The Total Economic Impact™

Of Microsoft Dynamics 365

Business Central
Cost Savings And Business Benefits
Enabled By Dynamics 365 Business Central

OCTOBER 2023

A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY MICROSOFT

Table Of Contents Consulting Team: Richard Cavallaro
Zahra Azzaoui
Executive Summary ................................................. 1
The Microsoft Dynamics 365 Business Central
Customer Journey ................................................... 5
Key Challenges ...................................................... 5
Investment Objectives ............................................ 6
Composite Organization ......................................... 6
Analysis Of Benefits ................................................ 8
Improvement To Staff Productivity ......................... 8
Reduction In Required Hires ................................ 10
Avoided Third-Party Fees..................................... 11
Avoided Costs Of Previous Solutions And Support
.............................................................................. 13
Unquantified Benefits ........................................... 15
Flexibility ............................................................... 17
Analysis Of Costs .................................................. 18
Subscription Fees Paid To Microsoft ................... 18
Implementation, Ongoing Management, And
Training Personnel Costs ..................................... 19
Financial Summary ................................................ 21
Appendix A: Total Economic Impact ................... 22
Appendix B: Endnotes .......................................... 23

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THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL

 Executive Summary
Microsoft Dynamics 365 Business Central allows small to medium-sized organizations to
modernize ERP capabilities and scale in the cloud. This yields productivity improvements
to finance and operations staff, better decision-making based on real-time information,
and opportunities for more profitable operations — all while avoiding costs associated
with on-premises infrastructure.

Microsoft Dynamics 365 Business Central is a cloud-

based business management solution for small to KEY STATISTICS
medium-sized businesses. Microsoft commissioned
Forrester Consulting to conduct a Total Economic
Impact™ (TEI) study and examine the potential
return on investment (ROI) enterprises may realize
by deploying Dynamics 365 Business Central.1 The
Return on investment (ROI) Net present value (NPV)
purpose of this study is to provide readers with a
framework to evaluate the potential financial impact 172% $306K
of Business Central on their organizations.

To better understand the benefits, costs, and risks

the ever-increasing demands of their business. The
associated with this investment, Forrester interviewed
organizations’ ERP stacks often consisted of several
five representatives with experience using Business
disparate on-premises solutions with limited
Central. For the purposes of this study, Forrester
interoperability, which obscured information required
aggregated the interviewees’ experiences and
for optimal decision-making and forced manual work
combined the results into a single composite
in finance and supply-chain operations processes.
organization with revenue of $15 million per year and
150 employees. After the investment in Business Central, the
interviewees described improvements to staff
productivity, cost avoidance on third-party reporting
and consulting fees, and greatly simplified and less
costly ERP deployments in the cloud. Interviewees
Productivity improvement for
also detailed ways in which Business Central allowed
finance and operations staff
their organizations to unlock additional revenue that

Up to 18% was not possible with their legacy solutions.

KEY FINDINGS
Quantified benefits. Three-year, risk-adjusted
present value (PV) quantified benefits for the
Interviewees noted that prior to using Business composite organization include:
Central, their organizations struggled to scale
enterprise resource planning (ERP) capabilities with

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 1

 EXECUTIVE SUMMARY

• A 9% to 18% improvement to productivity for • Net profit from Business Central-enabled

finance and operations staff. Deploying revenue. Business Central enables organizations
Business Central allows the composite to undertake projects and onboard customers.
organization’s finance and operations staff to This leads directly to additional revenue and
reduce the amount of time they spend on manual profit.
reporting and information reconciliation while also
• Improved business outcomes from more
providing improved visibility and tools to
informed decision-making. Interviewees said
accelerate and improve the quality of decision-
day-to-day decision-making for finance and
making. This reclaimed personnel capacity is
operations personnel improves with Business
worth a PV of $116,000 to the composite.
Central due to having visibility into real-time
• Avoided hires amid organizational growth. As information.
the organization grows, finance and operations
• Improved employee experience. With Business
responsibilities grow as well. Business Central
Central, finance and operations personnel are
enables the composite’s finance and operations
less burdened by manual effort and reconciliation
staff to operate more effectively in the present,
tasks mandated by a disparate set of ERP
which offsets subsequent hires the organization
solutions.
requires as it grows.
• Works with Microsoft solutions. Business
• Avoided third-party fees of nearly $30,000
Central natively integrates with other Microsoft
annually. The organization previously paid for
solutions, which drives additional value from
external reporting on a quarterly basis because
these solutions.
finance staff were working at capacity. It also
engaged third-party consulting services to work Costs. Three-year, risk-adjusted PV costs for the
on customizations and integrations amid the composite organization include:
complexity of the legacy ERP deployment. After
• Subscription fees paid to Microsoft totaling
implementing Dynamics 365, the composite
$51,500 over three years. The composite
eliminates third-party reporting costs because IT
organization pays a monthly subscription fee per
staff can internally manage integration and
user for Business Central access.
customization work.
• Implementation, ongoing management, and
• Avoided costs of legacy ERP solutions and
training personnel costs of $126,000 over
support worth $50,600. The composite was
three years. The composite organization
paying several vendors across its ERP stack
leverages internal personnel resources to deploy
while incurring the costs typical to on-premises
Business Central over a four-month period. Once
solutions including infrastructure, maintenance
deployed, part-time staff work to maintain and
personnel costs, and upgrade fees. By
upgrade the solution (e.g., making
consolidating ERP functionality on Business
customizations and integrations).
Central, the organization avoids these costs.
The representative interviews and financial analysis
Unquantified benefits. Benefits that provide value
found that a composite organization experiences
for the composite organization but are not quantified
benefits of $484,000 over three years versus costs of
in this study include:
$178,000, adding up to a net present value (NPV) of
$306,000 and an ROI of 172%.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 2

