Category: Business knowledge

Production planning programs – how to choose the right solution?

Post author By Maksymilian Śniegocki
Post date November 14, 2024

Table of content

Production planning software – the principle of operation
Features of a good production management program
Production planning software – solutions available on the market
What should you look for when choosing a system for production?
Production planning programs – what to choose?

Choosing the right production planning program can significantly affect the efficiency of a company’s production processes. A well-chosen system allows for better work organization, resource optimization, and reduction of production costs. Before choosing the right program, it is worth analyzing your company’s specifics and needs. Is it mass production, unit production, or perhaps of a project nature? What are the main challenges they face? What functions will be necessary for daily tasks?

The next step is to determine the budget and expected implementation time. Some systems, especially the more complex ones, require a more extended implementation period and human resource commitment. It’s also worth consulting other company departments—for example, IT and finance—to assess whether the company has sufficient resources to support the implementation and whether the system is compatible with other tools used in the company.

Production planning software - the principle of operation

Production planning programs are designed to streamline and automate production management processes. Their primary operating principle is based on collecting and analyzing data on production, resources, orders, and time. Based on this data, the system creates a production schedule that considers all essential aspects, such as the availability of machinery, raw materials, employees, and order deadlines.

These systems can operate in real-time, allowing production plans to be monitored and updated according to the current situation. An example would be if one of the critical raw materials is unavailable – the program automatically adjusts the schedule so that production can run smoothly.

Features of a good production management program

Good production scheduling software should meet several basic requirements to support production process management effectively. Among the most important features are:

Intuitiveness and ease of use - The program should be easy to use so that even people not directly involved in IT can use it. An intuitive interface allows employees to be trained faster and minimizes the risk of errors.
Flexibility and scalability - It is worth choosing a system that can be customized to meet the company's individual needs and that will grow with the business. Scalability is essential if the company plans to increase production.
Integration with other systems - Good software should be able to integrate with different tools, such as ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), or SCM (Supply Chain Management) systems, to enable a smooth flow of information.
Analytical functionalities - Production management software should allow data analysis and reporting, facilitating better decision-making and quick response to changes.
Technical support and upgrades - The system should be updated regularly, and the vendor should offer technical support to solve problems quickly.

Production planning software - solutions available on the market

There are many production planning solutions available on the market, which differ in functionality and the way they work. Depending on the size and needs of the company, one can choose ERP-type programs such as SAP, Microsoft Dynamics 365, or Oracle, which offer extensive production management modules and can be tailored to the company’s specific requirements.

APS (Advanced Planning and Scheduling) systems are also available for companies looking for more specialized tools, such as Preactor or Asprova. These advanced solutions focus mainly on optimizing production schedules and managing resources.

What should you look for when choosing a system for production?

Choosing the right production scheduling software requires considering several vital aspects:

Specificity of production - Not all software is universal. It is advisable to choose a solution dedicated to the specifics of the company's industry, as this will allow for more precise management of production processes.
Costs - Purchase and implementation costs can vary depending on the sophistication of the system. The cost of the license, training employees, and ongoing maintenance of the system should be considered.
Ability to integrate - The program should cooperate with other systems used in the company. Lack of integration can lead to problems with information flow and slow processes.
Technical support and availability of updates - A good software provider should provide technical support to resolve any problems that may arise quickly and regular system updates.
Data security - The system should provide adequate protection, primarily if the company processes sensitive production or customer data.

Production planning programs - what to choose?

The right production planning program should depend on the company’s size, specifics, and business goals. Small companies often need more straightforward production planning and monitoring systems without significant investments. For larger manufacturing companies that need to manage complex processes, sophisticated ERP or APS systems will be a better choice.

OptiFlow - Production Planning

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Business Central Team Members License – A cost-effective solution for teams ready for the challenge!

