The Ultimate Dynamics 365 Migration Guide for 2025: Best Practices and Key Insights

Migrating to Dynamics 365 offers a powerful way to enhance your ERP capabilities, but it’s a complex journey that requires thoughtful planning and execution. This guide will provide you with the essential steps—from initial evaluation to post-migration testing—helping you manage the transition with confidence.

Adopting Dynamics 365 is a transformative decision, unlocking opportunities to optimize processes, harness the power of the cloud, and improve collaboration across your teams. However, no two migration experiences are alike. Even companies within the same industry, using the same Microsoft tools, may encounter different challenges due to variations in operational needs, existing infrastructure, and data environments.

In this comprehensive guide, we’ll outline the critical phases and best practices to ensure a successful migration. From assessing your current ERP landscape to choosing the most appropriate migration strategy, we’ll equip you with the insights needed for a seamless transition to Dynamics 365.

Understanding the Challenges of Migrating to Dynamics 365

Migrating to Dynamics 365 can bring significant improvements, but it also comes with a range of challenges that organizations need to plan for. Data migration is often the most complex aspect, as moving large volumes of data from legacy systems can be difficult, especially when there are discrepancies in data formats and structures. Coupled with this, organizations may face customization and integration challenges – existing custom applications and third-party tools may need extensive reworking to function properly within the Dynamics 365 environment, which can introduce delays and unexpected costs.

Another key challenge is user adoption and training. Employees must be effectively trained and supported throughout the transition to ensure smooth adoption of the new system, especially if it represents a major shift from the previous one. Additionally, it’s essential to align business processes with the capabilities of Dynamics 365. Failure to do so can result in inefficiencies or missed opportunities for process optimization, which could undermine the full potential of the migration.

Minimizing downtime is critical, as prolonged system outages during migration can disrupt business operations and harm productivity. Lastly, cost overruns are a common risk, particularly if the scope of the project expands unexpectedly or unforeseen complexities arise. By anticipating and addressing these challenges early, organizations can ensure a smoother, more successful migration to Dynamics 365.

Step 1: Key Steps to Evaluate Your ERP System

Overlooking business requirements and process flows early in the migration can derail the entire project,” cautions Senior Consultant Nicholas DiAngelo. To prevent this, it’s crucial to conduct a detailed evaluation of your current ERP system, identifying what functions well, what doesn’t, and what needs refinement.

Here’s how to start process:

1. Analyze Existing Workflows: Review the data sources, applications, integrations, and processes in your current system. Identify inefficiencies, such as data silos or broken workflows, that may be slowing down operations.
2. Consult End-Users: Gather feedback from the people who use the system daily. What challenges do they face? Which tasks are too time-consuming? What features or improvements would they like to see in the new system?

For organizations using Dynamics AX or CRM, Microsoft’s built-in assessment tools offer valuable insights across several key areas:

1. Functional & Business Assessment: Gain a clear understanding of your customizations, third-party solutions (ISVs), and opportunities where new Dynamics 365 capabilities can enhance your operations.
2. Technical Assessment: Review your existing code for compatibility with the new system, estimate development efforts, and receive a comprehensive migration overview.
3. Upgrade Assessment Summary: Get a recommended migration path tailored to your current solution, including a high-level timeline, necessary resources, and the standard tools you’ll need for a successful transition.

Users migrating from NAV, GP, or SL do not have access to this tool, meaning they may need to invest additional time in scoping the project, determining the budget, and establishing a clear timeline.

However, organizations upgrading to Dynamics 365 Finance & Supply Chain Management can take advantage of several powerful tools within Lifecycle Services (LCS), offering a more detailed needs assessment. These include tools for upgrade analysis, customization evaluation, and subscription & infrastructure estimation, among others.

Step 2: Leveraging Dynamics 365 for Growth

New Dynamics 365 functionalities drive greater unification, visibility, and alignment across your organization. Instead of merely replicating legacy processes, these tools can help optimize workflows, resolve challenges, and seize new opportunities.