 EXECUTIVE SUMMARY

ROI BENEFITS PV NPV PAYBACK

172% $484K $306K 7 months

Benefits (Three-Year)

Reduction in required hires $245.1K

Improvement to staff productivity $116.3K

Avoided third-party fees $71.6K

Avoided costs of previous solutions and support $50.6K

“[Business Central] is making it

possible for us to chase those new
revenue opportunities because we
can actually manage it now with our
current resources.”
— VP of commerce operations, technology
manufacturing
THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 3
 EXECUTIVE SUMMARY

TEI FRAMEWORK AND METHODOLOGY

From the information provided in the interviews, DUE DILIGENCE
Interviewed Microsoft stakeholders and
Forrester constructed a Total Economic Impact™
Forrester analysts to gather data relative to
framework for those organizations considering an
investment in Dynamics 365 Business Central. Dynamics 365 Business Central.

The objective of the framework is to identify the cost, INTERVIEWS

benefit, flexibility, and risk factors that affect the Interviewed five representatives at organizations
investment decision. Forrester took a multistep using Dynamics 365 Business Central to obtain
approach to evaluate the impact that Dynamics 365 data with respect to costs, benefits, and risks.
Business Central can have on an organization.

COMPOSITE ORGANIZATION
Designed a composite organization based on
characteristics of the interviewees’
organizations.

FINANCIAL MODEL FRAMEWORK

Constructed a financial model representative of
DISCLOSURES the interviews using the TEI methodology and
Readers should be aware of the following: risk-adjusted the financial model based on
This study is commissioned by Microsoft and delivered by issues and concerns of the interviewees.
Forrester Consulting. It is not meant to be used as a
competitive analysis.

Forrester makes no assumptions as to the potential ROI CASE STUDY

that other organizations will receive. Forrester strongly Employed four fundamental elements of TEI in
advises that readers use their own estimates within the modeling the investment impact: benefits, costs,
framework provided in the study to determine the
flexibility, and risks. Given the increasing
appropriateness of an investment in Dynamics 365
Business Central. sophistication of ROI analyses related to IT
Microsoft reviewed and provided feedback to Forrester, investments, Forrester’s TEI methodology
but Forrester maintains editorial control over the study provides a complete picture of the total
and its findings and does not accept changes to the study
economic impact of purchase decisions. Please
that contradict Forrester’s findings or obscure the
meaning of the study. see Appendix A for additional information on the

Microsoft provided the customer names for the interviews TEI methodology.
but did not participate in the interviews.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 4

The Microsoft Dynamics 365 Business Central Customer Journey
Drivers leading to the Dynamics 365 Business Central investment

Interviews

Role Industry Region Revenue (USD)

Manager of data integration Biotech EMEA ~$7M

Founder Financial services EMEA ~$5M

Manager of finance and

Healthcare EMEA ~$350M
integrations

CEO IT services EMEA ~$3M

VP of commerce operations Technology manufacturing North America ~$5M

business value were not available. The VP of

KEY CHALLENGES
commerce operations at a technology
The interviewees noted how their organizations
manufacturing organization explained: “We would
struggled with common challenges, including:
often just not do something because even though
• Disparate collections of on-premises ERP it would add value, it was much too difficult to
tools. Many of the interviewees described the complete the work within the environment of ERP
homegrown state of their organizations’ ERP
functionality. Most of the interviewees’
organizations used a siloed collection of on-
premises, Microsoft, and non-Microsoft ERP tools
they had acquired and maintained for specific “We had a product for
functionality (e.g., payables, customer invoicing, bookkeeping, we had a product
materials forecasting). Over time, this led to
for inventory management, [and]
redundant functionality, limited interoperability
we had a product for analytics.
between tools, and excessive costs. Finance and
operational personnel were required to manually
We had all these systems that
reconcile information between these systems, were disparate and only
which resulted in lost productivity. sometimes compatible with one
• Lacking ERP capabilities and customizations
another, but [with] separate
to support the business. Interviewees told vendors, separate environments,
Forrester that adding additional ERP tools or [and] separate technologies that
capabilities to reduce manual work or improve all marched to the beat of their
finance or operations processes was not always own drum.”
feasible for their organizations. Cost barriers,
infeasibility due to IT complexity, and/or a lack of VP of commerce operations,
technical resources to deploy and maintain the technology manufacturing
solution meant that capabilities that would add

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 5

 THE MICROSOFT DYNAMICS 365 BUSINESS CENTRAL CUSTOMER JOURNEY

tools that we already had. We were constantly • Be deployable in the cloud to support
making those trade-offs.” organizational cloud-transformation initiatives.

