HR Vision Podcast #39 – The D365 HR to Finance & Operations merge from an HR standpoint ft. Dan Reader

Dan Reader is one of our Iron men. Not only because he just completed an Iron Man race two days before the recording of this episode (!), but also because he’s always
willing and able to come on the podcast to give us his perspective on things.

This time we went over a very timely subject around Microsoft, and Microsoft HR specifically: Dynamics 365 Human Resources and Finance & Operations infrastructure merge.

This merge was announced last year and much has been said about it. We felt it would be time to give an update from an HR department standpoint.

We hope you find it insightful!

Hello there, welcome to episode 39 of the HR Vision podcast. If you follow us for a while, we have a pretty familiar face today. Hey Dan how's it going?

Yeah, it's good to be back. Yeah indeed. I think this is your first time on the podcast, right? If we include the Christmas special.

Of ourse we include the Christmas special. It was the best one ever. Yeah, all right. Today Dan and I will talk about a very specific subject, the ongoing merge, announced by Microsoft, that will bring the Dynamics 365 HR module back to Finance & Operations. What will this look like through the HR department point of view? That's exactly what we'll discuss today and try to make it a bit clearer.

Dan, are you ready?

Yeah, let's go yeah, let's jump in. Let's go for it.

So just as an introduction for people that haven't heard about this yet, and some people didn't. What will this merge be about? What is this?

Yeah, so I think Bert was on the podcast originally and he he coined the term saying "it's coming home". You know that was, I think back in that 2016 or something, they split HR out from Finance and Operations into its own platform. And it was all standalone. They were limited to what you could develop and change. And after some internal conversations with Microsoft or whatever they're going to do on their end. Then merging the two back together so effectively the HR platform that a lot of our clients and people out in the world are going to be using. Are going to become a Finance and Operations instance.

So with that, because we talked a lot in the past about, well, not necessarily me. But all the people on the podcast. A lot of the information that's come out and that's gone out to people is very, very limited to more technical aspects, I thought it would be nice to kind of have a chat about some of the more functional things that people are going to go through. How it's going to affect HR users. How it's gonna affect users in the organization and what the kind of impact is. So with the change and with the merge there will be certain things that are gonna change from HR perspective.

The first big thing that will change will be the overall layout, so it's going to change from a standalone D365 HR box with all your modules on the left hand side. Constant operation box. So everything effectively stays the same, it just goes into a much bigger playground. Basically. So instead of everything being HR, HR is 1 module in a much bigger environment which caters to purchasing finance, sales, production, manufacturing, warehouses and all that jazz. And all the core functionality that we will have discussed in the past.

So the Trinity of records like jobs, positions, workers, all of that stays the same. All the core concepts that we've gone through internally in meetings and configuration sessions all stays the same. The main difference is... and it's kind of difficult to put it into words really, but the main difference is HR will have to play with the wider business more and the wider business will have to play with HR more.

OK, I really like that what you just said, do you think it's because HR is getting a bigger role within the organization and Microsoft sees it that way so it actually needs to be part of the bigger strategy?

Yeah, absolutely. I think it was the first. I think it was the first time I was on when we were talking about HR becoming more profit centers and cost the merge. The merger that point how in how the hedge more than ever gonna be the starting point for pretty much any process in the system, so they're going to add the legal entities departments. They should normally fall under HR remit. Workers being created will be the starting point of somebody's journey, so in theory, if you're using Finance and Operations as an ERP system, and you've been hired as a warehouse manager, everything you will do will be in that one Finance and Operations box.

So without HR creating you as a worker, putting you in the positional hierarchy, you can't do your job.

So HR really are at the absolute start of the process. They can't be bypassed. They can't be messed around. HR need to be included more in the organization. They need to have more visibility about what's going on and they need to really have a seat at the table when they're talking about some of the more strategic decisions in the organization, which I think overall we're seeing more and more HR definitely being treated with a lot more respect. And kind of use more for strategic insights when businesses are making decisions about every now and again.

You do come across instances where they are still left in the dark a little bit, and the merge will alleviate that a lot.

