Top Seven ERP Trends for 2022

This post was originally published in Ximple Blog. Ximple provides ERP Solutions for Wholesale Distribution Industry. You can contact Ximple on Email info@ximplesolution.com and over phone +1 301 949 4400. You can get additional details from the company website www.ximplesolution.com

Introduction:  

COVID pandemic has accelerated the Digitization, Digitalization and Digital Transformation plans for many Organizations. Organizations have suddenly understood that Technology can improve efficiencies and profitability. Technology no longer looks esoteric.

In addition, the last ten years have seen many technologies and ideas mature from the POC (Proof of Concept) phase to become ‘Industry Ready’. Technologies like Artificial Intelligence, Remote Collaboration, Machine Learning, Robotics Process Automation, Industrial IOT and Blockchain has demonstrated its value to the early adopters who made these technologies a part of their day-to-day activities. The information and intelligence provided by these technologies have added value to the adopters. 

Companies have started looking at technology as a revenue driver rather than a cost element. This shift in perspective means higher readiness to embrace technology. 

ERP is the backbone of any technology initiative in the company. ERP will both drive and be impacted by the shift to technology adoption mindset of the companies. This article looks art seven trends that will influence the ERP market in the coming years. 

While on the demand side Organizations are evaluating ERP as a part of their Digital Transformation initiative, ERP Vendors are providing new revenue models to lower the pain of the customers and improve the customer experience. They have introduced simple and innovative revenue models that give a sense of predictability to their customers. They are regularly adding new features to their applications to meet myriad requirements of the customer. 

Both these aspects, demand pull and supply push will drive the ERP market in the years to come.

Global ERP Market: 

The ERP Market is expected to grow from 44.40 Billion USD in 2020 to 60.23 Billion USD by 2020 according to the market research firm Valuates Reports. The major factors impacting the rise in demand are technology adoption, efficiency improvement and cloud & mobility. Yet another driver is the demand for ERP from SME segment.

While North America will see the largest market share, Asia will see the highest increase in demand for ERP, especially driven by SMEs in India, China and Singapore.

Global Cloud Computing market will grow from 445 Billion USD in 2021 to 832 Billion USD by 2025 ( and further to $947 Billion by 2026). ERP Vendors are expected to add new technology solutions to their Cloud portfolio to benefit from this investment. 

Trend 1: Cloud ERP: Cloud ERP Vendors are offering a number of value propositions. They are moving away from the traditional pitch of Capex (Capital Expenditure) versus Opex (Operational Expenditure) and are now stressing advanced security, data redundancy, flexible payment plans and advanced features in their ERP applications. This makes Cloud adoption an attractive option for companies considering ERP. On-premise model limitations like regular and disruptive upgrades, high amount of Capex and shrinking consultants ecosystem as consultants shift to Cloud ERP make Cloud adoption an easier decision for customers.

Trend 2: Integration with Advanced Technologies: Cloud computing is enabling ERP Vendors to quickly integrate advanced technologies like IIOT and Blockchain with their ERP. ERP Vendors are already providing standalone technology solutions to their customers and we will see these getting integrated quickly. A simple example of this integration is the use of real-time data provided by IIOT to trigger the Blockchain smart contract that automatically generates a new Sale Order in the ERP application. Another example will be the use of Machine Learning to auto-fill data in ERP thus reducing data entry and improving user experience. Improving user experience will be the initial goal of these integrations, but soon they will start generating business value by enabling better analysis and decision-making.

Trend 3: Industry specific solutions: The teen years of the 21st Century was driven by Generic ERPs and Cloud adoption. Now that the cloud has matured, ERPs that provide niche, industry specific solutions will be the future. The core ERP will remain unchanged of course, but ERP Vendors will offer more niche and modular solutions that will deliver a plug and play integration with ERP. For example, while the generic Procure to Pay solution will still be available, the ERP Vendors will offer bolt on solutions to handle the complex procurement process or the dairy or a meat processing industry, the unique supply chain requirements of a Wholesale Distribution industry or the complex costing requirements of a logistics industry. 

While the second decade of the 21st Century focused on generalization, the coming decade will see specialization coming back with a vengeance.

Trend 4: Digital Transformation: This is a change in mindset for an Organization, where it changes the way it uses Technology. The objective is to make IT as a business value proposition and a revenue driver rather than just a resource consuming department. An ideal transformation will change every aspect of the Organization starting from sourcing to customer relationship and everything in between.

