Top ERP Trends and the Future of Enterprise Resource Planning

ERP stands for Enterprise Resource Planning and, in a broad sense, denotes a strategy of consolidating all aspects of an enterprise’s operations within a single system to improve management efficiency. The term ‘resources’ includes everything that needs to be accounted for, processed, and analyzed. The ERP automation system is a practical implementation of this strategy.

93% of organizations featured in the 2020 ERP Report by Panorama Consulting said that their ERP implementation projects were successful. And according to Panorama’s 2018 ERP Report, 95% of the surveyed companies improved their business processes entirely or partially. 

A well-chosen ERP system is no longer a prerogative of big corporations but a prerequisite for any functioning business. The market need for such solutions attracts investments and drives innovation. The Rocketech experts prepared an overview of the top ERP trends that decision-makers should consider in 2022.

Top Five ERP Trends of 2022

Enterprise resource planning has a long history. It started in the 1960s with Material Requirements Planning (MRP). The first systems were cumbersome and expensive and required a lot of technicians to keep them functioning. The 1980s brought Manufacturing Resource Planning (MRP II) as technological advancement. It was a modular system covering key production processes: planning, procurement, specification, and contract management.

In the 1990s, the industry leaders SAP and Oracle launched their ERP solutions. And Gartner named this system Enterprise Resource Planning (ERP). By the mid-1990s, the market for ERP implementation services was formed. In the 2010s, vendors faced the market need for more flexible software. Gartner named the new generation of these solutions Postmodern ERP. 

In 2020, Gartner introduced the term “the 4^th era of ERP.” The new concept is a logical step in the evolutionary process of ERP products. It includes the main “hallmarks” that directly reflect the latest technological advancements in software development and new approaches to business management.

“By 2023, 65% of organizations will use ERP applications that encompass one or more fourth-era hallmarks.”

AI Implementation

Like in many other fields, machine learning and artificial intelligence are set to play a key role in the newest ERP solutions. It applies to both simple algorithms (like chatbots) and more complex neural network algorithms. As an example, ML algorithms can forecast hardware failures or demand-based production using the data from previous periods. The main goal is to automate all everyday routine operations completely.

• Inventory Management

Effective inventory management ensures keeping the business running smoothly and having the necessary cash reserves. AI and ML algorithms can accurately predict demand and user needs and will become powerful tools for stock management and optimization. 

• Financial Management

In financial management, AI improves transaction processing efficiency, validates reports, and predicts future financial performance based on market data and trends. Machine learning can also help executives better assess human factors and adapt to the behavior patterns of accounting professionals.

• Human Resources

AI-driven systems evaluate candidates to select the most appropriate and upgrade personnel training. Moreover, artificial intelligence can analyze employee needs and productivity to reduce the rate of layoffs.

Focus on Data

Data is a paramount element of the digital world. All analytics, optimization, and, ultimately, AI-driven systems are based on the processing of large amounts of data, whether internal (business operations) or external (clients and other stakeholders). The Internet of things is the best illustration of the immense potential of data processing.

• Variability

The more diverse the information that comes into the ERP system, the more accurate and complete the state of affairs of your business you will get. For example, sensors at buildings’ entrances help track attendance, and sensors in warehouses increase the transparency of product flows.

• Accuracy

IoT tools detect only specific and predefined data. For example, sensors collecting server-status diagnostic data or determining a person’s presence in a room cannot register any other data type. It means that unstructured information does not enter the ERP system.

People-Centric Approach

There’s certain skepticism toward the overall automation of all working processes. However, according to the 2019 State of Work report by Workfront, US employees spend “only 40% of their workday on their primary tasks.” The rest is taken by distractions like emails, administrative tasks, and meetings.

Here’s why Gartner is rather optimistic about implementing smart automation systems. The fourth-era ERP solutions aim to make people more efficient rather than replace human contribution completely. Such software is an instrument designed to free employees for faster and better performance and provide them with time for higher-level tasks.

Flexibility

Agility is a leading tendency in many business processes of the past decade. Logically, a system tailored to manage those processes should reflect the flexibility of the approach. Gone are the days of enforced rigid solutions — the fourth-era ERP adapts to the unique needs of every organization and the ever-changing environments.

Take one example: the chaos the global pandemic brought to many working places. Companies were forced to adapt to new conditions rapidly and effectively. It was hardly possible without appropriate tech solutions for mobility, remote working, data security, and distributed team collaboration. And most up-to-date ERP software is ready for such challenges.

Customer-Facing Approach

For flexible customer interaction, a functioning company requires tight two-way integration between different business applications. Organizations need all customer channels in one place and in real time. Essentially, any business is customer-facing. Correctly-chosen management instruments help companies understand their clients better and increase customer satisfaction, whether it is on-time delivery or better product availability due to more efficient stock management.

When Is It Time to Introduce an ERP System for Your Business?

As the business grows, sooner or later, any company owner faces the question of implementing information systems that optimize work processes, reduce resources, and make the company most competitive. Here’s a clear checklist of “symptoms” signaling that you’re likely to need one:

• Your employees spend too much time on routine operations that can easily be automated.
• You lack the operational information essential for decision-making.
• You have many disparate software products for automating various business processes and external integrations and, as a result, double data entry.
• There is no data on inventory balances and cash flows.
• Communication between departments and staff is difficult.
• You have no free access to information outside the office.
• You have no effective monitoring tools.
• You spend too much time preparing accounting reports.
• Sales and customer communication processes are complex and fragmented.
• The company’s IT processes are too complicated.

The ERP project’s cost is generally considered a strategic investment. When ERP systems are configured and run properly, the cost of implementation will eventually pay off.

1. ERP systems cut the operational overhead of finding and entering the right data, eliminate duplication across departments, and reduce routine and error rates. All employees work with the same data — accounting, procurement, and logistics.
2. They free up resources to meet strategic business objectives. Rapid access to complete, reliable, and consistent information helps business leaders make informed decisions quickly and adjust to changing market conditions.
3. Investments in the ERP project equal investments in personnel. By introducing a balanced management system, the company improves employees’ competence and mutual responsibility of all divisions.

Additionally, ERP systems also address the issue of protecting sensitive data. For this purpose, ERP solutions have a rich toolkit — from providing employees with various levels of access to differentiating access to critical information between management, line managers, partners, investors, and customers.

Final Thoughts

The market of ERP systems develops dynamically and acquires state-of-the-art functionality shifting to more mobile, convenient, and accessible products. Vendors and software developers adjust to the market needs making ready-made options more available for smaller companies.

However, business processes in current conditions become more complex. More often, organizations require tailored solutions better accommodating their unique needs. At some point, out-of-the-box products with standard functionality no longer meet the business-specific requirements of well-established companies. In such cases, an optimal strategy is finding a trusted tech partner to create custom software specifically designed for the company’s objectives. The Rocketech Team has extensive experience in building successful products from scratch, as well as perfecting existing projects. Contact us for more detail.