The News: In a recent blog post, Microsoft recently shared how Microsoft Copilot is enhancing the Microsoft Dynamics 365 experience with AI, adding more intelligence at users’ fingertips. Read Microsoft’s blog for more information

Microsoft Dynamics 365 ERP is Being Revved up by Microsoft Copilot

Analyst Take: Microsoft Dynamics 365 ERP continues to be enhanced by Microsoft Copilot, which promises to boost productivity, enhance customer centricity, improve profitability, and strengthen organizational agility. Fundamentally, many characterize ERP as the center of gravity (or nerve center) of order management, warehousing, and supply chain management, to name a few.

Image Source: Futurum Research

A Company Unified with AI: Strategic Pillars Align and Resistance Declines

One of the keys to the success of any organization is the alignment of strategic objectives that are cascaded down from the CEO, COO, and CFO. Without a doubt, ERP is a key linchpin for change since it adds critical logic for employees to follow, coupled with collecting data from all areas (via modules) of the organization for analyst teams (e.g., supply chain analysts, financial analysts, etc.) to utilize. As illustrated above, every department has its own DNA (things it does) along with associated metrics (image above) it must achieve, which are cascaded down by the CFO.

Maybe the company wants to generate cash faster to fund acquisitions versus using stock, which means the company may isolate customers and products that generate cash much faster. Maybe the company is in startup mode and is spending more than 10% to 15% of marketing dollars as a percentage of company revenue since it is in rapid customer acquisition mode. Or maybe you are a company in a mature market that is highly competitive with tremendous buyer and supplier power requiring “extreme” cost controls.

Fundamentally, every department is a part of the overall company strategy and each division’s strategy, and metrics are associated with the overarching strategy of the company. Thus, analyst teams from across the organization need to assess themselves using industry benchmarks (e.g., APQC), competitors, and changing industry conditions. In a nutshell, “all” job functions matter and it is prudent for organizations to let employees know how they contribute to the strategy coupled with providing them tools that make them more intelligent via data, along with being more connected across the organization.

Microsoft Dynamics 365 ERP with Microsoft Copilot

With those things in mind, Microsoft aims to help organizations become smarter, more optimized, and connected at a department and job function level by weaving more intelligence into Microsoft Dynamics 365 ERP Finance, Dynamics 365 Project Operations, and Dynamics 365 Supply Chain Management.

A few months back, at Microsoft Build 2023, the company announced its new AI, low code, and data management capabilities via Microsoft Dynamics 365 Fabric Work with Dataverse, allowing users to spend less time crunching data and using tools such as Microsoft Power BI and Microsoft Excel infused with Copilot. Fundamentally, this functionality allows working professionals the ability to interact, create, and re-analyze data in different ways leveraging Microsoft Power BI and Microsoft Excel using natural language to dynamically adjust data in dashboards and the like.

Studying Personas: Using AI and Automation at the Job Function Level

Microsoft is now introducing Microsoft Copilot capabilities for Dynamics 365 Project Operations, Dynamics 365 Finance, and Dynamics 365 Supply Chain Management. As mentioned above, Microsoft is looking at how it can improve the day-to-day job functions within each department and infusing AI to make them smarter, more efficient, and connected (Peter Gibbons in Office Space would be proud).

Within Microsoft Dynamics 365’s various modules, the company is making day-to-day work that much easier for project managers, financial analysts, collections agents, project managers, and procurement professionals.

Project managers: Whether they are in a program management office (PMO) or embedded in a business unit, project managers often wrestle with completing projects within budgetary requirements as well as spending excess time on gathering information on project status reports, task planning, and risk assessments.

Now, with Microsoft Copilot, users can search across all projects and identify common risks that can throw a project off, and encounter delays and budget overruns. Another excellent feature is that project managers can create new project plans within minutes by describing the details of the project, leveraging natural language.

Credit and Collections Professionals: Credit and collections professionals play a critical role in helping an organization manage key functions of the cash conversion cycle. Remember, if your organization’s strategy is generating cash at a faster rate, credit professionals want to ensure they are selecting customers that may be larger and pay earlier which improves days sales outstanding (DSO), which is the average number of days it takes a company to collect payment from a customer.

Procurement Professionals: Purchasing managers or procurement professionals also play a critical role in managing days inventory outstanding (DIO), which is a key working capital metric that shows the average number of days that a company holds inventory before turning it into sales. In essence, Microsoft Copilot can help identify high or low-impact changes to orders and when they find one that is at risk, Copilot can swiftly identify and help send email and other notifications to stakeholders. Now more than ever, organizations have learned just how fragile supply chains can be due to the pandemic, and they do not want to get thwarted in the future.

Microsoft is laser-focused on infusing AI into its products such as Microsoft Dynamics 365 with Copilot at a department and job function level, allowing organizations greater oversight to ensure that each division is in line with its strategic objectives. Thus, it makes sense that each company using Microsoft 365 with Copilot will more seamlessly train and automate aspects of job functions in the future, which should have a deflationary effect since it optimizes the core while simultaneously enabling a smarter corporate culture.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.