In-depth Guide To
Migrating To Dynamics 365

Find out why you are ready to migrate your ERP to the Dynamics 365 Cloud

Table of contents


How to upgrade Microsoft Dynamics AX to 365

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As a Microsoft Gold Partner we have been implementing and maintaining ERP systems since 2002 which resulted in over 300 successfully supervised and conducted projects for our clients. 


This experience led us to understand why moving the ERP to the cloud can be a challenging task for all enterprises alike, regardless of their size.


In fact, a great majority of our customers have been constantly on the fence whether this change will be truly an upgrade for their business.


However, from our perspective, if you are a Microsoft Dynamics user, the migration to the cloud is unavoidable. We would even risk saying that you are ready to switch to the cloud, even if you don’t know it yet.


Why? An upgrade to Dynamics 365 cloud doesn’t only mean the access to the latest technology, cost effectiveness and overall productivity increase.


Migration to Dynamics 365 is a part of an enormous change in the ERP enterprise market that will continue to promote the trend of transitioning ERPs to single cloud deployment in the following years.


If you are reading this ebook, chances are that you too, are trying to answer the question whether your business should be a part of that change.

Luckily for you, in this ebook you will read about:

  • the insights of the ERP market transition to the cloud
  • reasons why you should migrate to Dynamics 365
  • properly conducted preparation for the migration process
  • unique migration process, offering the most efficient way to upgrade your ERP to the MS Dynamics 365, crafted by the specialists in the field

We are ready to guide you in-depth on migrating to Dynamics 365 – let’s dive right in.

Chapter 1:

The ERP Market Background

According to Gartner’s report “Market Share: Enterprise Resource Planning Worldwide, 2019”, ERP software was worth $38.8 billion in 2019, with the annual growth of 8,8%. This trend is supposed to continue with a steady pace of 7% per year, making the ERP software market value worth $44 billion by the end of 2022.

According to another source, Valuates Reports, the ERP market size worldwide is expected to reach $60.23 billion by 2026, while Industry Research predicts that the compound annual growth rate will reach a 9% increase during 2020-2024, generating $19.52 billion during these years.
However the data may vary depending on the scope of the source, it all points to one direction – an undeniable and swift increase of the ERP software market value.



In the enterprise world which closely follows development of technologies like AI, intense process automatization and pay-for-less culture, it’s not a surprise that the ERP market continues the transition to the cloud. We could agree that this is definitely the trend that is currently transforming the whole market. However, how did this happen?

Dynamics AX vs Dynamics 365 Support

If you are a Microsoft Dynamics user, you know that you will still have the chance to get the support for both Dynamics AX 2009 and 2012 throughout 2021. While this is definitely convenient, it’s rather easy to predict that it will be more and more difficult to get support for your current system version, especially if it has any customizations.


In the close future, you may experience more and more denied support requests from Microsoft and the fixes for your system version can become increasingly defunct. This has no chances of happening once you upgrade to Dynamics 365.



Migrating to the cloud also means no more data upgrades. Once you migrate to the cloud, Microsoft will automatically update the system twice a year (April and October). The updates are always backward compatible so your apps and customizations will work continuously.


When it comes to the major changes that could be disruptive to certain features, the automatic update will turn them off by default. Admins will be able to perform regression tests on these features before re-enabling them, ensuring for a smooth transition and continuous functionality.


One thing is certain – after the upgrade, Dynamics 365 won’t require any major transitions from your side. This means ongoing and extensive support.

The ERP Transition Time: Market Insights

As the cloud revolution emerged in the mid-2000s, the business perspective of the functionality and security of the cloud has changed. Business leaders could see that the cloud offers reliability, improved security, extremely precise focus on given projects, and cost reduction. On top of that, the innovation-favoring trend pushed for enterprises to try new technologies, which made enterprises accustomed to complex in-the-cloud applications.


The first market who adopted and pioneered the cloud transition was the midsize enterprise market, where companies are more likely to look for lower operating expenditure in the long run, system stability and ease of access.


As of today, the midsize sector has the largest rate of operational cloud adoption. Flexera and Microsoft report that 78% of SMBs have fully adopted cloud computing by 2020, with 94% of them appreciating the security it brings. At the same time, the midsize market sets the cloud transition trend for large and global enterprises in all verticals.


