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IT Showcase On: Microsoft Dynamics® AX

How Microsoft Information Technology uses Microsoft Dynamics AX to resolve its business challenges

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Executive Summary

Microsoft Information Technology (MSIT) supports more than 100,000 employees worldwide by providing key infrastructure and line-of-business (LOB) applications to users and business groups within Microsoft. MSIT works closely with business and product teams throughout Microsoft to better understand their business processes, gather business requirements, and develop technology solutions. At an enterprise company the size of Microsoft, fulfilling this mission often requires extensive planning to ensure that all user groups of a new solution have access to the functionality and training that they need to do their jobs.

As a flexible and extensible application for supporting businesses, Microsoft Dynamics® AX provides the functionality and performance that an IT organization requires to deliver these services to users.

When large company business challenges arise at MSIT—such as the need to support a new business unit, expand services to new remote offices, or replace aging systems that no longer meet the company’s needs—MSIT faces the familiar issue: What type of solution would meet our business needs, and how should we implement the solution with a minimum amount of custom development and employee impact? In many recent cases, for MSIT the answer was to deploy Microsoft Dynamics AX.

Two-Tier ERP at Microsoft

Microsoft, like many enterprise companies, uses two-tier enterprise resource planning (ERP) for its business software architecture. With two-tier ERP, a primary ERP system centrally manages business data, while a second tier of ERP solutions—with connectivity to the primary system—provides unique functions and workflows to individual LOBs.

By using this two-tier approach, MSIT can help the businesses it supports to grow and adapt their ERP to meet specific business needs without having to plan and implement extensive changes to the primary tier. The resulting architecture resembles a wheel hub and multiple spokes, with each spoke representing connectivity of the primary hub ERP system to each of the second-tier ERP solutions.

Two-Tier ERP at Microsoft

At Microsoft, SAP is the primary administrative ERP system (or, the corporate hub) for financial data. MSIT uses Microsoft Dynamics AX as the second-tier solution (or, the business spoke) for many business areas. This two-tier combination is central to a growing number of business processes within MSIT.

A successful two-tier ERP solution depends on efficient transfer of information between the hub and spokes. To achieve this, a solution often requires a middleware layer, such as Microsoft® BizTalk® Server. MSIT uses BizTalk Server in part because it contains built-in communication abilities with hub systems such as SAP, and because it requires little or no development of message structures for the hub system to transact data with each of the spokes.

The primary advantages of two-tier ERP are cost savings and efficiency gains over heavy customization and single-tier (big ERP) solutions.

Custom applications have the following limitations:

  • Independent businesses have different goals, making a single, unified ERP solution difficult to achieve.
  • Work must be performed by skilled, autonomous custom developers.
  • Custom work does not scale; therefore, there is low consistency and high redundancy across all development efforts.
  • Re-analysis and re-engineering is necessary for every project.

Likewise, using single-tier ERP solutions can also lead to unwanted issues:

  • Expensive resources are required for implementation and support.
  • Inflexible business processes are constrained by architecture of a single system.
  • Implementation is slow due to long development cycles.
  • Solutions are difficult to integrate with other systems.
  • User adoption is challenging due to non-tailored user experiences.

Using Microsoft Dynamics AX in MSIT Today

MSIT has used Microsoft Dynamics AX implementations to run several business areas since as far back as 2006:

  • In manufacturing operations in Puerto Rico, MSIT implemented a Microsoft Dynamics AX 2009 solution that is currently being upgraded to Microsoft Dynamics 2012.
  • Three separate Microsoft Dynamics AX implementations are currently running software modules for order processing, vendor management, and expense reporting.
  • In retail, MSIT uses Microsoft Dynamics AX in conjunction with a point of sale (POS) solution to run the Microsoft Store chain of stores.
  • Starting in 2012, MSIT will use a Microsoft Dynamics AX 2012-based solution to manage project accounting for its own consulting engagements.

The remainder of this section describes in more detail several of these MSIT implementations of Microsoft Dynamics AX.

MSExpense 2.0

Challenge

Inconsistent UI and processes for managing employee expense reports at worldwide offices

Solution

Two-tier ERP with Microsoft Dynamics AX configured to reflect processes in all worldwide locations

Benefits

Common web-based expense UI, configurable per office; better reporting; direct credit card and user payments

Results

Role-based user experience; significant gains in efficiency and performance; easy access to more consistent business intelligence (BI) data

Like many large companies, Microsoft uses an expense management process to collect employee expense reports and receipts, and reimburse employees. Over the years, the tools and methodologies that support this process grew inefficient. Different geographic locations used different user interfaces to accomplish the expense report workflow tasks, leaving MSIT with no centralized tool to manage and support them. Outside the U.S., the process relied on users submitting Microsoft Office Excel® spreadsheets that were then uploaded to the financial system of record, SAP.

MSIT developed MS Expense 2.0 as a solution to improve the user experience of submitting and managing expense reports, and to make it easier to train and support users on the system. Built on Microsoft Dynamics AX 2012, MS Expense 2.0 provides a web-based expense management user interface that can be differentiated based on each country office’s needs, but that stores its data in a single central taxonomy. As an effective ERP business solution, MS Expense 2.0 is a spoke in the hub-and-spoke model of two-tier ERP, providing new, streamlined functionality to users while transacting data with SAP.

