If the name Abraham Wald is not familiar, pay attention, because he might just save you hundreds of thousands of dollars on your ERP implementation. Maybe even get you promoted.
Wald’s insights helped the Allies win the Second World War, but today, they’re applicable to the subject of selecting and implementing ERP systems like SAP Business One and Microsoft Dynamics 365 Business Central.
You see, back then the Allies were losing a lot of planes in combat. They analyzed the bullet-ridden planes returning from missions, deciding to reinforce those zones on all fighters.
But Wald pointed out that they should do the opposite.
The planes that made it back safely had done so despite the bullet holes. Meaning, those bullet holes were in non-critical, not critical zones. It was the zones without bullet holes that needed armor. This counterintuitive thinking significantly improved aircraft survival rates.
Fast forward to now, when US businesses spend six to eight months evaluating ERP systems. Yet, Gartner reports that seven out of 10 businesses say their ERP implementation went badly. How do things go sideways despite hundreds of team hours spent on evaluation?
Just like the Allies did initially, businesses often focus on the wrong factors in the ERP selection process. Wald’s lesson highlights the importance of looking beyond the obvious. Your choice of ERP should be based on your team’s needs and goals, not bullet points in marketing presentations.
Here’s how you can leverage Wald’s wisdom to ensure your ERP choice is a successful, transformative one.
Understanding SAP Business One and Microsoft Dynamics 365 Business Central
Both SAP Business One and Microsoft Dynamics 365 Business Central offer robust functionalities that streamline operations and enhance productivity. But they each come with their own unique features and capabilities. Let’s break it down.
SAP Business One is a comprehensive ERP solution designed specifically for small and medium-sized businesses (SMBs). It integrates various business functions such as finance, sales, purchasing, inventory, and customer relationship management (CRM) into a single platform. This streamlined approach allows your small business to manage its operations more efficiently.
SAP ERP products
This means you can have all your critical business processes seamlessly connected in one place. That’s the power of SAP Business One. From financial management to inventory tracking and beyond, this solution provides a holistic view of your business operations, so you can make informed decisions swiftly.
Microsoft Dynamics 365 Business Central, on the other hand, provides a unified platform that combines ERP and CRM capabilities. It integrates seamlessly with other Microsoft applications such as Office 365 and Power BI. This enables flexibility, which helps as your business needs evolve.
The Microsoft Dynamics lineup
Key Differences Between SAP Business One and Microsoft Dynamics 365 Business Central
Here’s quick overview of their similarities and differences at a glance.
| Feature | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| Financial Management | Comprehensive financial capabilities for small businesses | Integrated financial management with CRM functionality |
| Inventory Management | Customer Relationship Management (CRM) | Inventory control integrated with sales and purchasing |
| Integration with third-party applications | Limited CRM functionality | Built-in CRM capabilities for managing customer interactions |
| Reporting | Robust reporting and analytics tools | Built-in CRM capabilities for managing customer interactions |
| Scalability | Scalable to accommodate business growth | Advanced reporting features with Power Bl integration |
| Integration Capabilities | Training resources and certification programs | Flexible scalability with cloud-based deployment |
| Customization and Extensibility | Customizable to adapt to specific | Deep integration with Microsoft ecosystem and third-party tools |
| Mobile Access | Mobile productivity for on-the-go | Extensible platform with custom apps and extensions |
| User Interface and User Experience | Intuitive UI for ease of use | Familiar interface with seamless integration with Microsoft tools |
| Market Size | Growing market presence with a focus on SMBs | Widely adopted by small to midsize businesses |
| Pricing | Competitive pricing tailored to SMBs | Subscription-based pricing model with flexible licensing options |
| Support | Access to SAP support resources | Microsoft support services and community forums |
| Training | Growing market presence with a focu on SMBs | Extensive training materials and online courses |
Features of SAP Business One and Microsoft Dynamics 365 Business Central
Let’s dive a bit deeper.
Financial Management
On managing your finances, both SAP Business One and Microsoft Dynamics 365 Business Central have your back. Here’s a quick look at how they stack up in this area:
| Feature | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| General Ledger Setup | Manual setup with guided assistance | Automated setup with assisted setup guides |
| Chart of Accounts (CoA) | Define COA to establish accounting records | Configure COA to structure financial data |
| Journal Entry Function | Auto-populate journal entries for efficiency | Streamlined entry process for accurate financial records |
| Financial Reporting Tools | Comprehensive reporting capabilities | Built-in analytics with integration to Power BI |
| Fixed Assets Management | Track and manage fixed assets easily | Simplify fixed asset management with virtual functions |
In Business Central, the general ledger is the core of financial processes, defining how data is posted and managed. With assisted setup guides, key finance configurations can be automated, streamlining the setup process.
