Island Pacific vs. Dynamics 365: A comparison
When on-premise systems reach end of life, retailers are often at a crossroads
What happens when your on-premise infrastructure reaches its end of life?
Retailers running Island Pacific ERP on-premise are no strangers to hardware deprecation announcements. While the ERP software itself will continue to be supported, IBM's Power 9 servers—which many Island Pacific users rely on—will reach end of life on January 31, 2026. That leaves retailers with two choices:
- Invest in a costly, time-consuming server upgrade to keep running Island Pacific on-premise.
- Seize the opportunity to migrate to the cloud and modernize their ERP strategy.
For decades, the Island Pacific + IBM Power server combination was a strong choice for retail operations. However, the retail landscape has evolved significantly, and the capabilities that today’s businesses need—scalability, AI-driven analytics, omnichannel commerce, and real-time insights—are difficult (if not impossible) to achieve on aging, on-premise hardware.
Deprecation announcements like this aren’t just obstacles—they’re a chance to rethink the future. Instead of doubling down on legacy infrastructure, retailers can evaluate cloud-based ERP solutions like Microsoft Dynamics 365 to expand capabilities, enhance agility, and position themselves for future growth.
What hardware is approaching end-of-life for Island Pacific?
It’s important to note that support for the Island Pacific ERP system is NOT ending; support for IBM's Power 9 servers, is ending on January 31, 2026. If you’re an Island Pacific user, you can keep using your ERP system on-premise by upgrading your servers, but that's an expensive and time-consuming prospect.
Even though organizations in every industry face this same dilemma, this blog focuses on retailers in particular since we encounter this scenario often. Moving off legacy infrastructure and onto the cloud opens up a realm of possibilities for retailers to modernize their brands.
If your business systems look like this, it may be time for a change.
Island Pacific vs. Dynamics 365: Which is the better choice for retailers?
Island Pacific is a global leader in providing retail software solutions to help retailers manage and optimize their operations across multiple channels. The company's flagship product, Island Pacific SmartSuite, offers a comprehensive suite of modules designed to streamline retail operations. These modules include merchandising, replenishment, financials, sales audit, warehousing, and ticketing functionalities.
Dynamics 365 is a suite of applications that unify processes across finance, supply chain, commerce, and customer service on a single platform. Its integration with other Microsoft products, such as Office 365 and Azure, provides a seamless experience for users familiar with the Microsoft ecosystem.
Below is a detailed comparison of the two systems:
| Feature Category | Island Pacific | Microsoft Dynamics 365 |
|---|---|---|
| Merchandising & inventory management | Offers a robust merchandising system through its SmartRetail module, enabling retailers to manage product assortments, pricing, promotions, and inventory across multiple channels. The system provides real-time visibility into stock levels, facilitating efficient inventory control. | Provides comprehensive inventory management features within Dynamics 365 Supply Chain Management. Users can track inventory levels, manage procurement processes, and optimize warehouse operations. The system supports real-time analytics to forecast demand and adjust inventory accordingly. Partners also offer solutions to customize Supply Chain Management for retailers, with advanced inventory allocation capabilities. |
| Point of Sale (POS) | Features the SmartStore module, which includes fixed and mobile POS solutions. These systems are designed to enhance in-store customer experiences by providing seamless transaction processing and integrating with back-end systems for real-time data synchronization. | Offers POS capabilities through Dynamics 365 Commerce, enabling unified retail experiences across physical and digital channels. The system supports personalized customer engagements, centralized payment processing, and integrated inventory management. |
| Financial management | Includes a Financials module that interfaces tightly with merchandising and warehouse functions, ensuring seamless invoice matching and financial reporting. Retailers can manage accounts payable, chart of accounts, and extract stock ledger data efficiently. | Dynamics 365 Finance offers global financial management capabilities, including budgeting, costing, consolidation, and financial reporting. Its integration with Power BI allows for in-depth financial analytics and insights. AI and Copilot capabilities can help automate and streamline financial processes. |
| Omnichannel capabilities | SmartOmni provides a centralized view of inventory across all channels, enabling retailers to offer flexible fulfillment options such as ship-from-store and click-and-collect. This ensures a consistent customer experience regardless of the purchasing platform. | Supports omnichannel retailing through Dynamics 365 Commerce, allowing for cohesive customer experiences across online and offline channels. Features include unified customer profiles, cross-channel loyalty programs, and seamless order fulfillment processes. |
| Customization & integration | Highly flexible and modular system, allowing retailers to integrate third-party apps and customize solutions as needed. Retail-specific features work well within the platform but limited API support makes integrating with other tools difficult. | Dynamics 365 apps have an extensibility model that lets you extend the built-in functionality to fit different requirements. More customization options are also available through the Microsoft Power Platform, allowing businesses to develop custom workflows. Dynamics 365's native integration with other Microsoft services ensures a cohesive ecosystem for users. |
| User experience & interface | Emphasizes a user-friendly interface with intuitive dashboards, enabling quick adoption by retail staff. The system's design focuses on streamlining retail operations, reducing the learning curve for new users. | Features a modern interface consistent with other Microsoft products like Office 365, providing a familiar environment for users. The system offers customizable dashboards, workspaces, and a responsive design, enhancing user engagement across |
| Scalability & deployment | Offers both on-premises and cloud-based solutions, allowing retailers to scale operations as their business grows. The modular nature of SmartSuite enables businesses to add functionalities incrementally. | Primarily a cloud-based solution, it offers scalability to accommodate businesses of varying sizes. The platform's architecture supports global operations, making it suitable for enterprises with expansive reach. |
| Licensing & costs | Pricing details are typically customized based on the specific modules selected and the scale of deployment. Infrastructure for on-premises deployments can add significant costs. | Operates on a subscription-based model, with pricing varying depending on the selected apps and user count. A Microsoft partner with retail industry experience can help you estimate your licensing and Azure subscription costs. |
| Customer support | Personalized customer service is available for enterprise clients. | Microsoft offers Standard, Premier, and Unified Support. Some Microsoft Partners offer ongoing support programs, from handling maintenance and upgrades to implementing new modules and capabilities. |
The challenges of remaining on AS400
Retailers still running AS400 face mounting challenges as the platform ages. While AS400 has been a reliable mainstay for decades, the reality is that legacy hardware is costly to maintain, difficult to integrate with modern solutions, and increasingly reliant on a shrinking pool of IT professionals with the necessary expertise. Upgrading AS400 infrastructure often means investing in specialized hardware and custom development, making it an expensive and resource-intensive endeavor.
