Dynamic Communities Magazine

This article examines business-process and application foundation considerations when implementing Microsoft Dynamics 365 for Finance and Operations. 

Originally published in H2 2018 D365UG/AXUG Magazine

Implementation of Microsoft Dynamics 365 for Finance and Operations includes many considerations. The following diagram illustrates elements of Dynamics 365, and this article dives deeper into business process activities and the application’s foundation.

Let’s explore the business process activities and application foundation at a high  level.

Business-Process Activities
The business-process activities consist of financial and operations activities.

Finance is the backbone of any organization. Organizations utilize enterprise resource planning (ERP) solutions to streamline the business process in a company and ensure that the operational activities are controlled. In addition to that, ERP orchestrates the integration between different departments. ERP is considered a decision support tool; it is used to generate reliable reports at the right time for all management levels to be able to respond to the business changes.

Let’s explore the financial activities in the organization from the perspective of Dynamics 365. The financial module is considered the heart of the implementation, since all business activities will be integrated either directly by generating automatic transactions to general ledger or indirectly by ensuring the executed processes are following the internal controls requirements to ensure accurate posting to general ledger.

• General Ledger: The general ledger (GL) represents the core of the financial module. It carries the chart of accounts, which will be used to build financial statements. Additionally, the GL module has the financial dimensions for analytics and reporting. Chart of accounts and dimensions combinations need to be controlled to ensure that the Users are selecting the proper dimensions based on the account. This control is done through the account structure and advanced rules structure, where configuring the system as to which dimensions will be applied to accounts. At the end of each fiscal month, the company should carry the financial closing process to report the results of this period.
• Sales Tax: Sales tax is required by government to get paid for the sales of goods and services. The sales tax is a separate module in Dynamics 365, and it is integrated with GL, accounts payable, accounts receivable, and inventory modules. It is crucial to configure the sales tax properly in the system and ensure the accurate sales tax calculations on each economic event since this will affect the tax declaration to government authority at the end of each tax period.
• Multicurrency: Multinational deployments are required to have multicurrency transactions. In this kind of deployment, companies dealing with overseas Customers or vendors and transactions may be conducting in foreign currency. At the end of the month, these transactions should be revaluated to represent the new economic rate.
• Accounts Payable: The accounts payable (AP) module represents all related activities to vendors and their transactions. Dynamics 365 has the required controls on vendor transactions and the integration between AP and procurement department. One of the major controls is invoice matching, and the system supports three-way and two-way matching.
• Accounts Receivable: The accounts receivable (AR) module represents all related activities to Customers and their transactions. Dynamics 365 has the required control on Customer transactions and the integration between AR and the sales department. One of the major controls is Customer credit limit management.
• Cash and Bank: The cash and bank module in Dynamics 365 carries the bank transactions that are generated from vendor and Customer payments. At the end of the month, it is required to reconcile the transactions recorded in the system against the bank statement.
• Budgeting: Companies need to monitor their performance by comparing the actual results against that budgeted. Dynamics 365 provides budgeting capabilities covering the budget planning process and budget control process.
• Intercompany: Enterprises that own more than one subsidiary are required to have intercompany transactions if there is any kind of business conducted between subsidiaries and the holding company. Dynamics 365 supports intercompany accounting transactions between subsidiaries, in addition to consolidation and elimination, to report the results on the holding company level.
• Inventory: The inventory cost is one of the most important aspects in any organization. Dynamics 365 supports the known method of inventory valuation, FIFO, LIFO, average cost, and so on. The system has a specific recalculation procedure to reevaluate the inventory cost, and this should be run at the end of the month.
• Fixed Assets: The fixed assets module represents the company’s long-term resources such as building, vehicles, and machines. This needs to be tracked from the acquisition until the disposal. Dynamics 365 has a fixed assets module which is integrated with procurement to support the acquisition through purchase cycle as well as the other required transactions for fixed assets such as depreciation, disposal scrap, and sale.
• Financial Reporting: Financial reporting in Dynamics 365 (a.k.a. Management Reporter) provides a financial reporting out-of-the-box balance sheet, income statement, cash flow, and may more reports. Also, the system provides the flexibility to design reports from scratch based on Customer requirements.

Application Foundation
The application foundation consists of the functionalities that are used across the application. Mainly these functionalities are used either to start up the system or ensure it is ready to be used. The foundation functionalities are required to have an up-and-running application. In other words, the environment should be provisioned through Dynamics Lifecycle Services, and the administrator should have the access credential.

The application foundation should be considered during the implementation lifecycle phases and discussed by the implementation team to ensure everything is captured, deployed, and well-tested in the early stages of the implementation phases. The following diagram illustrates the application foundation during the implementation lifecycle phases.

Since the application foundation is involved in the business process activities, it should be discussed in the implementation workshops, starting in analysis phase, and moving forward to other phases until the operations phase, where the actual usage of the foundation elements happens.

The application foundation contains the master data which will be used in the daily transactions. The master data involves chart of accounts, banks, fixed asset register, items, vendors, and Customers. The requirements of the master data should be collected in the analysis phase to guarantee that the Customer requirements are captured. Dynamics 365 has a special concept of the global address book that can be used for internal persons, external persons, and organizations that the company interacts with. The global address book may record the following party roles: Customer, prospect, worker, user, vendor, competitor, applicant, and contact. The master global address book records are associated with party ID, party name, address, and contact information.

• Data Management: The data management is used to import/export data to/from Dynamics 365. This feature could be used either to move configurations or to migrate master data and transactions as well. The data management in Dynamics 365 is built on the data entity concept. The system is shipped with default data entities. The import/export source format could be either Excel sheets, data packages, CSV, or XML files.
• Workflow: The workflow is the tool used to ensure that the sensitive business documents get the required approvals based on business process and approval matrix. Dynamics 365 shipped with major workflows for business documents. The workflow is easy to design and deploy, and its capabilities can identify approvals, delegations, and exceptions. The workflow is considered as a control point for business documents such as purchase requisitions, purchase orders, invoices, and payments.
• Task Recorder: The task recorder is a new feature introduced in Dynamics 365. This is used to record the tasks and could be used as a training aid for end Users as well as to record scenarios that need to be raised for support and assistance.
  The number sequence is a vital feature. It is responsible for generating the sequential numbering of newly created master data, transaction documents, and transactions.
• Security: The security in Dynamics 365 identifies who has access to what. This is the major feature to define the segregation of duties on the system and to either grant access, edit, or post to documents.
• Print Management: The print management in Dynamics 365 is used to print data from the system whether it is to be used internally or externally. The print could be on the screen, send to PDF file, or may be sent by email.

The following capabilities are mainly used after go-live of the project, although they could be used before that.

• Traces are mainly used to log a support ticket. This captures information of what is executed behind the scenes from the code and database perspective. It is mainly used for performance scenarios that could be analyzed afterward.
• The hotfix deployments are important to ensure that Dynamics 365 is up to date. Dynamics 365 has application (X++) hotfixes and platform updates.
• The auditing and policies are capabilities used to ensure that Dynamics 365 applied the company policies and procedures for sensitive areas such as purchasing.