Yeah I see that that's pretty clear to me. So let's go into what this will mean for HR departments, I think that's an important perspective to give people listening. So what do you think needs to be done as a prerequisite before the merge? How will this merge affect the business?

Yeah, so in support the more technical specs in like a simple. Or layman's terms. Effectively, Microsoft are adopting something called lift and Shift, so they'll take your D365 environment and they will simply convert it to a Finance and Operations environment. So when you actually go through the merge process, when it's all been arranged, that will all be done for you. So for market data migration standpoint, there's nothing really required from HR users or anything like that. Everything will be done in the background and the same with FourVision web apps as well.

There will be changed to point to a finance operations instance instead of a D365 instance. What will become a bit of an issue for data migration? Is if you want to then use Finance and Operations in the wider organization. And the reason I say that is because you'll need to make sure your legal entity structures are the same. You'll need to make sure that your operating units so cost centers departments.

Anything like that or my job if you're using two different sets of values in each system, that's really the main problem you're gonna have. So if you're thinking about doing the merge, that's the main thing that should be. You should be thinking about looking for, so if you keep you keep only the HR what is going to happen is that you go back to Finance and Operations. Everything is switched off on that platform. The only thing on, let's say the switch on is HR.

The problem comes when you try to switch on or might come when you try to switch on the other functionalities within Finance and Operations.I'm sorry to interrupt you. Sorry mate.

I think there will be something that will come across quite a lot, and it's something that we've been talking about a lot during implementations over the past few years, anyway, irregardless of the merge, making sure that HR and finance are basically singing from the same song sheet, so making sure that an operating unit is used in the same contacts whether it's HR or in a finance methodology, there's obviously financial dimensions and operating units, and that sort of thing.

In a much bigger role in a wider ERP setting, so for the wider organization you know these things get stamped on transactions, suppliers, customers, all sorts of things and they need to be monitored as such. So it's not really necessarily just costing where an employee is. At this point, it's costing where and employee years how many transactions go through that cost center? How many in their general Ledger work with those financial dimensions. All sorts of things, so that's something that will need to be checked. It will need to be cleansed.

The other main thing will be. And I don't think you'll find this anymore, but sometimes people that are using Finance and Operations without HR. Well, find the HR module and start using it for something they maybe shouldn't. OK, so checking any preexisting data that's been left in there by. Random Department, for example: effectively there is HR data. It will need to be checked to make sure it actually matches up with what HR data is normally would recommend overriding it and getting rid of it.

I think those instances will genuinely be quite rare. You know the the security and the the processes involved in. Really, internally, in Microsoft Partners and the way that we do, developments has changed a lot in the last 5-10 years, so it's very much an old world problem in the last few years we talked about before HR. They're much more recognized in the organization, so I think the chances of that happening will be pretty slow. But if it is, it's not the end of the world. It will be a case of clearing it out and then we can just literally dump whatever's in our newly merged F&O instance.

It will be nice. So the main the main thing that people using these tools need to prepare for, it's regarding that that part where if you want to use some more functionalities of finance & operations. If you only have HR or if you have financing operations and you want to use the HR module within it, that's the main thing that people need to think about. Like aligning cost centers and the same values. That's basically what it is. Pretty much.

So like I think two of the big examples you can get from it really will be as soon as you've merged your HR and F&O into the same box. The Finance and Operations side of things can utilise a lot of the organizational data so you can use the organizational hierarchy in your workflows for things like purchase orders and sales orders and all sorts of stuff like that. You can also introduce things like spending limits, which is functionality that exists solely in the HR side of F&O. So you can limit approval limits to different types of jobs, for example.

So a warehouse person might have an approval limit of €1000 and a manager might have a limit of €5000, so all of those things can be built up utilizing the HR data. That goes in and the wider organisation gets the benefit pretty much immediately. There's not really any setup required for anything to do with the organizational hierarchy, because it's just getting dumped in there.

It will just be merged in. The tables can be exported from the blank environment and put into their functioning F&O environment. And it's up to the wider organization to adopt those changes. So really, I think it will be up to HR to inform the wider business as well. What's happening how it's happening? What the benefits are as well. Because a lot of our implementations, Finance and Operations is still in its infancy, and a lot of our clients so. You know the wider ERP systems - it takes a long time to implement, whereas the HR side it takes. Much less time, we'll say.