Post author By Maksymilian Śniegocki
Post date November 14, 2024

Table of content

Business Central Team Member – It has more features and less paperwork
What possibilities does the Business Central Team Members license offer?
Why choose the Business Central Team Members license?

Business Central Team Member - It has more features and less paperwork

Are you looking for an effective and affordable way to engage more employees with Business Central? This license is an excellent option for you. It’s worth noting that it’s not the same as the Dynamics 365 Team Members license – as it offers a unique set of features tailored to tasks that support teams’ daily work.

What possibilities does the Business Central Team Members license offer?

Broad access to data: Users can freely read data in Business Central, facilitating the efficient flow of information.
Update critical information: The license allows users to update existing data, such as payment deadlines or contact information for customers and suppliers. This allows the team to respond quickly to ongoing changes without involving other users.
Approving and rejecting tasks: Team members can approve or reject tasks within workflows assigned directly to them. This solution streamlines decision-making processes and allows them to focus on priority activities.
Flexibility in sales and purchase offers: Users can create, edit, and delete sales and purchase offers, enhancing their role in the sales process while better managing daily transactions.
Handling personal data: The ability to create, edit, and delete personal data gives companies confidence that their database is always up-to-date and complies with legal requirements.
Editing timesheets: Team members can submit their timesheets for approval. This simplifies time management and optimizes the work recording process.
Integration with Power Apps and Power Automate: The license allows you to use Dynamics 365 Power Apps and Power Automate to automate processes and create simple applications to support your team's work.
Customization: The module can be extended with additional tables (up to 15), which can be used to customize the system further to meet your team's specific needs.

Why choose the Business Central Team Members license?

The Business Central Team Members license is the ideal solution for companies that want to involve a wider team in working with the ERP system. It provides access to key features while maintaining full control over permissions. With this license, a company can take full advantage of Dynamics 365 Business Central without incurring high costs.

By opting for Business Central Team Members, you invest in efficiency, control, and scalability – a solution ideal for modern teams.

Ask our expert for details: https://inlogica.com/en/microsoft-products/microsoft-licenses/

articles Business knowledge Dynamics 365/AX Recommended

Final consultations for e-Invoices (KSeF)

Post author By Maksymilian Śniegocki
Post date November 8, 2024

Spis treści

What solutions does the Ministry propose?
Key Changes in KSeF
New e-Invoice Structures – what and when.

What solutions does the Ministry propose?

The Ministry of Finance has announced the launch of final consultations on implementing the mandatory National e-Invoice System (KSeF). The draft’s work considers the specifics reported by Local Government Units (LGUs) and entrepreneurs’ demands. Comments on the draft law can be submitted until November 19, while business solutions can be submitted until November 22.

Key Changes in KSeF

Phased Implementation of KSeF:

Transition Period:

Support for the “digitally excluded”:

New e-Invoice Structures - what and when.

The proposed changes also apply to the structure of e-invoices. The modifications are expected to streamline the process of marking up TSU invoices, allow the addition of attachments, and introduce a new “employee” role. The latest FA (3) and FA_RR (1) structure will be effective from 2026, with the final version to be implemented before the mandatory KSeF.

This consultation is a crucial step to ensure the quality of solutions before the system is implemented.

Get ready for KSeF!

Check out the solution for KSeF from INLOGICA for Microsoft Dynamics 365/AX systems.

articles Business knowledge

Advance payment invoice vs. final invoice – differences, application

Post author By Maksymilian Śniegocki
Post date November 7, 2024

Table of content

Advance invoice vs. final invoice – differences, application.
What is an advance invoice used for?
Final invoice – the most critical information
Advance payment invoice and VAT
What are the differences between the advance payment invoice and the final invoice?
When to issue a final invoice?

The advance and final invoices are two documents that play a crucial role in business transactions. Although both relate to sales transactions, their purpose, application, and detailed information differ. This article will look at these differences and the uses of both types of invoices.

Advance invoice vs. final invoice - differences, application.

