by Jonathan Soriano
Enterprise resource planning (ERP) applications are common business tools that appeared during the 1990s, evolving from simple applications to customizable software systems. However, with the recent emergence of Industry 4.0 and the increased connectivity required across a business to optimize end-to-end production processes, standard ERP systems are becoming obsolete. At its core, Industry 4.0 focuses on data capture, analysis, and application to improve overall efficiency, which is why some firms have already begun switching from systems of record, to systems of engagement, intelligence, and decisions. These new systems are being referred to as intelligent ERP (i-ERP) systems.
An i-ERP system utilizes machine learning, block chain technology, artificial intelligence, the Internet of Things, and advanced data analytics to allow companies to operate more efficiently in an increasingly digital world. Through human-machine interaction, i-ERP systems provide employees with an assistive and conversational user experience (UX) by automating a set of high-volume repeatable tasks, and augmenting less frequent or more novel tasks. Additionally, the UX offers guidance on the next best action for various tasks regarding customers, suppliers, hiring, or financial actions like payment and collection.
A study performed by the International Data Corporation (IDC) projected that 40 per cent of large organizations will have at least 60 per cent of their ERP applications in a public cloud (defined as a computing service offered by third-party providers over the Internet) by 2020. Public clouds save companies money by removing the need to purchase, manage, and maintain hardware and application infrastructure. The IDC study also presented three features of i-ERP systems that offer firms significant benefits:
Reduced operating costs
Real-time analysis and decision making
With i-ERP applications, firms can discover how to produce more while using fewer resources. These systems utilize machine learning on comprehensive data sets to drive higher employee productivity and maximize return on information assets, while enabling firms to manufacture more innovative products. These benefits occur because rather than being used simply for record management, i-ERP systems are capable of learning from experience—for example, exceptions made by the firm to standard procedures—and then adapting business rules. The assistive and conversational UX allows employees to more efficiently distribute and utilize resources by discovering new insights, better predicting and planning for outcomes, recommending next best steps, and automating additional processes. Examples of resources that could be optimized include human input and interaction, business processes, and the technology itself.
Reducing Operating Costs
The reduction of operating costs follows immediately from resource optimization; however, it is important to note there are other business applications using machine learning and advanced analytics to cut costs that can easily complement i-ERP systems. For example, manufacturers across the globe are investing heavily in robotics and other automation technologies to lower unit costs, increase productivity, and manufacture products of a better and more consistent quality. By analyzing purchasing patterns and automating the next order, i-ERP applications can assist with the implementation of automation technologies by eliminating redundancies and additional transactional steps. Exemplary uses of i-ERP in finance processes including real-time cash management, surveillance-based audits, and continuous budgeting. These systems provide an excellent long-term solution to help executives make strategic investments and organizational changes to lower costs.
Real-Time Analysis and Decision Making
By using in-memory computing (IMC) technologies, i-ERP applications can process, analyze, and act on large data sets in real time. Through human-machine interaction, the i-ERP system is able to determine which processes should be automated and which should be augmented, enabling employees to become more efficient and effective within their roles. Moreover, taking into account different worker behaviours and styles, the UX is designed to be mobile friendly for convenience and availability.
The anytime, anywhere interfaces of i-ERP systems drive crucial information flow to the right employees at the right time, which facilitates better high-level decision making within the firm. This type of autonomous support gives firms a competitive edge in the digital economy because they have the agility and flexibility to adapt to obstacles in real time. Further, the applications are scalable, so firms of all sizes have the opportunity to benefit from the increased agility that they provide.
There is no disputing that a wave of digital transformation to business processes has begun in earnest; firms must embrace it to remain profitable and competitive. The benefits and capabilities of i-ERP should not be underestimated, and firms should begin considering how to integrate these intelligent systems into their operations as soon as possible.
“Four Ways Intelligent ERP Applications Deliver Value to Your Organization.” IDC https://www.idc.com/promo/thirdplatform/RESOURCES/ATTACHMENTS/ierp-book1.pdf
“From ERP to Intelligent ERP in the Smart Factory and Supply Chain.” I-SCOOP, April 19, 2018. https://www.i-scoop.eu/erp-intelligent-erp-smart-factory-supply-chain/
Rizza, Mickey. “The Rise of Intelligent ERP (i-ERP).” IDC Community, September 19, 2016. IDC Corporate USA https://idccommunity.com/groups/it_agenda/bigdataanalytics/the_rise_of_intelligent_erp_i_erp