Why are Dynamics ERP Customers Moving to the Cloud? Top Questions Answered!
Tracey: What are the potential benefits of moving to the Cloud?
Brent: I think that there’s many, many benefits. The one that gets most people interested is reduced cost. And reduced cost can come through some things we spoke about sort of at a high level earlier which is that idea of economies of scale. There’s probably 20% to 30% reduction in cost by moving certain workloads into the Cloud. In those cases, you might spend a little bit more money with Microsoft but save a heck of a pile of labor on your own end but mostly it’s just cost that gets cut out that sort of you having to incur the costs. It gets shifted someplace else. That’s what’s on labor reduction, on maybe 10 workloads.
There is a lot of benefits to being able to scale for the, you know, the computing power that you have to be elastic to grow and shrink with what your need is. Most businesses have a very high fixed cost footprint and most businesses stay awake at night or get out of bed early in the morning to try and figure out how they can have less of a fixed cost footprint and more of a variable one. So this is a good way to do that.
I think that there is an amount of risk that’s being shifted around. So again, and it’s got to do with that capital outlay versus an operating dollar outlay where in the world 10 years ago, if you were going to buy a new system, whatever that might be and let’s say the price tag on that new system was a million dollars, you spent a lot of time thinking about it. You probably waited two or three years longer than you should’ve to pull the trigger and then when you put it in place, you as the customer were taking all of the risk of it actually working or not.
And if you think about the world today in terms of this idea of variable cost where I can actually buy a user for \$100. If I wanted to buy five users for \$100 a month, that’s \$500 a month over the course of six months. You know, for \$3,000 I can try something so I don’t have to wait for three years to pull the trigger and… Like I can just kind of try it and if it works great, I do more but if it doesn’t work, I don’t. So those are some of the really big things that are changing it. The one thing on that list that maybe is a little bit a sleeper is mobile.
So when you think about the Cloud and things that you can do with this technology that you couldn’t do before, a lot of it is enabling mobile and allowing you to do more and more things on your phone and not having to have a computer and not having to be at the office, not having to be at home, not having to connect via VPN into the network and that’s really powerful. It’s powerful in that the tools now are being created so that when you have say visualizations maybe in the form of BI… So power of BI as an example. Those things render to the size of screen that you have. If you have a very small screen, they render in a way that you can look at it and use it. If you are using your tablet, they render to that size. If you have a sort of a large screen, it renders to that size.
And if you think about sort of the doors it unlocks, the things that allows you to do differently, it could be a really big deal and it can allow you to take assets that you have in your organization… You know, if you think about what a business does, it organizes whatever assets it has into a format where their customers can consume it. Or if you think about… This is sort of digital world and back to that slide of the Vatican and that idea that, you know, every one of your customers, every one of your colleagues has a phone. Well, not everyone but most of them, a smartphone. All of a sudden, you can do a bunch of things that you couldn’t do before and that could be very, very helpful, I guess, in unlocking the business potential that you have.
So one example might be Airbnb. The thing about Airbnb… Not everybody knows who that is but they started selling people’s sofas to sleep on and then eventually rooms and houses and eventually, you know, could be an apartment, could be a house, could be whatever it was, a boat. What’s interesting is that those beds always existed just nobody could get access to the inventory and they created a way in which people can do that. If you think about that in the context for your own business, there’s all kinds of interesting things that constant mobile opens up.
Tracey: Great. Thanks, Brent. I’m curious. Is the Cloud right for every company?
Brent: No. No, it’s really not. But it’s right for a lot of companies and, you know, where it’s really wrong is if you have bad communications to the Cloud. So if you live in Yellow Knife, you’re going to have a difficult time with Cloud-based services. It would work for email and things like that but ultimately, for a lot of the workloads, they wouldn’t be suitable to the Cloud just because your communication speed has too much latency built into it. I’d say that, you know, if we look at our customer base, less than 5% of them have everything that they do in the Cloud and I’d say that less than 5% of them have nothing that they do in the Cloud. So everybody’s sort of in the middle or most of the people are in the middle and trying to figure out what makes the most sense for them so they could really take advantage of the technology.
