Dynamics 365

Migration Program
Initiative
Business Value Insight AX OP2OL
Finance and Operations
strategic context
 ERP business trends – cloud as the new standard
Cloud technology is a major disruptor and many businesses are using cloud to optimize their operations.

4% 78% 50% 13% 36% 3X

Non-compliance Leaders are 78% By 2020, 50% of the Organizations on From 2009 to On average,
of GDPR will have more likely than G2000 will see most the latest ERP today, there is a on-premises ERP
fines of up to 4% followers to keep of their business release saw 13% 36% increase of set-up cost is 3X
of annual revenue their ERP depend on their improvement in organizations who more than
profitability.** consider cloud cloud ERP set-up
or €20 million per updated.** ability to create
cost***
incident.* digitally-enhanced solution for their
products, services, next ERP
and experiences.**** deployment**

*European Commission
**Aberdeen
*** Nucleus Research
**** IDC 2017 predictions
 How much better would you be with a 1% increase?*
Below is what a set of 1% improvements might look like for a $100M USD company*

KPI Effect
Revenue growth Every 1% increase in revenue generates $311 K in operating income

Gross margin Every 1% increase in gross margin generates $311 K in operating income

COGS as a % of revenue Every 1% decrease in cogs generates $689 K in operating income

SG&A expense as a % of revenue Every 1% decrease in SG&A expense generates $239 K in operating income

Total operating expense as a % of

Every 1% decrease in total operating expense generates $65 K in operating income
revenue

Revenue per employee(1) Every 1% increase in revenue per employee generates $193 K in operating income

Asset turnover Every 1% decrease in property plant and equipment generates $217 K in available capital

Inventory turnover Every 1% increase in inventory turn generates $5 K in operating income

Days in inventory (DII) Every 1 decrease in days in inventory (DII) generates $189 K in available capital

Days payables outstanding (DPO) Every 1 increase in days payables outstanding (DPO) generates $189 K in available capital

Days sales outstanding (DSO) Every 1 decrease in days sales outstanding (DSO) generates $274 K in available capital

(1) Calculated as the value of the FTE reduction for the same level of revenues
* See example company financials appendix 5
The benefits of Dynamics 365
(maximizing the return on D365
investment with the cloud)
 Measuring the business value of online
Migrating to Microsoft Dynamics 365 On-line involves benefits beyond the total cost of ownership advantages;
other advantages include additional business capabilities and enhanced business performance.

Reduce total cost of Achieve best Accelerate

ownership business results time to value

Reduce costs to procure, Improve specific business Flexible, evergreen platform.

configure and manage F&O capabilities.
software and hardware. Time to value–speed of
Improve employee acquisition & implementation.
Productivity.
Switch from CapEx to OpEx for a Business transformation and
leaner financial operating innovation.
model.
Measuring the business value of online

Reduce total cost of Achieve best Accelerate

ownership business results time to value

Reduce costs to procure, Improve specific business Flexible, evergreen platform.

configure and manage F&O capabilities.
software and hardware. Time to value–speed of
Improve employee acquisition & implementation.
Productivity.
Switch from CapEx to OpEx for a Business transformation and
leaner financial operating innovation.
model.
 TCO Comparison: On-Premises vs Cloud
On-Premises Cloud

Software Licensing Cost

Subscription Fees

Customization,
Implementation
& Training Implementation,
Customization &
Hardware Training

IT Personnel

Maintenance

Upgrades

• Apply patches, upgrades
• Downtime
• Performance tuning
• Rewrite customizations
• Rewrite integrations
Ongoing Costs
• Upgrade dependent applications • Subscription fees
• Ongoing burden on IT (hardware) • Training
• Maintain/upgrade network • Configuration
• Maintain/upgrade security • System Administration
• Maintain/upgrade database
 TCO Impact: AX vs Dynamics 365 for a $100 M USD Company*
The cost of ownership gap between the AX platform and D365 cloud is driven by the cloud licensing and support models

AX Cloud TCO D365

Infrastructure 25 % 100% Infrastructure Benefit -5%
Cloud based solution does not
Licensing 10 % require any infrastructure TCO
Cloud Benefit
70 %
Subscription

