• Mark Bonnici

Which ERP Software? - Xero vs Microsoft Dynamics 365 Business

Choosing the right accounting software is not an easy task. To be honest, it doesn't happen that often, and very few of us can actually experience ERP software changeovers that often. It's certainly a decision that's not to be taken lightly and any hastened decisions will not lead to any good. Having said that, we still need to define the features which we are to look for when choosing the right system.


Today we have opted to put this into practice by comparing Business Central and Xero. Both systems are hugely popular and both of them have a couple of strong areas.

But prior to that let's define the key points which are to shape our thinking process:

  • Flexibility - we won't be implementing an accounting system every other year, thus flexibility is a key matter

  • Cost - Cost is crucial as ultimately it all boils down to our Income Statement and Profitability

  • Scalability - whilst no business starts off as a conglomerate still each one of us has that hope, or maybe just a spark of it, that one day the business will grow like hundred times its current operations.

  • Usability - The success of any accounting software implementation is highly dependant upon the user's feedback.

  • Reporting - The usefulness of the system is heavily dependant onto the level of information which may be extracted out of the sheer raw data which is recorded over the months or years.

Xero-ERP-Accounting-Software


Flexibility


When discussing flexibility we need to differentiate between an accounting system and an Enterprise Resource Planning software, most commonly referred to as simply an ERP system. The former is mostly concerned with handling the accounting of the company, in most cases restricted to a basic general ledger. Xero albeit being an entry-level system handles this very well and in addition provides data related to suppliers and customers. However, Microsoft Business Central moves far beyond these basic entities and instead has a wide range of areas which are entirely integrated to the accounting functionalities of the systems. The key question at this point would be....do we really care? Not really if the company has no intention of exploring new areas, new markets or new revenue streams and instead is interested in retaining a status quo for years to come. If this is not the case, and if the company sees itself as a dynamic one, ready to explore whatever surprises the future has in hold for it, in that case, an ERP system is required.

Microsoft-Business-Central-ERP-Accounting-Software


Cost


Cost is definitely one key factor which everyone needs to look into, and which doesn't need too much elaboration. Business Central offers two options: perpetual license (a one-time lump sum and a low yearly update fee) or a monthly subscription fee. Xero, on the other hand, offers the second option only. Having said that the entry-level price for Xero is cheaper than that for Business Central. The secret to getting the final pricing though is to look into the cost over five years and after including the required modules. The cash flow position of the company pretty much determines which model to opt for in terms of business central and this, in turn, may hugely affect the pricing analysis.

Implementation


Costing however does not limit to just the license model. We must also bear in mind the implementation which the company is to opt for. The Business Central ERP or accounting solution offers two models - the on-premise solution and the cloud solution, whereas Xero has to jut the cloud solution available. Getting into the discussion as to which solution one has to opt for will open a pandora box, which needs to be tackled separately. It's good to know that there are two contrasting views in relation to this, therefore getting a clear answer is out of the question. Having said that, whatever the option the company goes for, would not in any way impinge on the connectivity which the user can enjoy. Needless to say for larger companies, having the option to choose is an important security aspect.


Scalability


Scalability goes hand in with flexibility, and this is an important winning point for Business Central. The latter does not have any limit whatsoever to the number of transactions. Even the most simple implementation can have thousands of transactions every day with no extra charges of any sort. Having said that both systems enjoy a limitless number of users which may be added t the system and equally important is that both solutions can be accessed through any device.


There's another face to the coin of scalability, and that is the possibility of amending the system to scale along with business requirements. Both solutions have an extensive number of addons which may enhance the features provided by the solution. However Business Central scores a winning point over here, as it may be customised for the individual company needs. Our experience has shown us time and time again that whilst the addons can provide a huge number of features yet there will always be that key feature which may be essential to the company and which we have to resort to creating a customised addon.