An advance invoice is a document a seller issues when he receives an advance payment for a future transaction. It is a form of payment confirmation that usually does not complete the transaction, but it is the first step in its implementation. On the other hand, a final invoice, also known as a sales invoice, is issued at the end of a transaction when the delivery of goods or services has already been completed, and the total amount to be paid is known.

The main differences between the two types of invoices are the timing of their issuance, the data they contain, and the function they perform in the sales process.

What is an advance invoice used for?

The advance invoice is designed to document the buyer’s advance payment. It is used in cases where the transaction is carried out in several stages or when the value of the service or goods is significant and requires an advance payment before delivery. With an advance invoice, the seller has formal confirmation of receipt of the advance payment, which facilitates subsequent settlement and provides assurance that the transaction is secured.

The advance invoice is also essential for the buyer, as it is a document on which he can claim a VAT refund if the seller fails to fulfill the contract.

Final invoice - the most critical information

The final invoice is a document that summarizes the entire transaction, including the goods or services supplied and the final amount to be paid. It contains all the necessary information, such as the details of the seller and buyer, a description of the goods or services, unit prices, VAT rates, and the due date.

The final invoice should be issued at the end of the transaction after the delivery of goods or services has been completed. It is a crucial document for both parties to the transaction, formalizing all obligations and confirming the performance of the contract.

Advance payment invoice and VAT

The advance invoice impacts VAT settlement. When an advance invoice is issued, the seller is obliged to pay VAT on the value of the advance. This means the seller should show this VAT in his tax return, even if the total transaction still needs to be completed.

On the other hand, in the case of a final invoice, VAT is settled on the total value of the transaction, considering the previously reported VAT from the advance invoice. In practice, if the buyer has made an advance payment, the VAT from this advance payment should be deducted from the VAT shown on the final invoice.

What are the differences between the advance payment invoice and the final invoice?

The main differences between an advance invoice and a final invoice include:

purpose: an advance invoice documents an advance payment made by the buyer, while a final invoice summarizes the entire transaction.
the time of issuance: The advance invoice is issued before the transaction is completed, while the final invoice is issued after the transaction is completed.
the information in the document: the advance invoice contains information on the advance payment, while the final invoice includes complete details on the goods or services delivered and the final amount to be paid.

When to issue a final invoice?

The final invoice should be issued after the completion of the transaction, that is, after the delivery of goods or the performance of services. The final invoice must contain all relevant information, such as:

If the transaction was completed in several stages, the final invoice should consider any advance payments previously made by the buyer.

In summary, the advance and final invoices are vital in the business process. Understanding and correctly issuing them is essential for any organization to manage its finances and effectively meet its tax obligations.

articles Business knowledge Recommended

VAT in the Digital Age: ViDA package approved

Post author By Maksymilian Śniegocki
Post date November 6, 2024

Table of content

What does the ViDA (VAT in the Digital Age) package mean?
How is it worth preparing for this?
ViDA Package Implementation Schedule

What does the ViDA (VAT in the Digital Age) package mean?

On November 5, 2024, at the ECOFIN (Economic and Financial Affairs Council) meeting, EU member states voted on new VAT regulations. This package includes three main areas of change:

Digital VAT Reporting:

Changes in the Digital Platforms Area:

Single VAT Registration (SVR):

How is it worth preparing for this?

These changes will come into effect gradually. It is worth thinking about a partner who will take care of:

ViDA Package Implementation Schedule

These changes may require your company to prepare for the new legal and technical requirements. Plan to implement the necessary solutions to help you adapt to the new tax reality.

articles Business knowledge

Production marshaling – what is it, and what is the application?

Post author By Maksymilian Śniegocki
Post date November 4, 2024

Table of contents

What is a production route?
Technological (production) route – what is it used for?
Types of times within the production route.
How does the technological route affect production efficiency?
Production marshaling vs. ERP system

What is a production route?

