Microsoft Dynamics GP Review: Assessing Its Place in Accounting Software Market

published on 29 January 2024

Most business owners would agree that choosing the right accounting software is critical for efficiently managing finances and operations.

With its robust capabilities and integration with other Microsoft products, Microsoft Dynamics GP offers a compelling option for small and medium businesses looking to modernize their financial systems.

In this review, we will analyze Dynamics GP's key strengths and limitations, including its accounting modules, reporting tools, technology architecture, and total cost of ownership. We'll assess where Dynamics GP excels in the SMB market and where it falls short versus competing solutions.

Introduction to Microsoft Dynamics GP

Microsoft Dynamics GP is an enterprise resource planning (ERP) and accounting software solution designed for small and medium-sized businesses. It provides a range of financial management, supply chain management, manufacturing, project management, human resources, and business intelligence capabilities to help organizations streamline operations and gain insights from their data.

Overview of Microsoft Dynamics GP

Microsoft Dynamics GP offers modules to handle core business functions:

  • Financial management: General ledger, accounts payable, accounts receivable, cash management, fixed assets, intercompany accounting, and more
  • Supply chain management: Inventory control, purchasing, order processing, sales, materials requirements planning, manufacturing, and more
  • Project management: Project accounting, resource tracking, budgeting, analytics, and more
  • Human resource management: Payroll, benefits administration, recruiting, employee self-service, and more
  • Business intelligence and reporting: Hundreds of built-in reports, dashboards, Excel-based analysis, and more

It provides role-based forms, workflows, alerts, and analytics tailored for different users across an organization. Dynamics GP integrates with other Microsoft tools like Excel, Power BI, and Office 365.

History and Market Position

Microsoft acquired Dynamics GP over 25 years ago. It has over 760,000 customers worldwide across industries like manufacturing, distribution, professional services, retail, and more. Dynamics GP holds a significant market share among small and mid-market ERP solutions. It competes primarily with solutions like NetSuite, Sage Intacct, SAP Business One, and Acumatica.

Microsoft continues to invest in Dynamics GP by releasing updates focused on new capabilities, modernization, and ease of use. The October 2021 release introduced over 200 new features centered around analytics, personalization, and mobile access.

Intended Users and Best Use Cases

Dynamics GP appeals most to small and medium-sized organizations with basic accounting and operational needs. It offers affordability, ease of use, and flexibility advantages over solutions designed for larger enterprises.

Specific industries that often leverage Dynamics GP include:

  • Manufacturing
  • Distribution
  • Professional Services
  • Retail & eCommerce

Businesses with less complex needs and under $50 million in annual revenue tend to benefit the most from Dynamics GP's balance of functionality and affordability. Those requiring advanced performance tuning, warehouse automation, or extensive customization may need to evaluate more customizable or modern ERP platforms.

Key Accounting Capabilities and Modules

Dynamics GP offers a robust set of tools to manage key accounting workflows and financial data. Here is an overview of some of the core capabilities:

General Ledger and Financial Reporting

Dynamics GP provides real-time visibility into financial performance through its general ledger module. Key features include:

  • Chart of accounts with flexible segmentation and reporting structures
  • Automated journal entries and allocation routines
  • Financial reporting for balance sheets, income statements, trial balances, and more
  • Drill-down analytics from summary to transaction-level details

Accounts Receivable and Payable

The AR and AP modules enable efficient billing and payment processes:

  • Generate professional invoices and track receivables aging
  • Streamline AP workflows with three-way matching of purchase orders, receipts, and vendor invoices
  • Cash flow analysis with forecasting and collections tracking
  • Automate processes like collections, prepayments, and credit management

Cash Management and Bank Reconciliation

Dynamics GP facilitates cash flow control and bank transaction management:

  • Bank reconciliation and fraud detection with advanced matching algorithms
  • Cash flow analysis with cash position and transaction reporting
  • Bank transaction types for deposits, expenses, interest earned, and more
  • Automatic payment application for outstanding invoices

Fixed Assets and Depreciation

For asset accounting and depreciation calculations, Dynamics GP provides:

  • Asset tracking and reporting by category, location, custodian, etc.
  • Depreciation methods including straight-line, variable declining balance, sum of years digits, and more
  • Customizable depreciation books tailored to accounting standards
  • Tools to handle asset acquisitions, transfers, retirements, and disposals

With these robust accounting tools, Dynamics GP empowers businesses to gain visibility into their financial health, accelerate processes, ensure compliance, and drive data-driven decisions.