40-60% Operation / Run

Support Staff 65 % Benefit
Lifecycle Services D365 cloud
model allows to greatly reduce Support Staff 30%
support cost

Strategies KPI Benefit Calculation Impact

Reduce TCO ERP Cost Impact = ERP TCO (Annual Revenue * 0.17%1) * 5% (improvement)
$100,000,000 * 0.17% * 5% = $8,500
$8.5 K

Presenting Typical Average Costs for SAP Life Cycle Support in 2013 * See example company financials appendix
Measuring the business value of online

Reduce total cost of Achieve best Accelerate

ownership business results time to value

Reduce costs to procure, Improve specific business Flexible, evergreen platform.

configure and manage F&O capabilities.
software and hardware. Time to value–speed of
Improve employee acquisition & implementation.
Productivity.
Switch from CapEx to OpEx for a Business transformation and
leaner financial operating innovation.
model.
 Cloud Dynamics 365 – improve operational efficiency
The Cloud Dynamics 365 solution helps to achieve significant improvements in operational efficiency by
providing enhanced capabilities.

Optimize workforce productivity

Elevate financial Streamline Optimize Optimize

performance procurement warehousing and manufacturing
distribution processes
 Optimize workforce productivity
Strategies Tactics Capabilities
Able to create, manage, and publish your own personalized views: Empower employees with role-based
Workspace workspaces that provide intelligent automation, task prioritization, and integration with Office 365
applications to maximize efficiency for superior business outcome.

Improved user Streamline Reduce process time quickly converge to leading financial, retail and manufacturing practices with advanced
process cloud capabilities: for e.g., manufacturing planning, accounts receivable predictions, order to cash processes.
Experience
Access to a large set of templates for different process and requirements, for example localisation and
Templates compliance.

Solution accessible through mobile for some basic process operations, for example: time and expense data
Mobile-ready entry, vendor invoice approval, mobile Point of Sale.

Integrated Power BI dashboards in Finance and Operations workspaces

Reporting Near real-time access to analytics to drive intelligent operations. Drill-down/Drill-through insights.
Reporting real-time
for better decision Improved timely, accurate, reliable and verifiable financial information used in (decision making) processes
Insight Bring intelligence and insights to the forefront for business users and increase efficiencies and productivity
for the organization.

Lower training costs up to 40% and increase user adoption and user productivity by 15% through Office 365
Training like user interface.
Office 365
integration Integration With the Office 365 integration (Excel, Outlook, PowerBI,..), finance staff can expect a gain of productivity:
O365 eliminate double entry, facilitate data entry (Excel based Inputs), automatics reports.

Extend and connect Enable users with a no-code approach to easily configure mobile or web apps for data entry, regulatory
PowerApps
easily reports, e-invoices, payment formats etc.
 Financial management
Strategies Tactics Capabilities
Mobile/web Shorten data entry time with PowerApps development by power users in business teams.
apps. Mobile workspaces allow uses to execute finance and administrative processes from any device.
Reduce process & training time and quickly converge to best practices with integrated process
Optimize documentation and embedded task guides. Embedded training ensures accurate master data and reduced
workforce Task guides hypercare during the ramp-up period after go-live. Developer recordings of task guides ensure fast response
productivity for Support tickets. Automated Regression Testing based on task guides ensures early detection of issues after
any change.
Increased insights with dashboarding tools (Financial Period close, etc.) and reduced integrations with single
Insights data layer. Drill Down/Drill-Through provides quick access to the right information.
Improve data quality by using single source of truth layer (D365, O365) and improving data entry experience
Data quality with mobile and PowerApps.
Increase
Advanced Shorten time to cost and revenue insights with streamlined dashboarding tools (Power BI).
profitability analytics and Accelerate analytics democratization by combining analysis method-of-choice (Excel, Power BI) with single
visuals source of truth data layer.
Reduce debtor days (DSO) with accounts receivable predictions for proactive collection management. Hence
provide recommendations on which customers to target in bill collection efforts, to be initiated immediately.
Finance
Streamline Increase cash discounts with faster invoice approval times with "real-time" mobile approvals and trigger-based
process
process optimization workflows.
Early budget check (during internal purchase requisition) to control spending and improve cash flow forecast.