A production route, or technological route, is a detailed production plan that includes the sequence of operations needed to produce a product. It provides information on:

Technological processes specify the following steps to process raw materials and semi-finished products.
Machinery and resources indicate each operation's machinery, equipment, and resources.
Production times consider the time required for each operation, which enables precise planning.
Technological requirements include quality, technical control, and safety requirements.

Technological (production) route - what is it used for?

The technological route is used mainly in production planning to accurately determine the following work stages and the resources needed. Here are the most critical applications of the production marshal:

Production scheduling: With a production marshal, you can accurately determine the production duration, allowing you to plan the work schedule better.
Resource allocation: A production marshal identifies the resources, such as machinery, tools, and personnel, needed at each production stage, which helps optimize their use.
Progress monitoring: Production marshaling allows one to keep track of a production unit's stage, which helps to monitor the work on an ongoing basis and make changes when necessary.
Quality control: The marshaling also considers quality control steps, ensuring that products meet appropriate standards and norms.
Cost reduction: The production marshal helps reduce operating costs by optimizing processes and allocating resources.

Types of times within the production route.

There are several types of times within the production route that are important to the efficiency of the entire production process:

Preparatory time (setup time): This is the time needed to prepare a machine or workstation before production begins. It includes setting up tools, checking parameters, and preliminary quality control.
Processing time: This is the time it takes to properly process materials at each stage of production, including processes such as cutting, welding, assembly, or painting.
Transportation time refers to moving raw materials, semi-finished products, or products between production stations.
Waiting time is when a semi-finished product waits for the next operation. This often results from a lack of available resources or machine downtime.
Inspection time refers to the time spent inspecting the quality of products at various stages of production.

How does the technological route affect production efficiency?

Technological marshaling directly impacts production efficiency, as it helps optimize each process stage. The main ways in which it affects production efficiency are:

Minimizing downtime: With precise planning of time and resources, machine downtime and waiting for resources can be reduced.
Optimization of resources: Marshaling enables better management of the availability of machines, tools, and personnel, leading to more efficient use.
Better quality control: Including quality control steps in the marshaling helps avoid errors and losses associated with defective products.
Reduced operating costs: Optimization of production processes and reduction of downtime allow for reduced costs, which improves production profitability.
Process scalability: Marshaling makes it easier to scale production processes, which is essential when product demand increases.

Properly planned production marshaling can significantly increase productivity, resulting in better financial results and greater customer satisfaction.

Production marshaling vs. ERP system

Modern manufacturing companies are increasingly using ERP (Enterprise Resource Planning) systems to manage all aspects of the business comprehensively, including production marshaling. ERP systems, such as SAP, Oracle, or Microsoft Dynamics, integrate manufacturing, logistics, and financial processes, enabling precise production planning and monitoring.

What are the benefits of manufacturing markup in an ERP system?

Process automation: ERP automates the processes involved in marshaling planning and monitoring, which eliminates the risk of errors resulting from manual data entry.
Real-time data access: ERP provides access to data at every production stage, allowing for real-time progress tracking and decision-making based on up-to-date information.
Integration with other modules: ERP systems integrate manufacturing marshaling with other areas such as warehousing, procurement, and sales to manage the entire supply chain better.
Reporting and analysis: ERP systems generate reports and studies on marshaling performance to identify areas for optimization.
Resource management: ERP enables better resource management and work scheduling, which increases production efficiency and allows better utilization of machinery and employees.

articles Business knowledge

BOM (bill of materials) – what it is, types, benefits

Post author By Maksymilian Śniegocki
Post date October 24, 2024

Table of contents

What is a BOM?
What is the material BOM is used for?
Bill of materials – is it necessary?
Construction of the BOM document
Types of material balances
The benefits of creating a BOM for manufacturing

BOM (Bill of Materials) is a crucial document used in manufacturing and logistics. It lists all components, materials, and raw materials needed to produce the final product. Many manufacturing companies base their processes on the BOM to manage resources and costs and ensure a smooth production process.

