At the Microsoft Inspire conference in Las Vegas, partners learned that a new change will be made to Microsoft Dynamics 365 licensing. Effective October 1, 2019, Microsoft Dynamics 365 for Finance and Operations will be divided into two separate applications: Dynamics 365 for Supply Chain Management, and Dynamics 365 for Finance. This change will occur alongside the elimination of all three major Dynamics 365 licensing plans: Unified Operations (which includes ERP applications), Customer Engagement (which includes CRM applications), and the Microsoft Dynamics 365 Plan (which includes both sets of applications).
Microsoft Dynamics 365 ERP Licensing Plans Today
Currently, Microsoft Dynamics 365 ERP applications exist under the banner of Microsoft Dynamics 365 Unified Operations. Customers have the option of buying each app individually, bundling the apps with the Unified Operations plan, or buying the entire Microsoft Dynamics 365 Plan, which also includes all Customer Engagement applications.
Today’s Microsoft Dynamics ERP apps include:
- Finance and Operations
Microsoft Dynamics 365 ERP Licensing Plans This Fall
As of October 1, Finance and Operations will be replaced by separate Supply Chain Management and Finance applications. Additionally, none of the above-mentioned plans will be available anymore; all apps will have to be bought separately. For customers who need more than one application, there will be the option to purchase a “base” app at full price, and then one or more “attach” apps at significant pricing discounts.
Beginning in the fall, Dynamics 365 ERP applications will include:
- Supply Chain Management
Why Microsoft is Dividing Finance and Operations into Two Applications
Supply chain and finance modules have been packaged together since the days of Microsoft Dynamics AX, so many are surprised that they will be separated under the new Dynamics 365 licensing model. At Inspire, Microsoft explained that the split is occurring because a significant number of customers only use one set of modules within Finance and Operations. For example, one customer might only use finance modules, while another may only use supply chain modules. This means that under the current plan they are paying for a significant number of modules they don’t use. According to Microsoft, this change will give users more flexibility when tailoring their selection of Dynamics 365 applications to their unique business needs.
Why Microsoft is Ending Plan-Based Licensing
Similar to the situation with Finance and Operations, Microsoft has decided to end all plan-based for Dynamics 365 licensing because very few people use all or even most applications that come with each plan. According to the company, 70 percent of Finance and Operations customers use only one or two apps in the Unified Operations plan. Less than 10 percent use all Unified Operations apps. For the Customer Engagement plan, 80 percent of users use just one app. In moving from a plan model toward a “base + attach” model, Microsoft will ensure that people only pay for apps they use.
Functionality Breakdown: Dynamics 365 for Supply Chain Management and Dynamics 365 for Finance
While the module below currently exist together in Finance and Operations, here is how they will be divided upon the October update:
Dynamics 365 for Supply Chain
- Cost Accounting
- Quality Control
- Sales Orders
Dynamics 365 for Finance
- Financials and Accounting
- Project Management
Pricing Details Effective October 1, 2019
While Microsoft has yet to release a new licensing guide regarding this update, we do know that there will be some minor changes to the pricing of certain applications, and that pricing will vary between base apps and attach apps. Regarding customers who are already on a licensing agreement, Microsoft says they will be able to continue with the current pricing until it is time to renew. Microsoft also says that customers may still use the current pricing model for deals closing before October 1.