For example:

• Power BI for Teams and Microsoft 365: Enhance remote collaboration, automate processes, and uncover insights to boost productivity.
• IoT Data in Business Central: Enable real-time inventory tracking and predictive forecasting to optimize cash flow and warehouse space.
• Low-Code App Development: Tools like Power Apps and Power Automate allow organizations like Toyota North America to empower employees to build custom solutions, creating a Center of Excellence to share best practices across teams.

Step 3: Aligning Your Migration Strategy with Business Goals

Migrating to Dynamics 365 varies based on the legacy system you’re transitioning from, with each ERP system having its own unique migration path. Understanding these variations is crucial for choosing the right approach.

• NAV to Business Central: This migration is typically done in two stages—first by moving data to an on-premises version of Business Central, followed by a migration to the cloud.
• SL & GP to Business Central: Primarily focused on migrating financial data, this process often involves integrating Business Central with other ERP systems.
• AX to Dynamics 365 Finance & Operations: With the help of advanced tools in Lifecycle Services (LCS), this migration covers data, code, and customization transfers, ensuring a smooth transition.

The differences between on-premises and cloud systems, such as varying programming languages and data structures, also influence your migration strategy. Older ERP versions can further complicate the process, particularly when it comes to identifying, mapping, and cleaning data for migration.

Once your data is mapped and cleaned, the next step is to ensure a successful migration through thorough testing and validation to minimize risks and ensure system integrity.

Step 4: Data Mapping and Cleanup

Successful data migration relies on careful mapping and comprehensive data cleansing. While it may seem easier to move all legacy data, doing so can result in unnecessary clutter and inefficiencies.

Data Mapping: Identify the ownership, usage, and necessity of each data set. Document data sources, configurations, ISV solutions, and add-ons, while also pinpointing any data that cannot be transferred.

Data Cleaning: Data cleansing involves eliminating duplicates, inaccuracies, and outdated records, ensuring only high-quality, relevant data is migrated to the new system.

Step 5: Testing and Validating the New System

Avoid potential issues during migration, follow these essential steps:

1. Develop Test Scripts: To ensure all processes align with your team’s objectives and the overall plan, test them against various scenarios. Define test cases and create scripts based on business requirements for each scenario.
2. Set Up Test Environments: For Business Central, configure a sandbox environment using Visual Studio. For Finance & Operations (F&O), testing environments are set up through Lifecycle Services (LCS).
3. Run Test Scripts in the New Environment: The goal is to confirm that everything functions as expected. Identify issues and areas for improvement, and assess what adjustments are necessary.
4. Conduct CRP Sessions: Conference Room Pilot (CRP) sessions are used to simulate typical use cases in the new system. These sessions help identify key users, processes, issues, and potential solutions, ensuring standard best practices are followed.
5. User Acceptance Testing (UAT): UAT combines training with testing to validate whether the system meets business requirements. End-users should check for missing data, confirm that legacy and cloud data fields match, and test workflows. User sign-off on test cases is essential before moving to production.
6. Test Plugins & Third-Party Integrations: Ensure that all plugins and third-party integrations are secure and compatible with your system. F&O users can rely on automated testing tools to identify issues with custom code or integrations data.

“Validate data before the upgrade, after the upgrade, and continuously explore new ways to work with that data.” – Lorna Link, Practice Director – BC Express. Testing should be an ongoing process to ensure continued success.

Collaborating with Experts for a Smooth Migration

Although it’s not a formal step in the migration process, bringing in a certified Microsoft partner early on can be invaluable – particularly if your current system is holding back your organization’s strategic objectives.

Migrating to Dynamics 365 is a complex undertaking, but with Velosio’s expert support, you can ensure a seamless and efficient transition. As certified Microsoft partners, we provide fast troubleshooting, expert solutions, and reduced post-launch risks, so your team can focus on driving your strategic goals forward.

Interested in discussing your migration with our experts? Reach out to us today.