Adapt quickly to
Shorten time to compliance with continuous updates of regulatory certifications.
requirement Compliance Reduce exposure to potentially significant fines and reputation issues.
changes
 Purchase and supply chain
Strategies Tactics Capabilities
Reduce inventory data entry effort with dynamic update of inventory levels based on purchase invoices.
Data entry
Optimize saving Reduce time spent managing returned items with compensation agreement management available for PO
returns.
workforce
productivity Mobile apps Reduce vendor invoice approval effort with access to mobile approvals.

Faster search and purchase of non-stocked items with 'PunchOut’ eProcurement—option to redirect to an
Search external site, the external catalogue, and return the shopping basket.
Improve control of unit margin and procurement limits with unit purchase prices thresholds and trigger
Control warnings.
Improve negotiation conditions with more timely payments as a result of faster invoice approvals and
Increase Buying power standardizing vendor selection with bid comparison criteria.
profitability Increase buying power with consolidated, timely view of all child legal entities purchases.

Procurement Prevent unnecessary or fraudulent purchases with easy to configure/implement approvals for internal controls.
management Prevent late asks for additional budget with configurable embedded budget control - warnings, blocks.
Reduce inventory levels by having a dynamically updated baseline—using purchase invoices to dynamically
Process update stock.
Streamline optimization
Perform fine optimization inventory levels with automated anticipation/postponing purchases.
procurement
Vendor Easily allow vendors to work directly in the Microsoft Dynamics 365 for Finance and Operations through Web
collaboration portal without having EDI.

Monitor and control your purchasing process with automated workflows.

Compliance Minimize risk
Easy to configure/implement approvals for internal controls, preventing unnecessary or fraudulent purchases.
 Warehouse management and distribution
Strategies Tactics Capabilities
Barcode Out-of-the-box support for the next generation of barcode scanners.
Optimize Use scanners and other mobile devices to optimize precision in the picking and put-away processes. You can
workforce Mobile devices configure the flow for system-directed push strategies and user-directed pull strategies.
productivity Monitor through single view the processing and the amount of work in a warehouse, push work to dedicated
Work planning warehouse workers, and trace completed work.
Operations can leverage big data, external and internal indicators, and machine learning algorithms to better
Capacity
Demand forecast forecast demand, and automatically identify and mitigate supply risks.
planning Master planning to plan for future material requirements.
Set up cycle counting thresholds, schedule plans, apply ad-hoc cycle counting, and configure real-time
Inventory replenishment.
management
Inventory properties controlled by inventory status.
Inventory pre-calculates and stores various intermediate results which enables fast real-time querying and provides a
management Real-time new mobile workspace that warehouse workers or anyone in the field can use quickly check on-hand
inventory, or query a given item bar code or License plate ID.
Improved capabilities for inbound weighing per pallet level and capture the outbound sales process during
Catch weight picking or packing per catch weight quantity (box).
Warehousing Create warehouse work such as picking, put-away by using work templates and location directives policies.
Space and packing optimization Identify pick and put locations for various handling units depending on pre-defined rules and policies.

Containerisation Set up container groups to sequence packing processes and create templates that support packing strategies.

Increase quality and Quality control Include quality control in any inbound or outbound processes that you set up for warehouse items.

customer Monitoring all inbound and outbound transportations : Companies can identify the orders to be fulfilled and
Transportation
show the quickest routing solution for inbound and outbound orders. Now, you can organize the transport of
satisfaction management materials to be delivered as soon as possible and identify the least expensive rates for transportation.
 Manufacturing
Strategies Tactics Capabilities
My timesheets (optimized for mobile) allows employees to create and submit project timesheets to record
Mobile their hours for a specific project on a mobile device.
Optimize Time & Time registration workers can enter different types of time registrations, for example: clock in, clock out,
workforce attendance register indirect activities, and absence registration.
productivity
Integration to
Track warehouse work for all material movements inside shop floor.
warehousing
Data shared across CRM and ERP: Integrated support for source documents for sales orders, returns, transfer
Sales integration orders, production orders, etc..
Improved material
visibility Integration to
Create granular material movements in the shop floor.
warehousing
Improve [Gross] Reporting and
Use and extend standard Power BI content packs for cost accounting and manufacturing.
margin visibility analytics
Bill of materials
Product Product configurator to meet customer demand for unique products while reducing or eliminating obsolete
management configurator inventory items.
savings
Resource
Reduce downtime / Consolidated resource view with dashboard and more granular resource allocation features.
allocation
increase plant
utilization Visual planning Gantt based project planning integrated in Microsoft Dynamics 365 for Operations.

