From time to time, I face questions from clients about which ERP system to choose: Microsoft Dynamics NAV (Microsoft Dynamics 365 Business Central) or Microsoft Dynamics AX (Microsoft Dynamics 365 Enterprise Edition). This question has become more topical in the last six months. So I decided to talk to our specialists who have worked with both the products and get more comprehensive information on this topic. Opinions and interpretations differ. Nevertheless, we have finally arrived at a common opinion, which I will share in this blog post, together with small examples of the different features of each type of software.
The information available on the Internet about the differences between Dynamics AX and Dynamics NAV is mostly formulated as follows: if a customer is large (the so-called enterprise level), the best choice is Dynamics AX, while Dynamics NAV is suitable for a smaller customer (or SMB – small and medium business). However, this categorical assertion cannot be accepted as the ultimate truth. There are examples where Dynamics NAV is used with success in companies with 100, 200, 500 and even a couple of thousands of users. By contrast, Dynamics AX is also used in companies with five users. Therefore, it is not correct to state firmly that the choice of the system mainly depends on the company’s size and the number of users of the software.
I believe that the key criterion of the choice of the system lies at the junction between the company size (including the amount of data) and the industry represented, as well as between the complex management of processes in the company and the need for an easy-to-use and simple, customizable interface. For example, Dynamics AX is more powerful in the management of complex processes such as production, offering greater functionality. Therefore, manufacturing companies which implement complex processes in their operation should definitely choose Dynamics AX. And the fact whether the company has five or 1,005 users is not so important here. Conversely, if the company operates, for example, in the wholesale sector, where the primary goal is the possibility for the users to easily and quickly process data, Dynamics NAV would probably be a much better option. User customized and simple data display will provide higher efficiency because less time will be needed to get to the information required. For example, by entering the customer name in the customer number field, the system will be able to filter out the necessary information immediately.
When analyzing the size of the company, in our case we refer to the amount of data (how effectively the system is able to process large amounts of data) and their complexity (the complexity of the processes). The key lies in the functionality delivered by both systems. In this case, I am reviewing the standard functionality ensured by Microsoft in the standard versions of the systems. Dynamics AX is definitely functionally richer in terms of management of a variety of processes, such as processes related to project management, the public sector or manufacturing (in this area, Dynamics NAV is capable of displaying only discrete manufacturing, whereas Dynamics AX can also reflect lean and process manufacturing. Moreover, Dynamics AX has a ready built-in barcode scanner interface for mobile devices (handheld) specially designed for warehouses). By contrast, in sectors such as wholesale, Dynamics AX loses its functional advantages over Dynamics NAV, which provides the same full functionality and is easier to use. Dynamics AX, likewise, cannot be considered to have all the functionality of Dynamics NAV, while Dynamics NAV cannot be considered to lack something: Dynamics NAV also offers features that are not present in the basic version of Dynamics AX, such as the breakdown of additional costs by goods. Unlike Dynamics AX, Dynamics NAV can do this work automatically.
Looking at the data display and modulation functionality, it must be said that although the Dynamics NAV solution offers possibilities of an extensive and advanced analysis by dimensions, these possibilities in the Dynamics AX solution are broader with more control options.
- Conclusion: when choosing a system, it is important to take into account not only the number of users or amount of data, but also the business processes
- Conclusion: the standard functionally of Dynamics AX is richer than that of Dynamics NAV in areas such as manufacturing or the public sector
- Both systems have functional differences that can determine the choice of the system for a particular customer
The performance of these systems is largely determined by the service infrastructure or the so-called hardware. An important factor is the choice of servers where the system will be installed. By saving on this item, performance will be low regardless of the selected Microsoft Dynamics software. When choosing the Dynamics AX system, greater investment in the server infrastructure is required, because the system is demanding of this item. In Dynamics NAV, these investments will be lower, as the system itself is less demanding of the hardware. At the same time, the performance decreases along with the increase in the amount of data in Dynamics NAV, so the hardware configuration should be designed in a way to make the system run smoothly even after several years. This feature is less pronounced in Dynamics AX. It should be noted that Dynamics NAV is fitted with a variety of free tools for data compression and archiving, which can be used freely by the customer to improve performance. This is all a matter of administration.
- Conclusion: no funds should be spared on hardware for the system to perform properly
- Conclusion: infrastructure costs will be higher for Dynamics AX than Dynamics NAV
It is important to understand that Dynamics NAV essentially sums up the data in different locations. This way, the system provides a more convenient user interface (the needed data, such as the customer’s balance on the card, is quicker to be displayed), while Dynamics AX does not add up the data, but the system works on demand. For example, in order to view the customer’s balance, the Dynamics AX user has to make more clicks to send a request to the server for this information, which is then compiled and displayed.
The interface of the Dynamics NAV system is significantly more convenient and easily readable for the user; it also enables the user go through the data quickly. And here comes the question of what is more important for the company: a functionally richer system or a more convenient user interface of the system? The interface of Dynamics NAV is similar to the standard Microsoft Office products with almost identical screen adjustment functions (opening and closing fields in cards, catalogues or tables, as well as easily customizable toolbars and screen for the user’s needs). I believe that it is much more convenient for an ordinary accountant to work in Dynamics NAV, while a financial analyst will have more ample opportunities when working with Dynamics AX.