There’s certain points in time where this comes up, you know. Should I be more in the Cloud? Should I be less in the Cloud? And I think that the two main drivers of that would be… Most businesses do a strategic planning exercise of some kind. Often it’s sort of looked at on an annual basis, whether it’s totally retooled or not is probably not the case, but every three years or so gets totally retooled in most businesses. And they’re looking at what they’re trying to do over the next three years and a lot of times a part of that plan is how is technology gonna support that and that’s a really good time to look at, “Hey, how might the Cloud be awaited? We’re not thinking about the [inaudible 00:05:37] to do more than we could otherwise.”
And the second time is if you’re ever doing an upgrade, so let’s say that you’re on a previous version of Dynamics and you want to upgrade to the newest version. That would be a great time, again, back to what you were asking earlier. We’re going to buy a server. Why am I doing that? It’s time to kind of rethink that and relook at what we want to do.
Tracey: Great. Do I have to move all my business applications to the Cloud?
Brent: Definitely not. So you can move some, I think that’s probably the easiest. There’s certainly some that have a sweet spot. So email is one that I’d be very surprised if many people had a reason why they wanted to have email on site. Disaster recovery is another one. File storage is another one. There’s certain ones that really are a sweet spot to be in the Cloud that save for everybody money. So those would be easy ones to justify your move. I’d say when you get into CRM, probably 75% of clients are in the Cloud. If you’re not in the Cloud again, usually it’s because you have a specific reason why you can’t be but it makes kind of [inaudible 00:06:37] sense for that particular article…certain application to be there. When it comes to ERP, what probably is going to drive you there is that next time you gotta replace the server. Yeah.
Tracey: Great. I’m just wondering if they still have control of their data that’s in the Cloud?
Brent: So yes, you do. You can basically do with it as you wish. I want to be a little careful about that because, of course, when you stop paying for it, that’s when you can no longer have control over your data so you want to be careful about when you’re transitioning things out of the Cloud. If you’re using things like Microsoft Azure, you actually can hibernate it. So [inaudible 00:07:14], putting it into hibernation, you stop paying but your data’s still there for whenever you want to come back and get it. If you have something like Office and each user in Office has a terabyte of data storage space for file storage and such, if you were to stop paying for Office, after a certain amount of time, that data would disappear unless you move it someplace else. So the trick is you’ve got complete control but as you’re changing what you’re paying for, you want to make sure that you are thinking about where those assets are.
Tracey: So Brent, what happens to my internal IT resources if I do migrate to the Cloud?
Brent: They get to go on vacation occasionally. They get to enjoy summers for the first time in their work lives. They might even get a couple of days off for Christmas which would be nice. I am an IT guy. Can you tell? Yeah. So I think there’s a lot of benefits to the IT resources and it’s interesting because when we talked to people about the Cloud three, four years ago, a lot of times it was the IT group that was blocking that discussion. You know, they had all kinds of reasons why this couldn’t work or shouldn’t work.
That really isn’t the case anymore. It happens occasionally but not very often. I think when you’re…Look at your IT team and they always have more stuff to do than there is time in the day so like that’s the first thing. And if you look at sort of where they spend their time and energy, oftentimes the things that they’re spending time and energy on is not the best use of their talents. And so, a lot of the work that they’re asked to do really is commoditized work. When you think back to the earlier discussion about economies of scale, it’s really easy for Microsoft to take on that stuff and do it instead of your IT guys. And by doing that, you really free them up to do things that are higher value for your business.
So what we’ve seen is not people going away. We have seen labor shift to Microsoft. What it’s allowed us to do is see the IT people in your organization play a much different role. Instead of them being the ones who were always the reason that things can’t get done quick enough, all of a sudden, they’re actually supporting and enabling your business and able to really be a lot more functional or proactive than they’ve been in the past.
Tracey: Thank you. What are the cost savings of moving my ERP to the Cloud?
Brent: So I was saying earlier, there’s different workloads that make a lot of sense to be in the Cloud. And those cost savings are dramatic and they are immediate and the three I think I mentioned were around email, disaster recovery, and file storage. A fourth one would be, you know, communications. So it’s ability for you to do video, instant messaging, telephone calls, have your phone system to be smart enough to know if you’re not at the office and ping your cellphone instead. Those kinds of things.
