ERP providers tout generative AI as the go-to technology for cloud migration assistance, analytics and more. But enterprise customers have yet to adopt the added features.
Top tier vendors, Microsoft and SAP among them, have spent much of the past year adding generative AI capabilities to the crown jewels of enterprise software.?Many of their customers are hanging on to older versions of ERP systems that can’t support the technology.
Experts attribute the delay in adoption to the technology’s lack of maturity. But the biggest hurdle ahead are pending ERP upgrades, as customers hang on to older versions of the software that can’t support generative AI use cases.?
Let me first expand on a what is discussed in this article as I have either used ERP systems or leverage ERP systems as part of the data connection:
- ERP systems are very complicated due to table structure including how sales, expenses, capital, and other items are handle within the various modules including the table structure.
- ERP systems built in logic as part driving the canned operational and finance reports including inventory management, financial statements, accounts receivable, supply chain management, sales contract management, and other reports. The canned reports are difficult to modify as they tend to be out of the box solution based on vendor, customer, and general ledger setup. https://community.sap.com/t5/enterprise-resource-planning-blogs-by-sap/harnessing-clean-core-and-sap-business-ai-key-partners-innovate-with/ba-p/13751250
SAP
- ERP systems also go extensive testing including audits due to the data being used as part of the regulatory reporting cycle. https://www.jitterbit.com/blog/what-is-erp-integration/
- ERP systems have challenges as many organizations leverage 3rd party options for their human capital management (Payroll and HR Management) https://www.dhirubhai.net/pulse/workforce-planning-human-capital-management-paul-young-zexic/
- Close, consolidate, and reporting cycle especially the consolidation process can be complex due to ownership rules, intercompany eliminations, currency management, segment reporting, and other parts of the consolidation process. ERP by design lack the functionality to complete cross geography and divisional consolidation - https://www.dhirubhai.net/pulse/what-makes-close-consolidate-reporting-solution-paul-young-ey2lc/
- Business process changes are not new to organizations as they have been done for over 20 years. The big difference now is how much focus both private and public sector organizations are looking at best ways to drive generative use cases to streamline order to cash, purchase to pay, customer service and support, and other business processes - ?
- https://www.dhirubhai.net/feed/update/urn:li:ugcPost:7216353209680805888?commentUrn=urn%3Ali%3Acomment%3A%28ugcPost%3A7216353209680805888%2C7216436603190222848%29&dashCommentUrn=urn%3Ali%3Afsd_comment%3A%287216436603190222848%2Curn%3Ali%3AugcPost%3A7216353209680805888%29. The challenge with any ERP team is making changes to system code including working with ERP internal teams along with the ERP vendor. Table structures can make it very challenging to update the code as part of transforming a business process.
- ERP systems also pushed data out for the financial planning, reporting, and analysis cycle. The data in most cases either comes from flat file or through a ODBC connection - Blog – Why FPA team should move away Microsoft Excel Vlookup function? https://www.dhirubhai.net/pulse/how-best-work-external-data-microsoft-excel-paul-young-7ukgc/ ??
- ERP and Data Management required proper alignment. Data warehouses have been around for decades. I used Oracle data warehouse back in the late 2000s as part of pulling data various operational, sales, and other data as part of my role as Senior Financial Analyst - https://www.dhirubhai.net/posts/paul-young-055632b_as-it-costs-mount-cios-want-hybrid-cloud-activity-7220073421311758337-ihIk?utm_source=share&utm_medium=member_desktop or Don’t rush ethics in generative AI adoption plans ?- https://www.dhirubhai.net/posts/paul-young-055632b_dont-rush-ethics-in-generative-ai-adoption-activity-7104813632529580032-W7X0?utm_source=share&utm_medium=member_desktop or https://www.slideshare.net/slideshow/business-analytics-and-audit-analyticspptx/257109902 or https://medium.com/@paul.young_40784/why-you-need-a-data-strategy-eb8c351fa72e
- ERP upgrades tend to be pushed out by both private and public sector due to time it takes to complete an upgrade. Organizations will look at required fixes as part of managing the security, functionality, performance, and sizing of their ERP application - https://www.dhirubhai.net/advice/0/youre-facing-resistance-upgrading-your-lq6if
- There has also been implementation challenges with ERP systems - https://erpsoftwareblog.com/2024/07/common-challenges-in-erp-implementation/
I have worked with ERP systems upgrades and ERP data over the years as such here are pitfalls to avoid:
- Ensuring you have the right project plan for upgrade including testing, quality assurance, and production environment
- Working with the ERP vendor and a qualified business partner on the upgrade and/or system modifications for your ERP code change.
- Ensuring that proper controls are put into place around audit process as part managing the system of record data.
- How best to work ERP data outside of the ERP system through data lake structures and the use of business analytical tools like IBM Planning Analytics or Board or OneStream Software or Anaplan or Vena Solutions or Workday Adaptive Planning or other vendors.
- Ensure you have clearly define use case for generative AI including security assessment, HR, and ethical reviews. There should be metrics including ROI - Blog – 1 and 10 Data and AI projects meet their ROI - https://www.dhirubhai.net/posts/paul-young-055632b_in-10-years-a-4-in-1-ai-task-will-be-profitable-activity-7220921151777128448-LWj2?utm_source=share&utm_medium=member_desktop
Paul Young CPA CGA is a former Senior IBM Customer Success Manager that has deployed over 300 data and AI solutions across geographies for the past 8 years. Paul is also FPA SME on how best to integrate macro and micro indicators as part of the data journey for the operational, management, and regulatory reporting cycles.