But yeah, so a lot of the implementations, even though HR have potentially been live for a year, two years. Finance and Operations might still be getting developed and designed and configured, so HR kind of have an advantage on the rest of their organization in a lot of ways, because they can jump ahead of the curb. They know the functionality they've got detailed data that they can import and utilize, and the organization. Hopefully for a lot of and bits and pieces that go on within the wider organization, right?

That's good, all right, yeah? So after the HR department figures all these things out, it's all preparations are done. What needs to happen behind the scenes that leads to the merge. What I'm getting at is. Our partners, people that implement these tools like ourselves. We need to do something in terms of data and... you've used the expression before, but I don't remember. The lift and shift. They will lift and shift.

What what is going to happen just before the merge itself happens. So in an ideal world, the process, as far as we're aware, is, when the clients are ready to do the merge because they don't necessarily have to do it in October this year, I think they have until December 2023 to make the decision. When they're ready. They can tell us to make arrangements for when they like it done, and then from that, FourVision on our side. We can then make the arrangements with Microsoft and go through the lift and shift process.

As far as data goes, they won't need to do anything other than the things that we've spoken about before checking what kind of data is being used in Finance and Operations. If we'll work on the assumption that every client that we have isn't using HR and at the moment they're not touched it. It's completely empty and the lift and shift process will take place. You'll then go to sleep on Thursday with D365HR environment and you'll wake up on Friday with a Finance and Operations environment with only HR data in it. From that point of view, if you wanted to merge the two together, it would be a case of FourVision moving that data from the HR to FnO.

That process is relatively straightforward because the database tables are the same. We can literally just pick up everything that's in this table and pop it in there. All the authentication, the data matching, will be the same because it's come out of an F&O database and it's going into an F&O database. So all that stuff will be very, very simple, but really they don't need to do too much. So if you are thinking about doing this. There is not really any prerequisite to you as an HR administrator will need to make.

As far as data goes. I definitely think... we'll use the example that me and you are are HR administrators in an organization. I think from a functional point of view it will definitely be a time to maybe make yourself known to the wider project. So I know you know F&O projects. They are, as we say, they're huge. They go on and they involve a lot of different people on the hand will probably only deal with people. FourVision, so it's definitely a time for HR to have some involvement with the wider FnO project. If nothing else, to kind of poke their head above the sand. So OK, what can we offer you? What's your workflow approvals? Like what are your... Do you wanna use spending limits? What of our data will be useful to you in the organization? This is time to be saying that.

Because you've then got. Three months, six months, a year. However long you want before you do the merge. For finance and Ops to build that into their process and start thinking about it themselves. Cause in a lot of instances. Finance and ops won't have thought about these things. You know some of the functionality that we can offer at this point. From the HR standpoint, it just won't have been thought about by the organization because it won't have been visible to them as an option.

So yeah, that kind of thing would be very, very important. It would be a big win for organizations as well.

Yeah, definitely let me just ask you something that is pretty straightforward. What is happening if you have Dynamics 365 HR and you don't choose to make the merge. It may be a stupid question, but what's happening at the end of 2023 if you don't merge?

So as far as I'm aware, and I might get in trouble for being wrong here, well enough to forgive me. As far as I'm aware, you'll stick with a 365 for HR instance, but it's basically unsupported, so there's no more updates for it. There's no more data changes. I think there may be the odd bug fix here and there, but to be honest I think it will pretty much be left as a legacy system at that point. It would make a lot of sense to move to F&O, optionality and the information and the way that they're changing their. Or the new functionality that they're implementing and designing is designed to be in F&O.

So if you want if you want the continual service updates and you want the changes to functionality and you want the ideas portal and all that jazz. Your best bet would be to go to after.

