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Dynamics AX 2012 cost-effective ERP
17 April 2012
Rebecca Lambert finds out how Microsoft Dynamics AX 2012 is helping government organisations boost operational efficiences while saving costs.
If you’ve just read the ‘Doing more with less’ feature, you’ll be well aware that Microsoft and its partners are committed to developing solutions that are not only rich in functionality, but are flexible, interoperable and, ultimately, cost effective. The enterprise resource planning solution, Microsoft Dynamics AX 2012, is no different.
Over the last year, Touch has had the opportunity to speak to Microsoft, analyst, partner and customer industry leaders in order to build a comprehensive picture of the public sector-specific capabilities of Microsoft Dynamics AX 2012, as well as share the benefits it can bring. Until now though, we’ve referred to the cost effectiveness of the solution as a benefit alongside the likes of ease of use, process and IT infrastructure consolidation and improved organisational efficiencies. However, with saving money being a particularly hot topic in this issue, it’s a good time to highlight just how cost effective Microsoft Dynamics AX 2012 really is and explain how it fares compared to other solutions available on the market today.
The modern solution
Working with key public sector customers and partners, Microsoft developed Dynamics AX 2012 from the ground up to ensure it includes a broad base of functionality that fully addresses the needs of public sector organisations. The solution has been designed specifically to serve a range of business processes that are unique to the government, education and healthcare industries, from project accounting, budgeting, procurement, supply chain management, grant management and many others to support public sector missions. Providing all this functionality through familiar, easy-to-use tools, equipped with interoperable collaboration assets, the platform enables public sector workers to operate more productively and improve communications with colleagues, vendors and constituents – all while saving costs.
Microsoft may be a relative newcomer to the market compared to some of its competitors, but we really believe that what we’re bringing to the table is truly revolutionary
Microsoft As Charlie Johnson, Microsoft’s Government ERP managing director, explains, Dynamics AX 2012 customers can realise value from their implementation in a number of ways. “First of all, our customers can save costs by retiring redundant legacy silo systems and running Dynamics AX 2012 as a single solution in their place,” he says. “Many government organisations around the world today are running anywhere from 20 to 100 financial systems – most of which are performing similar functions. By running this many systems, they’re clearly going to be spending budget on related hardware, personnel and more – that adds up. If you retire all these systems and use just one solution in their place, you’re certain to achieve significant cost savings from the consolidation alone.”
Of course, running legacy systems creates other issues too. Public sector organisations have long experienced working with inflexible, ageing systems that hinder their ability to support open government, compliance requirements and fiscal accountability. Most of the time processes run in siloes and the chances of individual applications or even entire platforms failing is high. “It’s not an option for government organisations to cease to operate if their legacy systems and IT infrastructure falls over,” says Johnson. “However, what we’re seeing in the market in general is that, faced with tremendous budget and resource restraints, organisations are choosing to get by rather than invest in consolidating to a single ERP solution. And if they are considering investing, they are generally waiting until they are far past their current systems’ end of life.”
Conducting a full upfront investment valuation usually highlights just how expensive running legacy systems can be. Ongoing modifications in particular can be costly and business users end up being hugely reliant on IT support staff to help them manage day-to-day processes.
“Organisations no longer need to be burdened by the barriers and limitations of legacy IT solutions,” adds Fiona Nolan, product manager, Microsoft Dynamics AX UK. “Modern, agile technology is critical to the future of the industry and the success of it. Microsoft Dynamics AX 2012 can be installed quickly and user training is minimal. And because implementation projects end up being much shorter, organisations can achieve a much faster return on investment. You only have to look at examples such as Compass Point Business Services and the City of Redmond to see the potential that a Dynamics AX 2012 implementation can bring. Using Dynamics AX in conjunction with Dynamics CRM, SharePoint 2010 and BizTalk Server, Compass Point expects to achieve savings in the region of £3 million per year. The competition just can’t match that.”
According to ERP Upgrades: What’s Your Philosophy?, a recent report from the Oracle Application User Group, sponsored by Oracle, 44 per cent of respondents took more than 12 months to upgrade, with 13 per cent not knowing how long it took. Where the scope of the upgrade was deemed transformational, 60 per cent took more than 12 months. Meanwhile 34 per cent of those undertaking an ERP upgrade did not know or were unsure about the length of business disruption. In terms of cost, 47 per cent of respondents upgrading ERP did not know the total cost of upgrade, with 23 per cent saying it cost more than US$1 million. All of this points to significant budget and resource allocation that doesn’t lead to ROI.
A recent Microsoft survey with US State Governments highlighted similar results: implementations can take a long time and that desired benefits take a while – sometimes four to five years – to come into effect. Customisation to suit business users, change management and user adoption were causes for concern, and 73 per cent of states even indicated that change management delays caused by system implementations typically cause months-long delays, contributing to lower levels of satisfaction. With that said, state financial leaders who have gone through the process agreed that modernising systems makes a difference in the long run, but it does not come cheap, or easy.
“Microsoft may be a relative newcomer to the market compared to some of its competitors, but we really believe that what we’re bringing to the table is truly revolutionary,” says Johnson. “Of course, large organisations are going to ask questions of us if they’re used to spending £50 million on their ERP solution and we’re offering them the same functionality with a better experience for a fraction of the cost. It can sound almost too good to be true. But industry analysts, and our customers and partners believe in us. What’s more is that when you look at other global ERP vendors, product roadmaps don’t include public sector-specific functionality; we do. And our upgrades are supported and seamless. We’re a safe haven from current ERP vendors that may not offer clear product road maps or commitment to long-term innovation.”
Interoperability is also key. “The fact that Dynamics AX 2012 has been developed to ‘work with and like’ the other Microsoft products that customers have already made investments in has had a very positive response so far, especially when bearing in mind the total cost of ownership perspective,” says Nolan.
Of course, as Johnson highlights, the real long-term potential in Dynamics AX 2012 is around creating more efficient processes that consume fewer resources. This leads to reallocation of resources and the ability to improve service. “From accounting and budgeting through to procurement, if an organisation is able to automate and connect processes, they not only save time but they also gain more insight into their operations. And because data is at their finger tips and they can access it more easily. The result: they can make more informed decisions.”
Explaining how she expects to see Dynamics AX 2012 impact the public sector in the long term, Nolan says: “This is the first solution to the market in the public sector that fundamentally addresses usability. You can have the most functionally rich ERP solution on the planet, but if users aren’t adopting the solution, the implementation will attract a much higher level of time and cost, and will typically be seen as a failure. This is certainly something we’ve seen with other ERP solutions in the market. Given we address that fundamental issue of usability at the core, with elements of Windows 7 and Office 2010 built into the framework of AX 2012, we have ended up with a more usable solution, enabling faster uptake and satisfied employees. If you combine this with a solution that is quicker to implement and built to work with other Microsoft solutions already purchased by our public sector customers, we believe that we are bringing a more cost-effective and flexible solution to market than those previously seen in the public sector market.”