By R “Ray” Wang, Principal Analyst and Founder of Constellation Research
As the shift to cloud continues, digital transformation and technology replacement have become business imperatives for virtually every industry. In this environment, cloud deployments provide a catalyst to improve back-office functions, and enterprise resource planning (ERP) is in the spotlight. With advanced technologies, such as artificial intelligence, organizations can automate back-office processes and reach remarkable new levels of efficiency.
There’s a lot happening in this post-digital ERP world, so we at Constellation Research have produced this overview for our clients on Oracle ERP. In addition, I outline 10 global cloud ERP trends for 2020 and beyond. This blog includes a brief overview of five of them. Here are some of the trends we’re starting to see:
When they first emerged, ERP systems were designed to be function-specific solutions, such as accounts receivable, accounts payable, and other functions. Eventually, they evolved into departmental solutions, such as finance, HR, procurement, supply chain, and manufacturing. But even those bigger-picture solutions are limited.
Now we have mega-ERP suites that span various departments and functions, delivering a holistic view of facts, behavior, and other data. When that data is enhanced with AI-powered automations and interactions, the suite can offer more powerful decision-making resources.
Just as Netflix offers an ambient AI experience—if you watch a movie or show, it will recommend more like it—AI-powered ERP can recommend your next, best action—such as offering a discount or adjusting a forecast. And when the data delivered spans the organization as a single source of truth, decisions are based on consistently accurate and uniform information.
Because of the nature of back-office processes and the amount of data within them, more than 70 percent make good candidates for automation. AI-driven robotic process automation (RPA) and process mining can eliminate repetitive tasks, reduce errors, and offer tools to enhance decision-making.
However, AI can do only so much, and its output depends on the quality of data with which it’s working and the way automated processes have been structured. Human judgement and intuition are behind setting up both of these inputs. People are still important to ensure that bad processes aren’t replicated when technology advances.
Older ERP systems typically had varied tiers of information access. Those with the greatest access—the “owners”—benefitted from key insights. Modern ERP democratizes and distributes data, providing every credentialed employee with relevant context and information. As a result, people can quickly see the data necessary to attend to the task at hand and/or solve a problem.
This “right time, right context” model empowers employees, contractors, and partners to find solutions and be more effective in their roles.
Once-discrete industries like telecommunications or entertainment are starting to meld into blended value chains, within which everyone must work together to deliver value to the client or customer. This is a core tenet of the “customer experience economy.”
While older solutions contained only a slice of data from a limited number of processes, cloud ERPs provide a single source of truth for multi-faceted data and so are becoming the arbiter of profit and loss (P&L) for modern business models.
A comprehensive and integrated suite that spans the back office not only keeps the accounting straight, but helps connect your finance and supply chain processes with third parties, such as customers and suppliers. In this way, the ERP system becomes the enterprise’s value chain driver.
As traditional buy-and-own business models shift to subscription models, ERP systems are adapting to changing needs. This provides important opportunities for enterprises. Now, there are more opportunities to generate post-sale revenue through installation, warranty, service contracts, and vendor-managed inventory. ERP systems manage revenue recognition and provide data for regulatory requirements, such as warranty management. Cloud ERP helps you support these important functions in more holistic ways; enterprises can leave less money on the table and better meet compliance regulations.
The Constellation Research report identified five more cloud-based ERP trends. To read about all 10 trends, download the full report.