Improve supply
MRP in-memory More frequent and complex material resource planning by leveraging Azure computational capacities.
plan visibility
 Improving specific capabilities (research)
Aberdeen Group (1,2,3) has researched how much better cloud-based ERP is at supporting various business
outcomes (KPIs) than traditional ERP. We consolidated here the results from various Aberdeen studies.
Cloud ERP vs OnPremises/Legacy F&O
Performance Metrics Traditional ERP Cloud ERP
Accelerate time
Reduce TCO
to value

Days to close a month 4,6 3,6

Days sales outstanding 45,2 33,2
Complete and on-time delivery 86 % 91 %
Internal schedule compliance 85 % 91 %
Inventory accuracy 87 % 91 %
Customer satisfaction 87 % 94 %
% of time info received within the “decision window” 82 % 90 %
Improvement in profitability 10 % 13%
1 Cloud ERP’s Time has come! Aberdeen Group, July 2016
2 Cloud ERP in Wholesale and Distribution: Driving Success Across a Wide Network; Aberdeen Group, February 2017
© Microsoft Corporation
3 Improve Your Midmarket Business Operations With Cloud Applications; Aberdeen Group, September 2014 Dynamics 365
 Finance | Potential capabilities impact for a $100 M USD Company*
Strategies KPIs Benefit Calculation Impact
Finance & Number of finance Results of 20%1 increase in productivity for finance staff for standard tasks, data $ 78 K
administrative FTEs as % of total entry, and reporting.
productivity employees Impact = personnel cost * finance & administration FTEs as % of total * improvement
$ 19,466,667 * 2% * 20%
Days to close a month

Spend control Reduce maverick Results of reduced COGS through decreased maverick spend. $ 138 K
spend (refers to % Impact = cogs * % purchases that are not controlled * improvement
purchases made outside of $ 68,866,667 * 1% * 20%
agreed contracts)

Procurement Procurement savings Results of 4.9% procurement savings and 0.4% reduction of COGS with modern $ 275 K
margin procure-to-pay processes.2
Impact = COGS * improvement
$ 68,866,667 * 0.4%

Working Days sales Results of reduced interest costs through decreased DSO or DII. Not Calculated
capital outstanding DSO impact = sales * DSO / 365 * improvement * interest cost
DSI impact = COGS * DSI / 365 * improvement * interest cost
Days inventory

$ 491+ K

1 Forrester
: Microsoft Dynamics 365 For Finance And Operations Brings Manufacturers and Retailers To The Cloud, September 2018.
2 McKinsey : A next-generation operating model for source-to-pay December 2018.
* See example company financials appendix 5
 Manufacturing | Potential capabilities impact for a $100M USD Company*
Strategies KPIs Benefit Calculation Impact
Direct labor Number of shop Results of 6%1 reduction in avoided shop floor staffing with better planning and $ 350 K
floor FTEs as % of efficiency. Impact = personnel cost * shop floor FTE as % of total * improvement
total FTE cost $ 19,466,667 * 30% * 6%

Inventory Obsolescence as % Results of 10%1 reduction in excess inventory and shrinkage. $ 28 K

management of total inventory Impact = inventory * obsolescence as % of total inventory * improvement
$ 9,333,333 * 3% * 10%

On-time Stockout losses Results of 3%1 increase in wholesale sales revenue. Sales staff have better visibility $ 216 K
accurate what they can promise, the global profitability of each proposal and ensure that
delivery production is aligned with customer orders.
Impact = revenue * gross margin * improvement
$ 100,000,000 * 7.2% *3%

