2023 has been characterized by significant technological transformation that has impacted not only the way we do business, but how consumers interact with the world around them. While the explosion of generative AI continued to make headlines around the globe, the field of enterprise resource planning (ERP) software also witnessed notable growth as companies increasingly leverage the technology to run their businesses.
As ERP continues to evolve and support new functionalities, here are the ERP trends and predictions I foresee coming to fruition in 2024.
Cloud ERP Deployments
The number of organizations migrating their entire ERP footprint to cloud is increasing. Most research firms agree that the cloud ERP market is between $50-60 billion and growing at an annual rate of 12% to 15%.
This shift is being driven by an acceleration of digital transformation initiatives that require the technology and capabilities inherent in cloud ERP and the associated enterprise application platforms. Cloud ERP systems feature multi-tenant deployments continually managed and updated by vendors deploying new capabilities multiple times per year. This means new technology and capabilities delivered automatically.
Modern cloud ERP capabilities offer significant productivity advantages. Organizations need to start planning for this migration now.
Enterprise Application Platforms
Cloud ERP is an important foundation for business transactions and is rapidly becoming the center of an ecosystem encompassing internal stakeholders, customers, suppliers, and partners. These modern ERP suites are deployed on enterprise application platforms (EAPs) that provide advanced technology required for digital transformations.
Much of the productivity gains delivered by cloud ERP will derive from the technologies and capabilities of the EAP. The main characteristics of EAPs include composability through low-code/no-code development and integration, AI/ML data analysis, process automation, and enhanced usability.
2024 will see EAPs growing in importance to rival that of the functional capabilities of ERP suites.
Composability. In other words, adaptability — means end users can adopt and use new capabilities without IT intervention. In 2024, the composability of cloud ERP becomes a standard characteristic as power users leverage the low-code/no-code development and integration tools extend and integrate ERP with ancillary systems and apps. This allows organizations to adopt to new capabilities quickly, streamline their processes, and enable data flow between separate systems.
Artificial intelligence/machine learning. One of the primary reasons ERP systems were developed was to collect data and provide basic reporting capabilities. Together, AI and ML expand the data analytics capabilities of ERP solutions by transforming volumes of business data into actionable insights. In 2024 and beyond, AI-powered analytics, data visualization, and analysis tools will replace static dashboards with intelligent advice and on-the-fly "what-if" capabilities.
Process automation. The process analysis, intelligence, and automation capabilities in EAPs have already permitted organizations using cloud ERP to automate routine tasks, leaving users available to make more complex decisions. In 2024, the combination of AI/ML with process automation capabilities will lead to hyper automation, which is the automating of any tasks that can be automated. This is a journey that will take time, but the business benefits are huge. Several research firms predict organizations can cut costs by 25% to 30% over the next several years by using AI/ML to automate processes previously considered too complex and requiring human intervention.
Enhanced usability. Most cloud ERP suites now have modern interfaces that are easy to use and navigate, look the same no matter what device is used, and, for the most part, provide real-time mobility.
2024 will see broader deployment and adoption of digital natural-language interfaces and personalization. Personalization here means the system adapts to an individual's way of completing tasks. It learns patterns and preferences, and can even point users to shortcuts that can help them become more efficient and effective.
Vertical Industry-Focused ERP
Demand for vertical industry-focused ERP is increasing. Many cloud ERP suites are delivered as huge compilations of business processes and configurable tables designed to suit the needs of organizations across multiple vertical industries. High-tech manufacturing, food and beverage, pharmaceuticals, service industries, and public sector all have standard processes inherent to their business but also very specific requirements that must be met. Tailoring any cloud ERP suite to the needs of a specific vertical organization means additional work in configuration and often extensions and customizations provided by partners.
Beginning in 2024, more organizations will choose vertical industry-focused cloud ERP over suites sold as "one-size-fits-all." This accelerates deployment of ERP by adopting standard business processes augmented with preconfigured vertical-specific solutions delivered by the vendor. Customers increasingly expect the cloud ERP vendor to understand and support the specific needs of their industry, thus minimizing additional costs of complex configurations and extensions.
Generative AI has been receiving a lot of attention recently but in 2024, in the context of ERP, it is still more hype than reality. It is like an assistant that can come up with original, creative content. For example, you can ask it: "How should I improve customer satisfaction levels?" and it will write a few paragraphs on the topic. The potential is huge, but the technology is still in its infancy and subject to the influence of the data sets and information it learns from. Thus, results may be skewed and not objective and deliver poor results.
Which brings us to a very important factor — people.
The Human Factor
The technologies and capabilities enumerated above will not replace people but will, instead, augment them. The potential to gain massive advances in productivity and decision-making is real. As new technology emerges, it is important to invest in your people so they can understand its capabilities and limits.
Beginning in 2024, it is more important than ever to invest in training and supporting your people in investigating these technologies. Organizations that invest in their people will thrive; those that do not run the risk of making expensive mistakes and falling behind competitively.
An example of this would be handing two people a high-powered sports car and having them race on a long complex track like Lemans. If the cars are the same, the driver who wins is the one who knows how to get the most from the car (the technology), the layout of the track, and how to efficiently drive it (how your business can and should use the technology).
Just having the tech is good but not enough.