PMC Hydraulics Group migrates to the cloud and transforms with Dynamics 365

Growth brings challenges

PMC had grown over the years through the acquisition of complementary businesses. While this allowed the company to offer hydraulic solutions to new countries and regions, it also meant inheriting multiple, disparate enterprise resource planning (ERP) systems, processes, data structures, and reporting methodologies.

In 2012, PMC leadership decided it was time to standardize and move all locations onto a common ERP system. They selected Microsoft Dynamics AX 2012, the precursor to Dynamics 365. To avoid disruption, the company deployed one location at a time. While implementation work went on, market conditions and business operations changed, and methods and systems adapted accordingly. With the business target constantly moving, the company’s goal of true harmonization seemed to be out of reach.

Furthermore, major product updates of the core application were delayed during the extended implementation period to prevent negatively affecting the ongoing work or any of the 100+ customizations that had been implemented. By 2016, the system was showing signs of age and lacked some key software updates. The IT leadership team began assessing modernization options.

Shifting to the cloud

When PMC first started exploring the idea of migrating essential business operations to the cloud in late 2016, the technology was still in incubation phase. Many businesses were still using on-premises solutions. The idea of trusting data, revenue reports, and mission-critical business activities to a cloud service was unsettling.

However, by 2018, it was clear that an upgrade was necessary. With research and guidance from implementation partner Tietoevry, leadership determined it was time to make a shift to the Microsoft cloud. By this time the technology, security, and services had advanced, and Microsoft Dynamics 365 provided a proven cloud-based solution with many success stories pointing to the benefits of a SaaS (Software-as-a-Service) solution.

Moving to the cloud with Dynamics 365 meant the core applications would receive multiple automated updates per year. A product that was always current would encourage process standardization and enable benefits like adding new features and enhancements with less effort.

The implementation team knew that if they put in the work to create a solution template with standard processes, it could be easily deployed to all company locations and countries. “Our intention was to not only harmonize the business but save time and money down the road,” says Anders Bäckman, CIO of PMC. “It wasn’t a financial decision per se, but we could see that the ROI [return on investment] upside would be built in over time.”

“Through the implementation of Dynamics 365 globally, we have achieved significant harmonization and simplification of business processes,” adds Mikael Lundgren, CEO of PMC. “As a result, we have managed to improve the quality and reliability of the information used to run the business.”

Standard solution saves time

Since many key offices were already running on a single instance of Dynamics AX 2012 and standardization was a primary goal, the team chose a “big bang” approach—a one-time cutover to Dynamics 365 after multiple rounds of testing. Company leadership mandated a strict customization policy. Customization requests would be heavily scrutinized and only permitted with approval from executive leadership. With an accelerated timeline for implementation, the rollout would use standard, out-of-the-box functionality to simplify and speed up the implementation and minimize post-launch maintenance.

One challenge was master data management. Although the legacy system was a single data source, the data structure from previously disparate ERP systems had yet to be standardized. Each location maintained its own master data scheme. For example, multiple locations produced and sold the same part, but each gave it a unique name or number.

The company aligned the data structures and relationships to allow references to legacy part numbers. Dirty or duplicated data was cleared out to enable sharing and enterprise-wide analytics. With this harmonization finally achieved, workflows and data are now common. The company can quickly adjust to changes in customers’ preferences, vendor pricing, and other market conditions. "When you get it all together, the technology is effortless with Dynamics 365. It took a while to get here, but we’re never going back," says Bäckman.

Excluding the sacrosanct Nordic July holidays, the focused PMC and Tietoevry team, in partnership with the Microsoft FastTrack team, applied the Success by Design framework and successfully launched Dynamics 365 Finance and Supply Chain Management in just eight months. Coming from an on-premises system that required significant external IT support, maintenance, and troubleshooting, it was hard at first to switch gears and trust that, “even though there’s less to see physically in terms of servers, etc., it works even better and is easier to use than our legacy system,” says Bäckman.

“We deployed Dynamics 365 for operations in four countries in eight months, and we would not have been able to do it without Microsoft FastTrack as an enabler,” Bäckman added.

More than a data migration

Nearly five years after moving into production, PMC Hydraulics Group is busier than ever, and Dynamics 365 is an integral part of its business operations. With the solution now running in Sweden, Finland, Poland, Denmark, China, India, and Estonia, Bäckman carefully estimates a 20 to 30 percent savings in overall total cost of ownership. That includes cost savings for maintenance and updates previously managed by consultants and hosting services. PMC was also able to remove the cost of ISV solutions for credit management, VAT, Intrastat reporting, and warehousing, all of which have been replaced with standard Dynamics 365 capabilities. Additionally, PMC is managing subscription licensing more cost-effectively with pay-as-you-need pricing versus the bulk perpetual structure of the past.

Other benefits of the transition to Dynamics 365 include:

• Improved security and privacy with zero system disruption to date.
• Efficient, enterprise-wide workflows, and real-time data visibility.
• Up to date, on-demand insights to support decision making.
• Flexibility and scalability to grow in new markets and adapt to customer needs.

According to Bäckman, “While it wasn’t the key driver, now we can see that standardizing and moving to the cloud has actually stabilized our costs quite a bit and [made them] more predictable.”

Taking advantage of all the tools

PMC was drawn to Microsoft because it invests so heavily in technology and is always rolling out new services and improving its platform. Now that everything is running smoothly, the PMC team looks forward to identifying enhancements in Dynamics 365 and Power Platform offerings that will further support their digital transformation.

One particularly interesting area for the future is the introduction of AI into the Supply Chain processes.

With Dynamics 365, PMC Hydraulics Group has all the tools it needs to grow and evolve for continued success today and in the future.