Asset Unplanned machine Results of avoiding direct labor and product overhead waste by reducing $ 31 K
utilization time unplanned machine downtime and/or lack of raw materials.
Overall equipment Impact = COGS * (labor cost as % of COGS + overhead costs as % of COGS) * unplanned
downtime % * improvement
effectiveness $ 68,866,667 * (($ 19,466,667 * 50%) / $ 68,866,667 + 4%) * 1% * 25%

Warehousing & Warehousing costs Results of optimizing labor and transport related costs. Not calculated
transportation as % of revenue Impact = revenue * (warehousing costs as % of revenue + transportation costs as % of
revenue)
Transportation costs
as % of revenue
1 Forrester
: Microsoft Dynamics 365 For Finance And Operations Brings Manufacturers and Retailers To The Cloud, September 2018.
* See example company financials appendix 5
$ 626+ K
Measuring the business value of online

Reduce total cost of Achieve best Accelerate

ownership business results time to value

Reduce costs to procure, Improve specific business Flexible, evergreen platform.

configure and manage F&O capabilities.
software and hardware. Time to value–speed of
Improve employee acquisition & implementation.
Productivity.
Switch from CapEx to OpEx for a Business transformation and
leaner financial operating innovation.
model.
 Time to value | flexible, evergreen, platform
Initial deployment Capability enhancement One version

“With applications that are
largely configured, instead of
customized, time to deployment
is much more rapid and often
requires less specialized
(and expensive) resources.”1
“The business is not waiting for IT
anymore which was their most
common complaint. We are now
seen as an enabler, not a
roadblock.”2
“Customers deploying on-premise
often avoid or skip upgrades
because of fear of disruption or
lack of IT resources. These
customers have complained about
functionality and usability issues
that have been already
addressed.”3

2-5 months of additional process

2-6 months annual Incremental benefit
improvements provided by
gross project benefits. compound growth rate of 1%.
Microsoft capabilities.

1Nucleus Research “Cloud now delivers 3.2 times more ROI ” 2017
2Forrester “Total Economic Impact of PowerApps and Microsoft Flow”, 2018
3Forrester “Total Economic Impact of Microsoft Dynamics CRM Online”, 2015
 Time to value | adapt quickly, potential value for a $100 M USD Company*
Launch and scale new sites
Decrease time to roll-out
additional sites, especially in new
geographies.
2-6 months annual
gross benefits for region.
* See example company financials appendix 5
Performance gap
More rapidly improve the
performance of acquired
companies relative to best-
practice processes and provide
increased visibility into forecasts.
Bring forward the achievement of
best-practice performance by 2-6
months.
Growth opportunities
Increase the cross-sell of the
acquired company’s products
and services and provide access
to additional customers for
existing products and services.
Incremental cross-organization
cross-sell and customer acquisition
by 0.5%*
$ 100,000,000 * 0.5% * 7.2% = $36 K
 and, drive innovation, potential value for a $100 M USD Company*
Data-driven
Drive sales, customer service and
operational performance by
rapidly surfacing insights, signals
and trends then proactively
respond to identified customer
and market changes.
Value of precise customer
knowledge, i.e., changing product
preferences, product failures,
satisfactions levels.
$ 100,000,000 * 1.25% * 7.2% = $90 K
* See example company financials appendix 5
New products & services
Offer new products and services
by combining proprietary data,
real-time data processing and
digital delivery channels to serve
customers in new ways.
Value of new service offerings, i.e.
remote monitoring, predictive
maintenance, bot-based
troubleshooting.
New operating models
Become more effective or drive
efficiencies by facilitating new
business configurations such as
centralized operating models.
Centrally capture intelligence and
deploy it in the right context, at
the right moment.
Value of automated/centralized
operations, i.e. remote assist,
virtual agents.
 Potential cost savings and business benefits with
online for a $100 M USD Company*

Reduce total cost of Achieve best Accelerate

ownership business results time to value

100% saving on infrastructure KPI improvement potential: Adapt quickly , drive

10-25% saving on support and innovation
maintenance (ERP staffing) > $1,117 K USD
> $8.5 K USD > $126 K USD

Overall this leads to improvements in the cycle time of key business processes, followed by improved
operational efficiency materializing in increased profit margins.