Inventory Control and Supply Chain Capabilities

Inventory and Warehouse Management

Dynamics GP offers robust inventory management capabilities to track stock levels, costs, and valuations across multiple warehouses and bin locations. Key features include:

  • Item master list to store inventory details like descriptions, pricing, dimensions, and more
  • Serial/lot tracking for traceability and recall management
  • Multiple warehouses and bins for accurate stock visibility
  • Cycle counts and physical inventory tools
  • Landed cost tracking for overseas shipments

With these tools, manufacturers and distributors can closely monitor every inventory movement and transaction.

Purchasing and Vendor Management

For procurement, Dynamics GP automates purchase order creation, approvals, and receipt processing. Additional purchasing features include:

  • Vendor master list for payment terms, item pricing, and contact info
  • Purchase order workflow with approvals and status monitoring
  • Landed cost calculation and payable cost tracking
  • Three-way purchase order matching
  • Vendor performance analysis reports

Together these capabilities simplify supplier relationships and optimize purchasing spend.

Order Processing and Shipping

On the sales side, Dynamics GP assists with order promising, payment capture, shipment building, and delivery tracking. Users can:

  • Configure customizable order entry forms
  • Manage entire order lifecycle from quote to fulfillment
  • Automatically generate pick tickets and packing slips
  • Track shipments and carrier information
  • Analyze customer buying behaviors with sales reports

This facilitates efficient order processing from order taking to revenue recognition.

Manufacturing and BOMs

For light manufacturing scenarios, Dynamics GP supports work orders, material planning, and configurable bills of materials (BOMs). Users can:

  • Build multi-level BOMs with cost rollups
  • Connect BOMs and routing steps to work orders
  • Plan materials with master production schedules
  • Analyze work center capacity with resource usage tools

Together these features handle many simple manufacturing requirements out-of-the-box.

With its inventory, purchasing, order processing, and light manufacturing capabilities, Dynamics GP can support diverse distribution and manufacturing workflows. The solution facilitates detailed supply chain planning while maintaining tight cost control.

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Reporting, Analysis, and Business Intelligence

Microsoft Dynamics GP offers robust built-in analytics and reporting capabilities to help businesses extract valuable insights from their data.

Financial Reporting and Statements

Dynamics GP comes with over 300 customizable reports out of the box, including key financial statements such as balance sheets, income statements, cash flow reports, and more. Users can analyze trends over time, compare budgets to actuals, drill into transactions, and gain visibility into the financial health of the organization.

Dashboards and Data Visualization

The system provides interactive dashboards that can be personalized to display critical KPIs for different roles, departments, or processes. Charts and graphs allow for quick visual analysis of trends and outliers. The visualization tools make it easy to spot issues, identify opportunities, and share insights across the business.

Microsoft Power BI Integration

For advanced analytics, Dynamics GP offers seamless integration with Microsoft Power BI. Users can connect live data feeds for up-to-date reporting and leverage Power BI's interactive dashboards, advanced visualizations, and AI-powered insights. This expands the analytics capabilities greatly for large or complex organizations.

Report Customization and Personalization

While Dynamics GP comes pre-configured with many reports, users have extensive flexibility to customize and personalize reporting to their specific business needs. Filters, views, formatting, and visualizations can all be tuned as required. Custom reports can also be created from scratch using built-in tools. These flexible reporting options help ensure users get insights tailored to their particular roles and objectives.

Technology Stack and Architecture

Cloud or On-Premises Options

Dynamics GP offers both cloud and on-premises deployment options. The cloud version allows access anytime, anywhere via the web, while reducing IT infrastructure costs. However, some businesses prefer keeping data on-premises for security or compliance reasons. Dynamics GP is flexible to meet different needs.

Database and Reporting Architecture

Dynamics GP leverages Microsoft SQL Server for its database, which enables robust reporting capabilities through native integration. SQL Server Reporting Services, Power BI, and Excel provide powerful analytics.

API and Connectivity

Dynamics GP offers SOAP and REST APIs for connecting other apps. This allows businesses to integrate Dynamics GP with custom apps or third-party solutions like CRM software. The APIs enable automation and data sharing.