The key improvements from this solution are that the user experience is unified for all employees worldwide, and managers have access to business intelligence (BI) data that allows them to work more efficiently—for example, to negotiate better rates with specific travel vendors based on their view of expense history.

Deployment:

  • First deployed in the US and some international offices (currently 15,000+ users).
  • Additional 75,000+ users scheduled in future phased deployments.

Technologies:

  • Microsoft Dynamics AX 2012
  • AIF (Application Integration Framework). Enables integration and communication with other business processes and partners, and enables more secure business-to-business and application-to-application integration scenarios.
  • BizTalk Server. Middleware solution for two-tier ERP that streamlines message transactions between the primary hub and business spokes.

MS Vendor

Challenge

Adding vendors was time and labor-intensive for all people involved; used many disparate systems

Solution

Add a vendor portal to the existing MS Expense 2.0 solution; retire old solutions

Benefits

Multi-language support for improved international user experience; improved speed and productivity

Results

Reduced the vendor implementation process from 21 days to four hours per new vendor added to the system

MS Vendor is a tool used by vendor companies that offer Microsoft products and services. The previous process of signing these vendors up and preparing them with the resources that they needed required three weeks of time and considerable manual effort. By developing MS Vendor as a self-service technology that was built on the Microsoft Dynamics AX 2012 platform, MSIT projects that this process will be shortened to take only four hours.

Another benefit of MS Vendor is that it is collocated on the Application Object Server (AOS) instances used by MS Expense 2.0. This reduces the need for additional spoke instances and allows the support team for each technology to develop independently without impacting each other.

Deployment:

  • Currently in pilot phase in Mexico (deployed January 2012) with plans for a full global rollout to more than 15,000 users and processing of over 40,000 vendor forms.

Technologies:

  • Microsoft Dynamics AX 2012
  • Microsoft SharePoint® 2010 for Internet Sites Enterprise (with Live ID integration)

Order Central

Challenge

Merging of many technologies resulted in multiple billing engines that were costly to support

Solution

Merged billing systems using Microsoft Dynamics AX 4.0; upgrade meets additional business needs

Benefits

Dynamics Transaction Engine replaces 84 old servers; upgrade enables Enterprise Portal and Collections module

Results

Streamlined invoice-to-cash application as part of end-to-end order management, tracking and fulfillment

Order Central enables Microsoft to receive orders from partners who sell Microsoft Dynamics products. As a part of this system, Order Central uses Microsoft Dynamics AX to process invoices and manage payment collections. Microsoft Business Solutions (MBS) is the team within Microsoft that fulfills these orders. Due to several acquisitions over the years of products such as Great Plains, Solomon, Navision and Axapta, the previous order tracking systems used by MBS were diverse and did not communicate readily with other systems.

By designing and implementing the invoice-to-collections portion of Order Central using Microsoft Dynamics AX 4.0—and later upgrading to Microsoft Dynamics AX 2012—MSIT met the business needs of MBS by providing an end-to-end order management solution.

Deployment:

  • Four deployment phases over nine years, including the recent migration to Microsoft Dynamics AX 2012
  • 150+ users

Technologies:

  • Microsoft Dynamics AX 2012
  • Microsoft SharePoint® 2010 for Internet Sites Enterprise (with Live ID integration)

Microsoft Operations Puerto Rico

Challenge

7-month date-driven effort to support Windows Vista® and Microsoft Office 2007 system launches

Solution

Fully-featured manufacturing planning, order management, inventory, and forecasting using two-tier ERP

Benefits

Easier mastering of media using Microsoft Dynamics AX; management and visibility of end-to-end production

Results

Manual data entry discontinued; 20% reduction in sales processing; better integration with corporate systems

The Microsoft Operations Puerto Rico facility in Humacao, Puerto Rico (MOPR) is responsible for producing all CD and DVD media for Microsoft software that is sold in the Americas. There are roughly 200 employees at this facility who use Microsoft Dynamics AX to manage the end-to-end production flow, from the point where an order is received from a Microsoft vendor, to the point when media is shipped to final assembly vendors.

As part of its Master Requirements Planning (MRP) function, Microsoft Dynamics also helps to analyze each order to determine whether any outside vendors are needed to fulfill it. Although the solution was first implemented on Microsoft Dynamics AX 3.0, MOPR is now in the process of upgrading from Microsoft Dynamics AX 2009 to Microsoft Dynamics AX 2012. This upgrade will reduce the need for custom development, provide better inventory management and reporting, and allow a more complete integration with the other systems on the MSIT Microsoft Dynamics AX platform. This in turn will result in a leaner, smarter manufacturing management tool.

