Businesses that have grown beyond the capabilities of the entry-level accounting tools and spreadsheets they used to get their operations off the ground typically turn to cloud-based enterprise resource planning (ERP) systems to increase efficiency. Similarly, businesses stuck on dated versions of on-premises ERP software are also looking to cloud-based ERP to capitalize on this delivery model's intrinsic benefits.

For companies in this position, two software providers often wind up on the short list: NetSuite and Microsoft Dynamics 365. Both have a rich history in the ERP market and a comprehensive set of features for businesses across multiple industries. They both provide a single source of data from across the company and enable automation that saves their customers time and money.

Yet, there are key differences between the systems that companies should understand as they compare NetSuite with Microsoft Dynamics 365, a group of business applications that includes two ERP systems in Microsoft Dynamics 365 Finance and Microsoft Dynamics 365 Business Central. Read on for a detailed head-to-head comparison of system architecture, functionality, customization, integrations, support and implementation strategy. All of this information will help buyers identify the best solution for them.

NetSuite Overview

NetSuite was the first cloud business application, founded in 1998 by Evan Goldberg, an entrepreneur and early employee of Oracle, and Oracle founder Larry Ellison. It started as a web-based accounting solution but quickly added additional functionality to realize Goldberg’s vision of a unified platform to run an entire business. NetSuite has natively integrated applications for inventory and order management, commerce, analytics, CRM, HR, professional services automation (PSA) and more. It has always been delivered as a software as a service (SaaS) ERP system, where all customers share the same version of the software and infrastructure, with data separated at the database level.

NetSuite’s tremendous success as a pure cloud software provider enabled it to go public in 2007 and later be acquired by Oracle in 2016 for $9.3 billion. Almost 25 years after NetSuite launched, it has more than 31,000 customers — all in the cloud.

Microsoft Dynamics 365 Overview

Microsoft’s growth in the ’80s and ’90s came primarily from its operating systems, business productivity tools and eventually its database offerings. It entered the business application market by acquiring two large ERP providers in the early 2000s that served midmarket and enterprise companies: Great Plains and Navision A/S (this name reflected Navision’s merger with Axapta shortly before it was acquired by Microsoft). Both already offered multiple solutions — some added through acquisitions of their own — and Microsoft later rebranded Great Plains’ systems as Microsoft Dynamics GP and Microsoft Dynamics SL (a reference to Solomon Software, which Great Plains added to its portfolio a few months ahead of the Microsoft acquisition). Microsoft renamed Navision A/S products Microsoft Dynamics NAV and Microsoft Dynamics AX.

Typical of software at the time, all were on-premises systems, and Microsoft continued to deliver them that way, selling the products primarily through partners. Eventually, the provider began to offer cloud ERP deployments by allowing partners to host the software in their own data centers.

Years later, Microsoft settled on a cloud ERP strategy with two choices: Microsoft Dynamics 365 Finance (formerly Microsoft Dynamics 365 Finance and Operations) and Microsoft Dynamics 365 Business Central — more on that later.

Microsoft Dynamics 365 Finance launched commercially in October 2016 and targets the upper end of the midmarket. Microsoft Dynamics 365 Finance is a robust ERP with strong support for finance, and it offers additional modules for supply chain management, sales (CRM), HR, commerce and more. However, only about 3,000 customers are believed to currently be live in the cloud on Dynamics 365 Finance.

How NetSuite Compares to Microsoft Dynamics 365 Finance

While both NetSuite and Microsoft offer extensive functionality for many departments and roles, there are critical differences that customers will notice. Let’s take a detailed look at how the design and features of each system compare.

System Architecture

The core difference between NetSuite and Microsoft Dynamics 365 Finance is how the two vendors developed the products. NetSuite was built for a multi-tenant cloud environment from day one, with customers receiving individualized space for storing their NetSuite instances and data. All customers are automatically upgraded to the newest release twice per year, ensuring they can benefit from the latest features and security enhancements. System customizations automatically carry forward with these upgrades.

Microsoft Dynamics 365 Finance has an outdated architecture based on a re-architected version of on-premises software that’s not equipped for frequent, automatic upgrades. This leads some customers to hold back on upgrading to the latest version over fears of it breaking integrations and bolt-on applications. This means that not all customers are on the same version of the software, even though all are paying for these regular upgrades through their annual subscription fees. In fact, some customers are at least three versions behind, putting them at a major disadvantage. Those customers are missing out on the latest features and security enhancements, which could prevent them from realizing the full value of the system and make them more vulnerable to damaging cybersecurity attacks.