Interviewees noted that customizations and • Enable real-time visibility into key information
integrations were also very difficult to manage across several workstreams.
within their legacy ERP environments without
• Reduce the burden of manual reconciliation effort
significant internal or third-party effort. The
on finance and operations staff.
founder of a financial services firm explained the
inflexibility of their organization’s previous ERP
tools: “We’re primarily a bookkeeping firm, and
we couldn’t work horizontally across our “When we did a TCO analysis on
customers. That’s quite hard because we’d have
[Business Central and factored]
to log in and log out [and] then log in and log out
in our customizations, the value
for each customer each time.”
was really good. It came in as
• Scalability. Each interviewee told Forrester that one of the most cost-effective
as their organization continues to grow, its ERP
solutions for us.”
deployment needs to grow with it to meet the
increasing demands of the business. Given the VP of commerce operations,
disparate and largely on-premises state of the technology manufacturing
organizations’ ERP deployments, scaling as-is to
meet the demand would result in technical debt,
increased costs, and increased personnel
requirements to maintain these deployments. COMPOSITE ORGANIZATION
Furthermore, the demand for manual Based on the interviews, Forrester constructed a TEI
reconciliation work on the part of finance and framework, a composite company, and an ROI
operations staff would also increase. analysis that illustrates the areas financially affected.
The composite organization is representative of the
• Decision-making on incomplete, static
five interviewees, and it is used to present the
information. Interviewees told Forrester that
aggregate financial analysis in the next section. The
decision-makers at their organizations were often
composite organization has the following
forced to make business decisions using
characteristics:
incomplete and out-of-date information, which is
a symptom of inconsistent interoperability and Description of composite. The composite
information sharing between ERP tools. This organization is a $15 million organization with 150
inherently led to suboptimal decision-making in employees. It primarily operates within the region of
the areas of supply-chain forecasting and its headquarters, but it has customers and suppliers
budgeting. around the globe.

INVESTMENT OBJECTIVES Prior to deploying Microsoft Dynamics 365 Business

The interviewees’ organizations searched for a Central, the composite organization maintained a
solution that could: homegrown collection of on-premises ERP solutions
that it implemented over the years for specific
• Scale cost-effectively with the current demands
functionality. As a result, there was some redundancy
of the organization.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 6

 THE MICROSOFT DYNAMICS 365 BUSINESS CENTRAL CUSTOMER JOURNEY

in capabilities from one tool to the next that resulted

in IT complexity and increased costs.

Deployment characteristics. In line with

organizational cloud-transformation mandates, the
composite organization deploys Business Central in
the cloud supported by a Microsoft partner and
internal staff. It also begins a phased retirement of its
legacy ERP tools, and it retires 75% of these costs by
the third year of the Business Central deployment.
The organization has 15 staff members who are
responsible for finance and supply-chain operations
decisions, and they are the primary users of Business
Central.

Key Assumptions
• $15 million revenue
• 150 employees
• 15 Dynamics 365
Business Central daily
users

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 7

Analysis Of Benefits
Quantified benefit data as applied to the composite

Total Benefits
Present
Ref. Benefit Year 1 Year 2 Year 3 Total
Value
Improvement to staff
Atr $46,778 $46,778 $46,778 $140,333 $116,329
productivity

Btr Reduction in required hires $98,550 $98,550 $98,550 $295,650 $245,079

Ctr Avoided third-party fees $28,800 $28,800 $28,800 $86,400 $71,621

Avoided costs of previous

Dtr $14,008 $20,758 $27,508 $62,273 $50,556
solutions and support

Total benefits (risk-adjusted) $188,135 $194,885 $201,635 $584,655 $483,585

IMPROVEMENT TO STAFF PRODUCTIVITY

Evidence and data. Interviewees said deploying
“We used to manually match up
Business Central allowed their organizations’ finance deliveries with supplier invoices.
and operations staff to reduce the amount of time We didn’t have that integration,
they spent on manual reporting and information so it was a manual handling of
reconciliation while also providing improved visibility all supplier invoices that
and tools to accelerate and improve the quality of
consumed hours per week. In
decision-making. Automating tasks within these
Business Central, we don’t have
finance and operations processes yielded
quantifiable productivity savings for the organizations’
to go and look for them
staff. anywhere else.”
• The VP of commerce operations at a technology Manager of finance and
manufacturer noted significant productivity integrations, healthcare
savings for both their organization’s finance and
operations staff in their daily workflows. They
said the firm’s finance staff members each save
• The manager of finance and integrations at a
an estimated 15 hours per month through
automation of finance reporting, while value- healthcare organization described the hundreds
added tax (VAT) reporting saves another 20 of manual invoices their firm needed to complete
hours per month. Operations staff save an prior to its deployment of Business Central. The
estimated 30% of their time with automation of interviewee said that once deployed, the
previously manual processes through native organization could automate these with “the
connections to online stores, order evaluation, press of a button.” The same interviewee also
and fulfillment. reported that Business Central helped reduce the
amount of time their firm required to generate a
sales quote by 75%.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 8

 ANALYSIS OF BENEFITS

• The manager of data integration at a biotech • • An organization’s industry as it affects its ability
organization said that using the supply-chain to customize Business Central for industry-
optimization functionality on Business Central, specific functionality.
their company eliminated the need for manual
Results. To account for these risks, Forrester
product labelling when preparing orders for the
adjusted this benefit downward by 10%, yielding a
market. They noted that automating label
three-year, risk-adjusted total PV (discounted at 10%)
creation through Business Central not only saves
of $116,300.
the organization’s personnel an estimated 20
hours per week, but also that “there is virtually no
chance for error now.”