A thorough understanding of a BOM and its benefits allows companies to plan, produce, and deliver better products to market.

What is a BOM?

A BOM, or bill of materials, describes a product’s complete structure and contains information about all the elements necessary to produce it. The BOM includes raw materials, semi-finished products, parts, technical documentation, and instructions. It is a tool for determining the bill of materials and a way to describe precisely how the various components are related.

A BOM usually consists of several levels, depending on the complexity of the product. Each level describes different components, which can be independent products or intermediates that will be combined to make the final product.

What is the material BOM is used for?

A material BOM serves many functions in a manufacturing and logistics company. It is crucial in planning, production, and resource management processes. The BOM helps in:

Production planning - The BOM provides insight into what resources are needed at various production stages, facilitating demand planning.
Cost control - The detailed information in the BOM allows for accurate calculation of the costs of raw materials, semi-finished products, and labor associated with manufacturing a product.
Inventory management - The BOM facilitates inventory management, enabling the company to monitor and optimize the number of raw materials and components available in stock.
Production process management - The BOM allows for monitoring production progress and identifying potential problems related to material shortages.

Bill of materials - is it necessary?

The BOM is essential for effective production process management in most manufacturing companies. Introducing a BOM into production allows for a better understanding of all the stages a product goes through, from raw material to finished product. Regardless of the production volume or the product’s complexity, a BOM is the foundation of an efficient production line.

With a BOM, controlling the entire production process is easy. Introducing even a minor change to one component without updating the BOM can result in production problems, delays, and increased costs. This is why keeping the BOM up-to-date and accurately maintained is so important.

Construction of the BOM document

A BOM is usually a hierarchical document that describes the structure of a product in detail. The structure of the BOM may vary from product to product and company to company, but several elements are invariable:

Product identification - The BOM contains information about the product name, part number, version, and technical details.
Component list - The BOM contains a complete list of raw materials, parts, and components needed for production. Each element is assigned to a specific level in the structure.
Quantity specification - The BOM describes how many pieces of a component are needed to produce one piece of the final product.
Description of relationships between components - The BOM indicates which elements are related to each other, allowing you to understand the assembly and production process better.
Production time and costs - More advanced BOMs also include information on production times, downtime, and costs associated with the manufacture of components.

Types of material balances

BOMs can take various forms, depending on the needs of the enterprise. The most common types of BOMs include:

Production BOM - Describes the components and raw materials needed to produce a specific product. It focuses on physical materials and assembly steps.
Engineering BOM (EBOM) – This material balance is created at the product design stage. It describes all the components that must be considered during production based on engineering specifications.
Marketing BOM (MBOM): This includes packaging, labeling, and product delivery information. It focuses on marketing components such as packaging and promotional materials.
Service BOM - Describes the components needed to service and repair a product after manufacture.

The benefits of creating a BOM for manufacturing

Creating a BOM has many benefits, especially for manufacturing companies:

Better control over production - the BOM enables accurate planning and monitoring of all production stages, avoiding delays and problems with material supply.
Cost reduction - The BOM allows you to manage resources more precisely, leading to financial savings.
Increased efficiency - A BOM allows for better inventory and raw material flow management, resulting in greater production efficiency.
Improved communication - A BOM facilitates cooperation between different departments in a company, such as production, logistics, marketing, or engineering.
Faster implementation of changes - If changes need to be made to a product, a BOM allows new components to be introduced quickly and accurately without the risk of errors.

In summary, the BOM is integral to production and logistics, enabling effective management of resources, costs, and production processes. With it, manufacturing companies can plan and achieve their goals effectively.

articles Business knowledge

ABC analysis – what is it, and when can it be useful?

