Adapting to Microsoft Dynamics NAV Managed Service: Positive Signs, Says One Early Partner

In October, Microsoft rolled out Microsoft Dynamics NAV managed service for partners, a way for them to host multi-tenant NAV-based solutions on Azure with new administrative tools, licensing, and cloud support provided by Microsoft.

Dynamics NAV managed service enables Dynamics NAV partners to easily offer SaaS solutions to their customers, deployed on Azure infrastructure and managed by Microsoft cloud engineers, according to the company.

For partners, one difference from other hosting approaches is that Microsoft hosts the databases in the cloud as a managed service, according to Microsoft MVP Eric Wauters. In short, partners no longer have to worry about cloud infrastructure and installation/monitoring services anymore, according to Wauters.

Currently there are about 15 ISVs using the Dynamics NAV managed service.

One of the very first of those partner companies to go live on the managed service platform is OneNFP, which was in the preview program for Dynamics NAV managed service. OneNFP, which spun off from Serenic in 2014, is a global provider of financial, fundraising, and business management cloud solutions that satisfy the requirements of non-profits and the public sector.

They offer OneNFP Financials with Microsoft Dynamics NAV and OneNFP Fundraising with Microsoft CRM Online.

“One hundred percent, we were going after the ‘One Microsoft’ story, so Office 365, Dynamics ERP, CRM Online for fundraising, Power BI-the whole stack, all integrated,” says Brandon Taylor, president of OneNFP.

Before Microsoft launched Dynamics NAV managed service, OneNFP was already able to offer a pure cloud-based solution built on Azure. It worked with Microsoft to build the foundation it needed to deploy its OneNFP products on Azure, Taylor says.

“We were in the TAP program and we started in October last year working with Microsoft to help them understand [our] requirements because we were doing it a year before that in our own Azure environment. Then we put our first customers on in April,” he says.

Currently, OneNFP has 22 customers running live on the service. The company also has three tenants it hasn’t been able to move from its previous Azure environment to Dynamics NAV managed service yet because there are forthcoming changes needed to handle their size.

Benefits to partners and clients

One of the reasons OneNFP decided to go with NAV managed service was because it wanted to get out of the infrastructure business completely and get access to new features in the web client, which the managed service provides, Taylor says.

“We wanted it to go beyond PaaS from the perspective that costs were more defined and we just attach to it,” he says. “But it’s not completely there yet-with most services this is what you get and this is how much you pay. But with NAV managed service there are variable costs still, unfortunately. It will take Microsoft some time to iterate through use cases related to ISVs. Until then, we expect it to come close in cost to our existing environment. We’ll know in the coming months.”

But in addition to getting out of the infrastructure, Taylor says another priority for the company was to get out of the yearly upgrade cadence.

“Every year in October, there’s a new release and then we had to go do work-it was painful,” he says. “Now we’re on a monthly release cadence. To move tenants now, we create a new app service after some development work and move a tenant in five minutes-and all the tenants are upgraded to the next version.”

So that painful process is now gone, and OneNFP’s clients now get access to the latest improvements quickly.

“We wanted access to that new web client-the month after they did it and we got that,” he says. “And if we found an issue, we could submit it and they’d make improvements in the web client and all the clients get it. Client-facing, we wanted a more reactive and timely response and you get that with this service.”

Running a cloud business

Although OneNFP didn’t have to make any operational changes to adapt to NAV managed service, other vendors might have to if they’re not already in the cloud.

“We didn’t have to recalibrate our team’s roles a lot [for the NAV Managed Service approach] but I would anticipate for an organization that isn’t into cloud, they’ll probably have to figure some things out,” he says. “It’s cloud, so it’s a twenty-four seven thing now and that’s a whole different program in and of itself. So from that perspective they’ll have to make changes. When you do changes, it’s multi-tenant so the concept of multi-tenancy is in place. It’s not just one client, it might be fifty. There are paradigm changes that are pretty dramatic-one hundred and eighty degree dramatic.”

Cost structure for a volume business

For ISVs examining NAV managed service, Taylor notes that pricing is the piece that is the least fleshed out. In theory, the way Microsoft has designed the cost structure probably makes sense, but in practice, it needs time to fully develop, he says.

“But don’t get me wrong, we wouldn’t have signed up if we didn’t see the vision on where it could go but it’s still early in the cycle,” he says. “For example, an issue was just fixed that prevented us from moving tenants. That will cause some billing reconciliation issues. However, when a fix is found, we don’t have to do anything. The platform is uploaded to the managed service, we create a new application service, and move tenants.”

In terms of performance, as a vendor adds tenants they will also need to add cores, which add to a company’s costs. Microsoft has benchmarks on the number of tenants that might run per core, but the exact number of tenants per core will likely vary per ISV.

“There’s some risk on cost from a pricing perspective, so vendors should really be aware of that,” says Taylor. “This is truly a volume play. It only makes sense that you’re going to have volume and repeatable IP. That’s the model. This is not a single tenant or five tenant model under the traditional service model where ISVs would customize per tenant.”