July 17, 2015

Microsoft Dynamics ERP Solutions: A Simplified Breakdown

Written by

Microsoft Dynamics is one of the world’s leading providers of enterprise resource planning (ERP) software. They have over 230,000 customers, millions of users, and of course, the financial backing of the largest software company on earth.

But for the average buyer, there’s an immediate drawback to Microsoft’s solutions: they’re confusing. The Dynamics ERP portfolio offers a seemingly endless variety of packages, customizations, deployment models, and pricing schemas, each offering some degree of end-to-end functionality for several different verticals. The ERP buying process is hard enough on its own, given the complexity of the software. Fragmentation within a single vendor only raises the barrier to entry.

To provide some clarity, we’ll look at all four of Microsoft’s ERP lines — Dynamics AX, GP, NAV, and SL — and explain (in the language of humans) how they’re similar, how they’re different, and what industries/companies each product is best suited for.

How They’re Similar

Microsoft has built a lot of continuity into their ERPs, which is nice because it keeps the points of differentiation focused on industry-specific features instead of the core software engine. It also prevents their products from cannibalizing each other (if one was built on a better platform, it would obviously deter customers from the other three).

Regardless of which solution you choose, you can expect to see the following features:

  • Implementation through an approved partner: None of Microsoft’s ERPs are available for cash-and-carry purchase. Instead, they connect you with a local consultant to determine the best solution, get a price quote, and help with set up. Here’s how they explain it:

    “Microsoft Dynamics ERP is sold and implemented by a global network of solution professionals called partners. Partners work with you to determine your specific needs, recommend the right solutions for you, and then help configure and implement the solution.”

    While that might deter smaller companies looking for a solution with no middle man, it’s common practice in the ERP world and can save you from costly mistakes in the long run.

  • Multiple deployment models: All of the Dynamics ERPs offer multiple deployment options. The software can be hosted on a private cloud server, hosted on Microsoft Azure, or installed on-premise with your own servers.
  • Custom pricing: You won’t find a standardized list of pricing tiers, because Dynamics’ pricing is completely custom — based on the features, bolt-ons, number of users, deployment options and level of support your businesses requires. That said, they do provide buyers with a choice between a perpetual license (payment required upfront) or a subscription-based license (paid per user, per month).
  • Compatible with Office 365: All Microsoft ERPs provide native integration with the Office 365 suite, which allows businesses to seamlessly manage documents, spreadsheets, presentations, email, instant messaging, and more, without manual API integration.

Microsoft Dynamics AX: ERP for Global Enterprises

Dynamics AX (acquired as “Axapta” in 2002) is Microsoft’s most expansive ERP, designed for global enterprises with multiple sites and complex software needs. In fact, it’s the preferred vendor (over Oracle and SAP) for large enterprises with $50 million or more in revenue, according to Ovum research. Think of it as the Swiss Army knife of ERPs, with financial management at the center and features and customizations for almost any need.

Of the four Microsoft ERPs, AX typically takes the longest to implement and demands the most IT resources (which means you probably shouldn’t take it on unless you have full-time developers and a strong IT department). Pricing will vary from company to company, but AX is typically the most cost-intensive of the four.

Dynamics AX has over 17,000 customers in 40 different countries, including companies such as Ashley Furniture, New Belgium Brewing, and AMEC. It offers industry specific configurations for manufacturing, distribution, retail, services, and the public sector.

Out-of-the-Box Capabilities

  • Performance and regulatory compliance
  • Financial management
  • CRM
  • Supply chain management
  • HR and payroll
  • Inventory
  • Supplier relationship management
  • Project management
  • Reporting/analytics

Microsoft Dynamics GP: ERP for SMBs

Dynamics GP (acquired in 2000 from Great Plains Software) is at the opposite end of the spectrum from AX, and is designed to help small to midsize businesses (SMBs) get up and running quickly. Many companies implement GP when they outgrow QuickBooks and other accounting suites.

GP is somewhat limited in scope, since it isn’t built for international use and doesn’t offer project management tools, but it’s also one of Microsoft’s more affordable ERPs. In most cases, your solution partner will suggest add-ons that align GP with your needs and workflows.

Out-of-the-Box Capabilities:

  • Financial management/accounting
  • Basic supply chain management (inventory, invoicing, procurement)
  • Sales and service management
  • Reporting/analytics
  • Human resources and payroll

Microsoft Dynamics NAV: ERP for Global SMBs

Dynamics NAV (formerly Navision) is a close cousin of GP, offering many of the same core features, but with expanded support for global companies, including multi-lingual and multi-currency capabilities. The solution is centered around financial and supply chain management. NAV offers a decent set of project management features (capacity management, cost and resource planning, budgeting, etc.), but only “basic human resources,” compared to GP’s optional full suite.

NAV is Microsoft’s most popular ERP, with over 100,000 customers from various industries, including IT, manufacturing, retail, hospitality, and financial services.

Out-of-the-Box Capabilities:

  • Financial management/accounting
  • Supply chain, manufacturing, and operations
  • CRM
  • Marketing, sales, and service
  • Project management
  • Reporting/analytics
  • Multi-currency, multi-language support

Microsoft Dynamics SL: ERP for Project-Based Businesses

On to Dynamics SL. Microsoft acquired this ERP in 1999 from Solomon Software, where it was originally an accounting solution built on the Microsoft SQL server. The backbone of SL is project and financial management, which makes it an ideal choice for construction, contracting, professional services, and engineering companies. The software brings traditional accounting features together with job costing, materials, and compliance management to support the needs of project-driven organizations, regardless of size.

SL offers the most robust project management features of all four ERPs, and even has field service management features (contracts, dispatch, maintenance), although it lacks a human resources module. Dynamics SL is comparable in pricing to GP, but again, licensing costs will depend largely on your specific needs and customizations.

Out-of-the-Box Capabilities:

  • Financial management
  • Project management (contracts, resources, billing, time and expenses, etc.)
  • Field service management
  • Payroll
  • Basic supply chain management
  • Reporting/analytics


As you can see, Microsoft has an ERP for just about everyone, but the demarcation between products isn’t always clear. If you still aren’t sure which ERP is the best fit for your business, that’s okay. The Dynamics line is built to be flexible, and your solution partner will work with you to build a custom solution.

If you’d like to learn more about ERP software and compare other vendors, check out our comprehensive ERP Guide.

Top ERP Software Recommendations

Free Download

ERP Software Buyer's Guide

Get My Free Guide