Mobile and Web Accessibility

Users can access Dynamics GP via web browsers for convenient access. Dynamics GP also offers mobile apps on iOS and Android to enable productivity on-the-go. The apps allow for time entry, approvals, expense reports and other tasks.

Implementation, Support, and Pricing

Implementation Planning and Training

Implementing Microsoft Dynamics GP requires careful planning and preparation to ensure it is properly configured for your business needs. It is highly recommended to work with a Microsoft partner who can provide professional services and guide you through the following implementation steps:

  • Business Process Review: Analyze your key accounting and operational processes to determine the best way to set up Dynamics GP to support your workflows. This involves documenting processes, data inputs/outputs, integration needs etc.

  • Installation and Configuration: Properly install Dynamics GP including any necessary hardware and software requirements. The system is then configured based on the findings from the business process review including setting up the chart of accounts, users, security roles etc.

  • Data Migration: Migrate and validate key data from legacy systems into Dynamics GP. This includes opening balances, customers, vendors, item lists etc. Data cleansing is often required beforehand.

  • Integration: Establish any integrations between Dynamics GP and other business systems like CRM, ecommerce, PoS etc. APIs and/or an ERP integration tool may be leveraged.

  • Testing: Thoroughly test all areas of Dynamics GP with real transactional data to validate accuracy across financial reporting, invoicing, inventory etc. Multiple iterative rounds of user acceptance testing are typical.

  • Training: Provide end user training on Dynamics GP tailored to the various roles in your organization like accounts payable clerks, inventory managers etc. Training is essential for user adoption.

Ongoing Support and Updates

Microsoft and partners provide ongoing support plans and updates for Dynamics GP to maintain performance and compliance over time:

  • Support Plans: Various paid support plans are available from Microsoft to provide technical troubleshooting assistance and access to resources to resolve any issues with Dynamics GP.

  • Updates: Regular software updates are released including security patches, performance enhancements, new features, and updated regulatory compliance. Updates should be carefully tested in non-production first.

  • Version Upgrades: Approximately every 2 years, a new major version of Dynamics GP is released to bring new functionality and maintain compatibility with dependent technologies. Version upgrades require extensive planning and testing.

  • Add-on Upgrades: If using any third party add-ons for Dynamics GP, ongoing coordination is required to test and deploy updates to those integrations when versions change.

Licensing Breakdown and Cost Structure

Dynamics GP is licensed by user based on their access type. Subscription pricing starts around $200/month per user. The main cost components include:

  • User Licenses: All accessing users require a license based on their usage profile (full/light). Example pricing:

    • Full User: $200/month
    • Limited User: $100/month
  • Functionality: Additional fixed fees apply for core modules like Financials, Distribution, Project Accounting etc. Popular add-ons bring further costs.

  • Infrastructure: Cloud options require monthly subscription fees for infrastructure and managed services. On-premise would incur the cost of your own servers and IT administration.

Additional costs to factor: implementation services (e.g. $40,000+), annual support plans (15-25% of license costs), and customizations. Carefully evaluate all components to estimate total cost of ownership.

Conclusion and Key Takeaways

When Does Dynamics GP Excels?

Dynamics GP is best suited for mid-sized organizations in distribution, manufacturing, and professional services industries that need a cost-effective ERP solution. It works well for companies with straightforward finance and operations needs between $10-250 million in revenue. Dynamics GP provides essential accounting and financial management tools to support inventory management, supply chain, analytics, and other core business functions.

Where Does It Fall Short?

While Dynamics GP covers the basics for most mid-market companies, it lacks some advanced capabilities of larger enterprise systems. For complex global organizations or those needing advanced warehousing, analytics, customization and integration, Dynamics GP can feel limited. Companies needing advanced manufacturing optimization, field service management or extensive CRM may be better served by alternative ERP tools.

The Future of Dynamics GP

As cloud adoption grows exponentially, Microsoft is investing heavily in Dynamics 365 Business Central as its strategic cloud ERP, while Dynamics GP remains on-premises. Still, Dynamics GP continues receiving regular updates, with no announced plans for sunset. Its large installed base and reseller network should enable it to remain relevant for the foreseeable future. However, companies needing flexibility of the cloud may consider migrating to Dynamics 365.

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