Post author By Maksymilian Śniegocki
Post date October 17, 2024

Table of contents

ABC analysis – what does it mean?
What is the ABC method based on?
ABC classification – how do you prepare the breakdown?
ABC method – examples
ABC analysis – when is it worth conducting?

ABC analysis, also known as the Pareto method, is one of the most popular techniques for managing inventory, production, and logistics. It involves dividing an assortment of products into three groups according to their value to the company. The ABC method allows us to manage resources better and focus on the items that generate the most benefit or require the most attention. It will enable companies to optimize their operations, improve efficiency, and better allocate resources.

ABC analysis - what does it mean?

The name “ABC” refers to three main categories for allocating goods or resources:

A - essential items that account for the most significant portion of value, but their number is usually the smallest. Usually, about 20% of the inventory generates 70-80% of the value.
B - the intermediate category, i.e., products or resources with moderate value for the company. This is about 30% of goods, which generate about 15-25% of value.
C - the least important products, which generate the least amount of value, but their number is the highest. About 50% of inventory creates only 5-10% of value.

ABC analysis, also called Pareto analysis, is based on the Pareto principle, in which 20% of causes are responsible for 80% of effects. Applying this method to companies allows them to focus on the most critical resources that significantly impact financial performance.

What is the ABC method based on?

The ABC method involves analyzing an assortment of products based on their value. The principle is simple – products or resources are classified according to their value to the company’s total revenue or cost. The process consists of several steps:

Identifying products or resources: The first step is determining the complete list of goods, resources, or services to analyze.
Calculating the value of each product: each product should be evaluated based on its contribution to the value of sales, purchase costs, revenue generated, or another critical indicator.
Sorting the products: after calculating the value for each item, the products should be sorted from highest to lowest value.
Categorization: The products are then classified according to the 80/20 rule. The most important 20% of the elements (category A) account for most of the value, the next 30% (category B) are intermediate elements, and the remaining 50% (category C) account for the smallest part of the value.

ABC classification - how do you prepare the breakdown?

Preparing ABC classification in practice requires following several key steps:

Gather data: Collect all necessary data on inventory or products. This could include sales, purchase costs, margins, or the frequency of use of goods.
Calculate each item's contribution to the total value. Each item should be evaluated in terms of its value to the company, such as revenue or production costs.
Divide the elements into groups: divide the assortment according to the Pareto principle - 20% of the resources generate 80% of the value (group A), 30% of the resources generate 15-25% of the value (group B), and 50% of the resources are responsible for only 5-10% of the value (group C).
Apply the classification in practice: Products from group A should receive the most attention—it is worth using more advanced management strategies for them, while items from group C can be managed more simply due to their lower importance.

ABC method - examples

Example 1: Inventory management

Imagine a company that sells electronics. An ABC analysis shows that A products (e.g., laptops and smartphones) account for 20% of the product mix but generate 80% of revenue. B products (e.g., accessories) are 30% of the assortment, generating 15-20% of revenue, and C products (e.g., cables, cases) are 50% of the assortment, generating only 5-10% of income. In this case, the company can focus its activities on group A to better manage resources and optimize sales.

Example 2: Manufacturing

In the case of a manufacturing company, ABC analysis can look at the raw materials used in the production process. A-grade raw materials are the most essential and most expensive or frequently used items. B-grade raw materials are of average value, and C-grade raw materials are rarely used and account for a small percentage of total costs.

ABC analysis - when is it worth conducting?

ABC analysis is helpful in many cases, and its application can help a company at various stages of its operations:

Inventory management: A company can use ABC analysis to better manage its inventory. Instead of paying the same attention to every product, it can focus on the essential items that bring the most benefit.
Production optimization: For manufacturing companies, ABC analysis can help identify the most essential raw materials critical to the production process.
Resource management: The analysis can also help manage time, costs, and even employees - identifying the areas that generate the most value for the company.
Purchasing planning: In logistics and sales, the ABC method allows for better purchase planning so the company can avoid overstocking low-value goods.