• The CEO of an IT services organization said their

firm automated recurring invoices on Business
Central, which saves staff tens of hours per “Automated invoicing on
month. The organization also automated [Business Central] will free up
processes that salespeople had historically been capacity for sales, and [it] will
responsible for, which gave them more time to help us to grow faster.”
sell.
CEO, IT services
Modeling and assumptions. For the composite
organization, Forrester makes the following
assumptions:

• Eight finance users save 15 hours per month

through automation of finance tasks that
previously required manual work.

• Seven supply-chain staff members save 30 hours

per month through automation of supply-chain
tasks.

• The average hourly rate for a finance or

operations staff member is $42.

• The composite has a 75% productivity recapture

because not all reclaimed hours are dedicated to
value-added work.

Risks. This benefit will vary among organizations

based on:

• The skill and effectiveness of the organization’s

finance and/or operations staff.

• The functionality gap between Business Central

and the organization’s legacy ERP solution(s)
relates to the possibility of automating manual
tasks.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 9

 ANALYSIS OF BENEFITS

Improvement To Staff Productivity

Ref. Metric Source Year 1 Year 2 Year 3

A1 Finance users Composite 8 8 8

Time savings on manual reporting per

A2 Interviews 15 15 15
month (hours)
Percentage of working week reclaimed
A3 A2/160 9% 9% 9%
(rounded)

A4 Hourly rate of a finance FTE (rounded) TEI standard $42 $42 $42

Annual time savings due to automated A1*A2*A4*12

A5 $60,480 $60,480 $60,480
reporting with Business Central months

A6 Operations users Composite 7 7 7

Time savings on operations activities per

A7 Interviews 30 30 30
month (hours)
Percentage of working week reclaimed
A8 A7/160 18% 18% 18%
(rounded)
Hourly rate of an operations FTE
A9 TEI standard $42 $42 $42
(rounded)
Annual time savings due to operations A6*A7*A9*12
A10 $8,820 $8,820 $8,820
task automation with Business Central months
Subtotal: Total value of time savings for
A11 A5+A10 $69,300 $69,300 $69,300
finance and operations users

A12 Productivity recapture TEI standard 75% 75% 75%

At Improvement to staff productivity A11*A12 $51,975 $51,975 $51,975

Risk adjustment ↓10%

Improvement to staff productivity (risk-

Atr $46,778 $46,778 $46,778
adjusted)

Three-year total: $140,333 Three-year present value: $116,329

REDUCTION IN REQUIRED HIRES present while offsetting subsequent hires required as

the business grows.
Evidence and data. Interviewees told Forrester that
as their organizations continued to grow, the finance • The CEO of an IT services organization told
and operations responsibilities also grew, which Forrester they would need to hire one additional
necessitates additional hires. Furthermore, these headcount to manage their firm’s finance tasks
hires require specialized preexisting expertise or before using Business Central.
significant training on the organizations’ legacy ERP
• The founder of a financial services firm said
tools.
Business Central completely transformed the way
Interviewees said Business Central enables finance their organization works with its clients, which
and operations staff to operate more effectively in the allowed the firm to take on a significant number
of new clients. The interviewee estimated that

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 10

 ANALYSIS OF BENEFITS

Business Central allowed their organization to • The rate of growth at the organization as it
avoid 12 additional hires, which is nearly double relates to the need for additional finance and/or
its current capacity. operations capacity.

Modeling and assumptions. For the financial • The functionality gap between Business Central
model, Forrester makes the following assumptions: and the organization’s legacy ERP solution(s)
relates to the potential for capacity reduction
• Without Business Central, the composite
once implemented.
organization would be required to add 1.5 FTEs
(full-time and part-time) in finance and operations Results. To account for these risks, Forrester
to meet the demands of the business amid adjusted this benefit downward by 10%, yielding a
growth. It avoids these hires with Business three-year, risk-adjusted total PV of $245,100.
Central.

• The average annual rate for a finance or

operations hire is $73,000.

Risks. This benefit will vary among organizations

based on:

Reduction In Required Hires

Ref. Metric Source Year 1 Year 2 Year 3

B1 Total finance and operations users Composite 15 15 15

Required capacity increase to manage

B2 Interviews 10% 10% 10%
growth
Required FTE capacity growth avoidable
B3 B1*B2 1.50 1.50 1.50
with Business Central
Annual rate of a finance or operations
B4 TEI standard $73,000 $73,000 $73,000
FTE

Bt Reduction in required hires B3*B4 $109,500 $109,500 $109,500

Risk adjustment ↓10%

Reduction in required hires (risk-

Btr $98,550 $98,550 $98,550
adjusted)

Three-year total: $295,650 Three-year present value: $245,079

AVOIDED THIRD-PARTY FEES external reporting on a monthly or quarterly basis

because finance staff were working at capacity, and
Evidence and data. While many interviewees spoke
they also engaged third-party consulting services to
about personnel challenges related to their
work on customizations and integrations amid the
organizations’ legacy ERP environments such as
complexity of their legacy ERP deployments.
manual labor and required reconciliation between
solutions, some noted their organization also incurred Interviewees said that once Business Central was
external costs. The organizations often paid for implemented, their firms eliminated third-party

