Although they delivered tremendous value to customers, ERP solutions historically have a well-deserved reputation as systems that cause organizational processes to cement themselves into place. ERP systems often take years to implement. Worse, they often implement business policies and procedures that were thought to be the right approach when they were conceived, but are well out of date by the time the system comes live. Then, when the business recognizes that changes to these policies and procedures need to occur, they know that it will be years again before they can take advantage of any insights. Rather than adapting to changing business conditions, organizations live with old, inefficient processes just to avoid the cost and disruption of trying to improve their ERP system.
"ERP systems ... can be treated as smart machines that adapt in real time to better serve the enterprise "
When will customers start looking for new ERP solutions? The time when the solutions can adapt to business change as it happens – and without engaging an army of consultants to make each change. Simply putting the same old solutions on somebody else’s computer (aka “the cloud”) isn’t enough to make this happen. However, some new ERP solutions are delivering innovations that put us on the path towards ERP systems that can be treated as smart machines that adapt in real time to better serve the enterprise. There are three major innovations ERP solutions will adopt in the near future before those solutions can adapt themselves to changing conditions in near real time:
Automation: This first innovation that will drive the revolution in smarter ERPs is the automation of as many information tasks as possible. Manufacturing processes saw enormous gains in speed, flexibility, and quality, by replacing assembly line steps with configurable robots. We’re already seeing ERP vendors start to market “hands-off” processes in certain areas of ERP (such as Payroll). Can we really trust an ERP solution to handle all of the complexity of these tasks? We regularly trust a computer to fly a plane, so why not? As automated systems take on more responsibility, information is processed faster and with fewer mistakes, delivering vastly superior results to today’s user-centric ERP.
Automation is the first step in creating a smarter ERP machine. By creating information processes that can execute faster and more reliably against larger quantities of data, fully automated ERP solutions set the foundation for the smarter ERP machine.
Integration: of integrating external systems, and will automatically negotiate with those systems to find the best way to move the information required without needing human beings. The emergence of the Internet of Things is bringing new innovations to how systems inter-connect, and may drive standards for generalized inter-connectivity that revolutionize the kind of integration needed for ERP.
Integration beyond the traditional boundaries of ERP is a prerequisite to the smarter ERP machine. Innovation in ERP is making it easier and faster to connect to external systems without requiring human intervention, allowing the ERP to automatically gather the information it needs, and automatically deliver the results of processes to those who need it.
Self-Optimization: An automated ERP solution that connects automatically and seamlessly with external systems captures lots of data about business processes. Why not use analysis and machine learning techniques to advise or even automatically configure flexible business processes into optimal processes for the business in near real time? ERP solutions are already implementing analysis and Big Data techniques to aid in operational decisions, such as fraud prediction. Innovative solutions will soon be using machine learning techniques to re-evaluate and optimize whole business processes. Why hire consultants and programmers to evaluate processes, make recommendations, and implement them, when a smarter system could assess, recommend, and reconfigure itself - providing needed training resources for any users within the application? In other words, a self-optimizing ERP solution would eliminate the need for armies of implementation (and re-implementation) specialists, instead replacing them with the same kind of technologies that drive Siri and Google search recommendations.
Not so long ago, the idea of a self-driving car was outrageous. Now, automated, integrated systems can learn to successfully drive – possibly better than their human counterparts. The innovations described above are the prerequisites to creating the self-driving ERP – the system which flawlessly manages the information flowing through the organization, so that management and employees can focus on the real job; making customers happy. Given this potential, why CEOs wouldn’t invest in a smarter ERP that could deliver on this promise?