It is important for companies that want to implement the ERP to understand that its implementation is not an easy task and it requires a professional partner. For example, Value Added Reseller (VAR), which has a consulting team experienced in implementing the ERP, preferably has a partner that is an expert in the customer industry. There is a high level of engagement between customers’ top management, key users, and end users in the implementation life cycle. The implementation team is considered as the key success factor for the ERP implementation.

The following diagram illustrates the ERP implementation team that consists of Subject Matter Experts (SMEs) and key users from customer- and partner-side applications, and technical consultants. This team works together closely during the implementation, where the customer representatives (SMEs and Key users) deliver the business requirements (that is, what they are expecting from the ERP), with the consulting team that bridges the gap between the business requirements and the implemented application. The implementation deliverables comes through several workshops from analysis, design, development, and testing.

The implementation team should focus on two types of internal clients: business executives and end users. Each client has a different perspective of the ERP implementation, and the implementation team should consider their requirements during the implementation lifecycle. The executives' management focuses on reporting and end results, and the implementation team delivers policies and procedures to end users who then operate the final product, which is the ERP application.

Responsibilities and motivation of an ERP consultant

Application consultant, Functional consultant—the job title differs from one company to another, but whatever the title is, the application consultant is considered as a middle man between the ERP and the customer, where the application consultant is specialized in the ERP application and is able to understand the business requirements and adopt it to the ERP software. The application consultant can start their career after graduating from university; they can major in business administration, finance, or information systems, if it covers subjects related to business.

Alternatively, the application consultant can start working in other fields. Some people start out as an accountant, procurement agent, commercial agent, or even sales representative. I do not consider it a career shift; I consider it as an advance in one's career path. In other words, it is capitalizing on previous experiences.

Traditionally, consulting skills are divided into two main areas: the business side, which is known as a functional consultant, and the technical side, which is known as a technical consultant. Then, there is a more general soft skills set that all application consultants need, as they spend most of their time in discussions, workshops, and training, related to business.

Some of the key skills a company should look for in an application consultant are highlighted in the following diagram:

The application consultants have a very important role in the implementation of the project, as they are involved in implementation tasks and activities. Microsoft Dynamics Sure Step has defined the application consultant role during implementation phases. It is a long and broad list of tasks, and this range of tasks is what I believe keeps most application consultants motivated and satisfied with their jobs. The challenges are always changing and the career path offers many opportunities to develop new skills.

Enterprises that intend to implement Microsoft Dynamics AX ERP pursue a variety of common benefits from the ERP, but in most of the projects, there wasn't any well-defined benefits that the organization's management agreed on, and no roadmap to help them accomplish those intentions. It is vital to plan the ERP implementation carefully. In the sections that follow, we will take the key objectives of ERP implementation.

The organization can have a legacy system and manual business processes, and they need to be unified by one single integrated application to manage, operate, and control the business areas and deliver reports to management, as shown in the following diagram:

Enterprises that have decided to implement ERP should be coordinating together with a consulting partner specialized in Microsoft Dynamics AX. The customer and partner should plainly outline the objectives of the ERP solution as early as possible in the diagnostic phase. They can replace the legacy system and reduce manual business processes by automating the business processes using the ERP solution in the organization's departments. Samples of ERP implementation intentions are as follows:

The core objective of running a business is to make a profit, which requires making revenue that cover the costs and adding the margin to secure the profit. This is the core role of management to achieve this profit; the ERP application gives the management the necessary business insights to monitor the business performance.

Microsoft Dynamics AX manages and controls day-to-day transactions that occur in the company; these transactions are transformed into financial information that represents the key component of the financial statements (balance sheet and income statement), which are expenditure and income; in other words, cash out and cash in. All these are shown in the following diagram:

The cash-to-cash cycle entails the core two cycles, which are commonly known by Procure to pay and Order to cash. The first cycle covers the expenditure part (cash out), that is, every aspect related to vendor management, procurement management, purchasing management, product reception, and vendor invoices, payment, and settlement. The second cycle covers the revenue part (cash in), that is, every aspect related to customer management, sales management, product delivery, customer invoices, collection, and settlement.

Microsoft Dynamics AX enables the module's integration that relates transactions to each other, and can automatically inherit information from one and pass it to another after adding additional information, along with generating automatic financial entries in the general ledger and control points to monitor the transactions. There is integration between Microsoft Dynamics AX 2012 R3 modules, where production modules are integrated with the warehouse management module and sales and marketing module, in addition to the procurement and sourcing module.

The project module is integrated with the inventory module, sales and marketing module, Accounts receivable modules, procurement and sourcing modules, and Accounts payable module. This book focuses on the integration of the financial module.

The main principles of reporting are reliability of business information and the ability to produce the right information at the right time for the right person. Reports that analyze the ERP data in a meaningful way represent the output of the ERP implementation; it is considered as the cream of the implementation, the next level of value that the solution owners should aim for. This ideal outcome results from building all reports based on a single information source, the ERP solution where the business is recording all transactions on a daily basis.

