Microsoft Dynamics AX is a legacy enterprise resource planning (ERP) system that many companies have relied on for years. However, with the swift evolution of cloud technologies and artificial intelligence (AI), upgrading to Microsoft Dynamics 365 Finance can deliver new, enhanced capabilities. This modern ERP system can provide extensive features, improved security, and effective navigation—now supercharged with AI-powered Copilot and autonomous ERP capabilities.
Why Upgrade to Dynamics 365 Finance?
Upgrading from Dynamics AX to Dynamics 365 Finance can be a strategic move for organizations aiming to modernize their financial operations and leverage leading-edge technology. This cloud-based solution, built on the Microsoft Azure platform, can provide compelling advantages ranging from enhanced agility and intelligent automation to deeper business insights and intuitive reporting. However, a smooth ERP transition requires careful consideration of technical aspects.
Cloud Advantages
At its core, Dynamics 365 Finance uses the inherent strengths of being a cloud solution built on Microsoft Azure. This foundation supports high availability and reliability, making critical business systems accessible. The system’s scalability allows businesses to adjust resources up or down based on demand, providing flexibility and cost efficiency. In addition, Azure provides enterprise-grade security, offering multilayered security measures, advanced threat protection, and in-depth compliance certifications to help safeguard sensitive financial data.
Beyond the operational benefits, the subscription-based licensing model of Dynamics 365 Finance can provide a predictable long-term cost of ownership compared to traditional perpetual licenses. This model typically includes updates, maintenance, and foundational infrastructure costs, reducing the burden of significant upfront investments and ongoing IT overhead associated with on-premises solutions like Dynamics AX.
New Functionality
Dynamics 365 Finance introduces a range of new modules and features that were not available in AX, including:
- Revenue Recognition & Subscription Billing – Supports recurring billing and deferred revenue in line with International Financial Reporting Standards (IFRS) 15 and Accounting Standards Codification (ASC) 606.
- Asset Leasing – Can help companies comply with IFRS 16 and ASC 842 by handling lease agreements, calculations, and transactions.
- Credit Management – Lets you set credit limits, gauge risk, and manage prepayments as liabilities.
- AP Invoice Automation – Uses optical character recognition (OCR) to capture invoices and streamline matching and approval processes.
- Dual-Write Integration – Provides real-time, bidirectional data sync between Dynamics 365 Finance and Dataverse.
- Improved Financial Dimensions – Supports flexible and granular financial tracking and reporting.
- Automation & Intelligence – Provides dashboards, financial reconciliation agents, and AI tools to automate processes and inform decision making.
These enhancements can provide tangible benefits that go beyond the capabilities of AX, helping organizations modernize finance operations.
Enhanced Business Insights
Dynamics 365 Finance business intelligence tools can provide deep financial and operations insights. New tools like business performance analytics and business performance planning aim to provide a unified platform for continual planning, acting, and analysis. This integrated approach can help break down data silos and provide a holistic view of business performance in real time. Team leaders can monitor key performance metrics, conduct variance analysis, and adapt forecasts with more agility.
Improved User Experience
Dynamics 365 Finance provides a modern, user-friendly interface designed to help teams work more efficiently. The clean layout and intuitive navigation make it easier to learn and use than legacy systems. Built-in guidance and smart workflows can support users through common tasks, helping reduce errors and improve productivity.
AI & Autonomous ERP
The evolution of Dynamics 365 Finance is increasingly leaning toward an AI-driven, autonomous ERP system. The introduction and expansion of Copilot-first experiences are central to this transformation. AI-powered assistants are designed to streamline and automate a variety of financial tasks. Users can expect to leverage Copilot for functions such as automating journal entries, simplifying bank reconciliations, and managing tax updates with increased speed and accuracy.
As part of Microsoft’s autonomous ERP vision, AI agents are emerging to automate tasks like real-time account reconciliation and financial planning. These tools can identify discrepancies, suggest fixes, and offer predictive insights—reducing manual work and helping finance teams focus on strategic decisions.
Considerations Before Upgrading
While the potential benefits of upgrading from Dynamics AX to Dynamics 365 Finance are impressive, a smooth transition requires careful planning and execution. Organizations should consider the following aspects.
