Artificial Intelligence

How AI Empowers Enterprise Resource Planning

Companies with an intelligent, connected ERP system will be able to take full advantage of artificial intelligence capabilities.

By Chanakya Arora, Oracle Insight

November 2018

Artificial intelligence (AI) and machine learning have already transformed homes, with devices such as Google Home enabling voice control of many functions such as entertainment and home security. At the same time, AI is altering the enterprise, as autonomous databases and digital voice assistants change the way people work. In fact, 51% of AI leaders surveyed by the Harvard Business Review predicted that by 2020 AI in the enterprise will have its biggest impact on their back-office functions of IT and finance/accounting.

Oracle Executive Chairman and Chief Technology Officer Larry Ellison showcased some of these new back-office innovations at this year’s Oracle OpenWorld conference. In his keynote address, he illustrated how intelligent, cloud-based ERP is able to close financial books and compare financial results faster than conventional human effort. “We’re able to automate these enormously complex business processes, thereby taking the labor out of closing the books,” he said, “and when you eliminate human labor, you eliminate human error.”

As AI-powered ERP goes mainstream, companies with integrated ERP systems will be able to move quickly and deploy AI solutions customized for their needs.”

Indeed, companies that have successfully deployed AI solutions in back-office operations are achieving remarkable benefits. The Associated Press used natural language processing and machine learning to automate text for short articles on sports and quarterly earnings and became 12 times as efficient at producing those stories. (And there were no job losses—in fact, “AI has freed up the staff to write more-in-depth stories on business trends,” according to the Harvard Business Review.) The AP is currently exploring AI-based image recognition and computer vision applications to automatically identify and tag relevant articles, images, and videos, saving employees time and driving syndication revenue. Meanwhile, Adani Ports & Special Economic Zone, India’s largest port developer and operator, has been using predictive and automated asset maintenance. Managers rely on Oracle’s machine-learning-powered application to proactively inform them when an asset across its 13 locations needs maintenance. And Mitsubishi Electric uses AI and process automation in Oracle Cloud to increase uptime by 60% and production by 30%.

Chanakya Arora, Oracle Insight

Chanakya Arora, Oracle Insight

IDC predicts a future of “intelligent ERP” in which ERP integrates with the Internet of Things (IoT), blockchain, and cognitive computing to automate large-scale processes, shorten execution times, and perform tasks without errors. IDC forecasts that by 2020 20% of Global 2000 manufacturers will be active users of intelligent ERP.

CIOs might be wondering whether these illustrations of cost savings and process efficiency are actually feasible or just marketing hype. And they have reason to be skeptical about ERP—a survey of 263 IT leaders found that 94% of companies use less than 80% of the features in their ERP system and about 33% use less than 30% of the features. But this usually occurs because of limited integration among ERP and back-office applications, lack of digital skills, or plain aversion to adoption. Companies that are not fully utilizing their ERP should take a step back and try to identify the cause of the problem. Purchasing and deploying ERP modules out of the box that are not fully integrated with the rest of the back office can lead to a fragmented, siloed IT infrastructure with limited functionality.

As AI-powered ERP goes mainstream, companies with integrated ERP systems will be able to move quickly and deploy AI solutions customized for their needs. These include

  • Chatbots and virtual assistants to record and share data involving operational processes such as order delivery, shipment status, expense reporting, and time and attendance – Significantly useful for supply chain operations, these bots can provide real-time insight and enable users to take preemptive action to prevent breakdowns in the supply chain.
  • AI-driven analytics embedded across ERP modules to run real-time diagnostic, predictive, and prescriptive analytics – Such analytical insights can have companywide applications, enabling users—from machine operators to strategic planners—to assess the current state of operations, analyze the information, and decide the next course of action.
  • Smart objects and appliances integrated with IoT sensors to provide a constant data feed to the AI solution, enabling it to make real-time predictions about operations, maintenance, and so on – Aided by AI methodologies, companies can turn data provided by IoT devices into valuable customer insights and use them in processes such as product development and delivery.
  • AI-powered digital procurement, where AI helps automate processes such as invoice processing, spend analysis, and contract analysis and constantly runs analytics to forecast trends and drive process improvement – A procurement department with AI capabilities would be proactively alerted about ongoing processes, and users would be able to take informed actions on product delivery, pricing, and process improvement.

Given the constantly developing capabilities and unexplored potential of AI, an integrated ERP system can add valuable intelligence to back-end systems. Companies that have upgraded to an intelligent, connected ERP system will be able to take full advantage of AI capabilities and stay ahead of the competition.

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