When the business model shifts: how an ERP keeps up

What does it mean when a business model shifts?

A business model rarely shifts with a board decision. It usually starts quietly. A machine builder sells a maintenance contract alongside the machine and later bills by operating hours. A wholesaler opens an online shop for end customers. A manufacturer offers software with its equipment that is paid monthly. The old business carries on, the new one is added.

The pressure behind this is real. In a survey by the German Economic Institute (IW) of around 900 firms from industry and industry-related services, 78 per cent of the firms facing Chinese competition say it offers comparable products at lower prices. Among firms under heavy competitive pressure, Chinese prices are more than 30 per cent lower in 63 per cent of cases (IW-Report 30/2024, June 2024). A study by FIR at RWTH Aachen for the VDMA's IMPULS Foundation draws the conclusion for mechanical and plant engineering: move from product supplier to solution provider, with services, digital products and subscriptions (FIR/VDMA IMPULS, "Success factors of digital business models for mechanical and plant engineering", January 2025). KfW Research shows that the move can pay off: SMEs with business model innovations show productivity that is 4.9 percentage points higher (KfW Research, Fokus Volkswirtschaft No. 480, 8 January 2025).

Where does the ERP notice the shift first?

Not in the licence, and rarely in a missing function. The ERP notices the shift in the basic assumptions it was built on. In the old model, the item is the central unit: it is manufactured, sold, delivered and invoiced. In the new model, it is the contract. It has a term, a billing cycle, perhaps a price per use, and it is tied to an installation at the customer's site, not to a delivery note.

This leads to questions that quickly become concrete in day-to-day work. When is revenue recognised, at invoicing or spread over the term? Where is it recorded which installation at which customer has which contract? And what does the contribution margin look like when a customer buys the machine, maintenance and software in one package? Anyone who does not answer these questions in the system answers them by hand at month-end.

Why does the new business so often end up alongside the system?

Because it is small at the start. The first twenty maintenance contracts fit into a spreadsheet, and the billing is done by a colleague who knows the business. That is sensible as long as you are experimenting. It becomes expensive when the experiment turns into a business unit and the spreadsheet stays. After a year, invoices, renewals and price adjustments depend on one file and one person. This is exactly how the pattern begins that we describe in the article Never starting over again: how an ERP grows with the business : changes are filed away at the edge of the system instead of inside it.

A new business model rarely fails because of the ERP. It fails because it runs alongside the ERP for a year.

What does Business Central offer as standard today?

More than many expect. Since October 2024, subscription billing has been part of standard Business Central and is included in the Essentials licence. It manages contracts for items and services, recurring and usage-based billing, price adjustments over the term, as well as deferrals and revenue recognition based on billing schedules (Microsoft Learn, release plan 2024 release wave 2, generally available since 2 October 2024). Since April 2026, an enhanced Subscription Billing Power BI app and less effort for recurring invoicing have been added (Microsoft Learn, release plan 2026 release wave 1).

So the function is rarely the problem. The question is whether the data foundation underneath can carry the second model. The FIR study explicitly names the ability to run traditional and new business models in parallel as a prerequisite for the change. For the ERP, this means that items and contracts, one-off sales and subscriptions, dealers and end customers must be able to sit side by side in one data foundation without one bending the other.

How can you tell that an ERP can keep up?

Three questions help before the new business grows. Can a new billing logic be added without having to rebuild the item master, chart of accounts or dimensions? Is there a process owner for the new model who is allowed to make decisions in the system, instead of every exception going through IT? And does controlling deliver figures for each business model separately, without manual analysis at month-end?

Anyone who answers yes to all three implements a new requirement in weeks, not quarters. That is the core of what we mean by an Evergreen ERP : not the current version, which Microsoft delivers in the cloud anyway, but a system that reflects the current state of the business. Anyone who says no twice should settle the basics before the next contract lands in the spreadsheet.

How we support companies when the business model shifts

We have been supporting ERP projects in mid-sized companies for more than 25 years, and Business Central is our home. When a new business model is added, we do not start with the configuration but with three questions: what is really changing in the business, which part of it does the data foundation have to carry, and who will decide on it in future? Only then comes the implementation in the standard, as lean as possible. Our goal is that the next major ERP project is the last one, and that every further change after it becomes routine. What this looks like is described under Just one last major ERP project.

Is your business changing right now, and you are not sure whether your ERP will keep up? Then we are happy to look at it together with you. The first conversation is about your situation, without a presentation and without a proposal.