Every transaction in Dynamics 365 Business Central is reflected in charts and overviews, providing real-time insights for informed decision-making.
Similarly, SAP Business One offers a fully integrated set of finance modules, including general ledger, journals, fixed assets, budgeting, and financial reporting. The system simplifies the management of fixed assets through virtual functions, eliminating repetitive manual data entry.
There’s a journal entry function that auto-populates based on previously entered information.
Image source: SAP
Inventory Management
Inventory management can be a headache, especially for startups and SMEs. It requires a level of tracking that smaller organizations struggle with. Here’s how both solutions address this need:
| Core Feature | SAP Business One | Microsoft Dynamics 365 |
|---|---|---|
| Core Inventory Management | Basic features: item creation, purchase orders, inventory levels tracking, basic reporting | Advanced features: multi-warehouse management, serial/lot tracking, kits/BOMs, landed cost management, advanced reporting/analytics |
| Predictive and Automated Features | Limited to basic reorder points based on historical data | Demand forecasting, automated replenishment, minimum/maximum stock levels |
| Integration and Customization | Limited customization options in core modules. Integrates with some third-party applications | More flexible customization options through extensions and development tools. Integrates with a wider range of third-party applications, including Microsoft products |
SAP Business One offers basic features like item creation, purchase orders, inventory levels tracking across locations, and basic reporting. It’s user-friendly and straightforward. That said, its predictive analytics are limited to basic reorder points based on historical data.
Three inventory valuation methods in SAP Business One. Image source: SAP
Dynamics 365 Business Central offers more advanced features like multi-warehouse management, serial/lot tracking, landed cost management, forecasting and auto-replenishment, and so on.
Customer Relationship Management (CRM) Functionality
The CRM functionality enables businesses to manage customer interactions effectively, track sales opportunities, and enhance customer satisfaction. Both SAP Business One and Microsoft Dynamics 365 Business Central offer integrated CRM solutions.
| Feature | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| CRM Integration | Seamlessly integrated CRM functionality | Centralized customer management with CRM integration |
| Customer Insights | Gain insights into customer interactions and behavior | Access precise customer information for targeted marketing |
| Sales Pipeline | Track sales opportunities and manage the sales pipeline | Visualize sales pipeline and forecast revenue accurately |
| Offline Access | Access customer information offline via Microsoft Outlook | Serve customers efficiently even without internet access |
SAP Business One’s CRM functionality lets you keep track of your customers, sales, and contracts in one spot. It ties in well with your inventory and revenue, so you can see how sales is doing without jumping through hoops.
On the other hand, Business Central enables deeper insights into customers, and more advanced sales strategies. Figuring out what your customers want next and sending them personalized marketing is all possible. But getting all these features requires that you use Business Central and Dynamics 365 for Sales together. Which, of course, adds to the cost.
Reporting and Analytics Tools
Effective reporting and analytics are extra important for small and mid-sized businesses to monitor performance and make informed decisions.
| Feature | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| Reporting Capabilities | Pervasive Analytics, Crystal Reports, Excel Reports | Ad-hoc analysis, standard reports, built-in analytics |
| Customization Options | Modify report layouts, develop custom reports | Customize reports, integrate external BI tools |
| Real-time Insights | Access relevant business data for decision-making | Analyze data interactively and discover new insights |
| Integration with BI Tools | Seamlessly integrate with external BI tools | Built-in analytics tools for enhanced reporting experience |
With Microsoft Dynamics 365 Business Central, you can do ad-hoc data analysis using in-client features or Microsoft Excel. There’s also the option to work with standard reports, run, print, schedule, and change the layout. You can even modify report layouts or develop your own reports from scratch.
SAP Business One offers multiple tools for reporting and analytics, including Pervasive Analytics, Crystal Reports, and Excel Report and Interactive Analysis Designer. These tools help you discover your business data, report and print your business information, and analyze your business information interactively using MS Excel pivot table to discover new business insights.
