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

1. What are the benefits of upgrading to Dynamics 365?

• Improved accessibility
  Dynamics 365 is a cloud-based platform offering easier access through a simple browser-based user interface built with a simplified architecture. Unlike AX’s Windows client, Dynamics 365 requires no local client installation; users log in through any modern browser, significantly reducing IT provisioning time.
• Cross-platform UI support
  The browser-based user interface can function on any device (PC, tablet, phone), any platform (Windows, Mac, etc.), and any browser (Chrome, Safari, Firefox, etc.). This is particularly impactful for field operations, warehouse teams, and remote finance staff who previously could not access AX without VPN or terminal server configurations.
• Reduced IT maintenance
  You can deploy Dynamics 365 in the cloud, as there will be no need for on-premise servers and systems that require maintenance. In addition, Microsoft monitors and updates the application, reducing the need for your IT staff to maintain the ERP system. Research from Nucleus Research found that cloud ERP users spend 50% less time on system administration compared to on-premises ERP users.
• Powerful integration
  Dynamics 365 can easily and seamlessly integrate with numerous other platforms and elements of the 365 suite. Native connectors exist for Teams, SharePoint, Power BI, Power Automate, Azure Data Lake, and over 1,000 third-party systems via the Azure API Management gateway.
• Highly scalable
  As Dynamics 365 is cloud-based, you can scale your solution as the business grows. Storage, compute, and user licences can be adjusted mid-contract; no hardware procurement cycle needed. Using powerful Business Intelligence features, you can also predict future licensing needs with usage analytics.
• Better security
  Dynamics 365 is hosted on Azure with enterprise-grade security. Microsoft Entra ID (formerly Azure Active Directory) provides multi-factor authentication, conditional access policies, and privileged identity management, capabilities that are either unavailable or require expensive third-party bolt-ons in AX. It is also easy to identify risks and respond to potential threats.
• Dynamics 365 pricing
  Dynamics 365’s pricing is much more flexible as it is a subscription-based model requiring you to pay monthly per license (user or device). Depending on the chosen functionalities and user activities, it has several different licensing options. As of 2025, Dynamics 365 Finance full user licences start at $210 per user per month, with Team Member licences available at $8 per user per month for read-and-light-task access, giving you precise cost control across different user types.

2. Should I move to the cloud or stay on-premise while upgrading from AX 2009 or AX 2012 to Dynamics 365? Which is better?

If you are using AX 2009 or AX 2012, you will not have access to the latest technology required to run the On-premise version of Dynamics 365. Moving to the cloud offers additional benefits, such as cross-platform UI (PC & Mobile, any browser), real-time BI, ease of access, reduced IT maintenance, and upgrades. The on-premises version of Dynamics 365 Finance (also called “local business data” deployment) is available but does not include Copilot AI features, Advanced Analytics, or Azure Machine Learning capabilities. For most organisations, the cloud deployment is the right choice.

3. If I migrate to the cloud, can I move back to an on-premise deployment in the future?

Yes, Microsoft provides customers the flexibility to bring their Dynamics 365 application back to on-premises if the cloud does not suit their business. However, this is a significant undertaking that requires a separate implementation project; it is not a simple export. Organisations should treat the cloud decision as long-term and ensure governance, data residency, and connectivity requirements are fully evaluated before go-live.

4. Can I customize the application and interface to third-party systems in the cloud?

Yes, you can modify the application to meet unique business needs and exchange data with external systems and cloud-based data sources. Dynamics 365 Finance uses an extensibility model rather than direct code modification; customisations are built as extensions that sit alongside the core product, which means they survive Microsoft updates without breaking. This is a major improvement over AX’s overlayering model, which made upgrades notoriously painful.

5. Will I be able to create my own BI and visualizations?

Dynamics 365 is a user-friendly platform and consists of ‘Data Entities,’ which helps users build reports and visualizations using Power BI. Power BI is embedded directly within Dynamics 365 workspaces, allowing users to create and consume real-time dashboards without leaving the ERP. Azure Synapse Analytics integration also enables large-scale data warehousing for organisations with advanced reporting requirements. We have seen the power of these real-time analytics in action across various high-stakes sectors; for example, discover how a leader in commodity trading used Dynamics 365 Finance and Operations to unify their global financial data and gain deeper market insights.

6. If I upgrade to DYNAMICS 365, what will happen to the customizations and integrations I did in AX 2009 OR 2012?

Reusing some existing functions, reports, and integration components is possible depending on their complexity and impact on core processes. For AX 2012 R3, Microsoft provides a code upgrade tool that migrates some X++ logic to the D365 extensibility model, though all migrated code still requires review and testing. For AX 2009, no automated code migration is available; customisations must be re-evaluated and rebuilt from scratch. Dynamics 365 has various functionalities and enhancements that may replace legacy customisations entirely, and ISV solutions on AppSource can address specific integration or customisation needs.

7. Is Dynamics 365 only available in the cloud? Is there an on-premises deployment option?

Dynamics 365 has an on-premise version that helps you leverage existing data centre investments. However, Microsoft Dynamics Lifecycle Services (LCS), a cloud-based application lifecycle management service, requires system management and update connectivity even for on-premises deployments. Note: Microsoft has announced that Dynamics 365 Finance + Supply Chain Management on-premises will enter mainstream support end in April 2025 and extended support in April 2028, after which cloud-only deployment will be the supported path.

On-premises deployment requirements include: configuring your own disaster recovery solutions; standing up sandbox environments; and managing your own infrastructure. These obligations increase your Total Cost of Ownership meaningfully, and the on-premises deployment option does not include Advanced Analytics, Azure Machine Learning, or Copilot capabilities.

8. What are some more benefits of moving to Dynamics 365?

Web-based login; a sleek, user-friendly interface; more integrations; regular updates; extensive new features. And in 2025 and beyond, the most significant emerging benefit is AI: Microsoft Copilot in Dynamics 365 Finance now surfaces intelligent collections recommendations, auto-generates financial narrative summaries, flags anomalies in journal entries, and assists with procurement approvals, all within the ERP workflow. Dynamics 365 is an entirely integrated, cloud-based solution that offers extensive insight into all areas of your business.

We have answered some of the most common questions, and we’ll also be happy to help if you have any additional doubts. Please reach out to us if you’d like more help and information on Dynamics AX to Dynamics 365 Upgrade. At LevelShift, we specialize in end-to-end Dynamics AX to Finance and Operations migration services, helping you manage code refactoring, data migration, and cloud configuration. Contact our experts today to start your assessment.