As shown in the following diagram, the organizational reporting levels are divided into the following three main layers:

Each level has a different perspective of report usage, irrespective of whether it is tactical/short-term usage or strategic/long-term usage, and a different opinion on a report's complexity.

The dimensional characteristic of information is divided into two dimensions; the first is scope of information and the second is types of decision making.

The scope of information defines the required level of detail for each managerial level. Typically, the scope can be described as follows:

The type of decision making used by an organization is another dimension of reporting analysis. Typically, decision-making styles can be described as follows:

In Microsoft Dynamics AX, there are two ways to post transactions to general ledger accounts. The first type is through the posting profile that represents the integration point between general ledger and subledgers, and it generates the entries automatically according to the posting profile setup. The second type is journal entries that post directly to ledger accounts. The two ways are explained in detail as follows:

The voucher line can be a ledger account, vendor account, customer account, fixed asset, bank, or project. If the selected account is an option other than the ledger account, the subledger posting profile will directly post to the ledger account.

There are some common terms that are used in all the phases of the ERP implementation. These terms describe a specific task or activity during the implementation lifecycle, and they are as follows:

Microsoft Dynamics AX gives flexibility to be adopted into business needs by personalizing the application, modifying it, or customizing it. This is described as follows:

Veteran ERP consultants understand how to execute an implementation project. They can call on their years of experience to design a new project that will have a good chance at success. When the next generation of consultants joins the team, these practices will be passed along, even if there is no process in place to manage the knowledge transfer. Many implementation consultants can probably recall their own experience learning as the way it was always done in their previous jobs.

Consulting companies can apply their own implementation methodology based on previous projects, and there is no problem with this as long as the company achieves its objectives and satisfies its customers. The company should also be committed to continuously improving its own methodology and building on it by experience.

However, there is a range of problems with an implementation methodology based on transferring the senior consultant's knowledge and experience to the next class of junior consultants. Such informal or small-scale approaches will lead to variances in implementation approach between different consultants, even in the same company, and it can create differences from one project to another, even for the same consultant. To add to the risk, a consulting firm that depends on consultants to provide an implementation methodology is exposed to a loss creditability with their customers if the consultant is changed and the new consultant will follow his own approach in the implementation methodology, which is different from his colleague.

Alternatively, there is an implementation methodology built up by an experienced organization where information and data have been gathered from a range of experienced implementers, based on the best practices from a broad range of previous projects and experiences, across a range of business domains and client types. That organization is, of course, Microsoft, and the methodology is Microsoft Dynamics Sure Step.

Microsoft brought Sure Step to the Microsoft Dynamics market in 2007 and they have recently launched its online version. The common question from implementers is: why do we need a standard implementation methodology for ERP when we have our own?

At a high level, there are common phases of an ERP implementation project, but the depth and complexity of each phase depends on the nature of the project itself. The procedure to execute the project will depend on the consulting firm and its approach in project execution, as well was its style in managing customers. The phases are diagnostic, analysis, design, development, deployment, and operation. The key characteristics of the Microsoft Dynamics Sure Step methodology are as follows:

Microsoft has announced the Lifecycle Services (LCS) tools to help partner and customer to be more engaged in the Microsoft Dynamics AX implementation project. LCS is a cloud-based solution that provides the required tools to let a customer collaborate with a partner and Microsoft in planning, managing, and operating the implementation project.

The Microsoft Dynamics LCS offers an assortment of services as follows:

Microsoft Dynamics AX 2012 revealed significant changes in the user interface, making it more user friendly and easy to use for complex business transactions, in addition to the richness in accessing the application by the client whether via a tablet or mobile.

The Microsoft Dynamics AX application is considered as a single sign-in application, where the active directory is the base of logging in AX. The user logs in to Windows using the username and password chosen at the time of joining the domain on the active directory. In order to add a user to AX, they should be registered on the active directory first.

Rich client is the most commonly used interface accessed by users from their PC or laptop. The Microsoft Dynamics AX workspace is the main screen when starting the rich client.

The Microsoft Dynamics AX workspace is shown in the following screenshot:

The main workspace is divided into the following sections:

In this chapter, we discussed the introduction of ERP and its main characteristics of modules integration, with general ledger (it will be covered in detail in the next chapters), and then discussed posting types in Microsoft Dynamics AX. We also explored the ERP implementation team and the role of the application consultant in the implementation project. Then, we covered ERP reporting levels and needs, after which we moved on to Microsoft Dynamics Implementation Methodology Sure Step and LCS, and explored the interface of Microsoft Dynamics AX 2012.

In the next chapter, we will cover the general ledger, the types of main accounts, classifications, and control points. We will also explore the practices in the financial implementations of Microsoft Dynamics AX 2012.