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 11

 ANALYSIS OF BENEFITS

reporting costs while internal IT staff managed • The composite avoids 40 consulting hours
integration and customization work. annually (10 per quarter) at a rate of $300 per
hour.
• The manager of data integration at a biotech
organization said that after implementing Risks. This benefit will vary among organizations
Business Central, their firm eliminated 60% of the based on:
external consulting costs required for its ERP
• The organization’s current spending on third-
deployment because internal IT staff gained the
party reporting and consulting.
ability to manage integrations and general
management independently. The interviewee • The skills of the organization’s personnel and the
specified that Microsoft’s product documentation firm’s capacity to manage historically third-party
and support for Business Central in particular are activities internally once Business Central is
helpful for their organization’s internal staff. implemented.

• The CEO of an IT services organization said that • Industry- or organization-specific customizations

when their firm’s ERP deployment required or integrations that still may require third-party
functionality upgrades, it required the services of consulting.
external consultants. But they said with Business
Results. To account for these risks, Forrester
Central, upgrades can be deployed internally for
adjusted this benefit downward by 10%, yielding a
no additional cost, which saves the company
three-year, risk-adjusted total PV of nearly $71,600.
thousands of dollars annually.

• The manager of finance and integrations at a

healthcare organization estimated their firm
reduced its overall total cost of ownership (TCO)
of its ERP solution after implementing Business “We used to pay much more in
Central and that external consulting and reporting consultancy fees to help build
fees comprise a large part of these avoided reports than we [do] today. It’s
costs.
quite a big difference.”
Modeling and assumptions. For the composite
organization, Forrester makes the following Manager of finance and
assumptions: integrations, healthcare
• The composite previously paid $5,000 per
quarter for external report preparation. It
eliminates this cost once Business Central is
implemented.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 12

 ANALYSIS OF BENEFITS

Avoided Third-Party Fees

Ref. Metric Source Year 1 Year 2 Year 3

C1 Cost per customized report Interviews $5,000 $5,000 $5,000

C2 Reports per year Composite 4 4 4

Subtotal: Avoided third-party reporting

C3 C1*C2 $20,000 $20,000 $20,000
fees
Avoided consulting time per quarter for
C4 ongoing support, upgrades, and strategy Interviews 10 10 10
(hours)

C5 Annual avoided consulting time (hours) C4*4 40 40 40

C6 Cost per consulting hour Assumption $300 $300 $300

C7 Subtotal: Avoided consulting costs C5*C6 $12,000 $12,000 $12,000

Ct Avoided third-party fees C3+C7 $32,000 $32,000 $32,000

Risk adjustment ↓10%

Ctr Avoided third-party fees (risk-adjusted) $28,800 $28,800 $28,800

Three-year total: $86,400 Three-year present value: $71,621

AVOIDED COSTS OF PREVIOUS SOLUTIONS on-premises infrastructure costs, and IT

AND SUPPORT maintenance costs.

Evidence and data. Interviewees told Forrester their • The manager of data integration at a biotech
organizations paid excessive costs associated with organization noted that their firm retired servers
maintaining their legacy ERP solutions. The from its legacy ERP deployment once deploying
organizations were paying several vendors for Business Central in the cloud and that this
solutions that offered redundant functionality across avoided hardware and personnel maintenance
the ERP stacks while incurring the costs typical to on- costs.
premises solutions including infrastructure,
maintenance personnel costs, and upgrade fees.
Interviewees said that by consolidating ERP
functionality on Business Central, their organizations “We don’t like on-premises
were able to shed some of these costs on
systems. They just present
deployment and most of the costs post-deployment.
problems most of the time.”
• The manager of finance and integrations at a
healthcare organization told Forrester the total Founder, financial services
cost of their firm’s Business Central deployment
was around 25% of the cost of its previous ERP
solutions. The organization avoids license fees,

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 13

 ANALYSIS OF BENEFITS

• The founder of a financial services firm said solution maintenance work. It avoids this with
deploying Business Central in the cloud allowed Business Central.
their organization to offset the cost of its previous
• The average hourly rate of an IT FTE is $42.
ERP solution entirely despite scaling Business
Central to serve nearly twice as many customers Risks. This benefit will vary among organizations
as the previous solutions did. based on:

Modeling and assumptions. For the composite • The scope of the organization’s previously
organization, Forrester makes the following deployed stack of ERP solutions and its related
assumptions: infrastructure.

• The annual cost of the organization’s legacy ERP • Contract constraints as they relate to the
solutions was $30,000, including license fees and organization’s ability to avoid license fees made
infrastructure. redundant by Business Central.

• With Business Central, the composite avoids • The skill and capacity of the organization’s IT
these costs at the rate of 25% per year, with 75% personnel who support the ERP solution(s).
eliminated by year 3.
Results. To account for these risks, Forrester
• The composite previously dedicated 16 hours per adjusted this benefit downward by 10%, yielding a
month among two IT personnel to basic ERP three-year, risk-adjusted total PV of over $50,600.

