Enterprise Resource Planning (ERP) systems have been in use for over five decades. But the adoption has increased only recently. According to an SAP study, ERP adoption grew up to 11% in 2021. It was at a time when the world was battling a dangerous pandemic, and businesses were struggling to achieve their goals.
Since then, ERP adoption has increased exponentially. According to IDC’s 2022 predictions, over 40% of global 2000 companies were to embrace ERP in 2023.
Over the years, ERPs have transformed to keep pace with market expectations.
Last year, companies saw significant developments like the rise of AI in ERP and the popularity of modular ERPs.
- SAP is collaborating with technology leaders to help companies adopt Generative AI and accelerate ERP transformation in the cloud. The aim is to create AI-enabled solutions and use cases and improve employee productivity. They also plan to integrate generative AI with industry-specific solutions to increase interoperability and use AI-enabled chatbots to suggest solutions that could reduce revenue impact.
- Modular ERP was another trend that caught everybody’s attention. Traditionally, an ERP upgrade could have cost a company up to $500 million. However, experts believe a modular or play-and-product approach could help companies manage ERP costs and improve business outcomes. For example, a large pharma company could face challenges upgrading an ERP when it is tightly coupled with various business domains. The dependencies are so high that the changes in distribution could have an impact on warehouse management. These dependencies and limited decision-making lead to high technical debt. The play-and-product approach decouples unnecessary connections and helps companies prioritize essential functions for ERP upgrades. This helps companies reduce the costs and risks associated with upgrades.
As we begin 2024, let’s look at the top five ERP trends to look forward to this year.
Five ERP Trends to Look for In 2024
1. Automation will become a necessity
According to a senior analyst at Forrester Research, more and more companies will add automation to their request for proposals (RFPs) in 2024. It means automation will no longer be a good-to-have feature. It will become a necessity for ERP implementation.
In ERP automation, the ERP automates the business processes. It helps companies streamline processes like accounting and inventory management, reduce manual effort, and improve efficiency.
ERP automation is especially crucial in industries like manufacturing, where most processes are complex and manual. It can automate these processes and enable companies to generate ROI.
Take the example of an agrochemical company that produces nearly 15% of India’s urea production. They used SAP ECC to post a large volume of transactions related to primary and secondary freight services. It was a daily manual activity. As the volume of transactions increased, the company could not keep pace. There was a massive log of pending transactions waiting to be logged. It impacted the company’s bottom line and increased vendor liability. The company saved 90% of its efforts when we automated these processes. It improved their efficiency and enabled them to maximize ROI from investments.
You can read the full case study here.
2. AI and Generative AI will continue to make strides
Artificial Intelligence (AI) and generative AI were in the news last year. Experts say it will continue to gain momentum in 2024. Vendors are partnering with AI and generative AI providers to embed this new feature in their products. It will strengthen the ERP’s forecasting, task automation, and decision-making capabilities.
Industries like manufacturing and retail can use AI and generative AI to manage inventories, optimize demand and supply processes, and personalize experiences. It can also provide real-time insights that can help companies respond to market demands quickly and set dynamic prices before the competitors get a whiff of it. The quick and accurate response will help them gain a competitive edge and deepen customer engagement.
3. Cloud and mobile ERPs will improve productivity
2024 will witness a lot of companies shifting to SaaS or cloud-based ERPs. One of the primary reasons for the move is that companies don’t have to wait to upgrade the ERP. They can use the new features when the ERP provider launches them. It also reduces infrastructure costs, improves scalability, and simplifies maintenance. It can be a perfect solution for companies wanting to adapt to a rapidly changing business landscape.
Mobile ERP is another feature that’s garnering attention from companies. It provides real-time insights and other vital information to companies on the go. This enables the workforce to become more responsive and make critical decisions even when they are working from a remote location. In a fast-paced business environment, mobile ERP can be quite an advantage for companies.
Take the example of a Kuwait-based electronic appliances distributor. They used legacy eCommerce solutions that led to fragmented operations, manual processes, and complex frontend interface of their online store. They saw a remarkable improvement in their processes and operations when we migrated their backend to SAP Commerce Cloud and used Cloud Platform Integration for middleware. A highly intuitive customer-facing app for the website, iOS, Android, and Huawei platforms helped them fulfill orders faster and be more responsive.
You can read the case study here.
4. Integrations with other applications will streamline operations
Integrations are essential to run modern-day data-driven companies. In 2024, companies will integrate ERPs with different applications and systems using application programming interfaces (API). ERP integrations will help in seamless data exchange and centralize all the data in one place to save the user’s time. Companies don’t have to worry about managing multiple systems. The integrated ERP helps companies visualize workflows, detect issues that prevent business optimization, and provide actionable insights to improve processes.
Integrated ERPs are especially useful in large-scale manufacturing companies operating in multiple locations. Let’s look at two examples of how integrated ERPs improved productivity, customer experience, and revenue.
The first example is Japan’s leading heavy industry multinational company that manufactures motorcycles, aerospace and defense equipment, and industrial robots. We integrated various systems like SAP Hybris with the PLM system, Salesforce with the website, and proprietary configuration systems with the website. The integrations and migration to SAP Commerce helped the client improve sales, customer experience, and revenue. They were also able to offer a personalized experience to vendors.
The second example is of one of India’s leading producers of customized polymers. As the client embarked on the journey of expanding their business, they wanted to implement a world-class ERP to support their expansion goals. We built a SAP S/4 HANA ERP from scratch and integrated it with RISE to help them migrate to the cloud. We also integrated the ERP with SAP Controlling-Profitability Analysis (COPA) and Salesforce to streamline sales and financial operations. The integration helped the company reduce manual work, improve productivity, and streamline sales, production, and maintenance processes.
5. Demand for industry-specific ERPs will increase
Every industry has its unique needs. Thus, a generic ERP might not be the right fit for all companies. The need for custom ERPs has led to the rise of industry-specific ERPs. In 2024, more companies may choose industry-specific ERPs. These ERPs are built after deep research into industry needs, and they promise to solve the common pain points of the industry.
For example, an automotive company could use an industry-specific ERP for warranty management, compliance, production planning, and more. A manufacturing-specific ERP could help the company automate label printing and barcoding processes, warehouse management, and tracking and updating materials suppliers. A food and beverage ERP could help with end-to-end traceability on an ingredient level.
Industry-specific ERPs can help companies maximize ROI, reduce implementation costs, and save time customizing the ERPs.
Why Should Companies Care About These Trends?
According to Statista, the global ERP market is expected to grow to around $101 billion by 2026. There is a steady demand for ERPs across all industries. Companies must consider investing in ERPs as business processes become complex and data-driven and if they are planning to expand their business and grow. It is crucial for managing the processes.
Companies must track these trends closely to ensure they get the most value from ERPs.
At Sapours, we implement next-generation ERP to enable companies to reap the benefits of emerging technologies like AI, analytics, and automation. We help companies with new ERP implementation, conversion to SAP S/4 HANA, and landscape transformation, depending on their business needs.
For more information on ERP transition, contact us for a free consultation.