Microsoft Dynamics vs. SAP: Which is the better ERP?

microsoft dynamics vs sap
  • Jan 25, 2021
  • Posted By: Robert Jordan
  • Category: Enterprise Resource Planning

ERP is the enterprise resource planning software that helps the crucial processes in an organization. The processes that it covers are human resources, finance, inventory, manufacturing, supply chain, and other services. Each of the module of ERP focuses on a single business area. The overall benefits of this ERP are it improves agility, gives deeper insights, lowers the risk, increases productivity, and accelerates the reporting.

So, as an organization, it becomes essential to choose the best ERP that gels well with the process and gives the desired results. But choosing the right one is not an easy task, as one needs to look into many factors such as cost, the overall requirements in the organization, and others.

In this blog, we’d be putting forth the pros and cons of Microsoft Dynamics 365 and SAP ERP. And which one is suitable for a specific industry and organization. But before that, let’s understand the SAP ERP and Dynamics 365.

What is Microsoft Dynamics 365?

Microsoft Dynamics 365 is an ERP application that helps businesses deliver excellent results via AI-enabled and predictive insights. The solution unifies the data, helps businesses make smarter decisions, and improve productivity.

It has varied applications that leads to offering a useful customer experience and an improved conversion rate. The solution is really useful for small-sized businesses.

What is SAP ERP?

SAP ERP offers a wide range of services. This enterprise resource planning software works in different areas such as finance, manufacturing, HR, sales, procurement, and others. The solution is available in 37 different languages, and has been used in 25 industries. The solution is widely used by 172,000 businesses across the world. It is observed SAP ERP is hugely popular among large enterprises.

It has supply chain management, customer relationship management, product lifecycle management, human capital management, financial management and many more.

Now we would discuss which ERP is the better one?


It all depends on the industries and other factors that decide which ERP is the better one for your business. If you are a financial organization, then your requirements are different, and the features that you need in your process would be different.

Microsoft Dynamics 365 is considered to be the better contender if you’re using it for finance in smaller organizations. It has the financial management feature that maximizes financial stability and overall profitability. The AI-driven insights improve financial control and help in making timely decisions. You can have real-time reporting, thus improving the business health.

It makes a strategic impact on the project and significantly reduces the costs. The process automation facilitates the optimizing of the organization spending across different geographies. Microsoft Dynamics 365 can make intelligent forecasting, simplified compliance, augmented processes, and holistic financial decisions.

In the case of SAP ERP, it is an entirely integrated system. Most of the companies are not ready to use the solution. It has a live system that means when you transact; the software automatically enables the integration with all the modules in which the transaction took place.

AI-automated decisions:

Both Microsoft Dynamics 365 and SAP ERP could help make AI-automated decisions. The SAP ERP includes the bots that can execute the manual tasks in the system. Both the software can function in multiple languages, and manages the inquiries, emails efficiently.

Inventory management:

If you’re mainly focused on the operational part of the organization like handling of the stocks, storage and fulfilling it, SAP ERP is better than Microsoft Dynamics 365. The SAP software helps in the streamlined movement of the goods, further optimizing the delivery of the goods at the right time. It gives clear visibility and prevents theft, spoilage of any of raw materials. SAP ERP’s intelligent inventory management solution helps in better efficiency and lowering the cost.

Sales management:

SAP sales management module helps organizations in sales ordering, shipping, and other sales processes like invoicing. It certainly has better features than Microsoft Dynamics 365 that looks after one of the high-end processes in an organization. The SAP sales module can work in tandem with other modules such as order to cash cycle. This module enables the generation of sales quote, and then placing of the order.

The module handles all the interactions between the sales team and the customer. It even handles the customer feedback, pricing of products. Overall, the function of the SAP sales module is sales and orders, inquiries and quotes, rush orders, consignment, credit and debit memo requests, scheduling agreements, and others.

Quality management:

Both Microsoft Dynamics 365 and SAP ERP offers the same quality management service. They don’t have anything outstanding to offer in this feature. So, if you’re looking to select the software based on this quality, just select any of them for your process.

Human resources:

This is another crucial module that facilitates managing human resources. It streamlines the employee tasks such as hiring, payroll, and others. The SAP HR has functionalities that are well suited for companies across the world. But if you’re a small organization, then SAP HR wouldn’t be suitable for you.

The total cost of ownership and the challenges in flexibility are all overwhelming for a small business.

Implementation cost:

You should know after purchasing the software you need to implement it. And the implementation costs vary for every software. If we take the example of SAP ERP, the implementation costs vary from $500,000 to $2000,000.

This is not the case if you’re implementing Dynamics 365. The PowerApps significantly makes the implementation process easier and cost-effective. When you start the implementation process, the application is automatically coded in the background. The PowerApps also connects the applications with the live data.

Manufacturing management:

Both Microsoft Dynamics 365 and SAP ERP offers good manufacturing management functionalities. Here, both the software is equal and gives the same benefits to the organizations. They provide orders, manages the inventory, offer end-to-end visibility into the process, among others.

In SAP ERP, the solution supports different manufacturing types such as process manufacturing, discrete manufacturing, repetitive manufacturing, and other types.

Purchasing management:

All organizations purchase materials or services to fulfil their business requirements. Both SAP ERP and Microsoft Dynamics 365 keep track of these needs.

The purchasing management software here has materials management, materials planning, invoice verification, and other phases.

The next question here is,

When can an organization think of integrating ERP?

Many organizations would feel that they don’t need to invest in an ERP. It’s not true in all scenarios.

So, how to confirm that you need ERP?

Spending more time on repeated activities:

It is observed, many organizations do spend a lot of time on daily work, which shouldn’t be the case if businesses want to expand their growth. They should have more focus on how to move to different business areas to improve the results.

The enterprise resource planning integrates the data into a single system via the common interface. This makes it easy for businesses to execute their daily work efficiently.

You have too many unanswered questions about challenges:

Do you have the right answer to business questions?

Often companies struggle to find the right answer for specific questions, such as number of returns, key performance indicators, revenue for a product line, etc. If you’re among them, acknowledge you need to purchase an accurate enterprise resource planning solution for your business.

This would actually work as an assistant for your process, and help you measure the performance of your organization. Thus, you could also get the right answers to your business questions.

You have a fast-paced business process:

Sometimes a fast-paced business growth can throw up many challenges. You should have employees that are good at multi-tasking otherwise, the process would go haywire. But if also you don’t have the right human resources, you can still have the ERP to resolve the major challenges.

So, delve deeper and ask yourself these questions:

Are you facing the challenges such as customer dissatisfaction?

Are you not able to manage the inventory?

Do you have too many manual processes?

If the answer to all the questions is ‘yes,’ then understand your process is messed up. You need the right technology that makes your process effective and efficient to produce the best results.

Key takeaways:

Just as we see, both the software has specific strength or USP that helps organizations achieve better results. In short, SAP ERP aligns well with the process of large enterprises than small and medium-sized businesses. Microsoft Dynamics 365 has more suitable features for the SMB’s and gives better results.