ERP Systems in Flux

by Dirk Bingler

Flexibility and a high degree of adaptability – companies that do not meet these requirements are often at a disadvantage in times of digitalization. As a result, the demands on their IT and especially on their ERP systems increase: The use of services from the cloud, mobile application options and the integration of artificial intelligence (AI) are just as much in demand today as the highest security standards and user-friendly interfaces.

For more than a third of user companies, mobile applications of ERP systems as well as cloud-based approaches are the most important trends in the use of standard business software today. This is a central finding of the Trovarit study “ERP in Practice 2018/2019,” for which the analyst firm, together with partners, surveyed around 2,200 managing directors, IT managers, and ERP specialists on the use of their ERP systems. This is not surprising. After all, the increasing networking of processes, especially across company boundaries, requires flexible ERP systems with a high level of integration capability. Instead of rigid suites, companies today are therefore looking for smart ERP services that can be easily combined with each other depending on requirements. The applications must not only communicate with each other, but also with mobile devices, external apps, or machines. This requires open ERP solutions that can be connected to other systems via a cloud.

In this context, the role of digital platforms is also becoming increasingly important. ERP providers can use them to supplement their own solutions with functionalities from the cloud (e.g. with services for IoT or AI), or they can offer individual modules as a service. The advantage is that the solutions are always up to date, and expensive and complex release changes are a thing of the past. In addition, this “division of labor” between basic technology and functionality allows manufacturers to concentrate more on their core competencies, such as mapping their industry know-how in the solution, which ultimately also benefits the users.

Security as a Top Priority

The security of their systems is also of great importance to ERP users: For 55 percent of the study participants, this topic is at the top of their list of priorities. And rightly so, because increasing networking increases the chances for hacking attacks. CIOs therefore feel uneasy about obtaining ERP systems or functionalities from the cloud or opening internal systems to the internet. Suppliers must therefore ensure that the technologies they use comply with global security standards and are regularly adapted to changing threats.

Hybrid models are the ideal solution for many companies. They offer the flexibility of a cloud solution without companies having to relinquish control over their critical data. One example is the “Digital Hub” of the GUS Group, a cloud service user companies use to publish selected services and functions of their ERP solution externally via the cloud, without giving up sensitive master or transaction data. The solution connects selected data and processes of the ERP system with machines, mobile users, external IT systems, or cloud services around the world without requiring a company to invest in integration solutions. This means that it is no longer necessary to open the company firewall for data exchange between the ERP system and the digital outside world.

Growth Market: Artificial Intelligence

An essential aspect in connection with ERP systems is the integration and use of artificial intelligence (AI). Based on the study “AI in Europe – Ready for Take-off,” the digital association Bitkom estimates that the European market for AI will grow from around 3 billion euros this year to 10 billion euros in 2022. “There is now a wide range of marketable solutions that use artificial intelligence. It ranges from software tools that can be used for speech or image recognition, ready-made solutions, for example for chatbots for customer support, to complex applications that can be used to send personalized mailings almost without human intervention,“ says Bitkom CEO Dr. Bernhard Rohleder.

Big Data as a Basis

AI has now also reached the production halls. Thanks to predictive maintenance, the production plant “knows” about possible problems before they even occur. For this purpose, sensors continuously collect data and evaluate it in real time. In the event of irregularities, the system immediately sends a warning message to the maintenance department, where the affected spare part is ordered and replaced even before the old one stops working.

The prerequisite for such extensive analyses and forecasts is a large amount of data (big data). ERP systems nowadays can store and process structured information and integrate it meaningfully into existing processes. Due to digitalization, the type of data changes: Whereas companies used to have to process mainly structured information, nowadays they must process increasingly unstructured data, for example customer feedback from social media channels, or sensor data from production. In addition to the cloud, where companies can flexibly “buy” computing and storage power, technologies such as NoSQL or in-memory databases help make ERP solutions fit for machine learning.

Forms of artificial intelligence and machine learning will also be indispensable in very classical business management processes in the future. With the help of structured data from the ERP system, an AI system is continuously trained to automatically recognize connections and patterns. With the created model, the ERP data can be analyzed in real time. The goal is to better predict future events in this way. Finally, however, AI is also used in the automation of processes, for example in accounting. Instead of manually assigned invoices, for example, smart applications already allow documents not only to be automatically captured, but also to be interpreted and correctly posted. Modern ERP systems should therefore either provide appropriate functionalities themselves or be designed in such a way that they integrate AI and predictive analytics applications and can process their results seamlessly.

Focus on Usability

Apps and social media, such as Twitter, LinkedIn or Facebook, but also the experience with the simple (mobile) use of software via tablet or smartphone mean that users expect even sophisticated business software to have a modern, clear interface that makes the applications intuitive and easy to use. According to the Trovarit study, 37 percent of companies therefore consider the software ergonomics of an ERP application to be very relevant. For example, some ERP solutions nowadays offer the possibility to configure user interfaces individually. Users can then create their own task-based views or configure individual layouts. The user experience in production will also have to adapt to the concepts of modern IoT applications. Here, voice input or visualizations using Augmented Reality (AR) and Virtual Reality (VR) will play an increasingly important role. But communication via chatbots will also be a component of the user experience of ERP applications in the future. Even if digitalization does not turn the ERP world upside down overnight, the upcoming changes are serious. Providers should therefore continually review their systems and align their development planning with the requirements of the digital future.

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