Currently, we observe large and global enterprises slowly following the footprints of their midsize counterparts, with more and more organizations with over $1 billion revenue noting an increased rate of the transitions to the cloud.


[graphics, data to show below: source]

As large and global enterprises keep on standardizing the move from the on-premise to the cloud deployment, we can expect this trend to accelerate and grow in size in the following years to come.


It’s important to point out that paradoxically, this supposedly slow transformation of large and global enterprises only paints the full picture of how fast the entire ERP market matures to switch to the cloud completely.


As the financial management and retail sector continue the technological shift to the cloud, it simultaneously paves the way for the supply chain, manufacturing, operations and asset management sectors whose cloud adoption rates move faster than ever before.



It is safe to assume that this is the reason why the cloud ERP software revenue is forecasted to reach 7,4% growth annually by 2025 and is expected to continue growing. All of the above thanks to – no surprises here – large and global product-centric ERPs that make up roughly half of the overall ERP market.



This is yet again confirmed by Gartners’ research predicting that by 2022, 30% of large and global enterprises will move to the cloud. At the same time, the report also predicts that 40% of ERP implementations will underachieve as a result of underinvestment in cloud integration.


Which leads us to the next chapter.

Chapter 2:

Why migrate to MS Dynamics 365?

Even though cloud-based ERP has been developed as an alternative to the on-premise solution, it has become clear that it is the cloud that reaps the rewards even when it comes to the standard side by side comparison.

ERP in the cloud:

  • minimizes the costs of IT support and maintenance
  • provides your business with immediate access to reliable information
  • helps you avoid the duplication of data in the database
  • reduces adoption and cycle time
  • increases cost savings
  • improves scalability

On the other hand there is the standard, on-premise approach that lacks any of the advantages above, yet provides you with undeniable accessibility to control, such as code customizations in the Dynamics AX.


Is this its only tangible advantage? Let’s analyze all cloud benefits in depth to find out.

Cost reduction

Migrating to Dynamics 365 Cloud results in great cost reduction in the long run. It is mainly for two reasons: the costs of the process itself and maintenance of your ERP system in the cloud.

Fixed migration costs

When it comes to the upgrade process, validation of the upgraded system and testing are the only required costs. All the other costs, specifically the ones related to IT infrastructure as well as staff training, are significantly reduced.


While costs of the upgrade process itself may seem like an obstacle initially, the external circumstances can very often validate these types of claims.


As many enterprises had to quickly scale their operations and maintain their business agility during the COVID-19 pandemic, it contributed to rapid acceleration of ERP migration to the cloud.



Fixed maintenance costs

As soon as you migrate to the cloud, you can expect to see the cost savings grow. As for the maintenance, an upgrade to Dynamics 365 eliminates the costs of on premise servers and systems as well as licensing and support fees.



This is due to the extensive use of already mentioned automatic updates that Microsoft will perform for your company, which also results in continuous back-ups. This means no costs of hardware investments, human resource maintenance and redundant services.

MS Dynamics 365 Applications Development Cost

Once you upgrade your ERP to the cloud, you and your Dynamics Partner will focus on building and modifying applications and modules using no code or low code approach.


The transition to the cloud, in this light, significantly changes the outlook on the productivity of any enterprise. Within the cloud, your business is supposed to be scalable and efficient even when the developers are not capable of constant programming; and low- and no-code approaches make this possible.


The whole process is facilitated by the Dynamics 365 Cloud that enables new modules and projects to be launched without the need of coding – this only doubles down on the cost-effectiveness as well as time-saving factors.

According to “The Total Economic Impact of PowerApps and Microsoft Flow” report, published in 2018, using no-code or low-code solutions for your business guarantees

  • 70% less application development cost and effort
  • 362% return on investment over 3-year term
  • around <3 months payback

It’s important to mention that using no-code or low-code solutions of your Dynamics 365 partner doesn’t mean that you have to resign from using any solutions that require coding altogether, but lets you avoid the time and finance roadblocks that it may cause.

In-the-cloud reliability

Moving your ERP to the cloud not only saves your business money, but also ensures that once implemented ERP will continue to successfully serve the enterprise.


