Artificial Intelligence and the evolution of ERP Systems

Are ERP Systems just a commodity?

Having been in the business for several years I am often asked the question if the ERP Systems are still relevant from a competitive advantage point of view, or if they have turned to be just a commodity.

Based on my experience, this is not the right question, or better, we are not looking at it from the proper angle.

Enterprise resource planning (ERP) systems look a lot different today than decades ago. Back then, you had to input data and move it along your ERP system to make results available for business operations.

Today, ERP systems are delivered via the cloud, capture data automatically, automate business processes, and provide alerts and reporting tools to help you derive the insights you need to make smarter business decisions.

Far from becoming just a commodity, ERP systems are becoming better and delivering value in new ways. That is why we now talk about business applications and not just ERP.

Artificial intelligence (AI) in ERP

Artificial intelligence is an important means by which the modern ERP systems are improving business processes. In ERP, AI technologies are performing tasks that had previously required human intelligence to complete. The technology is being incorporated into ERP systems to further reduce manual effort and accelerate the generation of insights across various business functions. Broadly, this ability is useful in two ways: offloading mundane manual tasks to machines and extracting business intelligence that takes considerable human effort and time to do.?

Examples of AI in ERP?

Among the repetitive tasks that AI-based tools in an ERP can take on are entering expense reports, conducting simple interactions like letting users chat with the system to generate orders, or confirming order receipts in warehouses. AI mechanisms can streamline routine tasks, improve the efficiency of ordinary tasks, and eliminate manual errors.

The more the data AI is given, the better it becomes. Artificial intelligence and machine learning can find new patterns in supply chain data to help drive improvements in areas such as supplier quality, demand forecasting, production planning, transportation management, and more.

An ERP with AI capabilities can predict which production stage results in the most material waste, which equipment in your factory is about to overheat, or which employee is likely to leave your company.

Most of the ERP software solutions have already introduced AI enhancements and Microsoft Dynamics 365 is leading the transformation. Some examples are new products like Dynamics 365 Supply Chain Insight, The Dynamics 365 Intelligent Order Management, Customer Insights, Sales Insights etc.: all use AI and ML for providing insights and to make better business decisions.

AI tools in ERP systems are a game-changer for organizations aiming to transform performance. The use of AI in ERP is not only expected to, but it’s already radically transforming the way organizations manage their data and processes.

So, in conclusion, it’s no-longer in the not too distant future, but now that the only obsolete ERP will be the one that isn't powered by AI and not part of a business applications ecosystem: that’s what I meant when at the beginning I wrote that we were not asking the right question.

These are just examples of how the ERP systems are evolving and are playing a crucial/pivotal role in the digital transformation at the core of each business transformation nowadays. As I stated at the beginning the ERP systems, or better the business applications in the broader sense, are very relevant and playing a big role in the business transformation plans of every company: it is where their digital transformation starts from, and it’s the beginning of their innovation journey.

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