Finance

As the name suggests, Dynamics 365 Finance has strong accounting, financial management and financial reporting capabilities. Like NetSuite, it offers real-time financial data and reporting, though this may require Microsoft’s PowerBI tool — more on that in the next section.

Dynamics 365 Finance supports the latest revenue recognition requirements, critical for complying with the complex accounting rules around subscriptions. This is especially relevant to many software and services companies. However, the system requires a partner application for subscription billing. NetSuite’s core financials natively support subscription billing, and customers can further customize billing rates and schedules with the SuiteBilling application.

Reporting and Analytics

A centralized source of companywide data is the central benefit of an ERP system. This enables intuitive, comprehensive reporting to help businesses monitor performance and make the most of their resources. NetSuite comes with an extensive set of dashboards and pre-built reports for different roles and functions. Non-technical users can easily create new reports to uncover additional insights. NetSuite also offers more advanced data analysis capabilities through SuiteAnalytics, which makes it easy to drill down into data to uncover business insights. SuiteAnalytics can pull financial, customer, product and services data directly from the ERP system.

NetSuite also offers a unique differentiator with Saved Searches. Businesses can use Saved Searches to quickly find relevant records across their systems — including customer, financial, inventory, supply chain and other records — with no configurations or coding. Users can save the results for future reference and even include them in dashboards that always display the latest results. Something similar can be achieved in Dynamics 365 Finance, but it requires additional developer resources familiar with C# and SQL-based coding.

While Dynamics 365 Finance offers some prebuilt reports, it relies far more on customers building reports themselves and integrations with other applications, notably Microsoft’s PowerBI data analytics tool, to deliver data visualizations and dashboards. PowerBI is a technical application that requires people familiar with the system to build custom reports.

Configurations and Customizations

An oft-overlooked aspect of selecting an ERP system is finding people who have experience setting up and managing the system. The SaaS ERP model solved many of those issues by eliminating the need for an IT staff responsible for managing the software, servers and data centers — the SaaS provider handles all of the hosting requirements, patches and updates. Moreover, NetSuite has taken a “clicks not code” approach that allows non-technical users to tailor the system to their needs through custom fields, custom reports and buttons without the need for programming. For more complex needs, NetSuite’s SuiteCloud platform is Java-based, providing a familiar platform for developers. Java has been on the market for more than 20 years, so there is a large ecosystem of skilled professionals available.

Making customizations to Dynamics 365 Finance requires more specialized coding capabilities and knowledge. It is based on .NET and SQL frameworks and, thanks to its legacy Axapta backbone, at times requires knowledge of C# and the older X++ language. The need for greater technical resources to make the system fit your needs can add to the cost of ownership. Additionally, there is concern that developers will need to understand both the old and the new technical aspects of Dynamics 365 Finance, given its convoluted evolution over the last two decades.

Integrations

Not all Dynamics 365 modules are on the same codebase. The CRM module, for instance, was built primarily by Microsoft itself rather than leaning heavily on acquired technology, so it’s on a different codebase than the Dynamics 365 Finance platform. This means it functions as a separate application and has a different user interface. Customers must purchase Microsoft’s DataVerse middleware to pass data and perform workflows between the finance and CRM applications.

With NetSuite, the entire suite is built on a single codebase, simplifying customizations and removing the need for middleware. This also makes the upgrade process much smoother because customers don’t need to test those customizations every time there’s a new release.

NetSuite Microsoft Dynamics 365 Finance
Origins Built for the cloud from the beginning On-premises Axapta system re-architected for the cloud
Reporting Comprehensive dashboards, prebuilt reports and easy customization Basic prebuilt reports, integrations to PowerBI and coding required for more advanced reports
Technical requirements JavaScript Mix of .NET, SQL, C#, X++
Footprint On the market since 1998, 31,000+ current customers Launched in 2016, estimated 3,000 live cloud customers

Microsoft Dynamics 365 Business Central Overview

To create Microsoft Dynamics 365 Business Central, the company re-architected its Navision product for the cloud and designed it for smaller companies than Dynamics 365 Finance. Microsoft released Dynamics 365 Business Central in 2018, meaning it is also newer than its counterpart.