Avoided Costs Of Previous Solutions And Support

Ref. Metric Source Year 1 Year 2 Year 3

D1 Cost of legacy tool(s) Interviews $30,000 $30,000 $30,000

D2 Percentage of total spend retired Composite 25% 50% 75%

D3 Subtotal: Total retired spend D1*D2 $7,500 $15,000 $22,500

IT personnel who supported and

D4 Composite 2 2 2
developed previous tool(s)
Time per month per IT FTE spent on
D5 Interviews 8 8 8
support and development (hours)

D6 Hourly rate of an IT FTE (rounded) TEI standard $42 $42 $42

Subtotal: Cost of support and D4*D5*D6*12

D7 $8,064 $8,064 $8,064
development for previous tool(s) months
Avoided costs of previous solutions and
Dt D3+D7 $15,564 $23,064 $30,564
support

Risk adjustment ↓10%

Avoided costs of previous solutions and

Dtr $14,008 $20,758 $27,508
support (risk-adjusted)

Three-year total: $62,273 Three-year present value: $50,556

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 14

 ANALYSIS OF BENEFITS

other systems and work with many

UNQUANTIFIED BENEFITS
customers at the same time and manage
Interviewees mentioned the following additional
multiple similar tasks for many
benefits that their organizations experienced but were
companies. So, when we do payments,
not quantified for this report:
when we do reporting, [and] when we do
• Net profit from Business Central-enabled our record solutions, we do it for several
revenue. Several interviewees detailed ways in companies instead of just [for] one… .
which Business Central enabled their We’re a team of 12 managing over 300
organizations to undertake projects or onboard customers.”
customers that directly led to additional revenue
The interviewee also noted that the
and profit. Given the variability of this benefit from
capabilities of Business Central are
one organization to the next, this benefit was
differentiators that have helped their firm
detailed for the composite organization below but
win new business: “We think that many
was not quantified in the top-level analysis for
customers have come to us because we
this report.
have Business Central. And it’s a big pitch
▪ The VP of commerce at a technology for us when we’re selling — the
manufacturer said their organization capabilities we have with Business
gained the ability to undertake projects to Central. The sky is the limit when we talk
connect additional sales channels (e.g., with our new clients.”
online stores, etc.) with Business Central
▪ To model this benefit for the composite
and that this was not possible before
organization, Forrester assumes the
given the manual labor required. The
composite generates $15 million in annual
interviewee estimated their organization
revenue, has an 8% operating margin,
saw more than a $2 million revenue
and sees a 10% uplift to revenue from
increase over a 12-month window from
Business Central-enabled activities (e.g.,
these channels alone, and they said the
integrations to additional sales channels
firm plans to integrate additional
or online stores, new customers, etc.) in
marketplaces native to other regions.
year 1, increasing to 20% by year 3 as
▪ The founder of a financial services firm new opportunities are realized.
that primarily provides accounting
▪ This benefit will vary among organizations
services for its clients said their company
based on the organization’s industry and
was able to leverage horizontal visibility
business as it relates to its ability to
and automation across its customer base
undertake revenue-generating projects
on Business Central. This allowed it to
with Business Central and the skill and
take on additional customers who were
capacity of the organization’s personnel
previously not manageable given the
who support these revenue-generating
manual work required. At the time of the
projects.
interview, the organization had nearly
doubled its customer base since
deploying Business Central. The
interviewee explained: “When we work
with Business Central, we can work with

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 15

 ANALYSIS OF BENEFITS

▪ To account for these risks, Forrester

adjusted this benefit downward by 20%,
yielding a three-year, risk-adjusted total
“The automation of sales-
PV of nearly $239,000. If this benefit was channel management [with
applied to the top-level TEI analysis, the Business Central] has allowed
composite organization would experience us to take on more sales
benefits of $834,000 over three years channels. We can pursue
versus costs of $178,000, adding up to a business relationships with
net present value (NPV) of $656,000 and
these channels we didn’t pursue
an ROI of 369%.
before because they weren’t
going to do the revenue volume
that made sense when
everything was managed by a
person.”
VP of commerce operations,
technology manufacturing

Net Profit From Business Central-Enabled Revenue

Ref. Metric Source Year 1 Year 2 Year 3

R1 Revenue Composite $15,000,000 $15,000,000 $15,000,000

Percent of revenue generated through

R2 new sales channels unlocked with Interviews 10.00% 15.00% 20.00%
Business Central

R3 Operating margin Assumption 8% 8% 8%

Net profit from Business Central-enabled

Rt G1*G2*G3 $120,000 $180,000 $240,000
revenue

Risk adjustment ↓20%

Net profit from Business Central-enabled

Rtr $96,000 $144,000 $192,000
revenue (risk-adjusted)

Three-year total: $432,000 Three-year present value: $350,533

• Improved business outcomes from more manager of finance and integrations at a biotech
informed decision-making. Interviewees told organization told Forrester that production
Forrester that day-to-day decision-making in their planning for their firm’s manufacturing processes
organizations’ finance and operations functions is now fine-tuned and optimized on Business
improved with Business Central due to visibility Central, which leads to better material utilization,
into real-time information. For instance, the fewer stockouts, and higher profitability. The