When it comes to your ERP, it’s probably a little less obvious what those cost savings are and I say that because often people will compare the cost of a new server to what’s it going to pay in the Cloud and then use that as a kind of an only comparison. They’re not thinking about all the other costs that they have with that server if they were to put it on site. And so if you just do a one to one comparison in the Cloud, it still often makes economic sense. But it makes a lot more economic sense if you look at all the things you would have to do if you didn’t have that server on site anymore, in terms of taking up office space, in terms of configuring it, in terms of patching it, in terms of, you know, putting new softer on it to upgrade it, in terms of, you know, air-conditioning to keep it cool.
Once you start comparing those kinds of things from a cost perspective, it no longer makes sense to have them on site. As I mentioned earlier, this idea of it being actually redundant in a way that is far superior than what you could ever perform on site just because of cost, that’s something that’s not doable. Just becomes financially not worthwhile, that quality of service and just how much higher level of service that you have with that equipment in the Cloud. When you look at the fact that most organizations these days are a lot more remote so not everybody is at the office. So having that file server or database server in a location that’s, you know, feet away is interesting for the people that are a few feet away but as soon as you are 100 miles away, you’re 50 miles away, it becomes a lot less interesting.
When you get back to things about security… Excuse me, and allowing access to those assets through the internet for an organization to be able to do that is very difficult. When you look at… I mean, I don’t know how many of you started your jobs recently but if you look at a new person coming into an organization or organizations, the first thing they want to do is get their smartphone in the network. And the first thing they find out is that that’s not going to happen or maybe they have to have an Android or they have to have an, you know, an iPhone or maybe it’s gonna take a month and it’s difficult to understand how something could take that long.
Again, as an IT guy, it’s very hard to secure those devices. It’s very hard to keep track of what softwares, where… And so it’s a mammoth pain to be able to manage those devices. Microsoft can do it in 36 seconds, you know. They have the process put in place whether you have an Android, an iPhone, a Blackberry, a Windows phone, it just works. And so, those kinds of things in terms of enabling your business are very hard to put an actual economic value on but they’re absolutely mammoth or massive if you are a person that business is trying to drive, you know, sales or drive marketing or drive change or whatever. So it’s often not calculated correctly but if you sit down and calculate it correctly, it would be far less expensive to have [inaudible 00:13:00].
Tracey: Well, will client’s IT solutions work with the Cloud based ERP?
Brent: The easy answer is yes. Now, it somewhat depends on which version of Cloud you’re… Some SAS cases, not all ISPs, are able to run in the SAS case but all ISPs are able to run in the PASS case or the IAS case and so I would say for most people, just people who are working with… The answer is yes. There’s not very many that would be in a software as a service solution [inaudible 00:13:39].
Tracey: Great. Will I lose control of when updates happen?
Brent: You don’t lose control when updates happen. Again, if you think of what a true software as a service setting… It does sort of lend itself that idea that things just get updates so I’m thinking about Office 365 example. So you can have Office 365 just update whenever you want. You can stop it from updating and still have control over when you do that. You can have it sort of stop for a while. I mean, a month or two months or three months and then it’s going to update and do a number of things.
We think about ERP which I think is probably what you’re really asking me. It’s no fun to come to work on Monday and find that you can no longer communicate with your bank. The people are expecting to get paid and that’s not going to happen. Right? So in the case of ERP, it is heavily controlled when you’re going to do updates just to make sure that those things that you’re doing that maybe integrations and things are not going to break and cause you, you know, business continuity issues. So that’s very tight. It works very well.
I mean, look at maybe an application between those two things like Dynamics 365 for Sales. It used to be called CRM. It’s sort of a mix of the two. So often what happens with that one is it kind of gives you a three-month window in which to upgrade and suggests strongly that you do it then but you have control over when in that three months and if you really want it to stop, you can. You can stay one version back.
Tracey: Okay. Before I go onto one of our last questions… Again, lots of information is coming out to our customers about different products and different offerings that we have. So maybe you can just quickly talk about that Dynamics 365, Office 365, Office. What things are in the Cloud for our customers?
