How to Navigate the Uncertain Future of ERP Software

By: on December 3, 2019

Enterprise resource planning, or ERP software, has a long and complicated history, from its early days as a type of manufacturing system to the postmodern deployment methods of today.

In the midst of all this change, how can an organization navigate the ERP labyrinth and do it with confidence? The short answer is that ERP isn’t going anywhere, but it will continue to evolve—just as your ERP initiatives should.

The future of ERP lies in a business’ ability to adapt, and those that prioritize integration and emerging ERP technologies will ensure the long-term viability of their investment.

Let’s take a deeper dive into ERP’s past, present, and future.

The first three eras of ERP

To understand where the market is going, you have to know where it started.

first three eras erp software

While its roots extend back to the manufacturing resource planning (MRP) systems of the ’60s and ’70s, the official birth of ERP was in 1990, when Gartner coined the term to reflect the software’s expanding scope. By that point, MRP was expanding beyond simple manufacturing processes to include enterprise-wide functionality—applications such as accounting, human resources, and customer relationship management. (For a detailed look at the timeline, check out our History of ERP infographic.)

Throughout the ’80s and ’90s, which Gartner calls the best-of-breed era, this early iteration of ERP was defined by complex and fragmented solutions (full content available to Gartner clients). Basically, ERP was an assortment of systems that carried out processes separate from one another, with little coherence or communication between them.

As ERP matured in the late ’90s and into the early 2000s, businesses began to implement larger applications that expanded beyond “enterprise” solutions to include more agile, industry-specific functionality. This is known as the monolithic era.

Fast forward to the 2010s—the postmodern era—when technology evolved to permit communication between different software through system integration. This is ERP software as we know it today: an increasingly customizable system of specialized business applications from multiple vendors.

ERP’s emerging fourth era

Today’s ERP software barely resembles that of past decades. Businesses of all sizes and specialties have the ability to tailor these systems to fit their unique needs, as the market evolves into something virtually unclassifiable.

As Gartner notes in the article linked above, “enterprise resource planning is no longer solely focused on ‘resources’ or ‘planning.’ It is slowly changing focus away from ‘the enterprise.’ It is evolving to be something much more expansive. As such, the terminology used to describe it needs to begin to change as well.”

Gartner’s proposed terminology? “Enterprise business capabilities (EBC).”

Despite this shift toward integration and customization, the emerging EBC era has several hallmarks:

  • AI-driven. Artificial intelligence is shaping the future of ERP software and is therefore the single most significant force behind the EBC era. The footprint of AI-driven technologies such as machine learning and predictive analytics will only continue to expand in the future.
  • Data-centric. Your ERP system is home to all your essential business information, from business financials to customer profiles and everything in between. In concert with AI, businesses can leverage data-driven insights to improve different outcomes.
  • Consumable. The postmodern era ushered in a new way of thinking: a shift toward individual functionality, emphasizing the inherent value of each consumable part. Consequently, vendors are rethinking how to best position their products based on how businesses consume them.
  • People-augmented. Many ERP processes are automated and require less hands-on attention from the end user—but robots aren’t replacing humans. Future ERP systems will instead augment the human element, freeing us mortals to focus on decision-making and analysis—and improving outcomes in the process.
  • Enabling. Automation enables users to focus on adapting and responding to more pressing matters. In this new era, individuals will be able to carry out tasks on the go through emerging voice- and gesture-based technologies, resulting in a more seamless and self-optimizing user experience.
  • Customer-facing. Similarly, less time in the ERP system means more time with the customer. While traditional ERP systems prioritize internal business value, the focus going forward will lean more toward providing value to clients. This, in turn, will create value for your organization as well.

We’re already seeing many of these concepts in action, yet we’ve barely scratched the surface: By 2023, Gartner predicts that 65% of businesses will use ERP applications that employ one or more of these fourth-era hallmarks.

Getting long-term value out of ERP software

Despite the changing nature of ERP software, its mission today is the same as it was in 1990: ensuring business value.

There’s no need to abandon your current investments or initiatives—not if you’ve already optimized your ERP system to maximize adaptability. The important thing is that you guide your ERP strategy with a 21st-century mindset, using a framework propelled by AI and automation to achieve the best possible outcomes for your business. In other words, today’s businesses can leverage ERP technology to guide and optimize their strategy on the fly.

Unsure how to do this? Worry not—we’ve written extensively on the topic. Whether it’s how AI is shaping the future of ERP software, using ERP data for more accurate forecasting, or how new ERP technologies are impacting small manufacturers, these resources can help prime your business to face the ERP challenges of today—and the EBC challenges of tomorrow.

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How AI Is Shaping the Future of ERP Software

How New ERP Technologies Are Impacting Small Manufacturers

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