Dynamics 365 Business Central: Preparing for the April 2025 Licensing Changes

Microsoft is making significant changes to its licensing model for Dynamics 365 Business Central, effective April 1, 2025. As a Microsoft Partner or customer, understanding these changes and their implications is essential to ensure a smooth transition and continued success with this powerful ERP solution. In this blog, I’ll break down what’s changing, who it affects, and how you can prepare.

The End of Perpetual Licensing for New Customers

Starting April 1, 2025, Microsoft will discontinue the sale of perpetual licenses for Dynamics 365 Business Central to new customers. This marks a pivotal shift in Microsoft’s approach, focusing on Software-as-a-Service (SaaS) solutions delivered through the Microsoft Cloud Solution Provider (CSP) program.

Under the CSP model, customers consume Business Central as a subscription-based service, ensuring ongoing access to the latest features, updates, and security enhancements. This transition aligns with Microsoft’s vision of empowering businesses with modern, scalable, and flexible cloud solutions that adapt to evolving needs.  Under the CSP program, customers receive major commitment and commercial billing advantages that allows customers to either choose short term (monthly) or annual and even triennial commitment options…flexibility that was never an option under the perpetual licence model.

Current Customers Are Not Affected

It’s important to note that existing customers with perpetual licenses are not impacted by this change. Organizations already using Business Central, or even older versions of Microsoft Dynamics NAV under a perpetual license can continue operating as usual, provided they maintain their active annual Enhancement Plan. This allows them to:

• Add functionality or users to their existing perpetual license.
• Access the latest versions of Business Central, aligned with Microsoft’s Modern Lifecycle Policy.

Customers are advised to talk to their Partners about cloud transition as customers with active enhancement plans receive MAJOR discount on their cloud subscriptions should their annual enhancement status be active.

Understanding the Modern Lifecycle Policy

Microsoft’s Modern Lifecycle Policy ensures that customers on an active Enhancement Plan receive regular updates and continuous innovation. Unlike the traditional support model, the Modern Lifecycle Policy provides:

• Frequent Updates: Access to the latest features, performance improvements, and bug fixes.
• Cloud-Ready Compatibility: Ensuring on-premises solutions stay aligned with cloud capabilities.
• Predictable Support: Clear guidelines on support timelines and product upgrades.

By adhering to this policy, businesses can maximize their investment in Dynamics 365 Business Central and stay ahead in a competitive landscape.

Why the Focus on SaaS?

The transition to a SaaS model reflects the broader industry trend toward cloud-first solutions. Here are some key benefits for customers moving to SaaS via the CSP program:

1. Flexibility: Subscription-based licensing offers predictable costs and scalability as businesses grow.
2. Always Up-to-Date: SaaS ensures automatic updates, so customers always benefit from the latest features and security standards.
3. Enhanced Collaboration: Cloud solutions enable seamless integration with other Microsoft products, like Teams and Power BI.
4. Simplified IT Management: Reduce infrastructure costs and reliance on on-premises hardware.

For Microsoft Partners, this shift represents an opportunity to deepen relationships with customers by offering value-added services such as implementation, customization, and ongoing support.

Preparing for the Deadline

Both Microsoft Partners and customers should take proactive steps to prepare for this change:

For Customers:

• Evaluate your current licensing arrangement and future growth plans.
• Consult with your Microsoft Partner to understand the benefits of transitioning to the CSP model.
• Ensure your Enhancement Plan remains active to access the latest versions of Business Central.

For Microsoft Partners:

• Educate your customers about the upcoming changes and the advantages of SaaS.
• Position yourself as a trusted advisor to guide customers through the transition.
• Explore opportunities to offer bundled services, such as migrations and managed support, to enhance your value proposition.

Conclusion

The April 2025 deadline represents a strategic move by Microsoft to drive innovation and efficiency through SaaS solutions. While this marks the end of perpetual licensing for new customers, it also opens doors for businesses to leverage modern cloud technologies and achieve greater agility.

For current customers, the path remains stable and supported, provided they continue with their Enhancement Plan. For partners, this change is a chance to lead the way in delivering transformative solutions.

By staying informed and proactive, you can navigate this transition effectively and continue to thrive with Dynamics 365 Business Central.

Have questions or need guidance? Let’s connect and chart the best course for your business.