Migrate from Dynamics AX to Dynamics 365 in 5 Simple Steps

Upgrading from Dynamics AX to Dynamics 365 – 5 steps for a seamless transition

Many Dynamics AX users have already upgraded to Dynamics 365 cloud-based solutions to remain competitive as Microsoft phases out support for all AX versions. As Microsoft AX versions become obsolete, businesses have started leveraging Dynamics 365’s best-in-class features to improve financial visibility and profitability.

Upgrading to Dynamics 365 from Dynamics AX offers various benefits, including cost savings, a modern cloud-native infrastructure, and customizable cloud implementation.

Why should you upgrade to Microsoft Dynamics 365?

According to a Forrester study, upgrading to Dynamics 365 reduced ERP total ownership costs by 3.4%, including licensing, infrastructure, and IT labour. A separate IDC white paper found that organisations running Dynamics 365 achieved an average ROI of 312% over three years, with benefits realised across reduced IT overhead, faster financial close cycles, and improved supply chain visibility.

Migrating from AX to Dynamics 365 improved staff efficiency by up to 50% and enhanced operational efficiency. In 2025, Gartner ranked Microsoft as a Leader in its Magic Quadrant for Cloud ERP for Service-Centric Enterprises for the fifth consecutive year, reinforcing that Dynamics 365 is not just a migration destination, but a long-term platform investment. Compared to on-premises business solutions, such as AX, organisations using Dynamics 365 have consistently reported superior financial returns.

Benefits of upgrading to Dynamics 365:

• Reduced system ownership and licensing cost
  When you upgrade to Dynamics 365 online, you save time, money, and resources. Transitioning from a capital expenditure (CapEx) to an operational expenditure (OpEx) model eliminates upfront server investments and makes costs predictable month-to-month. With Dynamics 365, flexible licensing options ensure you only pay for what your teams actively use.
• Automated system updates
  Microsoft provides automated and regular updates, ensuring teams work with the latest software version and cutting-edge features. Dynamics 365 undergoes a continuous 2-wave release cycle each year in which online customers receive significant updates in April and October. This means your ERP stays current without the costly, manual patching cycles that AX required.
• Improve security, privacy, and reliability
  Microsoft stores your critical business data in highly secure, state-of-the-art data centers. Microsoft Azure maintains over 90 compliance certifications globally, including ISO 27001, SOC 1 and SOC 2, GDPR, and HIPAA, ensuring your ERP environment meets regulatory requirements across industries. Due to a 99.9% uptime service-level agreement, your data will always be available when needed (SLA).
• Enable scalability and flexibility
  Dynamics 365 enables scalability and flexibility, allowing businesses to expand without costly IT infrastructure modifications. The platform’s modular architecture means you can activate Finance, Supply Chain Management, Commerce, or Human Resources independently, adding capability as your business complexity grows, without a full system overhaul.
• Reduction of risks and costs of running a legacy application
  Microsoft ended all mainstream and extended support for Dynamics AX versions by 2021. Running an unsupported ERP exposes your business to unpatched security vulnerabilities, growing compliance gaps, and an increasingly scarce pool of AX-qualified IT staff. Dynamics 365 is fully maintained by Microsoft and its partner ecosystem, making support more accessible and predictable.
• Easily transition to the cloud
  Transitioning to the cloud with Dynamics 365 empowers companies to innovate and automate real-time operations, fostering agility. Access automatic Microsoft updates and critical business data anywhere, anytime by integrating Dynamics 365 with third-party APIs. Dynamics 365 also integrates natively with Microsoft Teams, enabling collaborative financial reviews, approval workflows, and exception handling directly within the tools your teams already use.
• Adapt to your business needs – Customize Dynamics 365 to meet your needs by leveraging pre-built applications from Microsoft and select partners on Microsoft AppSource. AppSource currently hosts over 6,000 business applications built for Dynamics 365, covering industry-specific requirements from manufacturing to professional services. You can also use the Microsoft Power Platform to create and configure apps to meet your company’s needs.
• Get in-depth analytics powered by AI – Unlock new possibilities with AI-powered analytics using Power BI, Microsoft Copilot in Finance, and Dynamics 365’s native AI capabilities, including anomaly detection in financial data, cash flow forecasting, and intelligent supplier risk scoring.

This level of insight is transformative for complex sectors; see how a commodity trading firm successfully implemented Dynamics 365 Finance & Operations to unify their global data and streamline high-volume transactions.

5 Steps to Upgrade from Dynamics AX to Dynamics 365:

Explore the next steps or upgrade seamlessly from Dynamics AX to Dynamics 365 with our curated 5-step guide.

Step 1: The upgrade process usually starts with a review of the existing AX system.

Conduct an in-depth review of your Dynamics AX solution to determine precise update requirements for the deployment team. During this step, your deployment team should review the transition of licenses, budgeting, and functional and technical recommendations. Document all active customisations, ISV integrations, and data volumes. This inventory becomes the foundation of your migration scope and cost estimate.

Step 2: Determine options for implementation and risks involved.

Following the review, the implementation team would propose the next steps for the implementation. Establish a thorough plan and statement of work by conducting an upgrade review that includes architecture configuration, customizations, and interfaces. For AX 2009 users, note that a direct technical upgrade path is not available; your options are a data migration into a fresh D365 environment or a phased re-implementation. For AX 2012 R3 users, Microsoft does support a code upgrade path, though it still requires significant testing and validation.

Step 3: Initiation of the Dynamics 365 upgrade process.

Thorough investigation and evaluation are required before auto- or manual code migration and data migration. The deployment team must also conduct code refactoring and reconfigure development and security roles. Use the Dynamics 365 Data Migration Framework (DMF) to map AX data entities to their D365 equivalents, and establish a sandbox environment for initial migration runs before touching production data.

Step 4: Test the Dynamics 365 functionality and train users.

Run migration tests for interfaces and BI/Reporting to ensure their correct functionality before the upgrade goes live. Testing should include parallel runs where feasible, processing the same transactions in both AX and D365, and comparing outputs. This is particularly important for financial reporting, where period-end figures must reconcile exactly. To facilitate change management, conduct user acceptability testing and train employees on specific job duties. Microsoft Learn offers free role-based learning paths for Dynamics 365 Finance and Supply Chain Management that can accelerate this process.

Step 5: Implementation of Dynamics 365 and support post-implementation.

Complete the analysis and testing stages before going live with Microsoft Dynamics 365. Plan your go-live for a low-traffic period, typically mid-month or mid-quarter, to reduce business disruption and give your team room to stabilise the new system before peak processing periods. Receive ongoing assistance from service providers after the Dynamics 365 implementation to support your solution and resolve any challenges. Post-go-live hypercare support, typically 30 to 90 days of dedicated partner availability, is a standard and strongly recommended component of any AX to D365 migration.

Related: Upgrading from Microsoft Dynamics AX to Dynamics 365 – Insights and Answers to FAQs

Upgrade from Dynamics AX to Dynamics 365 with the right implementation partner!

Although the above steps might make upgrading from AX to Dynamics 365 seem straightforward, execution involves significant technical complexity and change management, and the stakes are high. ERP projects that exceed budget or timeline typically do so because of underestimated data complexity or insufficient change management, not the technology itself. Having the right partner to guide you through the process is not a luxury; it is the most reliable way to protect your go-live timeline and budget.

Our consultants at LevelShift are experts in upgrading solutions to Dynamics 365. Review your existing AX system, design a customized plan, and ensure a successful Dynamics 365 upgrade with our assistance.

Talk to our experts for any assistance on upgrading from Dynamics AX to Dynamics 365!