Why microservices
in Dynamics 365

For Finance and Operations - By: Johan Persson

Microsoft Dynamics 365 for Finance and Operations is Microsoft’s latest iteration of their flagship ERP system, which used to be called Dynamics AX (before that, Axapta). The idea here is to build a modern ERP system that is easier to support and maintain to make the ALM story more attractive to customers. This comes with a lot of changes, such as a new model for development and a One-Version vision for updating, and it also comes with a partly different approach to adding features to the ERP system.

Those already using D365FO have probably noticed feature management, where new features appear after updating to the latest version. This is primarily new functionality already in the product and has been improved, but there are also different features: Large ones and some that have been rebuilt from scratch.

When Microsoft creates these significant changes, they probably think (I do not work for Microsoft, so I cannot be sure), “Should this be part of the main product?”. Some historical examples include the retail components in AX 2012, integrations in AX moved to an external integration platform, and using SSRS instead of a built-in reporting engine.

What Microsoft is doing now is moving some services out of D365FO and using APIs and services to connect them. The first one that became available was resource planning. The built-in MRP functionality has been deprecated and completely removed from the main product, and it is instead known as a plugin to install from LCS. Another example is the configuration of exports to Data Lake (which will replace the Entity Store). Data Lake and Dataverse are integral parts of the integration.

Many of these services, such as Finance Insights, Tax Calculation, Electronic Invoicing, and Expense Management, are in preview and will soon be available. I suspect we will see many more of these in the future.

There are many reasons why this change is happening right now. When Microsoft “moved” AX to the cloud, “AX7” was mainly AX 2012 R3 with a web interface. In the 5-ish years since then, we have seen a lot of change. The architecture has changed from a traditional database and a Win32 frontend to a containerized solution with near-zero downtime maintenance. To improve the product even more, reduce the complexity, increase performance, and make the product more resilient to partners/customers developing customizations, they (Microsoft) are building a more modularized solution that scales better and does not affect the speed of the main product. We see this, for instance, in MRP, where a resource planning job that used to take multiple hours now finishes in 15 minutes.

Another upside of this design is that these services can be updated without ” respecting” customizations made outside Microsoft’s control. This means they can be iterated on even faster than the monthly cadence of One-Version. We also see customers and ISV vendors using the same methodology when building code… “If it doesn’t need to be in the ERP system, we should probably move it out.” In Microsoft Azure, several services are available to build these modular solutions.

If you want to learn more about these services, why they exist, how to use them, and whether you can build your own, contact us at

Written by:

Johan persson

Senior Specialist

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