Brent: So Microsoft’s model is such that they believe that everything should be able to be in the Cloud or on site or what they would call a hybrid model where you could have part on site, part in the Cloud and I’ve been talking about the public Cloud a lot but this [inaudible 00:15:41] a private Cloud as well. So if you wanted to host things with a host, that would be a private Cloud or if you have maybe a different data center that was yours but it was off site somewhere. That could be a private Cloud. And, you know… I totally lost my train of thought.
Tracey: We’ve got Dynamics 365, which is true SAS, correct? Software as a service.
Tracey: What about our customers… I mean, everyone’s using Office and we also offer Office 365.
Brent: So Office 365 is kind of a… It’s, you know, a licensing model so it’s a pay by the month model. Again, you’re allowed to run it on prem only. You’re allowed to run it on the Cloud only or some hybrid of that. So just the same with Dynamics. That’s sort of the model you’re allowed to run part in the Cloud or part on site or all of it on site or all of it on Cloud. Whichever…
Tracey: Right. So it’s a lot about choice, like you were talking about today. You’ve got choices. You started a business 10 years ago, you can still migrate to the Cloud. If you’re starting a business today, you can start off in the Cloud.
Brent: Absolutely. Yeah.
Tracey: Great. So that leads us to our next question. Where do I start?
Brent: Where do I start? I think it’s, you know… This is changing a lot. So from week to week, day to day, hour to hour. What was true last week may not be true anymore. It’s a good place to consult a partner. We do this for a living. This is all we’re doing every day, all day. You know, whatever business you happen to be in, that’s sort of what you do every day, all day and you kind of just want stuff like this to work. So I think it’s important to really think about just how technology plays in your business in a more holistic fashion.
So you know, back to the water heater example. Often if we own houses and our water heater breaks, the first thing we do is we buy a new water heater. We don’t look at sort of, “Hey, should I do geothermal? Should I… You know, should I be doing on demand? You know, what should I do?” You just want to fix the problem because I want to have a hot shower tomorrow. And I think we’re a little bit like that in our businesses as well. I’d suggest strongly that it’s a good idea to really have a plan about what you’re going to do and how the Cloud is going to affect you.
And why I believe that is it’s just been my experience that as an organization, you’re going to spend a \$100 a year for the next five years on technology, as an example, as a hypothetical number. Whether you have a plan or not won’t often change the number you’re going to spend. You’re going to spend \$500 in once case or the other. If you don’t have a plan, you’re going to wake up five years from now and be pretty close to where you are today. And if you do have a plan, you’re going to wake up five years from now and be pretty close to where you want to be. So if you look at the pressure that’s being put on IT in general, even finance because the two are related. There’s a lot of pressure to do more with less. There’s a lot of pressure to allow the business to evolve more quickly and to have technology be the basis of that business evolution.
And if you think about sort of where we really spend our time in IT, we’re just trying to keep the stuff running that we already have. So the idea of doing new stuff is not a very fun thing to think about, mostly because every time we do something new, it opens us up to the risk of things not working and we’ve been taught by many, many beatings over the years that things need to work every day, all day and so we’re averse to that kind of concept. And the best way to not have something break is just to never change it.
If you think about this world instead of those massive updates that are happening every 18 months, as an example, or something like that. They’re just doing a little bit of updates every week. And so, it changes the risk profile a lot. So things are changing. That’s fine. Some things will work. Some things won’t. That’s fine. We do a little over the course of time. The impact is not a challenge to your business continuity whereas if you do a lot, at once, you have this sort of change or potential for disaster to happen in terms of your business being down for an hour or a day or whatever it might be. So the new world really allows you to do things in a different way. We kind of have to unlearn the stuff we’ve been doing for the last 30 years because it’s exactly counter to how you would use new tools. Yeah.
So in terms of how you get started, I think you’ve got to have a plan and you’ve got to have a plan that’s sort of relative in scale to what you’re trying to achieve. So we tend to go at this in three different ways. One would be the simple, you know, hot water heater broke, got to do something. We would call that a Cloud consult. How do we take a quick and dirty look at what you’re doing? And trying to align that very quickly with what other customers are doing and taking advantage of best practices and sort of the things that you can really take advantage of pretty quickly to get value. That value, as I said, often is in the form of less cost but other times in the ability for you to be able to do things you couldn’t do before.
