How AI Is Shaping the Future of ERP Software

By: Zach Hale on September 28, 2018

Despite its relative infancy, artificial intelligence is making serious waves in the software market. Gartner predicts that by 2020, almost every new piece of software on the market will leverage AI technology in some form or fashion. By 2021, 80 percent of all emerging technologies will rely on AI as the centerpiece of its infrastructure.

ERP software, which boasts operational efficiency as a defining characteristic, is a particularly pertinent case study, proving to be a breeding ground for the implementation of such future-forward technologies. Recent advancements in AI and machine learning have shown limitless potential for ERP vendors—but with that comes a lot of uncertainty.

So what does the future of ERP look like in a post-AI world?

This we know for certain: If businesses optimize their ERP systems and data for the practical applications of AI in the present, they will be better positioned to leverage the technology as it matures and becomes nearly universal within the software market.

Here’s what we’ll cover:

What AI Looks Like in an ERP System

3 Key Benefits of Using an AI-Based ERP

2 Risks to Consider When Implementing an AI-Based ERP

Next Steps: Looking Ahead to the AI Takeover

What AI Looks Like in an ERP System

Gartner defines AI as “technology that appears to emulate human performance.”

To understand AI in an ERP context, think in terms of its practical applications—things like machine learning and natural language processing. AI isn’t any one thing; it’s all the parts and processes toiling away behind the scenes to make something whole, rather than the physical or theoretical manifestation of that whole.

AI ERP systems can recognize patterns and automate routine tasks, and they do all of it in the blink of an eye, giving businesses an unprecedented level of efficiency, functionality and insight into their data. Malin Huffman, senior director of product management for Oracle NetSuite, is excited by how AI can supercharge an ERP:

“By having a complete picture of our customers’ operational business data, we can provide better intelligence to unlock the hidden potential of your data and help you manage your business more effectively.”

But what exactly does that look like?

3 Key Benefits of Using an AI-Based ERP

Huffman stresses the importance of not remaining too in-the-clouds about AI, and this is especially true in ERP.

“You hear a lot of hype about companies sprinkling AI across their applications, but it’s important to focus on what tangible value it will actually provide customers.”

Malin Huffman, Senior Director of Product Management for Oracle NetSuite

As she explains, AI presents three primary benefits for businesses:

1. Offers Deeper Insights Into Your Data

Within a given data set—such as the massive data sets found in an ERP—patterns and correlations exist that aren’t always visible to the human eye. With AI, SMBs can identify these less obvious trends and make insightful inferences about specific business operations, which in turn allows for more accurate forecasting and informed decision-making.

For instance, an AI-based system could pinpoint the correlation between a rise or dip in production and a specific business function in, say, supply chain management—insights that would take a human significantly more time to extract.

2. Automates Routine Processes

When a human performs a given task within their ERP system, they’re following a set of rules—consciously or subconsciously—that governs their actions and methodology. Such behavioral tasks can often be expressed in mathematical terms and programmed into software, which can then apply this set of rules to a specified data set and make intelligent decisions more quickly than any human could.

This can make routine responsibilities such as accounting and payroll administration as effortless as the click of a button. It is, in a sense, an advanced form of efficiency optimization, freeing up valuable human brainpower to focus on more high-level tasks and processes that no machine can reliably handle.

3. Improves User Experience Through Interaction

This element of AI makes intelligent decisions based on human input, which in turn make the application faster and more useful to the individual user.

Huffman gives the example of searching for information in NetSuite and consistently interacting with a certain set of record types, such as customer data or product catalog data.

The software can then prioritize those search results based on a user’s interaction history, in a way that personalizes the user experience and makes it easier to find what you’re looking for. In a system that employs vast amounts of data, like an ERP, this is crucial.

2 Risks to Consider When Implementing an AI-Based ERP

The benefits to utilizing AI within an ERP framework are clear. That said, there are risks to implementing such ambitious, far-reaching technology. And contrary to much of science fiction, they don’t involve robots supplanting the human race (at least not in the foreseeable future).