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 16

 ANALYSIS OF BENEFITS

interviewee explained: “We have so many

different products. We have products that sell
very well, and then we have some niche products
that have a limited number of specific customers.
“In biotech, it’s extremely
You could certainly say our production team can important that we see what
plan better around which antibodies need to be components are currently
produced at any given time.” available and what products we
• Improved employee experience. With Business can make with these. If we have
Central, finance and operations personnel are customers doing clinical studies,
less burdened by manual effort and reconciliation they need everything from the
tasks mandated by a disparate set of ERP same batch. [Business Central]
solutions. Interviewees noted that is a quality-of- helps us understand how much
life improvement for employees.
we can produce with what we
• Works with Microsoft solutions. Business have now, it helps us with
Central works natively with other Microsoft communication with our
solutions, which drives additional value from
customers, and it informs our
these solutions. The founder of a financial
services company lauded the seamless
production teams.”
interactions between Business Central, Excel, Manager of data integration,
and Power BI when reporting for their firm’s
biotech
customers. They also noted these integrations
make Business Central more intuitive and that it’s
easy to train staff members who are already
familiar with Microsoft solutions.

FLEXIBILITY
The value of flexibility is unique to each customer.
There are multiple scenarios in which a customer
might implement Dynamics 365 Business Central and
later realize additional uses and business
opportunities, including:

• Scalability in the cloud. Nearly every

interviewee said their organization now has the
ability to scale users and capabilities for their
current business demands. Amid periods of
growth, they said their organizations have been
able to provision their ERP resources accordingly
on Business Central and save on costs.

Flexibility would also be quantified when evaluated as

part of a specific project (described in more detail in
Appendix A).

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 17

Analysis Of Costs
Quantified cost data as applied to the composite

Total Costs
Present
Ref. Cost Initial Year 1 Year 2 Year 3 Total
Value
Subscription fees paid
Etr $0 $20,700 $20,700 $20,700 $62,100 $51,478
to Microsoft
Implementation,
ongoing management,
Ftr $75,038 $20,700 $20,700 $20,700 $137,138 $126,515
and training personnel
costs
Total costs (risk-
$75,038 $41,400 $41,400 $41,400 $199,238 $177,993
adjusted)

SUBSCRIPTION FEES PAID TO MICROSOFT

Evidence and data. Interviewees said their
organizations pay Microsoft a subscription fee for
their usage of Business Central. Their firms pay
license fees on a per-month, per-user, or per-device
basis.

Modeling and assumptions. For the composite

29%
organization, Forrester makes the following
assumptions: $51,500
Subsciption
• The composite has 15 Business Central users. fees to
Microsoft
• The composite pays each user $100 per month.

• Pricing may vary. For more details, contact

Microsoft.

Risks. This cost will vary among organizations based

on:

• The specific tier of Dynamics 365 Business

Central license the organization uses.

• The organization’s number of Business Central

licenses and/or users.

Results. To account for these risks, Forrester

adjusted this cost upward by 15%, yielding a three-
year, risk-adjusted total PV (discounted at 10%) of
$51,500.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 18

 ANALYSIS OF COSTS

Subscription Fees Paid To Microsoft

Ref. Metric Source Initial Year 1 Year 2 Year 3

E1 Total subscribed users Composite 0 15 15 15

E2 Monthly price per user Interviews $0 $100 $100 $100

E1*E2*12
Et Subscription fees paid to Microsoft $0 $18,000 $18,000 $18,000
months

Risk adjustment ↑15%

Subscription fees paid to Microsoft (risk-

Etr $0 $20,700 $20,700 $20,700
adjusted)

Three-year total: $62,100 Three-year present value: $51,478

IMPLEMENTATION, ONGOING MANAGEMENT, three [worked on this] full time for a period of
AND TRAINING PERSONNEL COSTS months.”
Evidence and data. The interviewees described Modeling and assumptions. For the composite
migration experiences for Business Central that organization, Forrester makes the following
averaged four months from concept to assumptions:
implementation, were often staged in phases, and
• Two IT and business FTEs spend 25% of their
typically leveraged Microsoft partners. While the level
of partner support varied, partner involvement in working time over four months on the initial
some capacity was consistent among the interviewed implementation of Business Central.
organizations. • A partner fee of $45,000 is realized over the four
• The VP of commerce operations at a technology month duration of the implementation.
manufacturer said the following about their • The average annual rate of an IT or business
organization’s implementation: “We structured FTE who works on implementation is $90,000.
our implementation to roll out in three phases.
• Once Business Central is deployed, one IT FTE
Phase one was implementation for our North
spends 20% of their time managing and
American office, which is where our global HQ is.
continuing to develop on it during the subsequent
That was very high-touch with our Microsoft
years of this analysis.
partner. [The partner] really led the
implementation and, at the same time, they were • Each of the 15 Business Central users
teaching us how the system works and preparing undergoes an initial 10 hours of training to
us to lead the second phase ourselves. Then, in maximize their effectiveness on the platform from
phase 2, it flipped, and we led the implementation initial implementation.
ourselves.”

• The CEO of an IT services firm described their

organization’s required internal implementation
effort: “On our side internally, there were eight
people involved — most only part-time. But about

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 19

 ANALYSIS OF COSTS

Risks. This cost will vary among organizations based

on:

• The skill and effectiveness of the personnel or

third-party partner that manage the organization’s
Business Central deployment.
$126,500
• The organization’s change management
Implementation
costs tendencies as they relate to user training and
71% effectiveness.

Results. To account for these risks, Forrester

adjusted this cost upward by 15%, yielding a three-
year, risk-adjusted total PV of $126,500.