In summary, ABC analysis is a versatile tool that can be used in various aspects of a business. It helps identify critical resources, better manage them, and focus attention on elements that have the most significant impact on company performance. In practice, it is one method that leads to more effective management and operations optimization.

articles Business Central Business knowledge Dynamics 365/AX INLOGICA products Other Microsoft products Recommended

Microsoft Licenses – Learn about cost differences – which model wins? Subscriptions or perpetual usufruct?

Post author By Maksymilian Śniegocki
Post date October 15, 2024

Table of contents

Business Central license fees
Advantages of subscription
A cost that won’t hit your wallet? See for yourself

In our previous article: Microsoft Licenses – Subscriptions or perpetual usufruct? Which option is better for your business we examined the strengths and weaknesses of both licensing models, providing a comprehensive comparison. Below is a detailed overview of the costs for these options.

Business Central license fees

The example illustrates a 5-year cost projection for a company using Business Central with 20 users. We calculated licensing expenses over this period to provide a clear understanding of the financial aspects associated with each licensing approach.

A comparison of licensing models often shows significant differences in cost structure, especially over the long term. The chart shows how the two models evolve in terms of cost.

The subscription model appears more cost-effective at the outset, with lower start-up costs, making it an attractive solution for companies that want to implement a system quickly without incurring a large one-time outlay.

In the holding model (perpetual license), the company must initially pay a larger sum to purchase the software. However, after a certain period, it no longer incurs regular licensing costs. The chart shows that in the long run, subscription costs start to equal the price of a one-time purchase, and after a certain point, the subscription may become slightly more expensive.

Advantages of subscription

However, it is worth noting that a subscription offers:

The subscription model is undoubtedly a better option for companies needing flexibility and regular updates. Unlike a one-time license, a subscription allows you to adapt the system to your company’s changing needs. The ability to spread the cost over smaller, regular payments makes the subscription model more affordable and flexible, especially for companies with changing needs and limited IT investment budgets.

Choosing the two models ultimately depends on a company’s needs, development plans, and budget. However, for rapidly growing companies, the subscription model offers greater flexibility and the ability to continuously adapt the system to new business conditions, making it a more attractive option.

A cost that won't hit your wallet? See for yourself

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articles Business Central Business knowledge Dynamics 365/AX INLOGICA products Other Microsoft products Recommended

Microsoft Licenses – Subscriptions or perpetual usufruct? Which option is better for your business?

Post author By Maksymilian Śniegocki
Post date October 15, 2024

Table of contents

Available licensing models
Read a comparison of the advantages and disadvantages of the available licensing models-shortcut
ADVANTAGES of using subscription licensing- details
DISADVANTAGES of using perpetual licensing- details
Further doubts? See which industries are successfully using the subscription model.

If you’ve ever wondered whether it’s more cost-effective to subscribe to Microsoft products monthly or to purchase a license on a one-time basis, here’s a detailed analysis of both options. We examine the costs associated with acquiring and maintaining a license to help you make an informed decision.

Available licensing models

Perpetual Licensing or On-premises.

We offer perpetual licenses. The cost includes the license price multiplied by the number of users, the cost of dedicated modules, and an annual subscription of 18% of the license value, known as the Enhancement Plan. The customer has the option of using its own infrastructure or an additional paid cloud computing service.
Subscription Licensing

The offer is based on recurring fees depending on the number of users, quickly allowing you to adjust the number of users according to your needs. The infrastructure can be based on customer or cloud resources, with the environment managed by a partner. For example, the Business Central system distinguishes between users: total users and team members, offering free licenses for the system administrator and an external accountant.