Comparing AS400 to Dynamics 365 isn’t a direct 1:1 comparison—AS400 is a hardware and operating system platform, while Dynamics 365 is a modern, cloud-based ERP system. However, the comparison is still valuable because it highlights what’s possible with a cloud-based approach. The major differences are highlighted below:
Technology & Architecture
| Feature | AS/400 (IBM i) | Microsoft Dynamics 365 ERP |
|---|---|---|
| Platform | On-premises, IBM Power Systems | Cloud-based (Azure), hybrid, or on-premises |
| Database | IBM Db2 for i (integrated) | Microsoft Dataverse & Azure SQL |
| Programming | RPG, COBOL, CL, Java | Modern languages (.NET, C#, JavaScript) |
| User Interface | Green screen (5250) or web-based GUI | Web-based, intuitive UI with Power Platform integration |
| Integration | Limited API support, file-based exchange | Open API, Power Platform, seamless Microsoft 365 integration |
Functionality & Capabilities
| Feature | AS/400 (IBM i) | Microsoft Dynamics 365 ERP |
|---|---|---|
| ERP Scope | Custom-built or third-party ERP solutions | Full ERP suite (Finance, Supply Chain, Commerce, etc.) |
| AI & Automation | Limited capabilities | Built-in AI (Copilot, predictive analytics) |
| Business Intelligence | Basic reporting, Excel exports | Power BI, embedded analytics |
| Customization | Highly customized but complex | Low-code/no-code customizations with Power Platform |
| Scalability | Scalable but hardware-dependent | Elastic scalability in the cloud |
Security & Compliance
| Feature | AS/400 (IBM i) | Microsoft Dynamics 365 ERP |
|---|---|---|
| Security | Strong, but older security models | Cloud-based, zero-trust security model |
| Compliance | Industry-compliant but requires manual management | Built-in compliance (GDPR, SOX, HIPAA, etc.) |
| Updates | Manual software updates, patches | Automatic cloud updates with regular enhancements |
Costs & Maintenance
| Feature | AS/400 (IBM i) | Microsoft Dynamics 365 ERP |
|---|---|---|
| Total Cost of Ownership (TCO) | High (hardware, licenses, maintenance) | Lower TCO with cloud model (subscription-based) |
| IT Maintenance | Requires in-house AS/400 specialists | Cloud-based, managed by Microsoft |
| Upgrade Costs | Costly and complex | Continuous updates included |
Future-Proofing
| Feature | AS/400 (IBM i) | Microsoft Dynamics 365 ERP |
|---|---|---|
| Cloud Adoption | Limited, mostly on-premises | Cloud-native, hybrid options available |
| Workforce Readiness | Hard to find AS/400 specialists | Widespread adoption, easy hiring |
| Innovation | IBM continues to support but limited innovation | Constantly evolving with AI, IoT, automation |
Evaluating your ERP options? Consider the future
Your organization's infrastructure should be a growth enabler, not a limitation. As on-premise hardware reaches end-of-life, retailers face a critical decision: invest in costly infrastructure upgrades or embrace cloud solutions that drive innovation and efficiency.
Moving from Island Pacific ERP on-premise to Dynamics 365 isn’t just about avoiding outdated hardware—it’s about unlocking new capabilities that redefine how retailers operate:
- Real-time, unified commerce – Seamless data integration across finance, supply chain, POS, and customer service.
- AI-powered insights with Copilot – Embedded intelligence to enhance decision-making and automate workflows.
- Cloud-based flexibility – Scale as needed, reduce IT overhead, and ensure business continuity.
- Modern, intuitive UI – A familiar, user-friendly interface that boosts adoption and productivity.
- Automatic updates & innovation – Stay ahead with continuous enhancements and an exciting feature roadmap.
- Microsoft ecosystem integration – Work effortlessly with Office 365, Power BI, and other Microsoft solutions.
- Low-code development with Power Platform – Empower teams to customize and extend functionality without heavy IT involvement.
- Easier talent acquisition – Skilled professionals prefer working with modern systems, not legacy green screens.
FREE ISLAND PACIFIC MIGRATION ASSESSMENT
If you're still on Island Pacific, now is the time to explore your options. A smooth migration to Dynamics 365 can future-proof your retail business while reducing costs and improving efficiency. Contact us today for a free assessment. Our experts will help you map out a cost-effective path forward and give you a blueprint for a successful ERP project.