Implementation, Ongoing Management, And Training Personnel Costs

Ref. Metric Source Initial Year 1 Year 2 Year 3

F1 Personnel required for implementation Composite 2 0 0 0

Implementation and initial ramping

F2 Composite 4 0 0 0
duration (months)

F3 Personnel time spent on implementation Composite 25% 0% 0% 0%

F4 Average yearly rate of personnel TEI standard $90,000 $0 $0 $0

Total personnel cost for

F5 F1*F2*F3*F4 $15,000 $0 $0 $0
implementation

F6 Total partner cost for implementation Composite $45,000 $0 $0 $0

Personnel required for ongoing

F7 Composite 0 1 1 1
management

F8 Time on task for ongoing management: Composite 0% 20% 20% 20%

Total personnel cost for ongoing

F9 F4*F7*F8 $0 $18,000 $18,000 $18,000
management

F10 Total users who require training Composite 15 0 0 0

F11 Training time per user per year (hours) Composite 10 0 0 0

Hourly rate of a user who requires

F12 Composite $35 $0 $0 $0
training (rounded)

F13 Total personnel cost for training F10*F11*F12 5,250 0 0 0

Implementation, ongoing management,

Ft F5+F6+F9+713 $65,250 $18,000 $18,000 $18,000
and training personnel costs

Risk adjustment ↑15%

Implementation, ongoing management,

Ftr and training personnel costs (risk- $75,038 $20,700 $20,700 $20,700
adjusted)

Three-year total: $137,138 Three-year present value: $126,515

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 20

Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)

The financial results calculated in the

Total costs Total benefits Cumulative net benefits
Benefits and Costs sections can be
used to determine the ROI, NPV, and
$0.5 M payback period for the composite
Cash
flows

organization’s investment. Forrester

assumes a yearly discount rate of 10%
$0.4 M for this analysis.

$0.3 M

These risk-adjusted ROI,

$0.2 M
NPV, and payback period
values are determined by
applying risk-adjustment
$0.1 M factors to the unadjusted
results in each Benefit and
Cost section.

-$0.1 M
Initial Year 1 Year 2 Year 3

Cash Flow Analysis (Risk-Adjusted Estimates)

Present
Initial Year 1 Year 2 Year 3 Total
Value
Total costs ($75,038) ($41,400) ($41,400) ($41,400) ($199,238) ($177,993)

Total benefits $0 $188,135 $194,885 $201,635 $584,655 $483,585

Net benefits ($75,038) $146,735 $153,485 $160,235 $385,418 $305,592

ROI 172%

Payback period
7.0
(months)

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Appendix A: Total Economic
Impact
PRESENT VALUE (PV)
Total Economic Impact is a methodology developed
by Forrester Research that enhances a company’s The present or current value of
technology decision-making processes and assists (discounted) cost and benefit estimates
vendors in communicating the value proposition of given at an interest rate (the discount
their products and services to clients. The TEI rate). The PV of costs and benefits feed
methodology helps companies demonstrate, justify, into the total NPV of cash flows.
and realize the tangible value of IT initiatives to both
senior management and other key business
stakeholders. NET PRESENT VALUE (NPV)

TOTAL ECONOMIC IMPACT APPROACH The present or current value of

Benefits represent the value delivered to the (discounted) future net cash flows given
business by the product. The TEI methodology an interest rate (the discount rate). A
places equal weight on the measure of benefits and positive project NPV normally indicates
the measure of costs, allowing for a full examination that the investment should be made
of the effect of the technology on the entire unless other projects have higher NPVs.
organization.

Costs consider all expenses necessary to deliver the RETURN ON INVESTMENT (ROI)
proposed value, or benefits, of the product. The cost
category within TEI captures incremental costs over A project’s expected return in
the existing environment for ongoing costs percentage terms. ROI is calculated by
associated with the solution. dividing net benefits (benefits less costs)
by costs.
Flexibility represents the strategic value that can be
obtained for some future additional investment
building on top of the initial investment already made. DISCOUNT RATE
Having the ability to capture that benefit has a PV
that can be estimated. The interest rate used in cash flow
analysis to take into account the
Risks measure the uncertainty of benefit and cost time value of money. Organizations
estimates given: 1) the likelihood that estimates will typically use discount rates between
meet original projections and 2) the likelihood that 8% and 16%.
estimates will be tracked over time. TEI risk factors
are based on “triangular distribution.”
PAYBACK PERIOD
The initial investment column contains costs incurred at “time
The breakeven point for an investment.
0” or at the beginning of Year 1 that are not discounted. All
other cash flows are discounted using the discount rate at the This is the point in time at which net
end of the year. PV calculations are calculated for each total benefits (benefits minus costs) equal
cost and benefit estimate. NPV calculations in the summary initial investment or cost.
tables are the sum of the initial investment and the
discounted cash flows in each year. Sums and present value
calculations of the Total Benefits, Total Costs, and Cash Flow
tables may not exactly add up, as some rounding may occur.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 22

Appendix B: Endnotes

1 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s
technology decision-making processes and assists vendors in communicating the value proposition of their
products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the
tangible value of IT initiatives to both senior management and other key business stakeholders.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 23

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT DYNAMICS 365 BUSINESS CENTRAL 24