Read a comparison of the advantages and disadvantages of the available licensing models-shortcut

ADVANTAGES of using subscription licensing- details

The choice of subscription licensing presents itself as significantly more advantageous for several vital reasons that make this model attractive to modern enterprises. Below are the arguments for choosing a subscription:

Flexibility and scalability: Subscription licensing allows companies to easily adjust the number of licenses to meet current needs. By arbitrarily increasing or decreasing the number of users each month, companies can effectively manage costs to suit the current situation and project requirements.
No significant initial investment: Unlike perpetual licenses, the subscription model does not require a substantial initial investment. Smaller, regular monthly fees are more affordable for a company's budget, making the technology more accessible, especially for smaller companies.
Constant updates and innovation: Subscriptions guarantee access to the latest software versions and updates, which is crucial in a rapidly changing technology environment. Companies using the subscription model are assured that their software is always up to date, which helps maintain high operational efficiency and data security.
Access to support and service: Subscribers are often provided with technical support and access to additional resources and tools that can help maximize software performance. Regular technical support and consultation can significantly reduce the risk of downtime and other operational problems.
Cost predictability: Regular monthly payments make budgeting and controlling expenses easier. Companies can forecast future IT costs more accurately, making it easier to manage finances and avoid unexpected expenses.
Response to changing business needs: The subscription model allows rapid adaptation to changing business and technology requirements. Companies can quickly introduce new technologies and services, promoting innovation and market competitiveness.

In an era of digital transformation, where technology is evolving rapidly, and flexibility and adaptation to change are becoming critical to business success, subscription licensing offers companies significant advantages. Subscriptions are a forward-thinking and strategic investment for any business, providing ease of customization, reduced upfront costs, and ongoing access to the latest technology and support.

DISADVANTAGES of using perpetual licensing- details

While perpetual licensing may seem like an attractive option due to its one-time payment and permanent right to use the software, several disadvantages can make this model less beneficial for today’s businesses:

High upfront costs: perpetual licensing requires a significant one-time investment, which can burden the budget, especially for small and medium-sized enterprises. Significant upfront expenses can limit a company's liquidity in the short term.
Lack of flexibility: This model needs to make adjusting the number of licenses easier to meet changing business needs. Reducing the number of users does not translate into lower costs, making the model less flexible than subscriptions.
Additional maintenance costs: To benefit from software updates and technical support, companies often must pay for additional plans, such as the annual Enhancement Plan, which generates further costs.
Risk of technological obsolescence: software purchased on a perpetual license basis can quickly become obsolete if a company does not continue to buy upgrades. This means that the investment may lose value, and the company may find it challenging to remain competitive.
Complexity of license management: Managing perpetual licenses, especially in large organizations with diverse software, can be complicated and time-consuming. Companies must keep track of which software versions are being used and their support and upgrade dates.
Lack of access to the latest technology: without continuous updates, perpetual license users may not have access to the latest features, tools, and security enhancements, which is standard with the subscription model.
Difficult to budget for the long term: while a one-time cost may seem beneficial in the short term, long-term maintenance, upgrade, and support costs can be challenging to predict and can significantly increase the total cost of software ownership.

These limitations can make perpetual licensing less attractive to companies seeking solutions that enable them to adapt and innovate quickly, given rapid technological change and a dynamic business environment.

Further doubts? See which industries are successfully using the subscription model.

The modern business world is leaning toward payment models based on regular monthly fees. Such a payment model has many benefits, such as continuous product improvements, regular updates, and the ability to customize the product based on customer feedback and experience.

Product subscriptions: Examples include subscriptions for cosmetics (e.g., Birchbox) or food (e.g., HelloFresh), which deliver monthly packages of products directly to the customer.
Amazon Prime: A subscription model that offers faster delivery and access to streaming services.
Allegro Smart!: A subscription service offering free delivery and other benefits to users.
Hebe Drugstore: Subscriptions for packages of cosmetics.

The subscription model provides numerous benefits, including flexibility, scalability, lower upfront costs, predictable monthly payments, constant access to the latest updates, improved customer service, better cash flow management, access to a broader range of features, the ability to cancel or adjust the service at any time, and easy integration with other services.