What is Microsoft Dynamics 365 Tenerife, really?

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The weather right now might not feel like it, at least in Europe, but Spring is just around the corner.  For the Dynamics community that means that Microsoft’s promised launch of the product codenamed Tenerife is rapidly approaching. But the most common questions I get is still: ‘What actually is Tenerife’? It is important that we all get an answer if the product is going to be successful, right?

Starting with the basics, and with the caveat that this based on my current understanding, Tenerife is Microsoft’s SaaS small to medium business administration solution. What does that mean? Would it help to add that it’s their below-enterprise cloud system of record ? What if I throw in that it’s their business application platform on which independent software vendors (ISV’s) should develop industry-specific solutions. Oh, I forgot to add that it’s the data store and logic engine to lots of the apps in Office 365 now as well.

Is it NAV?

Lots of other people will tell you it’s ‘NAV in the Cloud’. Dynamics NAV, since its acquisition by Microsoft in 2002, has grown into the most prolific (by user count, implementations, revenue, partners, ISV options, take your pick) of Microsoft’s Dynamics on premises “accounting plus” products. It’s been cloud ready since 2013 but has relied on the partner to host it. Tenerife is Microsoft providing that platform and software as a service. In fact, everything you need as part of the core offering for a simple, per user, monthly fee.

So it’s NAV isn’t it? Just a name change and online, right?

Yes, NAV has to be a good place to start understanding Tenerife, as it has the same codebase as NAV. That means the software Microsoft installs on their platform is the same that I could install on your servers on premises as we have for decades past. See it on screen and you’ll have to look very hard to tell if its NAV or Tenerife.

But to confuse matters, yes there are some differences. What follows is a list of differences I can recall, and that I know are not under NDA at time of writing.

  • Web client only, with apps for iOS and Android for both phone and tablet. But there is no Windows client, meaning the main desktop users are going to be using their browser of choice. For some existing NAV users this would be a critical blocker, but users that have only ever users the web client don’t see the issue. If it does prove a problem in the wider market, expect Microsoft to update and enhance the capabilities further, as I can’t see the technical problem.
  • It’s licenced by the new Microsoft CSP program, which means per named user, per month subscription. No concurrent user or upfront purchase or annual maintenance options for Tenerife. Some veteran NAV partners are concerned about the loss of margins on licenses, but Office 365 partners already working with this model may adapt more easily.
  • Subtle functionality changes caused by security concerns around running it as a true SaaS multitenant application. Access to files on the servers, for instance, .NET function calls, and even access to some system tables have been blocked off to developers to prevent any organisation being able to compromise another. If you’ve never used NAV I’ll doubt you’ll ever notice.
  • You can install apps or extensions directly from AppSource, allowing you to try out ISV options and quickly uninstall if they don’t do what you want. This is a key advantage that I wish NAV had. The ISV options for NAV should rapidly migrate to Tenerife, and that will provide a major strength that the product hasn’t had in quite the same way to date. A bigger and more accessible market should benefit both publisher and consumer.
  • It’s a later release of NAV. The development team’s ongoing work gets to Tenerife monthly instead of waiting for the annual release that you have with Dynamics NAV. That means a monthly email telling you what they’ve added or improved. I’m hoping that you’ll be able to test the new features in a sandbox or test environment before deciding when to implement, but it’s likely you’ll need to be within six months or so, of the latest release.

Tenerife is “full fat” NAV, not the “skinny NAV” of the Dynamics 365 Finance and Operations, Business edition that has been available in the US, Canada, and the UK, for the past eighteen months. Tenerife has not just financials and a limited set of supply chain functionality but advanced inventory, warehouse management, and even the option of discrete manufacturing and service management as well. There will be no functional areas in NAV that will not also be available in Tenerife.

What do you want it to be?

Those aware of the NAV product’s legacy will know that, while we all call it NAV, no two organizations deploy the same solution. They have installed ISV addons for their industry needs or they have paid a developer to change or add anything they thought they needed.

Tenerife promises to continue to allow that level of “per tenant” customisation via custom extensions. That means that the long-held trump card of NAV is coming to Tenerife.

