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Intelligent ERP: the foundation of digital transformation

Enterprise resource planning platforms are as old as the hills, and have changed beyond all recognition. What could the future of the systems look like?

Enterprise resource planning (ERP) platforms – which integrate the management of core business processes – have come a long way. Originally comprising monolithic on-​premise systems designed primarily for inventory management and control in the manufacturing sector, they evolved in the 1990s into a series of separate modules – for example, human resources, inventory, and supply chain management. More recently, ERP has shifted towards cloud-​based systems that greatly increase accessibility, allowing users to share and transfer data internally and externally in real time, making them more cost effective, faster and more easily scalable, while the web dimension means integration and data accuracy are also improved.

Technologies such as artificial intelligence (AI) and machine learning are transforming business practices as a whole

More changes are now on the way. Technologies such as artificial intelligence (AI) and machine learning are transforming business practices as a whole, and ERP is no exception. With the advent of so-​called intelligent ERP (i‑ERP), high-​volume repeatable tasks can be automated, and less-​frequent tasks can be assisted by human-​machine interaction. Applications that instantly analyse sets of data for products, sales and markets can reduce the sales cycle time. Meanwhile, i‑ERP systems are becoming increasingly assistive and conversational, often using chatbot interfaces; this makes them more intuitive and easier to navigate, improving both user and customer experience.

“An assistive user interface is key in enabling today’s knowledge workers to become the digital knowledge workers of tomorrow, and though true conversational interfaces are a future goal, the quality of the interaction will improve over time, enabling flatter organisations, a fluid work environment, and goal-​oriented and redefined back-​office processes,” says Alexandros Stratis, IDC research manager, European software.

 

The benefits don’t stop there. Through its ability to automate routine tasks that are currently carried out by human beings, i‑ERP can significantly cut operational costs. Operational bottlenecks can be spotted more easily and productivity enhanced, while in-​context access to curated and aggregated data sets means the accuracy of business insights can be greatly improved.

“Overall, i‑ERP leads to speedier, more intuitive, analytics-​based insights, higher employee engagement, automation of routine or standardised tasks, process redefinition based on data and the opportunity to innovate and refine existing or stagnant business practices,” says Mr Stratis.

It’s hardly surprising, then, that i‑ERP is starting to take off in a big way. By 2021, IDC predicts, half of all ERP applications globally will combine AI and standardised industry and line-​of-​business best practices. By 2023, it says, i‑ERP will have led 65 per cent of the top 2,000 public companies in the world to refresh their systems through a process of rationalisation, modernisation, and transformation.

“It is certain it will be a motivator for change and it will drive investments in software in the next few years,” says Mr Stratis. “Enterprises will create their i‑ERP environments by drawing on extensive and dynamic ecosystems of software, content, and services providers – and this is where the whole concept of the modern enterprise ecosystem becomes very relevant for the future.”

According to independent ERP consultancy Panorama Consulting Solutions, only 60 per cent of organisations currently say that their ERP implementations have played a significant role in their digital strategies.

Enterprises will create their i‑ERP environments by drawing on extensive and dynamic ecosystems of software, content, and services providers

Alexandros Stratis, IDC

“Instead, many organisations use ERP software solely for the purpose of addressing technical pain points or improving transactional processes,” says the firm. “If you don’t align new technology with your people and processes, you may not realise expected business benefits.”

In fact, when properly implemented, i‑ERP can play a significant role in making organisations more agile and in genuinely transforming business processes, improving the efficiency of certain activities and eliminating others. It should be considered as an aid for redefining roles and responsibilities in advancing digital transformation, says Mr Stratis; with more tasks open for automation, human jobs will favour those that are beyond the scope of automation or that lend themselves to augmentation via human-​machine interaction. When coupled with the changes in quality of the user experience, “it is bound to emerge as the major differentiator between applications,” he says.

IDC says that i‑ERP is starting to become a significant motivator for organisations to change, and predicts that as businesses catch on to the advantages, it will be a big driver for investments in software over the next few years.

“Enterprises will create their i‑ERP environments by drawing on extensive and dynamic ecosystems of software, content, and services providers,” says Mr Stratis, “and this is where the whole concept of the modern enterprise ecosystem becomes very relevant for the future.”