Digital de-occupation: how to migrate from 1C to Microsoft Dynamics 365 Business Central

Toxic legacy and the illusion of “secure” BAS

The key message of the meeting was an uncompromising position on 1C and BAS products. Many entrepreneurs still hold the illusion that migrating to Business Automation Software (BAS) is a sufficient step to diversify risks, since the brand is nominally registered in Poland. However, Olena Chernets dispelled this myth: “Migrating from 1C to BAS is not a rejection of russian software. Even though BAS is nominally registered in Poland, the beneficiaries, owners and investors of this product are the same people who own 1C.” This fact is also confirmed at the state level: in January, The State Service of Special Communications and Information Protection of Ukraine officially included both systems in the list of prohibited software for the state sector, and experts are confident that similar restrictions will eventually affect private companies as well.

Using software with russian origin today is a direct sponsorship of the war and a significant operational risk. “By migrating from 1C to BAS, we continue to finance the war and expose ourselves to threats,” warns Olena. Among the critical threats, she highlighted the sudden loss of data (with already recorded cases of inability to connect to systems), espionage of employees’ personal data and reputational damage.

Microsoft ecosystem: more than just automation

The world is moving away from the concept of isolated solutions toward global ecosystems. Microsoft Dynamics 365 Business Central is the core of such an ecosystem, combining ERP, CRM and supply chain management systems. The main value lies in seamless integration: the user can export data to Excel or Word, edit it and bring it back, and send invoices directly from Outlook or Teams. With the Azure platform and Power Platform tools, companies gain access to artificial intelligence Copilot, which helps automate routine tasks, as well as Power BI for deep analytics.

As Olena Chernets noted: “This platform provides many advantages because you use all applications together. You can quickly send any information to Teams and immediately review it.” This provides businesses with the flexibility to scale from a small startup to a corporation with thousands of employees, without limitations on the number of companies within a single environment.

IW Localization

A traditional barrier to implementing Western accounting systems used to be their incompatibility with Ukrainian legislation. Innoware has solved this problem by developing its own extension IW Localization. This solution fully covers VAT accounting requirements, including the “first event” rule, and adds specific printed forms such as reconciliation acts, commissioning acts, and fixed asset write-offs, which are not available in the standard version.

Particular attention should be given to the module IW HR&Payroll, which ensures a full personnel cycle: from vacation or mobilization orders to complex payroll calculations and tax withholding. “The modules were developed and enhanced so that Ukrainian accountant could find familiar processes in a familiar format,” the speaker explained. In addition, integration with the M.E.Doc service has been implemented: the accountant can generate the required forms in Microsoft Dynamics 365 Business Central, export them to XML and upload them to M.E.Doc for reporting.

Migration strategies: from Light/Basic packages to complete projects

ERP implementation is a long-term game. Olena Chernets compared this process to the most complex business operations: “ERP system implementation projects are among the most complex projects overall – only mergers and acquisitions are more challenging.” For success, it is critical to form an internal team of “progress drivers” and choose a partner you can trust.

Innoware offers three migration approaches. The first is a package solution (Light/Basic), which is optimal for small and medium-sized businesses. Pricing starts from $400 and deployment takes up to one week. However, this requires a high level of involvement from the client, who will need to independently go through the training materials and carry over balances.

The second is a complete project implementation for large companies with hundreds of users. It includes a deep analysis phase, interviews with process owners and the development of design documents that define how each process will work in the new system.

Finally, the third is a combined approach – a mix of package configurations for standard areas with individual training and developments for specific needs, such as complex manufacturing.

Financial model and updates

Microsoft Dynamics 365 Business Central operates on a subscription-based (SaaS) model, which frees companies from the need to invest in servers and SQL licenses. “Data copying and backup are handled by Microsoft,” the expert notes. The cost of the core Essentials license is $80 per user per month, while the Premium license (required for manufacturing) is priced at $110. There is also a cost-saving option – a Team Member license for $8 for managers who only need to view reports, or a Device license for shared computers in manufacturing.

Ukrainian localization is paid separately: $27 for financial accounting and $20 for personnel accounting. Paying for licenses ensures continuous updates from Microsoft and Innoware, but if payments are discontinued, access to the environment is lost after two months.

Data migration and parallel accounting

Technically, migration from 1C is carried out by filling in Excel templates, as there is “no automated process that would simply allow data to be transferred” due to the large number of custom modifications in each database. Innoware recommends downloading only directories and opening balances, as transferring the entire history of operations requires overly costly development.

After the system is launched, a parallel accounting period is critical. “One, two, or three months is the maximum duration of parallel accounting. It is useful for increasing end-user trust, but it is important not to prolong it due to the significant workload it places on users,” advises Olena Chernets.

Experience of leaders: Orbico and Leoni

The real effectiveness of Microsoft Dynamics 365 Business Central is confirmed by the cases of major players. The international group Orbico, which unites 18 companies across 20 countries, has been using the system for over seven years, receiving support from Innoware in Ukraine and Moldova. Leoni, which employs over 4,000 people in Ukraine, has been working with Innoware since 2003. Interestingly, Leoni uses a hybrid model: finance is managed in the corporate system SAP, while personnel accounting and payroll calculation are handled in Microsoft Dynamics 365 Business Central with IW HR&Payroll localization. “This is an argument for starting with a specific part of the functionality rather than switching everything over at once”, the speaker summarized.

As a conclusion

Migration to Microsoft Dynamics 365 Business Central is an investment in digital independence. The system enables accounting in accordance with PSBO and IFRS, integrates with any external services via API and is preparing for the implementation of electronic reporting standards SAF-T. In times when every hryvnia spent on russian software is turned into a weapon against us, choosing a global and secure platform becomes the only viable path for the development of Ukrainian businesses.

The original article is on KO.