According to analysts on the subject, 75% of the ERP projects fail due to underestimation of time, effort and resources needed to implement and maintain the ERP, costing the company lasting damages.

Forbes in their “Real costs of choosing the wrong software vendor” article lists many examples of well-known companies that experience this first-hand:

  • In 2004, University of Massachusetts experienced a faulty ERP implementation which left nearly 27,000 University of Massachusetts students unable to register for classes or collect financial aid checks.
  • In 2000, Nike lost $100 million in sales after a failed supply chain project, which was followed by a series of lawsuits and 20 percent nosedive in its stock.
  • In 1999, Hershey’s chocolate’ s ERP implementation failed, causing the company not to deliver a $100 million worth product before Halloween. This was followed by the 8% stock drop.

The good news is that ERP failures can be avoided and the transition to the cloud plays a role in making that happen.


Moving your ERP to the cloud provides a total centralization of your data. As a consequence, your system is no longer reliable on the on-premise infrastructure that can be prone to system failures, loss of productivity and hardware fallacies.


This also makes you independent of any third-party software.


On top of that, Microsoft guarantees constant counter-attack of data-hacking threats as well as continuous monitoring of system credentials. Dynamics 365 services have built-in security and privacy features that include network connectivity, service hosting platform, user access and physical datacenter.


Because of this robust cloud service infrastructure and security mechanisms, you can be sure that your data is fully protected.

Full accessibility

Once you move to the cloud, gone are the days of a specific way of accessing your data! Dynamics 365 allows you to access the platform from Outlook, any web browser or any device, even mobile. This means that you can perform any business operation without the need of using a dedicated enterprise portal or remote desktop.


All that is possible thanks to Azure, for which Dynamics 365 was built. Even though Azure is not a cloud itself but functions in a platform-as-a-service model; it hosts the Dynamics cloud, hence these two work seamlessly together. This enables you to enjoy the full accessibility and the stable environment provided by Azure.


On top of that, Azure offers a perfect environment for building and managing business applications in Dynamics 365. These applications are fully standardized, so they are compatible and dependable for the seamless all-in-cloud experience.

Unmatched flexibility

One of the mentioned benefits of the on-premise systems was bigger control of the code and the possibility of customization.


However, it’s worth mentioning that when the ERP system’s code is continuously patched based on the current needs of the enterprise, the risk of incompatibility of these patched modules increases.


As smooth functionality of the overlapping processes becomes difficult or impossible, the whole ERP system can become gradually non-developmental.


Hence, patching legacy systems might be a good short-term solution, but it can create more problems in the long run.


On the other hand, enterprises that choose the cloud solution have one business ecosystem to manage all essential processes in an integrated, controlled environment, from customer support through finances up to project management and CRM.


Think of Dynamics 365 as a multiplatform with many layers, from which you choose what to integrate and operate within – a perfect ecosystem.


Being a part of the Business Application Solutions Ecosystem is a significant feature of Dynamics 365 – it enables you to customize the platform you use according to your needs.


As B.A.S.E is designed for enterprise customers, it’s no surprise that products and cloud services offered in it are tightly integrated.


While typically ERP-associated Business Apps such as Sales, Customer Service, Field Service or Finance and Operations integrate and pull the data from mentioned Azure, Teams and Skype integrate with Outlook. OneDrive flawlessly connects with SharePoint and LinkedIn access facilitates the Recruitment and Sales processes. Each process is compatible with another.


This ensures the smooth streamlining of operations, improves responsiveness and provides the right tools for each member of the organization.


Dynamics 365 provides 7 tightly connected layers in its B.A.S.E:

Chapter 3:

What does the migration to MS Dynamics 365 look like?

Upgrading to Dynamics 365 is not an easy process, but once you prepare for it and invest time and effort to go through this operation, we can guarantee it will be worth it in the long run.

The methodology provided by XPlus offers a unique approach towards the migration process which makes it the most efficient up-to-date.

The upgrade usually consists of 7 steps:

  • Customer Diagnosis
  • Assessing technical and functional aspects of the upgrade
  • Custom migration assessment
  • Determining the upgrade approach
  • Migration process execution

based on the approach you will choose one of the three processes:

  • Technical upgrade
  • Reimplementation
  • Hybrid upgrade
  • Testing

To make sure it will go as smoothly as possible, it’s important to remember some of the best practices that minimize the risk of errors and prepare you for the whole process.


