United Kingdom, Department for Environment, Food, and Rural Affairs renews financial operations with Dynamics 365

In the United Kingdom, the Department for Environment, Food, and Rural Affairs (Defra) is charged with improving and protecting the environment, with a mission to enhance it for the next generation. They are responsible for policy and regulations that span a wide range of areas, including sustainable development, biodiversity, pollution control, animal health and welfare, and farming. With this broad remit, their work impacts the life of UK citizens each day.

The Rural Payments Agency (RPA), an executive agency of Defra, distributes the European Union’s Common Agricultural Policy (CAP) and agri-environment payments to farmers, traders, and landowners in England. The RPA pays out more than £2.4 billion each year to support a thriving farming and food sector and strong rural communities. Since about 250,000 payments are made annually to 111,000 individual farmers or customers, the RPA’s payment and accounting service is extremely complex and relies heavily on technology. In 2021, the agency was facing the end of support for their existing service and urgently needed to migrate to a new solution and modernize their technology.

“Defra has a strategic objective to move its services to the cloud where possible, which will help to increase cyber resilience, improve user experience, and avoid future obsolescence. To be ready for the annual payments window, we had to complete the migration in September 2021. If we had missed this window, we would have had to delay the project significantly, and become unsupported. There was a need for huge collaboration between many different teams in this project, particularly between Defra’s Digital, Data & Technology Services, the Rural Payments Agency, Hitachi, and Microsoft.”

Neil Davies, FFCP Dynamics 365 Finance & Operations Program Manager, Defra

Time for an upgrade

The payments system had been using Microsoft Dynamics AX 2012 for more than seven years, but it was due to reach the end of support in late 2021. It was clear that the RPA could not afford the risk of an unsupported platform, given the farming sector’s dependence on the service and RPA’s need to distribute large amount of money in a timely manner. With the date quickly approaching, Defra selected Dynamics 365 because it presented the least complex migration opportunity and would receive significant support from Microsoft.

The new solution would need to support a rapid implementation timeline. It needed to be in place by October 2021 for payments to be made on time during the annual payment window. The solution also needed the flexibility to support both existing farming and agri-environmental payments and emerging and future schemes that would need to be introduced following the UK’s exit from the European Union.

Defra also had the strategic objective to move its services to the cloud where possible, to increase security, improve the user experience, and ensure adaptability to meet changing business needs. They also wanted to streamline business processes, provide a customer portal, and add real-time reporting. And all of this needed to be accomplished with minimal impact on system users and with minimal impact on the legacy systems that the solution would need to continue to interface with.

With those requirements in mind, the Defra team decided to upgrade to Microsoft Dynamics 365 Finance, Power BI, and Power Apps. This powerful combination could give them all the benefits of the cloud for their CAP payments and other existing schemes, plus the ability to adapt as needs continue to change following the exit from the EU.

The implementation

To be ready in time for the 2021 payment window, the migration to Dynamics 365 Finance needed to be completed by September. If they could not cut over before the payment window, the project would have to be delayed until the payment window closed in March, and they would run the risk of losing key project team members to other projects.

Internal business stakeholders at the RPA were nervous about moving to a new solution just before one of the agency’s busiest times of the year. The project team worked to build confidence and address their concerns. The team also emphasized the benefits of moving the system from one stored on physical servers in Defra’s data centers to a system that is predominantly in the cloud (some sensitive banking details were required to be stored on-premises.) The business team also brought in a Change Manager to help ensure that end users would be prepared for the changes in functionality between Dynamics AX 2012 and Dynamics 365 Finance.

Defra implemented capabilities from Dynamics 365 Finance general ledger, accounts payable, and accounts receivable to support RPA’s business needs. The system incorporates a high level of automation. Defra automated the claim entry process, including integrating a claim entry portal, to process up to 50,000 claims per day for farmers, landowners, and other organizations. Claims automatically enter Dynamics 365 as invoices.

Taking advantage of the dual currency functionality of Dynamics 365 Finance, Defra can view new payment reports in pounds sterling while being able to view older claims in euros. The system is used to meet both EU and UK Royal Treasury reporting requirements, with different financial calendars, a different reporting basis (accrual vs. cash), and different currencies (euro vs. pound sterling).

With collaboration and communication across many different teams—including Defra, the RPA, Hitachi Solutions, and Microsoft—the migration was completed on schedule. The Defra team considers the project an exemplar for how internal teams, vendors, and delivery partners can work together to deliver results that truly matter, even under tight deadlines with high stakes.

Benefits and impacts

Once the new Dynamics 365 Finance solution was up and running, users adapted well to the upgrade and there have been fewer support calls. RPA processed 111,000 payments totaling nearly £2.5 billion just in the first three months following the go-live date.

With the addition of Power Apps and Power BI, RPA has a better view of their business through real-time reporting. Further enhancements to reporting, analytics, and data sharing will deliver reporting services to improve information insights and intelligence.

The Dynamics 365 cloud-based solution is more cost-effective than the total cost of an on-premises solution. It has streamlined and integrated RPA’s business processes, enabling enhanced productivity and reducing operational and maintenance costs. Support costs for patches and updates, not to mention hardware costs, are minimized by the cloud model. RPA also has a clear path to continuous improvement, since faster and more frequent deployments are now much simpler and more cost-effective.

Along with greater flexibility and scalability, Defra benefits from the improved security, privacy, and reliability of a cloud-based system. With a more stable service and increased automation, it will be easier to process payments for even more schemes. The new schemes are an important part of Defra’s mission, allowing RPA to target payments to priority areas such as biodiversity, net-zero, water quality, and sustainable agriculture.

“Migrating on to cloud-based Dynamics 365 and Azure Logic Apps has brought reliability and removed risks around on-premises hosting and resulted in a reduction of major operating incidents.”

Maurice Walpole, Senior Service Owner, Defra

What is next?

Since the initial implementation had to happen so quickly, Defra concentrated on the basic functionality required to get through the payments window. Once the payments window closed, they began to think about enhancements and potential expansion of use cases for Dynamics 365 and additional reporting capabilities that they would like to take advantage of. To that end, Defra created a Dynamics 365 Enhancements Program to manage future strategic updates, which includes 15 individual projects.

They are also working on additional cloud-to-cloud integration between Microsoft Azure and Dynamics 365 Finance that will complete the work begun in the initial migration. They plan to move components related to some of their older integration services to Azure to make the payment services more reliable and scalable.

As Defra continues their modernization journey, they will continue to increase their use of Dynamics 365 capabilities as they pursue their mission to improve and protect the environment in the UK.