At Microsoft Build 2025, Microsoft introduced the Dynamics 365 ERP Model Context Protocol (MCP) server marking a major leap forward in how AI interacts with enterprise resource planning (ERP) systems. MCP established a unified, governed protocol that allows AI agents, applications, and services to securely work with ERP data and carry out business operations within Dynamics 365.
The initial release was a significant breakthrough. For the first time, ERP data structures and business logic became discoverable, callable, and consistent through a standardized toolset creating a strong foundation for agent-driven innovation across finance, supply chain, and operations.
Now, Microsoft is expanding that foundation with two major advancements:
1. The Dynamics 365 ERP MCP server is moving from static to fully dynamic.
This evolution unlocks hundreds of thousands of native ERP functions—available in real time and governed through user permissions. Developers, AI agents, and applications can now interact with ERP processes more naturally and securely. This dynamic MCP server is now available in public preview.
2. A new MCP server for analytics is being introduced.
For the first time, the same model-context framework will apply to analytics, KPIs, semantic models, and business intelligence. This analytics-focused MCP server, expected in public preview this December, delivers governed and consistent access to insights across the ERP ecosystem.
Together, these advancements transform how ERP systems, data, and AI agents connect making extensibility simpler, accelerating development, and strengthening governance across critical business processes.
The Model Context Protocol: A Shared Foundation for ERP and AI
The Model Context Protocol (MCP) establishes a universal way for agents, apps, and services to interact with enterprise data and business logic. Instead of relying on custom APIs or fragmented integrations, MCP provides a consistent, governed framework that standardizes how ERP operations are accessed and executed.
What MCP Enables for Developers
With MCP, developers can:
- Build once and reuse across multiple ERP apps and environments
- Dynamically expose ERP actions and data to AI agents
- Ensure consistent permissions, data access, and auditing across all integrations
This makes it easier for partners and customers to build intelligent agents whether it’s reconciling accounts, processing invoices, triggering journal entries, or pulling KPIs across Finance, Supply Chain, HR, or Projects. Once an MCP server is attached, the agent automatically gains secure access to operations and analytics based on its security role.
As organizations shift from “systems of record” to “systems of action,” MCP becomes the connective layer that unifies ERP data, analytics, and AI. The move from static to dynamic MCP, along with the new analytics-focused MCP server, is a major step forward in creating a more adaptive and AI-ready ERP architecture.
From Static to Dynamic MCP
The first MCP server, introduced at Build 2025, offered a static set of 13 curated tools for Dynamics 365 Finance and Supply Chain. It helped early adopters experiment with real agent scenarios, but static systems come with limits toolsets were fixed, updates required code changes, and extensibility was slow.
The new dynamic ERP MCP server, now in public preview, removes those constraints. Instead of a fixed catalog, it provides a flexible, adaptive framework that evolves with business needs. Agents can now perform nearly any action a user can from reading and writing data to triggering processes—without custom code, connectors, or APIs.
This shift unlocks far broader automation possibilities and sets the stage for next-generation ERP intelligence.
How It Works
The new dynamic MCP server allows agents to interact with ERP systems much like a human user would. Instead of relying on fixed, predefined tools, agents can now open forms, update fields, trigger actions, and navigate through the application using server APIs. This replaces earlier static tools—such as “Find Approved Vendors” or “Release Purchase Requisition Lines” with a far more flexible, form-driven approach.
Because of this shift, hundreds of thousands of ERP functions across Finance, Supply Chain, HR, and Project Operations become instantly accessible. Every action the agent performs automatically inherits ERP’s built-in permissions, auditing, and security policies, ensuring innovation doesn’t come at the cost of compliance.
The MCP server also updates its context dynamically. With each interaction, it adjusts to the agent’s security role, environment configuration, extensions, and customizations—meaning the agent always works with accurate, up-to-date information. ISV and custom extensions are included automatically, with no extra integration effort.
For example, imagine an agent responsible for choosing a supplier for a purchase requisition. It can analyze pricing and performance data, open the requisition form, fill in the selected supplier, save the record, and submit it for approval—all through native MCP capabilities. This real-world scenario reflects how the new dynamic server supports complex, end-to-end business processes with speed, intelligence, and precision.
Extending MCP to Analytics
Microsoft is now expanding MCP beyond operations and into analytics. The new Dynamics 365 ERP MCP server for analytics applies the same model-context framework to business intelligence, giving agents governed access to measures, dimensions, reports, and semantic models stored in Business Performance Analytics (BPA). This ensures that every insight whether generated by an AI agent or an end user is built on consistent, trusted definitions.
By connecting ERP transactions with analytics under one unified protocol, MCP eliminates discrepancies and creates a reliable foundation for forecasting, variance analysis, and data-driven decision-making. Agents can now generate insights using natural language and surface them directly inside tools like Microsoft Copilot or Teams, making advanced analysis easier and more accessible.
For partners and developers, this opens the door to building analytics extensions that tie directly into ERP models while still maintaining governance, security, and auditability.
Why This Evolution Matters
This evolution goes far beyond launching new APIs it introduces a governed, scalable architecture for innovation across Dynamics 365 ERP. For IT teams, the dynamic MCP server provides a standardized, secure way to publish and manage capabilities, reducing maintenance overhead and accelerating solution delivery.
