Dynamics 365 Business Central, Dynamics NAV On-Premises Enhancement Plan (EP) Increases – all you need to know! And what you need to do now!
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The Enhancement Plan Price Increase
For the third year in a row, Microsoft have announced that all Enhancement Plans (EPs) for Dynamics on-premises products will be subject to a price increase – and this one will be effective from 1st October 2024 (or your subsequent renewal date).
More specifically this affects both Dynamics NAV and Dynamics 365 Business Central on-premises/perpetual licences. It affects both customers paying their EP annually and those who switched to monthly payments.
A 1-year Enhancement Plan will this time go from 18% to 19% of Protected List Price (PLP) –a more than 6% price increase. This increase, together with the increases in 2022 and 2023, mean the cost is up almost 19% over the last 3 years.
EXAMPLE:
Customer A purchased Dynamics NAV licences in October 2015
PLP = £28,705
Annual EP 2015- 2021: £4,592.80
Annual EP 2022: £4,879.85
Annual EP 2023: £5,166.90
Annual EP 2024: £5,453.95
What is a Microsoft Dynamics Enhancement Plan?
According to Microsoft, “Your Microsoft Dynamics enhancement plan service plan is what you need to stay compliant, competitive, and thrive in today’s complex global business environment” but what do you really get for this annual charge.
Customers who are on an active EP receive:
- New version rights
- Updates and tax and regulatory releases
- Access to Customer Source (online portal for self-directed support)
- Ability to add new objects (tables, page, code units etc. to your licence)
- Access to promotions to transition to other licencing options
However, if you use Dynamics 365 Business Central before version 22 (which coincidentally was launched in October 2022) or any version of Dynamics NAV then mainstream support is no longer available. That can be confirmed at in the fixed lifecycle policy section of the following Microsoft publications;
Being out of mainstream support means that you have no access to new product releases and if your Dynamics software is out of extended support then you no longer even have access to security updates. It’s then down to us as your partner to keep you successfully using the product. Paying your annual EP fees to Microsoft in no way assists us in doing that.
As a result, many Dynamics NAV as well as older Business Central customers are questioning why they should continue to pay their Microsoft Enhancement Plan.
What are the other consequences of not paying it?
In addition to a loss of rights to new versions, there are a number of other consequences that can materially affect your business if you let your EP lapse;
1. You can no longer add additional items to your licence
If you may want any further customisations to any Dynamics solution then you could well need extra objects such as tables, pages, reports or code units. Without a current EP in place Microsoft refuse to transact these orders. If you have more than just a few users we can use a percentage of your annual EP payment to add many more spare objects than you likely to need just before you cancel, negating this problem.
2. You can’t use any promotional pricing to go to SaaS
If you plan to update your solution and migrate to the online version of Business Central (SaaS) soon, then continuing to renew your EP is advised as it will give you access to available promotions to migrate your licence to a SaaS subscription at a discounted price.
There is an active promotion for Business Central that is currently available if your goal is to migrate to the SaaS platform which gives you 40% discount off the retail price of licences and free licences where your annual subscription exceeds double your current EP for 3 years.
EXAMPLE:
Customer A have 9 users on their on-premises Dynamics NAV licence. A premium user of Business Central costs £82.20 per month. Customer A would receive a 40% discount for 3 years.
9 x £49.32 = £443.88 per month
Annual Software Subscription: £5,326.56
In the case of customer A, the promotional price gives all the benefits of SaaS at an annual cost, only a small amount more than they currently pay for EP. In addition, all future EP increases can be avoided. Note though that this discount only last for three years, then you are back to the full subscription price current at that time.
So, Customer A in the example above is saving £32.88 per user per month which for their full 9 users adds up to £3,551.04 per annum. By paying in 2024, £5,453 per year they are preserving the option to get a total saving, during the three years the discounts reduces subscription, of £10,653.12. The subscription saving is equivalent to 23.4 months of EP.
Our advice, if you have no intention or are unable to move to SaaS within the next two years, is that you must question why you would pay the enhancement plan when it comes up for renewal. Your plans for further customisation might extend that slightly but can be mitigated.
3-year subscription with promotion: £15,979.68
3-year subscription without promotion: £26.632.80
Promotional saving: £10,653.12 (compared to £16.361.85 saving by not paying EP as above)
Let’s work through the example of Customer A again. Let’s assume that they do not have the budget or time for investment in their ERP system today and are unlikely to change in the next 3 years. Assuming EP increases at 1% of PLP every year they could cancel their EP and this would save £16,361.85 over 3 years. If they then decided to migrate or reimplement to the SaaS platform then they would not be entitled to any promotional discount, but this example shows that this does not offer significant financial benefit – and any additional cost saving can be used for the services cost of the implementation.
What should I do next regarding my Microsoft EP Increase?
All of the above examples are just that and each customer case is different. Lapsing your Microsoft EP should be considered carefully – going back on to EP is possible but can be expensive as penalty charges will be incurred.
Our obligation is to you our client not Microsoft. You’ll likely have heard us repeat our mantra that we ‘spend our customers money like it’s our own’ and this means we cannot continue to just send that annual invoice.
The interests of what is best for your specific scenario should be costed and explained to help you make an informed decision on your best option. As a proactive partner we’d be delighted to do that with you.
The increase in EP will start affecting some customers in less than 6 months and there’s both planning and potential project work to be done before the increase impacts your business cashflow.
So, let’s work through your specific scenario soon! And make sure it’s way before you just sign off that annual invoice without a second thought. As always, your Customer Engagement Manager is your first point of contact.
In the meantime, you can always check out the latest episode of Tecman Talks Dynamics where we cover all of the above. Always a great way to get your head round things when you’re on the move!