Specific feature benefits of this latest upgrade include the following:

  • Ability to track inventory at both the serial number level (unique ID) and batch level (production group), making it easier and faster to research a possible product defect and determine where in the manufacturing workflow the defect occurred.
  • Improved integration with Microsoft Office products, such as Office Excel, which can be used both for displaying data reported from Microsoft Dynamics AX, and for importing master setup data into the system.
  • Custom BI enhancements that allow users to view dashboards that display up-to-the-minute key performance indicators (KPI) and other metrics, which are helpful for assessing and improving system performance.

The MOPR implementation of Microsoft Dynamics AX is another example of two-tier ERP in MSIT. Customizations are made easier using the configurability of Microsoft Dynamics AX architecture, compared with the costlier custom development that would otherwise be required to achieve similar functionality in the SAP hub administrative ERP system.

The savings from implementing Microsoft Dynamics AX in MOPR has been considerable, with an estimated 20 percent reduction in operating costs for servicing new sales orders in the MOPR system. The implementation of Microsoft Dynamics AX has enabled automated integrations with Microsoft corporate-wide systems and tools, and has eliminated manual processes and other failure points that existed previously.

Deployment:

  • 200 users

Technologies:

  • Microsoft Dynamics AX 2009 (originally Microsoft Dynamics 3.0; currently upgrading to Microsoft Dynamics AX 2012)
  • BizTalk Server

Microsoft Store

Challenge

Needed to create a fully-featured retail headquarters solution that integrated both with POS and with Microsoft corporate systems

Solution

Developed Microsoft Dynamics AX-based solution using built-in components and customization

Benefits

Real-time inventory tracking and POS sales visibility for each retail store location

Results

Scalable retail workflows and operations to be implemented at more than 50 new stores by the end of 2013

When the first Microsoft Store retail locations opened in 2009, the retail division’s technology group worked with MSIT to gather requirements for an ERP system that would run operations at the stores. The key requirements for the new system were that it be able to interact directly with each location’s POS technology, and that it transact data with other key financial systems at Microsoft, including the general ledger.

The resulting implementation meets these needs, and provides additional abilities for up-to-the-minute inventory reporting, forecasting inventory requirements, and distribution center communications for inventory planning and procurement.

Microsoft Dynamics AX 2009 is currently used to manage the entire supply chain and financial data for 17 Microsoft Store locations. The retail division’s goals are to add 11 to 13 more stores in 2012, and to have a total of 75 stores—including some stores outside the U.S.—by the end of 2013. With the planned upgrade to Microsoft Dynamics AX 2012, the Microsoft Store solution will have improved support for these new international stores, including the ability to specify each country as an individual legal entity in the Microsoft Dynamics AX setup hierarchy. This in turn will simplify the process of setting up item masters across multiple international store locations.

Deployment:

  • Currently 300 accounts and 600+ employees with POS access; roughly 2,000 accounts expected by the end of 2013

Technologies:

  • Microsoft Dynamics AX 2009 (upgrade to Microsoft Dynamics AX 2012 currently planned)

IT Finance

Challenge

Lack of services end-to-end project planning solution; lack of timecard management capabilities

Solution

New financial management tool mostly developed using built-in Microsoft Dynamics AX functionality

Benefits

Integrated time reporting for employees; BI data reporting for better budgeting, capacity plans, and utilization

Results

Significant expected gains in efficiency from improved BI support for professional services projects

The finance arm of MSIT needed a better way of tracking the costs associated with its IT projects, starting with a better view of the time that employees were currently spending on various consulting tasks. To date, MSIT has not used the full capabilities of time reporting software to track this information, which caused difficulties with budgeting and capacity planning for future projects.

By using built-in functionality that is available in Microsoft Dynamics AX 2012, MSIT recently began developing the IT Finance Transformation initiative. The resulting solution will include a time reporting function. MSIT will use the data from this for more accurate project accounting, budget forecasting, and resource management on MSIT engagements.

By replacing the previous tool, MSIT and the finance department will no longer require multiple integration points to other applications to perform the desired functions. The new IT Finance deployment of Microsoft Dynamics AX will simplify data management and processing by collocating all functions in an integrated system. As a result, MSIT will have an IT Finance toolset for project accounting that enables efficient development and project delivery best practices.

Deployment:

  • 4,500 users

Technologies:

  • Microsoft Dynamics AX 2012

Implementation Best Practices

  • Reduce the time and cost of custom development by using and adapting the built-in services and functionality of Microsoft Dynamics AX.
  • For greater agility, create reusable components based on the core Microsoft Dynamics AX functional types.
  • Data quality is essential to an effective ERP solution. Spend the time to define data structures before starting to build a solution.
  • Two-tier ERP is a preferred model for many enterprise businesses. If your IT has a primary ERP system that is expensive to customize, look for ways to use Microsoft Dynamics AX on a second-tier business spoke ERP systems to deliver value for individual business needs.

Summary

Microsoft Dynamics AX continues to provide high value to the business groups served by MSIT. The extensible architecture of Microsoft Dynamics AX allows for the flexible mapping of its capabilities to the business requirements of many day-to-day Microsoft operational areas. The recent implementations described here provide real life scenarios for using Microsoft Dynamics AX to run multiple aspects of enterprise business.

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