventory management system on its own as it doesn’t currently support multiple warehouses, bar coding, or similar features you’d expect in that category.
The standout features are Microsoft Dynamic 365 for Financials’ ability to create sales quotes and even invoices directly inside of a Microsoft Outlook$149.99 at Amazon email and have the quote or invoice immediately reflected in Dynamics 365. This is a result of the very tight integration with Microsoft Office 365 and easily justifies obtaining Microsoft Office 365 if you don’t already subscribe.
When in Microsoft Outlook 365, there’s a button with the Financials icon. Clicking this icon opens the customer’s record, and you can create the estimate or invoice directly in Dynamics 365; it attaches to an email reply sent to the customer. With most other accounting systems, you’d have to create the document inside of the accounting system, save it as a document of some kind, and then attach it to an email.
Not Quite PM
In addition to sales, purchases, and inventory, Dynamics 365 offers what Microsoft is calling project management. But if you’re expecting a true PM tool that supports features such as Critical Path Method (CPM), Program Evaluation Review Technique (PERT) charts, min/max resource allocation, or Gantt charts, then you’ll be disappointed. This feature might more accurately be called job management or job costing. To use it, you create Job Cards and then create tasks and rates for these as well as planning times and a budget. Once that’s done, you can apply resources to the job.
While Dynamics 365’s PM capabilities don’t include Gantt charts, you can still set milestones and determine how well the job is meeting them. You can also enter time cards and allocate these time card expenses to the project or job. For many small and midsize businesses (SMBs), this approach will work well enough. But if you need more depth, you’ll have to spring for Microsoft Project (the company does offer a cloud version) or some third-party PM tool.
Fixed Assets Is a Nice Addition
It’s not all that usual to find Fixed Asset capability in an ERP or accounting system that’s targeted to the SME market strata. However, even when one is available, it’s often an extra cost, optional module. Dynamics 365 includes Fixed Asset capability as part of its Basic bundle, which is a nice touch. Assets are entered into the system on Asset Cards that contain a description of the asset, acquisition cost and date, and the desired depreciation method.
Dynamics 365 has the standard depreciation methods including Straight Line, Declining Balance, and Depreciation, calculated by using the Half-Year Convention. You can also specify your own depreciation method. While Fixed Assets in Dynamics 365 isn’t quite as comprehensive as those in many of the standalone Fixed Asset modules available for modular ERP systems, such as SAP Business One Professional$82.00 at SAP, it should be satisfactory for most of Dynamics 365’s intended customer base.
Inventory Is Slightly Limited
Dynamics 365’s Inventory menu represents a fairly generic inventory management sub-system. However, it looks good; in the test system, I reviewed, each inventory item was paired with a photo of that item. That’s a nice touch and it makes it easy to visually verify that you are working with the correct item.
On the downside, Dynamics 365 has only a single inventory costing method, namely, First-In First-Out (FIFO). That’s probably not going to be a deal breaker for many potential users, and a Microsoft rep confirmed to me that the company thinks FIFO is enough for its intended customers. But I would have liked to have seen at least the Weighted Average Cost method included as well. Microsoft is in the process of adding Kitting (creating sub-assemblies), though this is not yet a feature in the version of the software I reviewed.
Overall, after testing this initial release of Dynamics 365, I think that what’s available was nicely done. However, the app is very much a work in progress. At the time I tested the software, it was only available in the US and Canada so, if you conduct a business in other areas of the world, then you should check with Microsoft first. Still, Dynamics 365 seems like a good fit for companies looking to move up from a more entry-level accounting system, such as FreshBooks$19.95 at FreshBooks. It’s highly scalable and will hopefully gain some of the additional capabilities that many of its mid-market competitors offer, especially payroll and a more comprehensive inventory management capability. Contact Musato Technologies today for more information.
Article by By Ted Needleman