Simple Trends That Will Continue to Drive ERP

New technologies are not the only trends that will influence ERP.

Erp

It will come as no surprise to anyone with their eyes on tech trends that the coming decade will see the enterprise resource planning (ERP) world take account of developments in Artificial Intelligence (AI), Machine Learning (ML), open APIs and cloud. But new technologies are not the only trends that will influence ERP.

AI and machine learning is a pairing of technologies whose full potential has yet to be fully realized. In our November 2019 study we found 40 percent of manufacturers planned to implement AI for inventory planning and logistics, and 36 percent for production scheduling and customer relationship management. Overall, 60 percent said they were targeting productivity improvements.

This reveals the scale of appetite for AI and ML because they can uncover fresh, innovative insights that boost the bottom line. Take the example of ‘just-in-time’ manufacturing—particularly relevant given the high-profile shortages of personal protective equipment during the COVID-19 crisis. This is designed to deliver components at the last possible moment to alleviate storage and associated costs.

If an AI is asked to look at just-in-time scheduling it can come up with a whole new approach to the production process, creating new options that can make a real difference and generate significant productivity gain.

APIs Open for Business

Another big trend that is transformational for ERP, is open APIs. Based on open standards and easily made available to developers, open APIs are huge. They allow a wide range of client-side functions to be integrated into systems easily and quickly. They allow development to happen at pace because there are no hidden complexities, and they permit inbound and outbound connections to the digital core with the greatest possible flexibility and speed.

In addition, open APIs make it easy to connect to applications, platforms, services and databases that are external to the core. At IFS we are 100 percent committed to open APIs. They are the foundation of how our front-end works. That’s not changing for us, and we expect to see open APIs gain even more traction across the industry.

Success in the Cloud

Cloud has been a trend for so long that it is now a basic fact of life. Yet cloud is still not universally adopted, despite some of its vast benefits. When non-cloud organizations do make the move, they often start with a hybrid model, to ‘test the waters’. But this can be a more glass half-empty approach than a glass half-full one because the non-cloud aspects hold things back. Only by going fully cloud can organizations really reap the benefits.

We expect to see more organizations realize this as the 2020s progress, and for the full-cloud trend to continue. In doing this they will allow themselves to take full advantage of the AI and open API trends already noted.

The trends mentioned so far are all primarily based around technology, but there are two others which are more about general business practice, and we expect these to gain traction.

At Your Service

We expect the term ‘servitization’ to become much more widely known as the business approach it describes takes a firm hold. Traditionally, manufacturers make ‘goods’ which are sold to customers by intermediaries. That is changing, and manufacturers are moving closer to their customers. Consider two ways this is happening.

One is via subscription-based sales – more prevalent today in software, but also, think of the number of people leasing cars. The other is through integrating services into products. Here we can think of any number of Internet-connected household appliances, and their number will grow.

In 2018 we found that 62 percent of manufacturers had a profitable aftermarket through planned maintenance or service contracts, but only four percent offered products entirely as a service. There are many unexplored opportunities for the evolution of the business-to-business-to-customer model. For example, a filtration systems customer of ours has transformed itself from selling air cleaners to selling clean air.

It helps customers measure air quality and establish an air quality goal, then maintains the filtration system to deliver the goal. Automation is key, as sensors monitor air quality, call out technicians, order parts, and monitor the equipment to action a condition-based maintenance program. It is easy for AI to deliver value from this model.

This type of model is not about squeezing the consumer. It is about delivering real value. Here, my final trend for the decade ahead comes into play.

Simplicity.

It trumps everything. We see this in our everyday lives. From the ability to stream our favorite TV programs on-demand, to order and pay for a taxi from our smartphone – the companies that can simplify a user experience will triumph. Similarly, organizations do not want to fight with disparate modules in their ERP applications that need integration, modification and extensions They want a single set of seamless processes and reporting. Anything less is nonsense.

In the end, simplicity will cut through all of these trends and will be the watchword for ERP implementations in the coming decade.

When AI and ML can identify more effective ways of doing things, when open APIs allow for the most efficient integration of applications and data, when cloud allows organizations to fully reap the benefits of those technologies, when manufacturers reach out to customers directly and deliver the products and services they really want, what we are doing is simplifying. It is the role of ERP to simplify using the means at our disposal. 

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