Dynamics NAV vs Dynamics 365 for Finance & Operations (Business Edition)

Microsoft has been pouring development and marketing funds into their latest ERP product: Microsoft Dynamics 365.  There are two “ERP” modules you can get within Dynamics 365: Finance and Operations Business Edition, or Enterprise Edition.  In this blog article, I’ll be focusing on how Microsoft Dynamics 365 for Finance and Operations Business Edition differs from Microsoft Dynamics NAV. I’m also going to use a few terms interchangably – so any time you see “Dynamics 365”, know that I’m talking about Dynamics 365 for Finance and Operations, Business Edition.

In writing this comparison, I did a lot of research. The result was more than just this article: I also created a tool that can generate a recommendation for you based on your response to a short questionnaire.  It will generate a score for both Dynamics NAV and Dynamics 365, plus provide a few other things to think about. You can try it out here.

Why Compare These Two? A Little History…

Microsoft Dynamics NAV and Dynamics 365 for Finance Business Edtion are very similar products. This is because when Microsoft began developing Dynamics 365 for Finance & Operations Business Edition – it was known as “Project Madeira” at the time – they essentially picked up most of Microsoft Dynamics NAV and “SaaS-ified” it.

The codebase and inner workings of Dynamics 365 for Finance Business Edition and Dynamics NAV are very similar for this reason. Skills acquired working with Dynamics NAV transfer very well to Dynamics 365 for Finance. But that doesn’t mean Dynamics NAV is going away; Microsoft will continue to release updates for both products well into the future.

Microsoft Dynamics 365 for Finance

Dynamics 365 for Finance Business Edition is the “new kid on the block”. It is a low-cost, SaaS offering developed and hosted centrally by Microsoft. The stated target market for Dynamics 365 for Financie is companies with up to 100 users. It provides basic finance, purchasing, sales, and inventory functionality.

Microsoft Dynamics NAV

If Dynamics 365 is the “new kid on the block”, Dynamics NAV is the well-seasoned veteran. More than 100,000 companies use Dynamics NAV every day. In addition to financial functionality, Dynamics NAV has an extended pack that includes production functions, supply chain management, CRM, and more.

Dynamics 365 for Finance vs Dynamics NAV

Infrastructure and Deployment Options

One of the biggest differences between the two products is how you can deploy them.  With Dynamics 365 for Finance & Operations, you must purchase the software “as-a-Service”. This isn’t a problem for many, but it does have some downsides such as flexibility and data autonomy. However, there are a great number of benefits to this model including lower cost, scalability, accessibility, etc.

Microsoft Dynamics NAV, on the other hand, gives you a little more flexibility in this regard. You can host the software on your own servers, or in a 3rd-party cloud like Azure if you choose. Dynamics NAV actually works very well when hosted by a 3rd-party cloud, so don’t base your choice between these two products on whether you want “the cloud” or not.  Your choice will have more to do with whether or not you are seeking for a SaaS application.

Pricing and Licensing

Dynamics NAV can be purchased either perpetually, or as a subscription. This means you can bear the full cost of licenses up-front, or subscribe to retain access rights. You can read lots more detail here. You can also purchase Dynamics NAV users as “concurrent” users, or “named” users. This means you can either buy the rights for up to [x number] of people to use Dynamics NAV at the same time, or you can buy the rights for certain people to use the solution whenever they want. Your choice.

Dynamics 365 users can only be “named”, and they can only be licensed as a subscription. So – you have to pay $40/month for every person you want to be able to access Dynamics 365.

Just about every time, Dynamics 365 for Finance and Operations, Business Edition will have a lower Total Cost of Ownership (TCO) than Dynamics NAV.  This is because those Dynamics 365 licenses are less expensive per named user ($40 monthly vs $65 monthly); and all infrastructure costs are included in its price.

Functionality

As I mentioned earlier, Dynamics 365 for Finance and Operations, Business Edition and Dynamics NAV are very similar. As Dynamics 365 continues to be developed, we expect that everything in the Dynamics NAV starter pack will be available in Dynamics 365 for Finance and Operations, Business Edition (most of it is already):

• Basic Financials (General Ledger and Fixed Assets)
• Basic Supply Chain and Basic Sales (Sales, Purchasing and Inventory)
• Jobs and Project Management/Accounting

If you need warehousing, manufacturing, or professional services capability out of the box, look at Dynamics NAV. These modules are included in the Dynamics NAV extended pack, but will not be available in Dynamics 365 for Finance, which leads us to the next topic…

Customization and Configuration

Once again, things are very similar when it comes to customizing your ERP.  Here’s a breakdown of your options:

Dynamics 365 for Financials (Read More)

• System Configurations
• AppSource Apps

Dynamics NAV

• Custom-Developed Functionality
• System Configurations
• ISV add-ons

When it comes to custom-developed functionality, as of the time of this post, there is no way to get unique code into your Dynamics 365 implementation unless that code is also placed on Microsoft AppSource. This could very well change, but you should know that if you require a large degree of modification to your system, Dynamics NAV is still the way to go.

For add-ons, the only real difference is where you get your extra functionality from. Let’s say you need an add-on to extend Dynamics NAV or Dynamics 365 so that you can manage your point-of-sale system. With AppSource, you should be able to find an app that plugs right in to Dynamics 365 for Financials. If you are on Dynamics NAV, you’ll have to find an Independent Software Vendor (ISV) that develops a point-of-sale add-on that works for you.

I would say that despite their similarities, Dynamics NAV will always have the edge on system customization. Dynamics NAV has one of the most “open” codebases of any ERP; meaning just about everything is exposed to the system developer to manipulate if desired. It may be that one or more of your business requirements is best served by the customizability of Dynamics NAV.

In addition – despite all similarities – Dynamics 365 for Finance  is generally a simpler product. Dynamics 365 for Financials (Business Edition) does not have all of the configuration options or deep knowledge/talent pool available to Dynamics NAV customers.

Comparison: Dynamics 365 for Finance and Operations (Business Edition) and Dynamics NAV

Feature	D365	NAV
Date Established	2016	1987
Number of Users	Less than 1000	100,000+
Infrastructure	SaaS only	Any
Licensing	Rigid	Flexible
Cost	Low	Mid-range
Upgrades/Updates	Automatic	Requires Project
Functionality (Financials)	Included	Included
Functionality (Manufacturing/Warehousing)	AppSource	Extended Pack
Configurability	Medium	Extreme