Upgrading from Microsoft dynamics AX to Dynamics 365

Upgrading from AX to Dynamics 365 (D365) unlocks enhanced functionality, cloud capabilities, and the agility your business needs to stay competitive.

Many organisations face growth limitations with outdated ERP systems. Transitioning to Dynamics 365 brings:

  • Advanced features and improved security
  • Seamless integrations and scalability
  • Connection to data lakes for advanced analytics and reporting

While migrating from AX 2012—including complex processes like transfer orders and customisations—can be challenging, the long-term benefits far outweigh the obstacles.

Benefits of dynamics 365

Upgrading to Dynamics 365 isn’t just a software update—it’s a strategic move that transforms how your business operates, processes data, and serves customers.

Key Benefits:

  • Cloud-Based Deployment
     Eliminate costly servers and maintenance. With AX support ending (2004, 2009, 2012), upgrading is no longer optional—staying on AX means relying on third parties for updates and security, which is risky and expensive.
  • Flexible, Cost-Efficient Licensing
     D365 uses a subscription model with user-based plans:
    • Team Members from £8/user/month
    • Full Users and Operations Activity users also available
      Pay only for what you need—no more perpetual licence fees.
  • Automatic Updates
     Say goodbye to major ERP upgrades. Microsoft handles updates, giving you access to new features without disruption.
  • Enhanced Analytics & Reporting
     D365 integrates with data lakes and Power BI to deliver advanced, real-time insights that AX couldn’t provide.
  • Seamless Integration
     Easily connect apps across the Dynamics 365 ecosystem—CRM, Customer Insights, Power Platform—using out-of-the-box connectors. No complex coding required.
  • Lower Total Cost of Ownership
     Reduce IT expenses, eliminate maintenance and support fees, and move to a more secure, scalable, and future-ready platform.

Steps

The migration path from AX to Dynamics 365 varies by version. For AX 2012 R2 or R3 users, Microsoft offers a more direct upgrade path than for older versions.

Step-by-Step Process for AX 2012 R2/R3:

  1. Set Up Lifecycle Services (LCS)
     Create your LCS project and select the “Upgrade AX 2012 to D365 F&O” methodology to initiate the process.
  2. Run the Upgrade Analyzer
     This tool evaluates your environment and highlights:
    • Data clean-up: Flags unnecessary data
    • Deprecated features: Identifies features not supported in D365
    • SQL assessment: Recommends performance optimisations
  3. Use the Code Upgrade Service
     Estimate migration effort and scope. Be sure to register your project as an “AX 2012 upgrade” to access the correct onboarding tools.
  4. Complete Preparation Tasks
     Your system/database admins handle tasks from the Upgrade Analyzer. Developers should perform code upgrades without modifying AX code unless critical.
  5. Fill Functional Gaps
     Develop new code to replace unsupported features identified during testing.
  6. Run Database Upgrade in Dev
     This first upgrade helps identify and fix early-stage issues before moving forward.
  7. Testing & Cutover
    • Conduct full functional and cutover tests
    • Complete a pre-launch checklist to ensure readiness

For AX 2009 and Earlier:

  • Direct upgrade isn’t supported. You’ll need to:
    • Map and export data using migration tools
    • Reimplement customisations in D365
    • Optionally upgrade to AX 2012 first, then follow the standard upgrade path

Challenges

Key Challenges in Migrating from AX to Dynamics 365—and How to Overcome Them

Even with a well-planned approach, migrating from AX to Dynamics 365 presents challenges that require careful strategy and execution.

1. Complex Customisations and Integrations

Many AX environments include custom apps, reports, and integrations that can’t be simply transferred. Each must be evaluated to decide whether to migrate, redesign, or retire. Understand the purpose behind each customisation to avoid unnecessary complications during migration.

2. Data Quality Issues

Poor or incomplete data can severely limit the effectiveness of your new system—especially when leveraging D365-to-data lake analytics. Ensure data is cleaned, structured, and validated before migration.

3. Organisational Resistance to Change

Shifting from on-premises to cloud affects not just systems but culture. Resistance from staff can hinder adoption. Invest in change management and training to build user confidence and buy-in.

4. Older AX Versions Increase Complexity

If you’re on AX 2009 or earlier, migration is more complex. Options include:

  • Upgrade to AX 2012, then move to D365
  • Reimplement directly in Dynamics 365 (often preferred to avoid carrying over outdated processes)

5. Business Continuity Risks

Maintaining operations during migration—especially around critical processes like AX 2012 transfer orders—requires detailed planning and resource allocation. Develop a phased rollout plan and ensure teams are not overstretched.

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