[graphics: timeline, based on XPlus process, example below]


How to prepare for an upgrade to Dynamics 365?

It’s essential to realize that the process of the upgrade to Dynamics 365 is technically a system migration that involves moving the data from your on-premise system into the Dynamics 365 Cloud. This consequently means the change of your deployment and switching from internally hosted data to an external source.


Best way to prepare for the upgrade is planning the data migration flow in a way that fits your business needs.

To start planning data migration, outline the most essential facts about your data to create a business process catalog:

  • Current data storage
  • Prospective data storage looking at the business processes
  • Data destined for migration
  • Data that will be left out before the upgrade
  • Number of code customizations
  • Number of users in your system
  • Prospective number of users in your system
  • Third-party applications your system is integrated with

Having clearly defined data based on the points above will save your company a lot of time and money in the long run. Now, let’s deep–dive into the process.


Customer diagnosis

The goal of the first step is to understand your organizational and technical environment in order to determine the current needs and state of the Dynamics system. As a result, you are provided with detailed information about the upgrade process.


The first step comprises of three phases:

1. Diagnosis interview and workshops
This phase consists of a general interview during which we will understand your current business situation and motivations.


2. Gaining data via questionnaire
During this process we accumulate the data that serves as a basis for upgrade assessment.
To make this easier, we ask about how each business process is performed; which processes are not the most efficient, and where the areas of improvement already can be seen. We can assist you with filling up the questionnaire.


3. Customer upgrade diagnosis
This process will let us outline the ideas regarding the scope and duration of the upgrade process as well as the unique approach that has to be taken, based on your current situation.

In this way, we can assess the expected effort and identify the business dependencies involved during the migration to Dynamics 365 .

Step 2:

Assessing technical and functional aspects of the upgrade

During this step we analyze the current business processes and calculate the scope of the upgrade process. In this way, we will determine how to leverage your processes to the Dynamics 365 so you benefit from new capabilities and enhancements. As a result, we also create an initial ROI calculation.

This step consists of seven phases:

1. Planning and initialization assessment
In this phase, we carefully plan out each step and its duration.


2. Execution assessment
This assessment will let us understand your current business processes and map them to the capabilities of Dynamics 365 cloud. As a result, we will be able to prepare the summary, recommendations, and estimates for proceeding with a Microsoft Dynamics 365 upgrade.


3. Technical migration assessment
The main purpose of this phase is to identify your current technical architecture in order to analyze the code and figure out how to leverage it to the Dynamics 365 Cloud.



4. Functional migration assessment
The most important goal of this phase is to clarify which customized features of your system can be now replaced by native features of the Dynamics cloud. In this way, we are making the process of the upgrade as efficient as possible and your post-upgrade functionalities will become even more operational.
By completing this step, you obtain a detailed migration summary plan including a task list report with rough estimates of the required development efforts.



5. Upgrade initial cost and estimation project plan
This phase will provide you with the upgrade cost estimation and project plan. Thanks to these deliverables we will decide on the approach to the upgrade as well as outline next steps.


6. Presentation of upgrade model proposal
After agreeing on the approach and next steps, we present and explain the upgrade model specified for your enterprise. After collecting feedback, we prepare for the upgrade process kickoff.


7. Assessment summary and closure
In this phase, we present the findings we gathered during this step and prepare recommendations for specific upgrade tasks based on the model of the upgrade we chose.

Step 3:

Custom migration assessment

The goal of this step is to prepare a more detailed results of a standard migration assessment in the areas identified as requiring more analysis and support for the business.


During this step we analyze the technical and functional migration assessment findings and evaluate the custom aspects of the given upgrade.

This step consists of two phases:

1. Customer requirements analysis
This phase serves to unveil all additional customer requirements. It also impacts the scope and duration of the whole assessment, as well as a selection of activities that have to be performed.


2. Assessment execution
In this phase, we evaluate the possibilities of an upgrade for special customer requirements and identify decisive factors when it comes to the approach of an upgrade.