For business leaders, the analytics MCP server ensures that every insight and AI-driven recommendation is rooted in consistent, accurate ERP definitions. This shift enables finance and operations teams to move from reactive reporting toward proactive, intelligent decision-making.
Together, the dynamic MCP server and the analytics MCP server create a unified environment where data, analytics, and automation work seamlessly. By unlocking hundreds of thousands of ERP functions and extending the same framework to analytics, Microsoft is laying the foundation for ERP systems that evolve continuously with the business—secure, adaptive, and built for the AI era.
Partner Innovation and Ecosystem Impact
The evolution of MCP is creating a major shift in how partners build, extend, and deliver intelligent ERP solutions. With a unified, governed integration layer across Dynamics 365, partners no longer need to rely on custom APIs or heavy integration work. Instead, they can leverage MCP to build agents that are reusable, compliant, and capable of accessing the full breadth of ERP functions including ISV extensions and customizations—without deep code dependencies.
The dynamic MCP server allows partners to create agents that adapt to each tenant’s unique configurations while still maintaining enterprise-grade security, permissions, and auditability. Meanwhile, the new analytics MCP server gives partners governed access to standardized measures, KPIs, semantic models, and BPA datasets—letting them build insight-driven apps that align perfectly with ERP’s trusted definitions.
Early partner solutions highlight how MCP is already transforming the ecosystem:
- RSM is helping manufacturers operate with greater agility by automating shop floor issue resolution, reducing downtime, and enabling real-time corrective actions.
- HSO’s PayFlow Agent accelerates accounts payable processes by handling payment inquiries automatically and delivering accurate, real-time status updates, improving transparency for finance teams.
- Fellowmind is eliminating repetitive data entry by converting emailed delivery notes directly into inbound loads, saving time and reducing errors.
- Cegeka supports rapid quality recall management with an agent that traces defective products across inventory and customer locations, orchestrating the right actions quickly.
- Crowe extends automation beyond traditional workflows by enabling AI agents to handle complex, unstructured tasks across sales orders, contracts, and vendor interactions.
- KPMG enriches supplier risk analysis by blending ERP data with external market indicators, giving leaders a more holistic view of supplier performance and resilience.
- Annata is transforming service operations by connecting AI directly to enterprise workflows, enabling agents to secure parts, schedule service, and coordinate multi-step processes within minutes instead of days.
- SignUp Software improves production reliability by providing an AI-driven downtime agent that identifies issues, simulates recovery options, and recommends optimal production plans.
These examples show how MCP is enabling partners to deliver deeper automation, smarter insights, and more connected ERP experiences—while reducing integration overhead and maintaining strong governance. It sets the stage for a more innovative, collaborative, and scalable ERP ecosystem across Dynamics 365.
Building the foundation for adaptive ERP
Microsoft is making MCP the core architecture for all future Dynamics 365 ERP experiences. To create a unified, intelligent, and context-aware ecosystem, every ERP team is moving toward a shared MCP-based framework:
- All new ERP agents will be developed on MCP.
- Existing agents will migrate to MCP by December 2025.
- All tools on the static ERP MCP server will shift to the new dynamic, event-driven framework.
By standardizing on MCP, Microsoft ensures that every ERP agent whether built by Microsoft or partners—operates with shared context, consistent governance, and seamless interoperability across Dynamics 365 apps and the broader Microsoft ecosystem. This shift lays the foundation for adaptive, agent-driven ERP.
What’s next
The dynamic Dynamics 365 ERP MCP server is now in public preview, with the analytics MCP server entering preview in December 2025. Over the coming months, Microsoft will work closely with early adopters to test new capabilities, refine the architecture, and evolve the agentic ERP foundation.
Customers and partners who want early access can reach out to their Microsoft representative or review the latest documentation: Use Model Context Protocol for finance and operations apps.
You can also explore the future of Agentic ERP at upcoming events:
- Microsoft Ignite, San Francisco (Nov 18–21): Deep technical dive into Agentic ERP and MCP extensibility.
- Convergence, Miami (Dec 9–11): Learn how AI and MCP are transforming ERP and shaping next-generation operational strategies.
FAQs
1. What is MCP in Dynamics 365 ERP?
MCP (Model Context Protocol) is Microsoft’s new architecture designed to give ERP agents shared context, governance, and real-time interoperability across Dynamics 365 applications.
2. Why is Microsoft moving all ERP agents to MCP?
Standardizing on MCP ensures every agent—whether built by Microsoft or partners—works on the same foundation. This improves consistency, reduces duplication, enables adaptive intelligence, and simplifies extensibility.
3. When will existing ERP agents migrate to MCP?
Microsoft plans to migrate all existing ERP agents to MCP by December 2025, making it the default architecture for future ERP innovation.
4. What’s the difference between the static MCP server and the new dynamic MCP server?
The static MCP server required predefined tools and limited flexibility.
The new dynamic MCP server supports real-time tool registration, richer context sharing, and more adaptive agent behavior—making ERP agents more intelligent and responsive.
5. How can customers and partners join the MCP preview?
Organizations can contact their Microsoft representative or refer to the official documentation to join the public preview and start testing the new MCP capabilities early.