That seems to make sense, but let's just advise our listeners to, you know, not take this 100%. If we have someone in the in the audience from Microsoft, just drop us a message on LinkedIn, send us an e-mail to rectify that and we'll be happy to do so. It's just what we believe is happening. The last thing, so we talked about the the the preparation. We talked about what is happening probably behind the scenes with this. What is going to happen on the day itself? On the merge itself? How much time could it take? You know what, what, what will be what, what needs to be done from an HR standpoint when you go through it?

From an HR standpoint.

Again we're theorizing at this point, but. My best guess is like I said before, you'll go to bed Thursday night after making all your arrangements with me and Microsoft and all that stuff. You'll go to sleep Thursday night with a D365 for HR instance. You'll wake up on Friday like it's Christmas morning with a nice new shiny Finance and Operations environment. From a typical user point of view. So from your your box, standard employees that don't have any HR access. I really doubt that they'll notice any change whatsoever. It's pretty much identical.

There'll be a new link in the in the. Most likely there'll be a new link to the updated, they'll maybe SharePoint running internal links that the company passes out and that sort of thing, or maybe some more automated forwarding to the new environment location. But employee self service manager self service? They've been designed to look pretty much identical, so as far as an employee goes, the main thing that they're probably gonna be using Finance and Operations or employee self service for is going to be things like putting in, leaving absence requests, and that sort of thing once leaves in F and O in the next month or two.

That's really the only thing that's that. They're not gonna see any change. I really doubt that a standard user will maybe notice that anything's changed at all. HR their point of view will be different. They will be affected by it. So instead of having all their modules on the left, they'll have one HR module and then all the workspaces. So compensation management, personnel management. Leave an absence all that stuff. They'll all be workspaces within the wider HR module.

So yeah, you don't think there will be a need for an extensive training or something like that?

I think HR will need trading because I think it's gonna be a change. I think as far as your users go for employees booking leave and that sort of thing. It will probably be a good idea to tell them. Maybe give them some small quick reference guides to advising what's changing maybe and why, but I think it will be up to the discretion of each organization. It depends as well how long they've been using D365 for. And how long that they've been using the employee self service for.

If they haven't really been using the employee self service at all to that point, users are definitely going to need to be trained. If they've been using it for a while, I think the likelihood is people won't notice. I think the best thing to do with it would be to make sure that you tell the users why it's happening. Because they'll effectively go from using. All of our HR related stuff in this box and all of their Finance and Operations stuff like purchase orders, sales orders and stuff in this box.

We can then turn around to them and say, OK, well now you don't need to bother with this second link. Everything's in here so you can raise a purchase order, do a leave request, change your bank account. All that jazz can be done in the same box, so I think it'll probably be worth putting some bits and pieces out for marketing purposes to the organization, because it's a good win for them, but I think as far as training goes, the processes that your employees are going to be following in the employee self service. And I don't think you're gonna change too much. And if they are, it'll be very minimal.

But for managers you think it's important for HR administrators. Those people you probably need some understanding of the platform?

Yeah. I think the way I always kind of explore it to clients: it's like when you move from your old HR system to D365. Your brains are used to doing things a certain way, so muscle memory almost takes over. Like if you need to create a new position, you don't really think about where you need to click and go to. And that changes slightly, or when something's slightly different, or the menu structure is a little bit different. Your brain has to calculate it a bit, so I think it would be beneficial to train out the team.

In a lot of instances, if they're already using F&O or they're implementing it externally anyway. There will be some boxes available so. There shouldn't be any problem in the HR team getting some level of access to an F&O test environment internally that they're using in the wider organization. Familiarizing themselves with the new layout, maybe making screenshots and making training materials and that sort of thing. And then obviously after the merge, everything can go into that production instance.

I think once the core concept of; We've taken everything in HR and made it into a module in the wider system. So instead of everything being here, everything's now in one little module, and then it splits out here, so it's effectively an extra step. To get to all of your HR data so it's one more click than you were used to.

but obviously there were tips and tricks within ethanol, so you can favorite things. You can add a custom list of all your most commonly used modules and workspaces and stuff. And so there's all sorts of bits and pieces we can do to kind of speed up the transition or make it as easy as possible. But yeah, I think it will be an easy transition as long as people just do a little bit of; little bit of investigation. Just a bit of curiosity.

