The future of ERP is automated, conversational and very much in the cloud
Not just about AI
Just to be different from every other article you read about technology this week, I am going to limit my take on AI to just a few sentences where it is most relevant.
Instead, I want to talk about what I believe to be the future of enterprise resource planning (ERP), a topic that may lack the glamour of AI but for most of us in business is, I suggest, more relevant.
When I was asked recently about my predictions for 2024, I joked that they were similar to my predictions for previous years and, in a way, there is some truth to that. The fact is that technology shifts tend not to fall into annual buckets, with rare exceptions such as ChatGPT last year.
Conversational user interfaces go mainstream
One prediction I've made before is that conversational user interfaces will break into the mainstream and that's partly because of ChatGPT.
It's certainly the case that ChatGPT and other large language models (LLMs) are the successors to the old chatbots, and they are very good at creating fluent, human-to-human style dialogues.
So, our conversations with our software won't be as stilted and prone to error as in the past, and we can get on with building a co-operative relationship between humans and digital assistants. We (the human ‘we') can ask our bots to help us do mundane jobs while we use our empathy and human creativity to solve larger problems. That, to me, is the future for ERP and for enterprise software as a whole.
Pervasive ERP in the cloud for everyone
I also have strong faith in the notion that as ERP becomes more automated the trend towards "pervasive ERP" will continue. It's going to be like the database or cloud where people may have started with strong preferences over supplier brand, associated tooling and so on but, today, care less and are more focused on the software helping to achieve a desired aim for a use case.
I'm also convinced that the future of ERP for nearly all of us will be in the cloud. Perhaps in some extraordinary use case where you know precisely what hardware consumption looks like, on-prem remains a viable option. And, if you are shackled by certain laws or industry rules then yes, there may be reasons not to be on the cloud. For everyone else, there's a cloud solution that offers benefits, which we should all know by now and be able to repeat like a schoolchild reciting times tables. Faster setup, elastic compute capacity, ubiquitous access, lower admin overhead, simpler rollout across countries and regions, spread payments, modern code that's refreshed on a regular basis, access to the best applications, device independence… you get the drill, I'm sure.
What else will change? I expect that ERP pricing will evolve over time in a way that aligns with what's happened to other cloud services and enterprise software. That is, towards a tariff based on throughput, volume and transactions. Thus, change should represent better value for all and be welcomed.
New role for CIOs in a less customised world
One more trend that I expect is more customers to embrace the default setting options for ERP and customise less. Decades of ERP adoption tell us that creating bespoke controls can create complexity. Unless you really are doing something highly differentiated in how you serve customers, it's far better to adapt processes to the built-in workflows, processes and drag-and-drop variations which are integrated into modern ERP and have been based on extensive research into best practices. I also expect to see greater use of app marketplaces and connectors to third-party software, as leaders build ecosystems around their ERP investments.
As a related point, I also think the CIO role is changing in line with ERP and platform change. Cloud and modern ERP with automation and a low admin overhead should free up tranches of time, enabling CIOs to focus on the more strategic goals they have always wanted to achieve. That is, to flip the equation between 80% keep-the-lights-on rote tasks and 20% innovation.
Perhaps I could finish by mentioning the hot topic of AI, which, it seems to me, is used as a catch-all term. A subset, machine learning, certainly has extraordinary promise but much of what we can achieve with ERP rules-based algorithms will solve the large majority of our needs for now. Of course, as good technologists, we will pursue all sorts of technological efforts and track developments, but we will not be getting too carried away for now.
This, then, is the future of ERP and for those that remain in the old on-premises world, I urge you to begin your journey to the cloud where all the innovation is taking place.
Claus Jepsen is chief product officer and CTO at Unit4