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Sunday, January 29, 2023

Top 7 ERP Trends for 2023

Another exciting year begins for ERP Market. After almost three years of self imposed isolation due to COVID, companies are cautiously optimistic and are starting to allocate IT Budgets, most of which will go to investment in implementation or upgrade of their ERP Systems.  

But here is the catch.

The last three years saw the explosion of technology in the form of AI, ML, RPA, Blockchain and many other technology advancements. Due to this the expectation of Businesses from ERP has undergone significant changes when it comes to ERP. The question that I hear from every customer is 'What can we do more with ERP?' and 'How can Senior Management see demonstrated value out of our ERP Investment?'. Unfortunately many vendors still position their ERP System as an efficient back office solution and not as a value enhancer. 

This has to change. ERP Systems integrating with AI and ML is the bare minimum expectations these days. Good news is that many ERP vendors realize this and are taking baby steps to incorporate ML into their ERP Systems. For example, Oracle has incorporated OCR (Optical Character Recognition) into its Cloud Application in which the ERP system can be 'taught' to read different formats of Supplier Invoices. 

Let us come back to the key topics. Following are the top ERP Trends for 2023. Most of these trends are continuation of the existing trends that are accelerating compared to the earlier years. 

1. Cloud Adoption: Much has been written about the benefits of Cloud Adoption. Cloud adoption as a trend started sometime in 2016 or 2017. In the last 5 years cloud offerings of the ERP Vendors have stabilized. Vendors seem to have addressed many of the early concerns like system security and system performance. In the last two years, I have implemented multiple Cloud Implementations and only one EBS (Oracle E-Business Suite) On Premise project. That last one was where customer wanted to add more businesses to their existing on-premise ERP Application. 

On their part, ERP Vendors have also tailored their Cloud Offerings to suit the requirements of different industries and incorporated customization options to handle specific custom requirements. This helps them expand their offerings to a variety of industries

Another opportunity for Cloud Adoption is to move the current On-premise applications to the cloud, customization and all. ERP Vendors provide IaaS (Infrastructure as a Service) option where the customer can move their On-premise ERP Applications to Cloud Infrastructure. This has two advantages, one, the companies can monetize their non-core IT Infra assets like Servers and two, they can convert their existing Capex to Opex which can be more predictable and controllable. 

2. AI and ML Utilization: ERP Vendors need to integrate AI, ML and other advanced technologies to stay in the race. Customer Demand is the driver for this trend. There are many business processes where AI and ML can add value. These include intelligent document reading and transaction creation, Demand Planning, Inventory Management, Production Planning and Production Scheduling being a few. Different vendors are focusing on different business areas for technology integration. I implemented Automated Vendor Invoice Processing and it was not very successful, but today, with ML being incorporated in this process, the updated offering is very user friendly.

3. ERP on Mobile / Mobile First ERP: This is the next logical step to Cloud Adoption. The customer is expecting ERP on Mobile. This is a low hanging fruit and help the IT Department to show value to the senior management. Year 2023 and beyond will definitely see more of this trend. Don't be surprised when the guy sitting across you at the airport on the airport is connected to the cloud ERP system and is raising a Purchase Requisition. If not all areas, many of the senior management facing areas like requisitions, Sales Invoices, Inventory Onhand Quantity tracking, Critical Customer tracking and Budget Controls are ripe to move to mobile, and they will.

4. 'Mobile-ization' of ERP: This is different from the point 3 above. Once the customers adopt to Cloud, it becomes easier to integrate different third party apps with ERP. ERP application will become like a mobile operating system that allows different apps to work seamlessly. For example, customer can integrate their ERP application with niche third party applications that will enhance the value add. Customers are already integrating their ERP systems with Niche CRM, SCM, Planning and Budgeting, Advanced Production Planning and Scheduling systems. This trend will accelerate. The ERP Server will become like Mobile Phone. 

5. Digitization Initiatives by Governments: These are exciting times for technology enthusiasts who track government initiatives in the area of technology. Governments of different countries, states, cities and even municipalities, from Africa to Alaska and Greenland are focusing on digitization and digitalization initiatives with the goal of improving the efficiency and transparency of Government Services. For example, in year 21-22, the Budget allocation for Digital India Initiative of Government of India increased by 68 percent over the previous year. ERP remains the backbone of these initiatives. However, due to data sensitivity, these initiatives are likely to be more on on-premise  servers rather than on Cloud. 

6. Analytics and Big Data: While new customers are taking baby steps towards selecting and implementing ERP Systems, mature ERP adopters are looking to reap value out of their ERP Investments through actionable information, insights and intelligence. Predictive analytics helps to identify potential risks in advance while 3-D Data Analytics help to cull out hidden insights that can help strategic decision making. Most of the ERP Vendors provide Analytics on the cloud that can easily integrate with existing ERP Systems. This trend will accelerate in 2023

7. Industrial Internet of Things (IIoT): In the last few years, companies have been investing big on IoT (Internet of Things). For example, it is estimated that 35 Million IoT devices will be installed in the year 2023. While IoT devices have been churning out vast amount of data, the integration of this data with the ERP Systems for planning, scheduling and analysis was far from satisfactory. With the advances in Big Data Analytics being integrated with ERP, this is bound to change. ERPs will be vastly efficient to cater to the data provided by IoT devices. ERP Vendors will have to work towards making this integration smoother by standardizing the IoT data and delivering APIs to seamlessly integrate IoT devices with their ERP applications. 

While these are seven trends that will guide ERP Market in 2023, these are not all. Additional trends to watch out for include Personalization of ERP, Integration of Industry 4.0 with ERP, the initiatives of governments towards securing Personal Information (GDPR for example), rapidly evolving Technology Landscape (Who would have thought of ChatGPT just two months ago?) etc

2 comments:

PKC India said...

Blog is very informative content. Awesome.
ERP Consultant Chennai

Nuriah Fadhilaturahcman said...

wow such a helpful information for someone like me to know more about enterprise resource planning