According to Gartner, the top three leading ERP systems for small and medium-sized businesses are:

1. Microsoft Dynamics 365 Business Central
2. SAP Business One (SAP B1)
3. Oracle NetSuite

But does this align with reality? Why does Microsoft Dynamics 365 Business Central manage to maintain its leading position in the face of fierce competition with SAP Business One? Below is the result of a strategic and functional analysis of the Microsoft Dynamics 365 Business Central and SAP Business One platforms.

‍

Factors for Choosing an ERP System

We frequently engage with clients and professional communities, and several factors stand out in determining Business Central's leadership in the market:

1. Cost effectiveness. Many clients note that the total cost of ownership for SAP B1 is higher due to the following:some text
   • Licensing: The per-user license cost for SAP B1 tends to be higher overall. On the other hand, expanding Business Central's functionality using Azure Services, Power BI, and the Power Platform may require additional licensing but can also reduce the number of ERP system users, lowering licensing costs.
   • Add-ons: In Business Central, features like Fulfillment & Delivery, Supply Planning & Availability, and Service Management are included in the license cost. In SAP B1, these features are additional, with non-transparent pricing.
   • Cloud Hosting Fees: These are included in Business Central's user licensing. For SAP B1, hosting fees are less transparent and depend on factors like the model, subscription type, user count, and deployment.

2. Cloud vs. On-Premise

Business Central offers both cloud and on-premise deployment, as well as a hybrid option where the database is hosted in Azure SQL Database. This provides flexibility in combining on-premise infrastructure with cloud benefits. Meanwhile, SAP announced in March 2024 passive support for SAP B1 on-premise, focusing users on cloud migration.

3. Cloud Ecosystem

Microsoft Cloud is a key strength of Business Central, integrating seamlessly into a global ecosystem that supports scalability and security. While SAP B1 Cloud offers similar benefits, the on-premise version lacks comparable scalability and security, as noted by SAP itself. 

4. Interface & Configuration

Many users praise Business Central's intuitive web interface with personalization options, requiring minimal training. In contrast, SAP B1’s complexity allows for system flexibility but complicates customization where standard functionality falls short.

5. Functionality

Both systems offer similar functionality, but notable differences include:

• Manufacturing: Basic manufacturing features in Business Central are more advanced. Manufacturers comparing the two should note that SAP B1 may require additional modules or third-party extensions to meet supply chain and production needs.
• Add-Ons: Features like Fulfillment & Delivery, Supply Planning & Availability, and Service Management are part of Business Central’s standard functionality but are add-ons in SAP B1.
• Reporting & Analytical Dimensions: Business Central offers the ability to use any number of multi-level analytical dimensions with customizable values and hierarchy. It also provides mandatory analytical controls at the chart of accounts level and other system entities. Standard reporting in SAP B1 works well, but for truly flexible and user-friendly reporting tools, the combination of Power BI (a Gartner Magic Quadrant leader in BI solutions for over 15 years) and Business Central delivers superior results. Many partners develop ready-made solutions on Power BI for Business Central, such as Power Central, which significantly reduces the cost and time required to develop analytical functionality.

6. Automatic Updates

Cloud-based Business Central is automatically updated twice a year. If you have extensive customizations, automatic updates may present challenges, but they are not mandatory. In such cases, a notification is sent in advance, allowing developers to adapt the customizations to the new base application. The time required for adaptation depends on the level of customization but typically takes a few hours per month.

7. Customizations

Business Central supports relatively easy customization while maintaining compatibility with automatic updates. In contrast, SAP B1’s customization options are limited, costly, and can exceed the cost of the core implementation project.

8. ISV solutions

In recent years, Microsoft Dynamics 365 Business Central has demonstrated faster growth compared to SAP Business One. Business Central supports a partner-driven model, where partners develop industry-specific solutions certified by Microsoft. SAP Business One utilizes the Integration Hub to connect cloud applications and services, focusing on integration. Business Central offers a wide range of third-party add-ons through Microsoft AppSource, which are seamlessly embedded into the application. Currently, there are approximately 5,500 extensions available on AppSource. This approach is considered more convenient and effective.

9. Integrations

In SAP B1, clients often encounter difficulties when developing customized APIs, as the SDK does not always provide access to the required data. In contrast, Microsoft Dynamics 365 Business Central enables integration through cloud technologies such as Azure Logic Apps, Azure Functions, and Event Grid. These tools allow for process automation, real-time event handling, and the expansion of system functionality.

In Conclusion

SAP is currently making significant investments in cloud infrastructure in an attempt to catch up with Microsoft, which has been actively advancing in this area for over seven years. The key factors in choosing a system are cost-effectiveness and advanced cloud capabilities, which enable companies to scale their business efficiently and securely.