The Evolution of ERP and Its Impact on Your Organization

Author: Kerrie Jordan, Vice President, Product Management, Data Platform, Epicor

Has your ERP kept up with industry innovations and technological advances, and is it providing you with the capabilities you need in order for your operations to be successful? Or are you losing productivity, efficiency, and money because your ERP is stuck in the past?

Enterprise resource planning (ERP) solutions have come a long way since tracking business operations with a pencil and paper. While ERPs aren’t a new technology, they’ve needed to evolve to keep up with today’s business and industry needs.

Here are some of the ways in which ERP has changed over the years, and predictions for where it’s headed and how it can serve your business needs into the future.

The State of ERPs Today

Being able to effectively manage your business’s internal needs like project management, supply chain, procurement, accounting, and more is perhaps the most critical part of your operations. According to our recent “Voice of the Manufacturing Manager” report, 55% of manufacturing leaders say they are investing in new technology, particularly AI, data analytics, automation, and robotics. As industry needs and technology evolve to improve efficiencies and productivity, an ERP needs to evolve to keep up.

ERP isn’t a new concept, and businesses have been using various types of enterprise resource planning tools for decades, evolving from paper-based manufacturing tracking to MRP systems to today’s ERP solutions. Here are three industry changes that have shaped ERP functionality today.

Cloud Adoption

We seem to have hit and passed through the tipping point for cloud adoption, and cloud technology is rapidly transforming the way businesses function and scale. Today, 47% of organizations are pursuing a cloud-first strategy and 69% of organizations have over half of their infrastructure and applications in the cloud. The days of on-prem solutions are dwindling in favor of cloud’s flexibility and scalability, and its increased security.

Not only can a cloud-based ERP offer more capabilities for an organization, public cloud investments in preventative measures like identity management and threat intelligence, as well as more frequent updates, make cloud a more secure option as well. Cloud usage is also encouraging vendors to look more closely at the overall consumer experience as well.

IT and Software Industry Changes

The evolution of ERP has also been impacted by the change in how people buy software, as the industry has grown away from software integrated into the hardware system to subscription-based, online software that can be accessed easily from a web browser on any connected device.

Today, organizations already use an average of 110 SaaS applications. The evolution of SaaS and integration technologies has made using different platforms, apps, and other IT offerings far more accessible. As such, ERP software has made the change to SaaS along with the industry.

Data Integrations

After its people, data is a company’s most important asset, but segmented or siloed data that doesn’t tell the whole story of an organization’s processes is unhelpful at best. An ERP is made to optimize the way a company leverages data, and should evolve with the need for various data integrations.

Additionally, integrations that can shed light into an organization’s end-to-end operations can create a competitive advantage as well. Being able to choose which data streams you integrate into your ERP can also help an organization have the right data for the right purposes, and gain more applicable insights from that data.

ERP Today

All of this has led to the current state of ERP today, with one additional industry shift: the changing nature of work. A remote and distributed workforce may have been necessary to weather the pandemic, but many businesses are choosing to remain remote as they reinvent their business processes for our changed world and the tools and technologies that businesses use to enable their people have to account for that distributed workforce.

These evolutions have businesses realizing the value of choosing SaaS for their ERP. Cloud-based, with easy integrations and catering to a distributed workforce, a SaaS ERP also provides the freedom for new apps, allows businesses to more easily invest in new locations, and can scale up and down according to business needs. It also brings financial and security benefits as well.

Also Read: Leveraging Cloud-Based Enterprise Resource Planning (ERP) to Future-Proof Business models

The Future of ERP

• Data as a service: Because collecting and integrating data across internal business functions helps an organization not only see how well they’re operating but can give insights into ways to improve, ERP vendors will increase their focus on data as a service. 67% of manufacturing leaders say their company embraces a data-first strategy, by prioritizing better ways to collect, manage, and analyze the data produced by their operations. We will see a shift in focus to bringing in external data as well, representing not just the company’s industry, but across adjacent industries that impact its value stream.
• Wider reach: ERP software will expand its reach, and play an even stronger role in sustainability and environmental, social, and corporate governance (ESG). It will also create ecosystems for collaboration, collective problem solving, and the breaking down of departmental silos.
• Concierge ERP: Going forward, we’ll see ERPs offer greater flexibility and personalization, and function as a self-service data marketplace, providing anonymous access to suggested data that is created by the industry ecosystem.
• Prediction and automation: With all that data and cloud-enabled scale, ERPs will evolve their predictive capabilities, especially when it comes to something like supply chain disruptions. Forecasting risk in supply routes allows you to understand and better prepare for the “what-if” scenarios. Then, the ERP can leverage automation to address issues as they arise.
• Manage rate of change: Finally, ERPs can use insight and artificial intelligence to manage change – for example, by sensing market data and using that data to update your business, change how you invest, ramp-up talent, re-tool, or proactively take other strategies.

Past, Present, and Future

ERP solutions have grown from static legacy systems restricted in their growth to scalable, flexible cloud-based solutions. Today, ERP solutions can help you more effectively run your operations, integrate data from across business functions, increase collaboration across teams, and more – but only organizations who seek out modern ERP solutions will reap the benefits.