Business Central is often priced very competitively, but companies should realize that they will get what they pay for. The system lacks functionality many midmarket businesses need as they outgrow their entry-level accounting system, and support for this functionality requires third-party applications that plug into the ERP. These integrations to other applications can quickly drive up costs, and each represents a potential point of failure. Additionally, companies considering Business Central should know that it’s not simple to set up, even though it’s less robust than Dynamics 365 Finance.

How NetSuite Features Compare to Microsoft Dynamics 365 Business Central

Many of the same caveats that apply when evaluating NetSuite and Microsoft Dynamics 365 Finance also apply to Dynamics 365 Business Central. In the sections below, we dig into the details of what separates NetSuite and Dynamics 365 Business Central.

System Architecture

As with Dynamics 365 Finance, the on-premises heritage of Business Central impacts the current solution. That means, unlike NetSuite, not all customers are on the same version of this software because some have skipped upgrades due to the time, effort and issues that come with that process. Microsoft customers on outdated versions could be missing out on key security enhancements, putting their critical data and processes at greater risk. They also miss out on new features and other system enhancements that could make their operations more efficient. In the meantime, some customers must rely on internal staff or paid consultants to help them upgrade to newer versions.

Revenue Recognition

NetSuite offers revenue recognition functionality that allows users to recognize revenue in compliance with US GAAP and IFRS internationally, whether a transaction consists of a single action, a series of actions across a period of time or different types of deliverables in a bundle. Business Central has no comparable revenue recognition capabilities. This function is particularly important for software and services companies that rely on subscriptions and must recognize revenue over time.

Billing

NetSuite also offers more sophisticated billing functionality than Dynamics 365 Business Central. NetSuite’s SuiteBilling module builds on the system’s core financial capabilities to further automate invoicing. Businesses can easily combine flat, tiered and consumption-based options with promotions, volume discounts and customer-specific rates to provide the flexibility customers require. It also supports multiple pricing models and complex rating scenarios, further simplifying invoicing.

Intercompany Consolidation

Dynamics 365 Business Central requires either external tools or significant manual work to create journal entries for subsidiaries and handle intercompany consolidation, creating another headache for companies structured this way. Third-party applications designed for Business Central are usually the best way to handle consolidations, but they can also be done through PowerBI. External tools mean integrations and another source of expenses and potential problems. And setting up this process in PowerBI requires technical help with specialized knowledge, which translates to more time and money. In addition, localizations for organizations with operations in multiple countries each require separate instances on separate databases, which must then be linked through middleware. This makes consolidation and multi-entity reporting far more complicated than it is in NetSuite.

NetSuite's unified platform provides a standardized general ledger structure at headquarters while giving regional business units or subsidiaries the flexibility to create custom charts of accounts. Transactions recorded at the local level are automatically mapped and posted to the parent account in the correct currency and at the appropriate exchange rate. International, multi-subsidiary businesses don’t need to worry about integrations or purchase third-party applications.

NetSuite Microsoft Dynamics 365 Business Central
Core Financials
CRM
Intercompany Consolidation
Subscription Billing
Revenue Recognition
Native Customizable Reporting

= Native capabilities

= Some capabilities supported by partners

Reporting and Analytics

Again, NetSuite comes with a much wider array of reports and analytics that are built into the system than Business Central. Business Central has limited prebuilt reports, and if customers want anything beyond that, they must turn to integrations with outside tools like PowerBI or JetReports. Each of those integrations require setup and maintenance, adding to costs.

Additionally, NetSuite’s global search capability means customers can drill down from reports to the individual transaction level and build their own reports and dashboards without any need for coding. That is more difficult with Microsoft. For example, if a customer has Dynamics 365 Business Central and Dynamics 365 Sales, they can’t push and pull data between those two systems without custom development, limiting reporting capabilities.

Configurations and Customizations

While Dynamics 365 Business Central does not require the same level of technical expertise to make system customizations or create custom reports as Dynamics 365 Finance, it still does not match the simplicity of NetSuite’s “clicks not code” strategy. Customizations to Dynamics 365 Business Central require coding in the AL language via the Visual Studio Editor.

NetSuite is a more complete system out-of-the-box and includes more prebuilt functionality that makes implementation and configurations easier. End users and administrators will find it far easier to adapt NetSuite to their unique needs without requiring internal or external technical assistance. This becomes more important as a business grows and its processes evolve.