- Conclusion: Dynamics NAV sums up the data during processing so that the user has to make fewer mouse clicks for viewing the daily data
- Conclusion: from the user’s point of view, the interface of Dynamics NAV is more intuitive and more easily readable than the interface of Dynamics AX
Another important thing to compare is the cost of the two products. As the Dynamics AX solution has much more extensive settings when configuring (adjusting) and using the system (user training), the final implementation costs of the system are on average at least 1.5 times higher than those of Dynamics NAV. If the company has no need for the rich manufacturing and project functionality of Dynamics AX, this aspect should definitely be taken into account for the investments made in the implementation of the system to be cost-effective.
Differences also exist in the licensing costs which are higher in the case of Dynamics AX. Based on the Microsoft RSP (recommended sales price), the minimum functionality licence with 3 Enterprise users of Dynamics AX (equivalent to Dynamics NAV – Full User) is about 290% more expensive than exactly the same Dynamics NAV licence. The same licence with 30 users of Dynamics AX costs 48+% more than that of Dynamics NAV. Also, the cost per each additional user will be over 33% higher in the Dynamics AX system.
Summing up the costs of consultations and licensing, as well as future maintenance, the TCO (total cost of ownership – the long-term costs) for the Dynamics AX solution will be more expensive than for the Dynamics NAV solution. It should be noted that Microsoft regularly offers special conditions in particular for the purchase of Dynamics NAV, which further increases the Price/Performance benefits of choosing the Dynamics NAV products. The campaigns available in 2015 include Give me 5 or On Azure in O365 (a special offer for Dynamics NAV cloud service in combination with Office 365 licences). The licences of the two systems are available both through licensing the software to be kept on the company’s own infrastructure and as a cloud service (rent per user per month).
- Conclusion: Implementation of the standard Dynamics NAV solution is less expensive
- Conclusion: Dynamics NAV has lower overall long-term costs
- Conclusion: both products are available for renting and by buying licenses
Shifting towards cloud services
An important modern trend is observed in connection with Dynamics NAV: a much more rapid shift towards the cloud is going on. At present, this system is basically a completely cloud-oriented product with fully-fledged web and mobile (including tablets) users. By contrast, the Dynamics AX system currently has no web client (a possibility to connect to the system through a web browser and use almost 100% of the system functionality) or tablet client (functionality available through an interface specially customized for tablets). It is likely that Microsoft is implementing a strategy aimed at making the Dynamics NAV solution a pure cloud solution suitable for the SMB segment in the future. Differences between Web and Windows client I have discussed at my other blog post.
Currently, the standard Dynamics NAV is available with Office 365 integration, including one authorization for all programs, integration with Outlook mail server, the opportunity to create individual document templates in Microsoft Word by making available some space for the data from the system and other options. By contrast, this integration is currently not as complete in Dynamics AX, although the data can also be exported to Excel, .pdf, etc., and there is also Outlook integration and a possibility to create documents with a Microsoft Word template.
- Conclusion: Dynamics NAV demonstrates a more rapid shift towards the cloud
- Conclusion: Dynamics NAV is available with Office 356 integration, while in Dynamics AX this functionality is limited
In addition to the standard functions provided by Microsoft in the Dynamics AX and Dynamics NAV software, the two systems have a very wide range of solutions developed by partners (the so-called add-ons), which are designed both for a specific industry and for certain general functionality. A good example here is the payroll module that is not part of the standard version of the systems but is always provided by the leading Microsoft Dynamics partners of the region. In areas such as equipment rental, leasing and factoring, real estate management and other sectors, it is the Microsoft ISV (independent software vendor) partners who provide software modules. One of the examples is the Elva DMS solution designed for car dealers and workshops on the Dynamics NAV platform. Having regard to the historical partner network structure and the fact that the number of Dynamics NAV partners is much higher than that of Dynamics AX, the Dynamics NAV platform offers a wider choice of solutions for industries.
In parallel, it should be mentioned that in very many countries Microsoft has not released local versions of the Dynamics NAV solution, but instead it signs contracts with local partners on the localization of Dynamics NAV for a particular region. Also, the official availability of Dynamics NAV is limited in some countries, such as Japan.
If someone asked me to select three main advantages and differences of the two products from all the arguments, my choice would probably be as follows:
Dynamics NAV (Microsoft Dynamics 365 Business Central)
- Ease of use (a comfortable user interface)
- A successful benefit-cost ratio
- Orientation towards cloud services
Dynamics AX (Microsoft Dynamics 365 Enterprise Edition)
- Rich manufacturing and project management functionality
- Excellent operation with large data volumes
- Extensive options for analysis
Therefore, the fact that the company is big does not mean that it necessarily has to use Dynamics AX, and, vice versa, small businesses do not necessarily have to choose Dynamics NAV. This may be just one of several preconditions. More important is the industry represented by the company or organization and the structure of the operational processes.
Taking into account the plans published by Microsoft, it is clear that both of these products will be developed dynamically. The question is about the focus of direction. Recent events show that the important innovations, such as a web client or RTC (a role tailored client) are initially included in the Dynamics NAV solution and their later versions also appear in the Dynamics AX solution. Also, Dynamics NAV is the first system to be integrated in the cloud with Office 365, which clearly shows the future focus of this solution.
*The article compares the Microsoft Dynamics NAV 2015 and Microsoft Dynamics AX 2012 system versions