The COVID pandemic of 2020 has energized the digital transformation initiatives. While mobility and remote working was always the goal of the transformation, the pandemic removed the skepticism around that. The pandemic has convinced many CEOs that Digital Transformation could work and there is lot more appreciation and budget going in for it.

ERP is the foundation of a successful Digital Transformation. Implementing ERP as a part of a five year Transformation plan will be a key trend in the coming years.

Trend 5: Mobility, Voice, Bots, Collaboration: ‘ERP on the go’ and  ‘ERP Everywhere’ are going to be the new trend. Mobility will enable both date entry (input) as well as information access (output). While many ERPs are already enabling mobility, it is going to explode with Cloud Adoption. It is only a matter of time before the salespersons at a customer site will check the mobile for available to promise and scan the QR code on the product to enter a new sales order.

Voice will be another related trend. Already CEOs are integrating their ERP with Alexa and getting the latest production numbers at their table by asking a simple question to Alexa or Siri. Going forward Voice could be used for data input, where a buyer can create a purchase requisition by dictating the order to Alexa. Potential is enormous.

RPA is getting integrated with ERP to create Chatbots that can help stakeholders get their clarifications quickly and accurately. Chatbots can also encourage internal collaboration. In addition, ERPs are integrating collaboration tools like chats and videos (and even Wiki) to their ERPs.

Future for ERP appears exciting. 

Trend 6: Plug and Play Integration: With Cloud Adoption, Integration using standard APIs will be the new trend. Customers will no longer be dependent on a single vendor for the entire solutions. You could see customers using one ERP for their core processes and using solutions from different vendors for their specific requirements. For example, they may use SAP as their core and use Oracle HCM (Human Capital Management) for HR, a third party payroll vendor for their Payroll, a sourcing solution from another vendor and an advanced planning system from yet another vendor. Customers will expect their ERP Vendors to provide seamless and non-invasive integrations of these niche solutions with their ERP Systems. This will be similar to many apps being installed on your mobile phones. 

Trend 7: Intelligent ERPs (iERP) that use AI and ML for advanced analytics: With the advent of Cloud ERP applications, the analytics features supported by ERP applications are becoming stronger by the day. Most of the applications have enabled embedded data warehouse tools like Cubes to have a 360 degree interaction with ERP. Unlike the past where data flowed from ERP to the DW (Data Warehouse), the advanced ERPs allow DW to use the information to generate transactions in ERP. 

While information if available in abundance, the currently available analytics tools are weak in generating intelligence out of the information. In addition, those tools are good at analyzing structured data, they are weak at handling unstructured data. That is where new technologies like AI and ML will play a major part in the future. They will use both structured and unstructured data for predictive analytics and identify gaps as well as opportunities. 

AI and ML are going to make ERPs Intelligent. 

What are the challenges that ERP Vendors can expect in the coming year?

COVID remains the main concern. In 2020, companies scaled down on their IT Investment. They are not expected to review the IT Budget in the current year as well. In a survey, more than 80% of companies reported same or lower sales expected in 2021 compared to 2020. No new ERP Investment is expected in the first half of 2021. 

The trends we discussed so far will come into effect as soon as the pandemic situation improves and world regains confidence.

Conclusion:

The COVID pandemic has changed the way companies look at technology adoption. Over the last ten years, many new technologies have come out of the labs and have become ‘Industry Ready’. This includes Artificial Intelligence (AI), Machine Learning (ML), Industrial IOT (IIOT), Robotics Process Automation (RPA), Blockchain and Cloud Computing.

These technologies offer value propositions that Customers cannot ignore anymore. Organizations are designing their Digital Transformation strategies that will provide the technology roadmap for the future. In addition COVID pandemic has demonstrated that Technology is scalable and mobility is real and both of them help increase revenue, reduce costs and improve efficiencies. Digital Transformation has moved from the esoteric concept to a driver of business value.

In addition, the market for new technologies is expected to explode over the coming years. The Global Cloud Computing market is poised to more than double by the next five years.

The coming decade looks very promising for the ERP market. ERP being the backbone of Digital Transformation will benefit as Companies look at initiating the transformation process. Other than Digital Transformation, there are standalone trends that drive ERP Adoption in the coming years.
This is an exciting time for ERP.