The second level is something we call a path forward which really is looking at what you’re trying to do as a business and make sure that your technology plan is aligned with your business plan and that it’s going to be supporting it, not inhibiting it. And really work with you to have a really good discussion about, you know, how we see that because you’re going to have an idea of what that looks like given your frame of reference and it’ll be pretty good in terms of what you think that should look like. The difference is the frame of reference that you’re using as what you know and sort of the number of things that you know are more traditional than the things that we’re starting to get to know because of our immersion in the Cloud.
And so, I think there’s a really good conversation that can happen there that doesn’t take an awful lot of time that really can create a better plan to ensure that you’re on the right path, so obviously at the medium level. And then the big one we’re doing these days is something called digital transformation where we’re not only looking at how do we align what the IT group is trying to do or what your IT plan is through business plan, strategic plan. We’re actually giving you a framework for how to execute against that because what you start to see in all of these different endeavors in terms of putting in a new system of some sort… The system’s only as good as the people and process around it.
And so, you know, if people can’t adopt the system, it actually has literally no impact other than just increasing your cost. And so, you really want people to do things in a different way. You have to show them how to do that. So I’ll give you an example about, you know, ERP system say ten years ago. And if you think about your common ERP system 10 years ago, first of all, it wasn’t really an ERP system. It really was a financial backbone. It didn’t really do anything other than financials. And if you think about it, what would happen is that the people that were running that solution would be very small. Almost always only people in your finance group and because the licenses were very, very expensive, you didn’t want to buy any more than you had to. So we shrunk the ability for the people to use it. So that was kind of the first issue.
The second issue was that people were unable to use that. If you’re not an accountant, as an example, it’s very hard to use the ERP system. It’s hard to be a casual user of an ERP system because it doesn’t work in a way that’s intuitive to people who are non-accountants. And so, you know, those are two pretty big hurdles in terms of adoption and getting it into a company. It was cost and just… Usability was just low.
If you look at sort of how this stuff works today and how integrated Dynamics 365 is with Office 365 as an example and how I can actually do purchase orders. I can, you know, do…print invoices and do all these kinds of things from within Outlook, I can do that kind of stuff. It also makes a whole lot of sense for casual users to be able to come into the system through a tool they’re comfortable with and that they know how to use and be able to do financial transactions in a secure, safe way that the people in the control room are going to be okay with. But everybody kind of gets a license to that at the same time. It’s, you know, priced the way that they would expect so they can afford to be part of the system and ultimately, you can drive this adoption of that ERP system across the organization. You get everybody the information they need when they need it.
So that’s, you know, the dream if you will. And digital transformation is about helping you think through…there’s a framework around how to not only look at those cost optimization pieces that we talked of earlier. How do I do things cheaper? How do I do it better? How do I do it faster? But how do you look at it in terms of doing it completely different? And how do you make sure that the business users, the ones that are outside of IT and finance can actually adopt these systems and use them the way they were intended to get the value that they want for your business. Yeah.
Tracey: So when we say you’ve got your head in the clouds, it’s a good thing.
Brent: It’s a good thing. It’s a good thing.
Tracey: And any thoughts on the future of Cloud?
Brent: I think it’s going to keep going, you know, more fast and more furious. I don’t know how much… Looking at things like predictive analytics, if any of you have done, but this concept of the data actually telling you things about your business that you didn’t know, as opposed to you having to ask. If you look at this sort of concept of, you know, artificial intelligence or these, you know, bots to be able to do things that humans used to do, to be able to, again, take some of those commoditized things that all of us have to do with businesses but make them into something that people don’t have to do. There’s some really neat work happening there. I think it’s going to be pretty mainstream in the next year or two.
And just more and more mobile. I mean, it’s all about people being able to do stuff on their phones, people not being tied to their desk. People being able to have all the benefits of social meaning that they can work together and be around each other but in a more virtual way as opposed to in a physical way. And you know, I think all of us kind of laugh at the people we see walking on the street. They have their face buried in their phone and not noticing anything going on around them. I don’t think it has to be that. I don’t think it has to be four people sitting at a table having dinner and not saying one word to each other, looking at their phones the whole time, but that is actually a thing. I mean, people are pretty engaged in their device and, you know, that’s the way that many people want to interact. We have to be able to figure out a way to support that that makes sense.