* See example company financials appendix 5

 Emerging technology platforms to drive innovation
and accelerate competitive differentiation
Robots and apps that learn, adapt, and create
Intelligent things intelligent interactions.
Business Analytics and AI

Immersive Merge physical and digital using AR/VR/MR HoloLens Services

environments to deliver rich experiences.

Explore
emerging Internet of Connect devices, data, and software to sense
technology
Azure IoT Platform
Things (IoT) and respond in real time.

platforms
Embed trust in supply chain transactions and
Blockchain Azure Blockchain
confirm product authenticity.

Human to machine communications that are

Natural interfaces Cortana Intelligence
easy and appealing.
Next Steps
Next steps
Value exploration with:

Benchmarking Program Business Value Assessment (BVA)

-or-
Thank you

© Copyright Microsoft Corporation. All rights reserved.

Appendix

Example Financials

29
$100 M USD Example Financials Used
Revenue (t) 100.000.000
Revenue (t-1) 96.666.667
Income Statement Inputs

Revenue Growth 3,4%

COGS excluding D&A 68.866.667
Research & Development Expenses
SG&A Expense 23.866.667
Operating Income Before Depreciation 6.466.667
Depreciation & Amortization 2.133.333
Interest Expense 1.066.667

Total Assets 73.866.667

Balance Sheet Inputs

Net Property, Plant & Equipment 21.733.333

Total Inventory 9.333.333
Accounts Receivable 8.666.667
Total Liabilities 21.666.667
Accounts Payable 10.066.667

No. of Employees 130

Op. Inputs

Number of Customers 1

Total FTE cost (Personnel expenses) 19.466.667

Teaser Slides
 ERP business trends – cloud as the new standard
Cloud technology is a major disruptor and many businesses are using cloud to optimize their operations.

4% 78% 50% 13% 36% 3X

Non-compliance Leaders are 78% By 2020, 50% of the Organizations on From 2009 to On average,
of GDPR will have more likely than G2000 will see most the latest ERP today, there is a on-premises ERP
fines of up to 4% followers to keep of their business release saw 13% 36% increase of set-up cost is 3X
of annual revenue their ERP depend on their improvement in organizations who more than
profitability.** consider cloud cloud ERP set-up
or €20 million per updated.** ability to create
cost***
incident.* digitally-enhanced solution for their
products, services, next ERP
and experiences.**** deployment**

*European Commission
**Aberdeen
*** Nucleus Research
**** IDC 2017 predictions
 How much better would you be with a 1% increase?*
Below is what a set of 1% improvements might look like for a $100M USD company*

KPI Effect
Revenue growth Every 1% increase in revenue generates $311 K in operating income

Gross margin Every 1% increase in gross margin generates $311 K in operating income

COGS as a % of revenue Every 1% decrease in cogs generates $689 K in operating income

SG&A expense as a % of revenue Every 1% decrease in SG&A expense generates $239 K in operating income

Total operating expense as a % of

Every 1% decrease in total operating expense generates $65 K in operating income
revenue

Revenue per employee(1) Every 1% increase in revenue per employee generates $193 K in operating income

Asset turnover Every 1% decrease in property plant and equipment generates $217 K in available capital

Inventory turnover Every 1% increase in inventory turn generates $5 K in operating income

Days in inventory (DII) Every 1 decrease in days in inventory (DII) generates $189 K in available capital

Days payables outstanding (DPO) Every 1 increase in days payables outstanding (DPO) generates $189 K in available capital

Days sales outstanding (DSO) Every 1 decrease in days sales outstanding (DSO) generates $274 K in available capital

(1) Calculated as the value of the FTE reduction for the same level of revenues
* See example company financials appendix 5
 Potential cost savings and business benefits with
online for a $100 M USD Company*

Reduce total cost of Achieve best Accelerate

ownership business results time to value

100% saving on infrastructure KPI improvement potential: Adapt quickly , drive

10-25% saving on support and innovation
maintenance (ERP staffing) > $1,117 K USD
> $8.5 K USD > $126 K USD

Overall this leads to improvements in the cycle time of key business processes, followed by improved
operational efficiency materializing in increased profit margins.

* See example company financials appendix 5

Thank you

© Copyright Microsoft Corporation. All rights reserved.