Step 4:

Determining the upgrade approach

Based on the assessment execution as well as considering factors such as time, resources, finances, business requirements, and non-functional requirements, we choose one the approaches to the data migration:

  • Technical
  • Re-implementation
  • Hybrid
Step 5:

Migration process execution

The data migration assessment summarizes the action plan based on both functional and technical review, as well as recommended migration approach.
During this step we perform a full data upgrade with no process change, optimization, or deep analysis.

The process consists of 9 short phases backed up by a unique XPlus Project Management tailored to the approach we’ve chosen during the previous step:

1. Customer preparation
In this phase, we prepare the environment for the migration execution.


2. Project Management
During this phase we manage, monitor, and control project activities during the whole lifecycle.


3. Project kick-off
During project kick-off, we prepare the environment for the data migration.


4.Project execution
This phase requires continuous task execution and monitoring in order to meet previously determined standard goals.


5. Project closure
Throughout this phase we make sure to provide you with determined deliverables as well as ensure all project activities are completed and accounted for.


6. Change management
During the change management phase we go through activities and tasks that will allow you to prepare for the transformation and gradually introduce the changes in a controlled environment.


7. Preparing for change
Throughout this phase we identify stakeholders who are impacted by the change and outline change management strategy.


8. Managing change
During this phase we establish specific plans for managing change in the project.


9.Reinforcing change
During this phase we outline specific plans that will ensure that the changes introduced will be sustained in the long term.

Step 6a:

Technical Upgrade Process

Whether you follow this step is determined by the decision taken in step 4. If your company requires a technical upgrade, the goal of this step is to perform thorough code and data upgrade according to the project plan.

Technical upgrade uses specific tools to convert your data and transform your customisations to the latest version, so even though the process itself is relatively short, it requires post-upgrade regression testing (step 9).

1.Analysis modification
In this phase, we analyze all custom objects and prepare solution proposals for the standard configuration of code customizations.


2.Execution phase
Throughout this phase we perform data and code upgrades, including the development of new functions, if they are necessary.


3.Validation phase
This phase consists of checking whether the upgraded data and code quality have met previously specified quality standards.


4.Go Live phase
In the final phase, we manage all tasks required for the production environment and go live.

Step 6B:


This approach to the upgrade requires establishing a clean version of the system and migrating only the desired data, while paying attention to harmonize process streamlining.


XPlus does all reimplementation projects according to CRP (Conference Room Pilot) scenarios that help develop business process models as well as set and validate business requirements.

This step consists of 7 phases:

1. Determining scenarios
During this step we agree on business requirements and establish measurable project goals.


2. Configuration
Throughout the configuration phase we plan and prepare for system configuration allowing us to meet your requirements.


3. Modification
During this phase, we prepare functional and technical designs of the upgraded system and establish a budget for their realization.


4. Prototyping
Prototyping phase consists of defining work packages, implementing them, as well as testing them in order to prototype target solutions.


5. Migration
During this step, we prepare and execute code and data migration.


6. Reporting
Reporting phase consists of collecting, analyzing, and planning the implementation of reporting requirements.


7. Start
The kick-off of the project and go live phase.


Step 6C:

Hybrid Upgrade

A hybrid upgrade requires both a technical upgrade of fragmented code as well as customization or addition of specific functions.

The process is entirely dependent on the customer’s needs. This is why it’s important to establish whether this procedure should be closer to the technical upgrade or reimplementation in the first steps of the upgrade process.

Step 7:



Once the data is migrated to the cloud environment, it’s time to leverage new business processes, establish data flow, and evaluate new features. It’s important to do it before the complete process redesign; only in this way, you will be able to adopt new processes and prepare the whole system to be significantly improved. Once you have finished with processes reimplementation, it’s time for regression testing.


According to experts, it’s an absolute must to start automated testing as early as it’s possible, even if our approach is to balance out the manual and automated testing in the long run. Automated testing is simply the best way of risk mitigation and a guarantee that all the code that has been transferred during the upgrade will work as a part of your improved ERP system in the cloud.


The testing process requires hundreds of functional and performance tests. Usually, it reveals all inconsistencies and functionality issues that may cause the ERP to fail.