CRM

The Dynamics 365 Business Central feature set is broader than Dynamics 365 Finance, its counterpart for larger companies, if not quite as functionally rich. Business Central includes a CRM system with contact management features and other tools for sales force automation. The CRM also includes project management capabilities. NetSuite offers similar functionality through its CRM across customer service, sales force automation, marketing automation and configure, price, quote. NetSuite has a separate module for Professional Services Automation (PSA) with extensive project reporting, billing and expense management features. Both modules are natively integrated with NetSuite ERP, so there is no integration to manage.

For more robust capabilities, customers must turn to outside modules which, like Dynamics 365 Sales, require the Dataverse middleware layer. Customers must use a Microsoft partner to set up these Dataverse connections each time, bringing additional time and costs.

HCM

Business Central also includes human capital management functionality in the core system (this was previously offered through a separate HR module).

SuitePeople, NetSuite’s human capital management module, also supports human resources (HR) administration, performance management, workforce management and HR analytics.

Why You Should Choose NetSuite Over Microsoft Dynamics

Regardless of which Microsoft Dynamics 365 product a company is considering, there are limitations decision-makers should be aware of when comparing those systems to NetSuite. The first is Microsoft’s decision to put two different cloud ERP products on the market.

Microsoft customers run the risk of outgrowing Dynamics 365 Business Central. If that happens, the move to Dynamics 365 Finance would essentially be a reimplementation, resulting in major disruption and steep costs. The inverse is also true. Downgrading from Dynamics 365 Finance to Business Central is akin to replacing your system.

NetSuite has a single system used by customers ranging from fast-growing startups with just a few million dollars in revenue up to billion-dollar companies that have gone public on the platform. NetSuite allows customers to start small and add functionality as their requirements grow. If a company divests part of its business and needs less functionality from its ERP system, it can turn off unneeded functionality in NetSuite.

Approach to Implementation

NetSuite has developed an implementation and customer engagement methodology called SuiteSuccess based on its 20-plus years of experience helping tens of thousands of customers implement cloud ERP. SuiteSuccess leverages leading ERP implementation practices and prebuilt workflows, reports, KPIs and dashboards tailored to specific industries and business sizes to speed up the ERP implementation process. That helps customers implement and derive value from the system much faster than they would with competing solutions. Customers can implement the system with NetSuite’s professional services team or from one of the many partners in its ecosystem.

Microsoft does not offer an implementation methodology comparable to SuiteSuccess. Most implementations are partner-led, making it more difficult to share learnings and follow consistent best practices. Moreover, because both Microsoft products are based on a combination of older and newer technologies, implementations are more complex and demand a wider range of skillsets. Microsoft’s history with on-premises software and its partner network can also affect how much you pay for an implementation. Many Microsoft partners are still incentivized by billable hours, which can drive up implementation time and costs. NetSuite, on the other hand, shares recurring revenue with partners, giving them a strong incentive to get multiple businesses up and running quickly versus getting as much as possible out of each customer.

Customer Support

Microsoft also relies on its partner network for frontline support that is limited to any one partner’s business hours. Customers have little contact with Microsoft and partners are mostly interested in ongoing consulting engagements and billable hours, so support often gets put on the back burner. Even if customers can contact Microsoft, there are limited hours for most customers.

NetSuite offers support 24 hours a day, seven days a week, and each customer has its own dedicated account manager. Working directly with the vendor ensures companies are working with support professionals who know the system and your business best.

Additionally, Microsoft must split its support resources across multiple products, meaning it cannot offer customers the same level of service as ERP providers like NetSuite that dedicate all their support staff to one system. This is a key difference over the life of using such a crucial system.

Research and Development

Both NetSuite and Microsoft will continue to invest heavily in their ERP product lines, adding functionality and industry-specific capabilities. However, NetSuite is supporting just one product with one codebase. Microsoft’s human and financial resources will be divided between two separate products with two distinct architectures, so it will struggle to make improvements to its solutions as quickly and frequently as NetSuite.

NetSuite Is Right for Growing Businesses

Many companies are making the case for a new ERP system and trying to determine if they want to migrate from QuickBooks to NetSuite, from Microsoft’s on-premise systems like Microsoft Dynamics GP to NetSuite, or to one of Microsoft’s cloud ERP offerings. As they weigh the risks and benefits of different systems, they need to account for the product’s history, current level of adoption, base functionality, costs and difficulty of customization and maintenance. Moreover, they should ask if the system has the scalability to continue supporting the business as it grows. After evaluating each of those areas, many businesses will realize that NetSuite is the clear winner.