Data Migration
Moving financial data to a new system is a critical and sensitive process. It requires meticulous planning and execution to support data integrity and follow relevant regulations. This often involves data cleansing, mapping, validation, and reconciliation.
Implementation Costs
The transition to a cloud-based ERP involves more than just licensing fees. Organizations should budget for cloud migration services, user training, and the potential reconfiguration or rebuilding of existing customizations to align with the new platform’s architecture and capabilities.
Customization Review
Legacy ERP systems often accumulate numerous customizations over time. Before migrating, it’s crucial to assess which customizations are still relevant and provide business value. Many existing customizations might be replaceable by new native features or enhanced functionalities within Dynamics 365 Finance, leading to a more standardized and maintainable solution. A thorough technology assessment can help streamline the system and reduce future upgrades.
By carefully considering these factors and working with experienced technology consultants, organizations can navigate the upgrade process effectively and unlock the transformative potential of Dynamics 365 Finance.
Steps & Strategies for Upgrading
Upgrading an ERP system involves a structured assessment phase, followed by execution. Here’s a recommended approach.
Assessment Phase
- Project Initiation: Work with experienced technology consultants to define objectives, complete a readiness checklist, and align the overall approach.
- Functional Workshops: Review business processes, key issues, and high-level modifications.
- Technical Review: Inspect customizations, integrations, reporting, and infrastructure components.
- Assessment & Recommendation: Identify areas that may need redesign and consider upgrade versus reimplementation options.
- Define & Deliver: Finalize findings, recommendations, scope, budget, and timeline based on insights from the previous steps with key stakeholders and your technology consulting team.
Execution Phase
- Upgrade Strategy: Confirm the path forward and prepare for implementation.
- Redesign & Development: Refine as needed based on technology assessment findings.
- Migration: Move code and data, making adjustments where appropriate.
- Unit Testing: Validate reports, interfaces, and security roles.
- User Acceptance Testing: Train users and confirm system readiness.
- Go-Live: Launch the new system.
- Post-Go-Live Support: Provide support to help steady operations.
Comparison of Upgrade Strategies
When considering upgrading from Dynamics AX to Dynamics 365 Finance with Forvis Mazars, there are three main options to choose from:
1. Technical Upgrade – Option A
- Upgrade all code and modifications.
- Redevelop integrations via extensions.
- Upgrade all ERP data, including historical data.
2. Technical Upgrade – Option B
- Drop all code and modifications.
- Upgrade all ERP data, including historical data.
3. Migrate Data & Improve
- Migrate master data and open transactions only.
- No historical data migration.
- Redesign and develop modifications as necessary.
- Reconfigure selected processes and functionality for improvement.
If the path forward is unclear, the Microsoft team at Forvis Mazars offers a four- to six-week Dynamics 365 ground-to-cloud assessment to help determine a best-fit strategy.
Best Practices for ERP Upgrades
- Be purposeful: Identify critical customizations and align them with capabilities available in the new system.
- Be efficient: Clean up legacy databases and code to help streamline the migration.
- Be proactive: Archive outdated data to help reduce clutter and improve performance.
The Emerging Vision of Autonomous ERP
Microsoft’s road map for Dynamics 365 Finance is increasingly shaped by the concept of autonomous ERP—a system that not only supports your operations but actively guides, predicts, and automates them. While many of these capabilities are still evolving, the introduction of AI-powered tools like Copilot marks a significant step forward. These tools are beginning to assist with tasks such as journal entry suggestions, bank reconciliations, and predictive planning. Though not yet fully autonomous, Dynamics 365 Finance is laying the groundwork for a future where finance teams can rely more on intelligent automation and less on manual processes. Organizations that adopt the platform today are positioning themselves to benefit from these innovations as they continue to evolve.
If you’re looking to gain more agility and efficiency from your ERP system and upgrade from Dynamics AX to Dynamics 365 Finance, the Microsoft team at Forvis Mazars can help you achieve your goals with Dynamics 365 Finance. As a certified and top 1% Microsoft Business Applications Partner, we can help you unlock new levels of efficiency. Schedule your assessment today.
Related reading: A Guide to ERP Modernization in Eight Essential Steps