1. Integration Can Fail Without Adequate Resources

For vendors, having the resources to unleash the power of AI is essential to realizing its full potential. But even those that do have the means are at risk without exhaustive research and preparation.

“AI is a specialized art right now,” Huffman says. “You need data scientists and developers who understand how to analyze the data that you’ve got and run it through these algorithms, to make your application into a self-learning system. That’s not something you develop overnight.”

Buyers, especially those who prefer the postmodern approach to ERP, should exercise caution when updating to an AI-based platform. The more complexity you infuse to your system, the more breakage points become a concern, so all integrations and external connections should be airtight.

This is true of all ERP upgrades, including those devoid of artificial intelligence. But automated tasks can have significant unintended consequences without thorough planning, and introducing AI to the mix enhances these risks.

2. Minor Mishaps Can Quickly Turn Into Serious Issues

The 2018 Gartner study “An Artificial Intelligence Reality Check for CIOs” implores businesses to use a concept known as digital ethics. The nuts-and-bolts argument is that the sheer power and scalability of AI presents businesses with the responsibility to consider the impact their technology can have when things don’t go as planned.

Systems designed for humans require a certain level of user training and control, and when non-human intelligence is added to the mix, the probability of unintended consequences increases. Again, this doesn’t mean killer robots taking over the planet, but it could disrupt the user experience.

When selecting an ERP system, SMBs should ask the vendor the extent to which they plan to leverage AI technology in their platform.

Ray Rebello, director of product marketing for ERP vendor Acumatica Cloud ERP, finds confidence in a mixture of thoughtful innovation and competitive necessity.

“It’s not like we’re out experimenting with AI and machine learning in a vacuum,” he says. “We’re adopting the stuff that [our engineers] have already vetted as the best, most useful technology.

“Sure, there are unforeseen consequences at the moment, perhaps. I don’t think any of them are drastic by any means, but the alternative is probably worse. [Companies that don’t leverage AI] are going to fall behind in business—everybody’s going to be serving the customer better, have a better customer experience.”

Next Steps: Looking Ahead to the AI Takeover

Peak AI won’t be here anytime soon—we’re not even in the stratosphere at the moment—but the dominos are beginning to fall. A 2017 Gartner Research Circle study found that only 4 percent of organizations surveyed had deployed AI, while another 46 percent were planning to implement it.

Fast forward just one year and the 2018 Gartner Annual Enterprise Survey found 20 percent of respondents planning AI-based projects, 26 percent piloting AI implementations, 31 percent with limited implementation in place and 23 percent fully implemented. (Full research available to clients.)

According to Rebello, when it comes to SMBs, “a lot of them have not even optimized their processes yet. They may not even have moved to the cloud yet. We’re talking over their heads and we’re not being realistic about what they want to achieve in the short term.”

So although AI hasn’t fully arrived, it’s only a matter of time—and SMBs better be ready.

Here’s What SMBs Can Do to Prepare:

Scrub Your Data

When bringing together many disparate systems into a single ERP, there’s bound to be duplicate or inconsistent data throughout. Structuring your data in an organized and intuitively formatted fashion allows for more thorough and accurate interpretation—by the human eye, certainly, but especially by a computer.

Changing dates, dollar amounts and other numerical data points into a single, consistent format will make it easier for AI to comb through the data and ensure top-to-bottom accuracy and analysis.

Stay Informed

Seemingly every day, new developments in the world of AI upend our preconceived notions of the tech’s current and potential capabilities. Here’s how you stay caught up:

  • Keep an eye on our Resources page

  • Subscribe to industry publications

  • Maintain a consistent dialogue with your ERP vendor

Staying on top of AI-related news is imperative for any current or prospective software user. Knowledge is power, as they say, and you’ll put yourself and your business in a position of power by keeping informed on the latest news and developments.

Give Us a Call

Our knowledgable software advisors are ready and willing to share their expertise on all things AI, ERP and software in general. For a free 15-minute phone consultation, give us a shout at (844) 689-4876.