Scalability and Flexibility
As your business grows, so should your ERP solution. Here’s how SAP Business One and Microsoft Dynamics 365 Business Central handle scalability and flexibility:
| Aspect | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| Scalability | Limited: On-premise deployment primarily, with limited scalability for user growth and data volume. Cloud options exist, but with less scalability compared to Business Central. | High: Cloud-based solution with high scalability for user growth and data volume. Supports large enterprises with complex needs. |
| User Management | Limited: Minimum user purchase and limited flexibility in adding/removing users. | Flexible: Add and remove users easily based on changing needs. Subscription-based pricing scales with user count. |
| Data Volume | Limited: On-premise infrastructure restricts data storage capacity and performance. Cloud options have capacity limitations. | High: Cloud infrastructure offers virtually unlimited storage and scalability for growing data volumes. |
| Customization | Limited: Core modules not easily customized. Requires development expertise for significant changes. | Flexible: Extensive customization options through extensions and development tools. Integrates with Power Platform for low-code customization. |
| Integration | Limited: Integrates with some third-party applications, but requires additional development and expertise. | Extensive: Integrates with a wide range of third-party applications, including Microsoft products like Power BI and Office 365. Seamless integration within the Microsoft ecosystem. |
One of the key benefits of Microsoft Dynamics 365 is its flexibility. The solution can be tailored to meet the specific needs of any business, regardless of size or industry. Moreover, as a cloud-based solution, it can easily scale up or down to accommodate business growth or contraction. This adaptability means organizations can continue to reap the benefits of Dynamics 365 even as their requirements evolve.
Though cloud options are available, SAP Business One favors on-premise deployments. This can become cumbersome and difficult to manage with rapid growth.
Cost Analysis
Let’s face it, cost often determines an ERP choice, sometimes overriding other considerations. The total cost of ownership (TCO) includes various components such as initial setup costs, licensing fees, ongoing maintenance expenses, customization, and integration costs. Here’s what that looks like:
| Cost Factor | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| Initial Setup Costs | Varies based on implementation complexity | Varies based on implementation complexity |
| Licensing Fees | Perpetual or subscription-based; starts at $3,213 per user | Subscription-based; starts at $70 per user/month |
| Pricing Model | Perpetual licensing with on-premises and cloud options | Subscription-based with three tiers: Team Member, Essentials, Premium |
| Ongoing Maintenance | Annual maintenance fee, typically around 18% of initial cost | Included in subscription; add-ons may incur extra costs |
| Customization and Integration | Costs vary based on extent of customization and add-ons | Costs vary based on extent of customization and add-ons |
The initial setup costs for SAP Business One and Business Central depend on the complexity of the implementation. Factors such as data migration, training, and infrastructure setup contribute to the costs.
SAP Business One uses a perpetual licensing model, meaning the only recurring payments are for upgrades and support. Maintenance fees typically starts at around 18% of the initial software cost. Microsoft Dynamics 365 Business Central includes maintenance in its subscription pricing, but additional costs may apply for add-ons and customization.
Customization and integration costs also vary depending on whether third-party add-ons are needed.
Total Cost of Ownership (TCO) Comparison
For larger teams, the TCO for SAP Business One is likely to be higher than that of Microsoft Dynamics 365 Business Central due to differences in pricing models, maintenance fees, and customization costs.
For detailed costs based on your business needs, check out our SAP Business One Pricing and Business Central Pricing guides.
User Satisfaction and Market Demand
User experience is particularly necessary for small businesses as it directly impacts productivity. A user-friendly interface can significantly reduce the learning curve for employees, leading to quicker adoption and improved efficiency.
| Review Platform | SAP Business One Rating | Microsoft Dynamics 365 Business Central Rating |
|---|---|---|
| G2 | 4.3 out of 5 | 3.8 out of 5 |
| Capterra | 4.3 out of 5 | 4.0 out of 5 |
| Trustradius | 7.9 out of 10 | 7.9 out of 10 |
| GetApp | 4.3 out of 5 | 4.0 out of 5 |
If staff members are not convinced about your ERP system, the system will likely fail. And an intuitive UX makes the work of convincing them easier. Plus, seamless integration with other business tools streamlines processes.
Microsoft Dynamics 365 Business Central is often favored for its user-friendly interface and seamless integration with other Microsoft products like Office 365, Power BI, and Azure. This integration enhances collaboration and productivity, making it a popular choice among users.
Like in the image example below, The Role Explorer feature gives you an overview of all the business features available for your own and other roles, streamlining navigation.
On the other hand, SAP Business One is perceived to have a steeper learning curve and a more complicated user interface. It also offers fewer dashboard and cockpit features compared to Business Central. However, SAP Business One is praised for its depth of functionality and industry-specific templates.
Market Demand and Adoption
Microsoft Dynamics 365 Business Central is widely adopted by over 30,000 small and medium-sized businesses globally. It is specifically designed to meet the needs of small and medium-sized businesses, offering a comprehensive suite of ERP and CRM functionalities.
