In 2023, Microsoft once again partnered with Forrester Consulting to conduct a Total Economic Impact™ (TEI) study, aiming to evaluate the potential Return on Investment (ROI) enterprises could achieve by implementing the ERP system, Business Central. This examination sheds light on intriguing results that could significantly influence corporate decision-making processes.
How was the study conducted?
The research initiative sought to dive deep into the challenges and needs of Business Central users (formerly known as Dynamics NAV). Forrester conducted surveys with five companies utilizing the system, gathering data to construct a model organization. This hypothetical entity was then used to calculate the system's benefits over three years. The study leveraged the TEI methodology's four pillars: benefits, costs, flexibility, and risk, creating a financial model that embodies the concerns and issues reported by the surveyed companies.
Pre-implementation challenges
Companies reported several challenges before adopting Business Central, including:
- Utilizing Multiple IT Tools: Previous software solutions failed to fully meet company needs, necessitating additional systems. This led to integration and data flow problems, missing functionalities, and unnecessary costs.
- Scaling Difficulties: Updating outdated on-premises solutions to match the growth of the organization often proved technically impossible and financially impractical. Finding a suitable new system was also a struggle for many, especially among SMBs.
- Maintaining Current System Versions: IT departments frequently lacked the capability to update existing solutions regularly, affecting security and functionality.
Benefits of implementing Business Central
The surveyed companies highlighted several advantages of moving to Business Central, including:
- Improved Financial and Operational Functionality: Thanks to automation of key business processes, better system access across devices, and increased financial transparency.
- Reduced ERP System Expenditures: Transitioning to the cloud version of Business Central eliminated additional license costs and the maintenance of on-premise infrastructure.
- Greater ERP Solution Scalability: Cloud adoption offers scalability that on-premise solutions can't match, crucial for the growth of small and medium-sized enterprises.
The Model Organization's results
Forrester's model organization, encapsulating the characteristics of the surveyed companies, valued at $15 million with 150 employees, transitioned from various on-premise tools to Dynamics 365 Business Central in the cloud. Over three years, the organization planned to cut 75% of its costs related to maintaining existing ERP solutions, with 15 Business Central licenses for financial and operations staff. Key effects noted were:
- Productivity: Finance department users saved 15 hours per month through task automation, while supply chain employees saved 30 hours. The average hourly wage for these employees was $42.
- Maintenance Cost Savings: Annually, $15,000 was saved on licenses and infrastructure maintenance, alongside a reduction in IT specialists' workload by 16 hours per month.
- Employment Needs: Without Business Central, the organization would need to add 1.5 positions annually in finance and operations to meet growing demands.
- Third-Party Service Requirements: Annually, the need for 40 hours of external consulting, costing $300 each, was eliminated.
- Previous Solutions Maintenance Costs: The annual cost of $30,000 for previous solutions, including licensing and infrastructure, was reduced by 25%.
This study provides compelling evidence of the tangible benefits and significant ROI that enterprises can achieve with Dynamics 365 Business Central. By addressing pre-implementation challenges and leveraging the cloud's scalability and flexibility, companies can optimize their operations and financial management, paving the way for sustained growth and efficiency.
The Forrester Consulting's Total Economic Impact™ (TEI) study not only highlighted the measurable financial returns of adopting Dynamics 365 Business Central but also shed light on the benefits that, though challenging to quantify, play a crucial role in enriching a company's operational and strategic landscape.
Beyond numbers: the intangible advantages
One of the standout features of Business Central, as noted by Forrester, is the enhanced user experience it offers. The intuitive interface and user-friendly design foster a more productive and satisfying work environment for employees. Moreover, its seamless integration with other Microsoft products enhances productivity by allowing for a unified platform where data and processes can be managed without the hassle of switching between applications.
Another significant advantage is the ease of making informed decisions facilitated by real-time data accessibility. This capability ensures that decision-makers are always equipped with the most current information, enabling swift and accurate strategic choices.
Lastly, Business Central's high degree of flexibility stands out as a major benefit. This adaptability allows businesses to tailor the system to their unique requirements, thereby not only meeting current needs but also scaling alongside the company's growth.
The ROI of Business Central
The financial aspect of Forrester's study showcases an impressive outcome for the modeled organization: over three years, the benefits amounted to $484,000, against costs of $178,000, resulting in a net gain of $306,000. This translates to an astonishing Return on Investment (ROI) of 172%! Such figures underline the economic viability and financial attractiveness of transitioning to Business Central.
Comprehensive ERP solution
Dynamics 365 Business Central isn't just about financial management. It's a world-class ERP solution that encompasses supply chain management, production, warehousing, and sales. Its broad functionality ensures that it can serve as the backbone of a company's operations, providing a solid foundation for growth and efficiency.
For businesses pondering over the potential benefits of implementing Business Central, the findings from Forrester's TEI study are compelling. With its blend of tangible financial returns, intangible benefits enhancing operational efficiency, and a high ROI, Business Central presents a strong case for companies looking to optimize their processes.
Considering the significant advantages it offers, businesses are encouraged to explore what Business Central can do for them. A free consultation with an advisor could be the first step towards transforming your company's operational capabilities and achieving substantial growth and efficiency gains.
Source: The Total Economic Impact™ Of Microsoft Dynamics 365 Business Central
