ERP: From Core Solution to Supportive Database in Modern Finance

For over 20 years, ERP solutions have been foundational to business and finance functions. Historically, finance departments could rely solely on ERP systems for key workflows—budgeting, planning, forecasting, purchase-to-pay, order-to-cash, payroll, tax reports, fixed assets, financial reporting, and project management. ERP was the all-in-one solution, encompassing everything from transactions to management reporting. Businesses adapted their processes to the ERP’s functionality, which was the trusted partner of enterprise operations.

However, the landscape has changed. Today’s workflows and technologies demand flexibility and rapid adaptation. Emerging tools like ML, RPA, iPaaS, AI, along with consumer-focused tech and mobile apps, are now critical. Meanwhile, niche solutions in the SaaS market and complex legal requirements add layers of complexity. Altogether, five major factors are reshaping the ERP landscape:

1. Evolving business workflows

2. Emerging technologies and tech stacks

3. Consumer technologies (UI/UX and apps)

4. The growth of niche SaaS solutions

5. Complex legal and regulatory demands

These factors have created significant gaps in ERP functionality. Users are looking for ERP systems to adapt to these shifts, but most ERPs, built as heavy, monolithic structures, struggle to keep up with new demands. The complexity of ERP functionality and databases further limits their adaptability.

To bridge these gaps, ERP providers have introduced app stores for third-party solutions, allowing users to enhance core ERP functionality with improved UI/UX, expanded features, and new technologies. This shift was initially positive, as it kept customers engaged and paying for core ERP solutions. Some ERP companies even pursued mergers and acquisitions of popular third-party solutions to integrate their functionality. While many third-party applications once existed as complementary “satellites,” today some have grown into independent, stand-alone solutions. As a result, we are now seeing a new trend:

Users who once spent all their time in ERP systems are now working in specialized third-party solutions; in some cases, they no longer need to access the ERP at all.

ERPs become a simple database that aggregates the data, which costs hundreds of thousands and millions of $.

Finance Function Breakdown

Purchase-to-Pay

The main processes in this area—corporate cards, reimbursements, procurement, vendor management, bill processing, reconciliations, and payments—have become a separate SaaS market often referred to as “Expense Management Software.” Many players, like Payhawk, Brex, Ramp, Navan, Expensify, Airbase, and Teampay, initially focused on specific needs like receipts, reimbursements, and card expenses. However, they are now expanding to become all-in-one expense management solutions that enable users to submit and pay reimbursements, generate virtual/physical cards, manage bills, vendors, reconciliations, and more. All transactions, from those tools, can be automatically synced to the ERP.

AP accountants no longer need to access the ERP directly to manage AP functions.

Order-to-Cash

This area has become even more disconnected from ERP. While many companies sync vendors to ERP in the AP process, in order-to-cash, businesses often manage customers entirely outside the ERP, syncing only total sales at the end of a month, week, or day. Depending on the industry and business model, billing engines, customer management, usage analytics, and other customer-related functions are often managed with custom solutions or specialized third-party tools like ChargeBee or Stripe, and ERP serving mainly as an audit database.

AR Accountants do not need to go to ERP to manage sales in the company.

Reporting, Payroll, Taxes, Budgeting etc.

The same shift is happening in every function of ERP systems. In payroll, many companies use third-party providers or outsourced services for accurate calculations (particularly in companies with a global presence). For tax calculations, ERP systems are often only used to manage tax codes, groups, locations, and reporting needs. Budgeting, forecasting, and reporting have also moved out of ERP, with FP&A teams preferring specialized tools like Pigment or Anaplan or any other FP&A tools.

The Future of ERP

ERP systems are becoming increasingly complex and less central to finance functions, leading to rapid growth in the SaaS market for specialized finance systems. In the next 5-10 years, ERP systems may primarily serve as databases to consolidate financial data from multiple sources and handle adjustments and allocations. Their main purpose, in ERP, may shift toward managing the Chart of Accounts, financial dimensions (class, location, department, segment, etc.), tax codes, and other key lists while other functions are performed elsewhere (even allocation rules are moved to FP&A systems, because of flexibility and completeness of the data).

Additionally, the rise of AI and other modern technologies allows companies to build in-house solutions more quickly and cost-effectively. Where outsourcing and lengthy custom development were once necessary, businesses can now develop tailored solutions with far less effort, in-house.

In short, the ERP landscape is changing dramatically, moving away from the all-in-one solution of the past to a more distributed, specialized approach where ERP systems act as a foundational but less central element in the finance tech stack.

We may see new types of "ERP" systems built using an entirely new approach, which will only give the business the necessary functionality. This new "ERP" system may be built on the fly based on company workflows; you can imagine a system with AI at its core that can design its functionality based on business requirements.