For requirements that still can’t be met via extensions (I have found few, but that’s an article for another day) or for ISVs that have lots of needed legacy modifications to the core application, Microsoft will provide ISVs with a version of Tenerife on which they can deploy their changes to the core objects or logic via a programme called ISV Embed. That means that not all “Tenerife’s” are going to be equal. Buyers will need to be careful what they are signing up for when using AppSource or working with a Microsoft partner.

So it is an ERP system, right?

Maybe you noticed that I haven’t used the ERP tag yet. But yes, this is what I believe Microsoft intend to be their strategic small to medium business ERP platform. Last I heard, they will not recommend maximum user counts to restrict it within that SME segment. What the functionality does decides its suitability for any organisation these days, much more than any (increasingly hard to define) seat counts.

Targeting Everywhere, but strongest for midmarket

Sensibly, Tenerife is designed to fit the segment of the market where NAV has been strongest. No more targeting the entry level requirements that Microsoft initially talked about with Business Edition or even the “outgrown QuickBooks” segment that they ended up with. Yes, Tenerife can be used for both of those and the application simplification work in the past three years has made that more viable. But really, where it’s going to succeed or fail is with the midmarket business that needs an adaptable platform for its digital transformation and is prepared to invest time and effort to get it. In other words, it will compete where NAV and GP have performed well, for all this century to date.

And the next questions are?

What will it be called? Unconfirmed right now but it will be part of the Dynamics 365 brand. I’m also promised the name will be short so Dynamics 365 Financials and Operations, Business edition is officially not going to happen. It won’t be called Enterprise, so make your own guesses and I advise you to watch the tweets from Directions Asia in mid-March.

What will it cost? Again, not announced but probably more than the $40/user/month that Business Edition costs. And with the talk of options for manufacturing, you can deduce there will be a range of prices. If you end up on one of the “cloud ISV embed” versions, expect to pay more.

What does ‘Spring’ mean? When it’s ready hopefully. The last thing we need is another change to the launch schedule. Don’t let your cynical side tell you that the last day spring in Denmark is 21st June so expect it then. You might well get a surprise. Again, I expect more public announcements at Directions Asia.

Will it replace the current Business Edition? Yes, current users will be upgraded to Tenerife I believe, and they are “making the commercials work”. That means that if you are considering it, I’d sign up for a couple of users on Business Edition now. It seems like you might get Tenerife for the price of BE. (What’s the keystroke for a winking emoji?)

Will NAV users be forced to Tenerife?  NO, NO, NO, for goodness sake how many times do you have to be told?! Microsoft makes a stack of money, even for them, out of the on premises NAV base and it would make no sense for them to threaten that. They assure me they will keep selling NAV licences for as long as you want to buy them and given they have just sold a 2009 classic licence to one of my customers this week (don’t ask why please), I believe them. Actually, I think it might be partners who stop selling it rather than Microsoft.

Dynamics NAV will continue? Yes, the single codebase means the cost of progressing NAV is negligible – or they get Tenerife almost for free, depending which way you want to look at it. There will be some change though. My bet is that they might change the name to match up with Tenerife – so Dynamics 365 Business On Premises, for example. I also think it makes sense that future on premises versions have named user and CSP licence options. With the Office 365 authentication we have now, that should be easy and means if you want to run on Microsoft’s ISV platform, on Azure, or on your own servers, it’s a technical choice about which platform is right for you, not a commercial or dogma based one.

Will Tenerife be successful? The most difficult question yet and definitely just my opinion at this stage, but yes I think it will. The conversation is about to flip from ‘why would I buy this’ to ‘why wouldn’t I. Sure, some people out there will say, you’ve haven’t got this feature yet or its doesn’t allow that, but people still point to classic NAV, now ten years old and say it was better at this or that. The Tenerife I’ve seen is good enough in all the key areas and has significant advantages in several. That, for me, should mean that if we give it a couple of years it will be the default shortlist option that NAV is now.

In fact, the biggest threat is the same one with which this article struggles. Tenerife can be so many things, how do the Microsoft product marketing team actually explain, in simple, language what it is? It might suffer from the curse of being able to hit so many targets, that it hits none. It would be tragically ironic if such a capable solution failed, because it was too flexible.

What I am certain of is that Tenerife is about to act like the erupting volcano its namesake was in years past, shaking the whole market as it stands. Whether you can successfully colonise the resulting landscape or are buried like Pompeii, is going to depend on how fast you evolve and adapt.

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