Tracey: Great. Well, thanks for chatting with us today about Cloud, Brent. We really appreciate that. If you’re interested in some next steps, we can provide you a complementary quote upgrading your ERP into the Cloud and receive free trial migration to the Cloud. So if you’re interested in that, you can certainly send us off an email. But lots of great resources to learn more about the Cloud and how it impacts you as a business. And for all of those people attending, they’ll be sent out all of that information after the webinar wraps up and we look forward to attending our next webinar which we’ll be talking a little bit more about Dynamics 365 and Office 365. As always, thank you so much for attending and we look forward to hearing from you all soon. Thanks, and thanks, Trevor.
Trevor: I have a question from the audience.
Tracey: Great. We should ask that.
Trevor: Tracy Godfrey. If anyone else has any, leave them in the chat or the questions area. “I have had a hard time finding online reviews or feedback from companies who have done a full ERP Cloud migration. What can be expected in terms of performance and speed for the user experience?”
Brent: So it depends a little about which platform you’re on. So I don’t know if you’re on Dynamics GP, Dynamics NAV, or Dynamics AX. But basically, if you look at the way that data centers are set up, they’re set up… Let’s assume that you’re using the KD data centers. They’re set up in a way that the latency time between those data centers in Ontario and Quebec… No matter what major city you’re in Canada, so let’s pick Victoria because that would be the one that’s furthest away physically. That you have basically zero latency or near zero latency between those centers.
So then really your ability to get decent speed… Excuse me, or performance of the system really is around how do you eliminate the number of hops between you and that hub. And by hops, I mean… If you think about it, you know, electrons fly around at the speed of light so that’s pretty fast. So what slows them down is every time it hits a piece of switching equipment has to decide where is this going. It’s sort of like a way of addressing it to the next place. So as long as you limit the number of hops between you and that hub, you’re going to get performance that’s pretty much the same as you would expect if it was sitting in the next room. And as I said, what’s neat about that is it’s not just the people in the head office that get that experience. It’s the people sort of across the company whether they’re sitting in their own office or in an airport lounge or where they happen to be.
So that’s sort of what I would expect. If you look at… And the web client and MNSGP, it’s still, you know… Generation two has to come a little ways before you can just use the web client to be able to do that but you should be able to use the full feature desktop to be able to get that kind of performance. Usually what we do in that case is we actually give you a remote RDP or, you know, [inaudible 00:28:40] server or one of those kinds of connections into the data centers so that you can actually get better speed where it’s just transferring key clicks and mouse clicks and screen redraws.
When you look at a product like Dynamics NAV, as an example, the web client is highly optimized and so some of the testing that I’ve done has been with a client in Dubai going against a data center in Northern Europe, then a data center in Southern or Southeast Asia and then a data center in North America. And the performance was such that you’d be happy using it. It’s not perfect but you’d be happy using it and why I use that as an example is Dubai actually… Although it’s probably one of the most opulent cities in the world, their communications infrastructure to the rest of the world is terrible. So if you could use something there, you can pretty much use it anywhere. Again, not satellite communications in places like Yellow Knife and White Horse, but in any terrestrial based, you know, wide area network application you should be able to use it and get speeds that you’d be happy with.
Tracey: Great. Thanks a lot, Brent.
Brent: That’s a long-winded answer. [inaudible 00:29:53]
Tracey: Another question?
Trevor: Yeah, hold on.
Trevor: All right. “We currently issue SQL queries against our own off site Dynamics SQL server for a number of integrations. Would we be able to query the database in a Cloud environment?”
Brent: Yes. Yeah, you can and in the NAV environment… You know, I mentioned that the… And this is a little different question because you’re talking about integration but I mentioned that you could, with the web client, sort of go across the wide area networking and actually do the same thing with the full featured client. It’s not really chatty and you can actually use it across the wide area network and it works quite well. In the case of SQL calls to be able to do integrations, whether that be batch integrations or, you know, from the service, you know, as they happen, real time integrations. Certainly, not a problem.
Tracey: Good. Fantastic. Well, if anyone does have any more questions, they can certainly email us here at [inaudible 00:30:47] and we’ll get back to you. Wishing you all a fantastic afternoon and looking forward to seeing you or listening to you and your questions on our next webinar. Take care.
Trevor: Thanks, everybody.
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