Similarly, SAP Business One is designed for small and medium-sized enterprises (SMBs), offering industry-specific functionality and templates across various sectors. While SAP Business One caters to SMBs, SAP also offers SAP S/4HANA Cloud and SAP ERP, which are designed for organizations of all sizes.
Customization and Extensibility
With customizing your ERP solution, both SAP Business One and Microsoft Dynamics 365 Business Central offer a range of options. You can modify the user interface, add custom fields and tables, create custom reports, and even develop custom applications to suit your specific business needs.
| Customization Option | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| Custom Fields | Yes | Yes |
| User-Defined Objects | Yes (UDO: User-Defined Objects) | Yes (Extension Objects) |
| Workflow Automation | Yes | Yes |
| Business Logic Customization | Yes (through SDK) | Yes (through AL: Application Language) |
| Integration with Other Apps | Yes (through DI-API, B1if, and Service Layer) | Yes (through APIs and Extensions) |
| Reporting Customization | Yes (through Crystal Reports and SAP Business One Studio) | Yes (through Power BI and other reporting tools) |
| User Interface Customization | Limited | Yes (through AL and Extensions) |
| Mobile Access Customization | Yes (through SAP Business One Mobile app SDK) | Yes (through Dynamics 365 Business Central mobile app) |
Reporting and analytics are also important here, with SAP Business One providing built-in reporting tools and Microsoft Dynamics 365 Business Central offering more advanced capabilities using Power BI.
Integration
Microsoft Dynamics 365 Business Central has seamless integration with various Microsoft business apps and is compatible with a wide range of third-party ERP and CRM integrations. It also boasts a large app store called App Source, offering several third-party solutions.
| Integration Support | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| Microsoft Business Apps | Limited | Seamless integration with various apps |
| Third-party ERP/CRM | Limited | Compatible with various integrations |
| App Store | Reliance on third-party solutions | Extensive App Store with wide range of solutions |
SAP Business One also provides a wide range of options that integrate with various third-party software. However, users primarily rely on third-party apps/add-ons and SAP integrations.
Below are the most popular third-party apps for small businesses both solutions integrate with:
| App Name | SAP Business One | Microsoft Dynamics 365 Business Central |
|---|---|---|
| QuickBooks Online | Yes | Yes |
| Salesforce | Yes | Yes |
| Shopify | Yes | Yes |
| Square | Yes | Yes |
| PayPal | Yes | Yes |
| Slack | Yes | Yes |
| Mailchimp | Yes | Yes |
| Trello | Yes | Yes |
| Zoom | Yes | Yes |
| Google Workspace (G Suite) | Yes | Yes |
Which to Choose between SAP Business One or Microsoft Dynamics 365 Business Central
Think about these factors below before deciding:
Ease of Use
If ease of use and user experience are important to you, Microsoft Dynamics 365 Business Central may be the better choice. It has a more familiar interface and seamless integration with other Microsoft products, making it easier for your employees to adapt and use effectively.
Integration and Customization
If your business heavily relies on Microsoft products and services, Microsoft Dynamics 365 Business Central offers better integration capabilities with various Microsoft business apps. If you require extensive customizations, SAP Business One may be more suitable, as it provides a wide range of integration options.
Budget
SAP Business One tends to have a higher upfront cost, especially for implementation and licensing, while Microsoft Dynamics 365 Business Central offers a more flexible subscription-based pricing model that may be more suitable for businesses with limited capital.
FAQs
Is Microsoft Dynamics better than SAP?
Microsoft Dynamics 365 Business Central is typically a better fit for companies integrated into the Microsoft ecosystem (Office 365, Outlook, Azure, etc), or businesses prioritizing flexibility and a cloud-first strategy. SAP Business One is often preferred by businesses with established, clear-cut workflows.
Which is better for small businesses?
SAP Business One can be great for mid-sized businesses (50-250 users) with stable, well-defined processes (like manufacturing or distribution.) It offers strong core ERP functionality at a predictable cost, but may lack flexibility for highly complex workflows.
It is a good starting point for businesses considering future growth into the SAP ecosystem. However, transitioning is not essential, as many businesses remain on SAP B1, long term.
D365 Business Central is ideal for smaller and mid-sized businesses (10-150 users) with varied or evolving operations. Business Central offers flexibility and tight integration with Microsoft tools, making it a better fit for varied workflows. While upfront cost can be lower, TCO can increase with customization.