What is Business Central and how is it different from Dynamics NAV?

Explaining the changes you need to know about

The latest version of Microsoft Dynamics NAV is called Microsoft Dynamics 365 Business Central…but wasn’t Business Central already around as a cloud-only product? So, what exactly has changed? Is it more than the product name?

‘NAV in the cloud’

Launched in the spring of 2018, Business Central was initially dubbed ‘NAV in the cloud’, as it was the first fully-featured cloud version of Dynamics NAV. Its goal? To position Microsoft strongly in the accounting software and ERP marketplace for SMBs as companies move to using cloud-based financial software. It means that Microsoft can now compete with other established cloud players such as Oracle NetSuite.

Business Central started life under the codename Tenerife before emerging first as “Dynamics 365 for Finance and Operations, Business Edition” – a cut down version of NAV run for users by Microsoft on Azure, its cloud platform. Initial take up wasn’t great, as everyone seemed to be waiting for the fully-fledged version of ‘NAV in the cloud’ that we now have.

An evolution

To understand the evolution of NAV into Business Central, we only need to look as far as Office 365 and the fact that since its launch, Microsoft has continued to sell Office 2016, and now Office 2019, as self-deployed, self-hosted on premises software that can be extensively customized to user needs.

The buy-and-deploy model of Office 2016 and Office 2019, which allows owners to use their software in perpetuity until it is outdated or no longer supported, contrasts markedly with the cloud-hosted Office 365 model, where regular updates and upgrades are available for an ongoing subscription fee for each user. Office 365 is priced keenly, and it’s evident that Microsoft would like us all to move to it. Yet, they haven’t forced anyone to do so.

Microsoft is taking a similar approach with Business Central. Like NAV, it can be bought on a perpetual license and deployed on premises. But it’s also available on subscription – either in the cloud or on premises. Do the math, and you’ll see that’s how Microsoft is encouraging new customers to purchase it. Like Office, there’s no requirement to move to the cloud, but Microsoft is making a compelling offer to SMBs to do so, with attractive pricing and simpler setup.

Looking at the versions, Business Central Essentials is similar to the Dynamics NAV Starter Pack, and Business Central Premium offers enhanced features, like Dynamics NAV Extended has. But user licensing for Business Central is different.

User licenses

Dynamics NAV has had perpetual licenses based on the number of concurrent users since its days as Navision. Only its Services Provider License Agreement (SPLA) rental licenses for cloud hosting have been based on named users, i.e. licensed on the basis of which actual employees can use NAV.

This named user approach is the norm for other Microsoft products, and is the only way that Business Central can be licensed – whether a perpetual license is purchased, or subscription is paid. And, remember, those subscription prices look good.

Subscription pricing

For new customers, subscription calls for a different approach to setting budgets. Sure, there will still be a need for a lump sum payment up front for a partner’s professional services to deploy and perhaps customize a new Business Central system, but there’s less risk with the software itself, as it will be paid for steadily only as it gets used. Also, unlike some other cloud offerings sold on subscription, there’s the option to run on premises now and in the cloud later, if that suits the user best.

For existing NAV customers with perpetual licenses, an upgrade to Business Central will give new features and the promise of support further into the future. But many may stay on their Business Ready Enhancement Plans (BREP), effectively software maintenance agreements, rather than switching to subscription. Microsoft is very keen to get more and more businesses using Azure, so expect ongoing offers to attract these customers off “NAV on premises” and onto Business Central subscription and ultimately to Business Central in the cloud, on Azure.

Flexibility

For Microsoft's SMB partners, the message seems to be “Become a Cloud Solution Provider (CSP) and get on the Business Central bus.” Actually, that went down pretty well with partners at last month’s Directions North America conference and should be welcomed this week by European partners. Probably because it’s an extra option on top of all the existing options already on offer with NAV. There's now perpetual or subscription licensing; on premises, hosted or cloud deployments; and C/SIDE customizations or AL extensions loaded privately or from the AppSource app store. Business Central is certainly flexible, and this should help it increase its market share amongst SMBs.

What’s next?

In next week’s blog post, we will analyse some more changes that Business Central brings, evaluating their impact on partners and users alike. Meanwhile, if you want to learn about our progress in ensuring that Zetadocs supports Business Central in all its configurations, head for this blog post.