So anyway, have some new friends in the wider team. You never know. But yeah, I think it's definitely a time to talk more to the wider organization. If HR aren't doing it already.

That's a great. That's a great point. Yeah, just one last thing. You seem pretty relaxed about all this. It seems like you feel like it's gonna be. It can be a smooth transition. You don't need to overcomplicate these things. So my last question to you is. There's no reason to worry about, you know, as an HR person about this merge and what is the advice that you can, you can give people before this happens?

Yeah, run for the hills. It's gonna be a terrifying process. Just going to be awful.

OK, so winter is coming again!

Legitimately. I don't genuinely believe Microsoft won't have been doing any of this without. Or they won't be taking this decision lightly, so there's been a lot of effort being put into making this transition as smooth as possible. I'm not too worried about it. I think the main thing I am worried about is, as I said, the reason that I kind of wanted to have this conversation today was. A lot of the information that's come out on the official channels is very, very technical.

I don't care about technical stuff. HR people don't really care about technical stuff, so it's worth kind of putting it into terms that - Really spell out how it will affect like a HR person. Because we know how it will affect like a database administrator or like a solutions architect in an organization. They've had all their demos and bits of information, but nothing's really been filtered down to the HR workers themselves. I really think it's gonna be a smooth transition. I really, really do.

Just a bit of curiosity and investigation.

Yeah, just have a conversation. You know it's worth doing anyway, because there are so many quick wins that HR can offer the wider organization. You know, it's like we talked about with sort of utilizing the positional hierarchy and workflow. Introducing approval limits for jobs and stuff like that, there's no real setup required. Or if there is, it's very, very minimal, you know and the organization can get amazing amounts of benefit from those. And it really is worth just for the sake of a 5 minute conversation. Just for HR to turn around and go. Oh actually, we can help you with this, or we've got all this benefits. We've got all this beneficial data here. How can we help it? Make your lives easier. I think it just makes organisations run so much better. You know it's moving away from having silos of knowledge around and no one talks to each other. And it's not the way to run a business. You know I've worked in those organizations. I'm sure you've been around them before.

Nothing goes well with those kind of things, but instances where there's interpersonal communication between departments. Relationships. And it just opens up corridors for people to talk.

You know, even going forward if they're looking at implementing something for finance or warehousing. They can then turn around and go "OK. Well HR, you should probably come into this meeting as well. Just so you've got a voice and see if you can help us with anything at all."

And that's the main goal. That's from a non-technical perspective, I think that's the main goal. I would like to see out of the merge.

Do you think, just a small point there. Do you think for companies that only use right now Dynamics 365 HR, they go back to financing operations? Do you think they will have a bit more power to influence the decision of the organization to say look, there's this tool that we can actually have everything together. We already know how to use the HR module in there, but you can also use all these other things that probably will help bring us together. Do you think HR will have a say in that as well? That this merge gives them kind of a tool to reach that.

Definitely yeah. I couldn't have put it better. Yeah, that's exactly what I think. Well, that's what I would hope would happen. Yeah, because you know, I said earlier: your HR data really is like the core foundation of the system with the exception of your chart of accounts and some of your financial information, your legal entities, operating units work as positions. These are going to be the backbone of your system. So if you've got something where you can turn around to your organization and say, hey, we've got this, everything's settled. Everything works. Sticky your finance stuff in, stick your warehousing stuff in, let's go.

You would hope it will be a good aid in a decision. If an organization of looking at making the move to any kind of ERP platform.

Right! You have been a real helping hand, or helping voice. But thanks for giving time today and this fresh perspective to the HR department department about this merge. It was really helpful. I learned a lot today. I hope you enjoyed it as well then.

Always mate, yeah. It's always always good.

It's always good to talk to you. I don't know, let's see if we can have one in before Christmas. Who knows.

Definitely yeah, I kind of wanna maintain my like most featured guest. So yeah.

I think you're way ahead on that so that's alright. Then have a good one for everybody out there. This was the HR Vision podcast and I hope you enjoyed it. We'll see you next time.

HR Vision Podcast Episode 39 ft. Dan Reader

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