Even if you apply automated testing to less complex processes at the very beginning, you still avoid the limitation of human capability and increase the cost to effectiveness ratio.

Chapter 4:

Biggest challenges of migration to Dynamics 365 Cloud

The main advantages of the migration process is that it usually takes a fairly short period of time and you have more control as the costs of the process are fixed, based on your needs. Upgrade to MS Dynamics 365 is mostly convenient, but you have to bear in mind that it’s never risk-free. Here are some of the most common challenges that this process poses.

Customized Code

The more the ERP is customized for the specific business, the more problems it can cause post-upgrade.


As the code is modified to fit the specific business’ need, the upcoming versions of the system are not supported, which causes the need of another code rewrite; or worse, it prevents the ERP from developing further, which is the absolute contrary to what you upgraded the ERP to the cloud for.


The situation described above shouldn’t be necessarily seen as a disadvantage. In fact, finding defects during the regression testing process will reinforce the upgrade to suit the standard of your specific ERP – the challenge is to make it as effective as possible.


This is a familiar scenario: a company exposed to the so-called upgrade risk decides to choose a native Microsoft solution, RSAT, as their go-to regression automation tool.


However, for the highly customized ERP to be tested for full functionality, it is recommended to conduct tests that are able to be adjusted and customized specifically for the given ERP.


This is where we step in and offer Executive Automats solution, a unique testing platform that was developed by us specifically for these types of scenarios. Our process of the upgrade includes the regression testing phase that uses our platform to perform hundreds of automated regression tests without any help from developers.


Executive Automats seamlessly integrates with the Azure cloud and lets you create and maintain hundreds of scripts, test workflows and security accesses as well as schedule and plan testing phases, even if your ERP is highly customized.

Overflow of flexibility

As we mentioned above, Dynamics 365 Cloud is one of the most flexible ERP systems out there, enabling you to change the software to fit your business needs. At the same time, it doesn’t always mean that you should follow that path. For example, certain organizations running operations in developing countries are not able to adopt cloud solutions across the entire company because of unreliable infrastructures.


Microsoft Dynamics 365’s flexibility is definitely an advantage, but it can also create a set of very unique challenges during the implementation and data migration.


A few of these challenges include the overwhelming amount of decision-making processes, and lack of proper project governance which can result in roadblocks for smooth analysis and even implementation failure.


Dynamics 365 is armored with extensive software packages and offers a variety of system integrators. It is important to define the blueprint for your enterprise and choose the best possible option in order to design a clear path of the data migration.


This will help you draw an internal decision-making process and draft the integration plan for every phase of the rollout that will prevent any possible analysis paralysis.

Data integration in the context of protection and safety

There is no guarantee that every migration to Dynamics 365 will be successful, therefore it’s understandable why many enterprises have doubts about their data’s safety and the possibility of external sources having access to internal business information.


In a real-life scenario, this issue needs to be discussed and thoroughly planned with your implementation partner as soon as possible. When your company has strict data sovereignty requirements, your priority should be keeping specific data and its backups in a more restricted cloud environment.


This is made possible thanks to technology options that secure the data and impose limited user access and authentication.


Long gone are the times when the only options are either migrating the existing database to Dynamics 365, or migrating only master data, while opening specific balances manually, using data entities – the most important phase is to plan a detailed and secure data flow, thanks to which the possible risks of errors can be excluded.


Your ERP system, especially if it has data sovereignty requirements, has to be upgraded to the cloud with your specific industrial needs in mind. Only in this way, you will be able to find weak points and protect your business data flow.


Dynamics 365 cloud is one of the most acclaimed digital ecosystems in the ERP environment not without a reason. This popularity is apparent especially in the sector of the product-centric enterprises, who praise Dynamics 365 for its operational capabilities carried out in a single global ERP along with multidimensional multi analytical features.


Looking at the numbers on the ERP market and its maturing, as well as the technological cloud advancement, it’s clear that it’s important to be acquainted with the Dynamics 365 data migration process. It is possible that soon it will help you leverage new best practices and supercharge your most complex business processes.


If that will be the case we encourage you to contact us and tell us about your needs and expectations. As Gold Microsoft Partner, we make the MS Dynamics 365 migration experience as seamless as possible – we would be thrilled to talk about your challenges.