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Cloud, AI and the rise of blockchain: five ERP predictions for 2019

Cloud, AI and the rise of blockchain: five ERP predictions for 2019 

One of the most important of these is Enterprise Resource Planning (ERP) software, which has come a long way since the age of the monolithic ERP of the 80’s and 90’s – when it was first known as materials requirements planning (MRP). While these early systems tended to focus purely on manufacturing, later versions extended into other areas of the enterprise such as finance, supply chain management and more recently human resource management (HRM).

They then evolved massively in the late 1990’s in response to Y2K and the introduction of the Euro, being seen as a standardised, cost-effective package to replace old systems and address these issues. Move forward another 20 years and today’s ERP solutions integrate all of the processes essential to running a business, interpreting data to provide insights in real time.

Looking forward, ERP development is showing no signs of slowing as we head into 2019. For example, financial analyst firm MarketWatch predicts that the global ERP market will grow to $47 billion by 2022, representing a Compound Annual Growth Rate (CAGR) of 7 per cent. Others are even more optimistic, with Stratistics MRC forecasting that the industry will more than double in size over the next eight years, reaching $74 billion by 2026.

Several drivers are expected to be behind this growth, including the likes of cloud integration, enhanced data security measures and the integration of next-generation technologies such as machine learning and artificial intelligence (AI). But what exactly can we expect to see in 2019? Here are our key predictions for the ERP industry over the next 12 months.

1. The cloud takes over

Cloud adoption has continued to grow in virtually all areas of the enterprise throughout 2018, with organisations accelerating their implementation and integration projects in order to transform their core functions. As such, transitioning away from legacy ERP systems to cloud-based ERP is becoming more and more compelling.

However, ERP’s movement to the cloud has generally lagged behind other areas of software, such as CRM. This has primarily been due to a handful of perceived challenges, including security issues, skills shortages and concerns around the time-consuming and costly nature of implementations.

Despite this relative sluggishness, we’re set to reach a tipping point in 2019, when cloud-based ERP will become the norm. Businesses are realising that cloud ERP offers the best solutions to today’s challenges, which is why the cloud ERP market is estimated to grow to nearly £30 billion by 2021. The one industry exception to this trend is manufacturing, where analysts have predicted a slower cloud uptake.

In other industries, a whole host of factors are driving adoption, such as improving product quality, the need for greater mobility and providing real time production and process monitoring. Being smart about managing rapid growth is also a key consideration. Given how fast modern businesses tend to grow, cloud ERP helps businesses cope with this growth and improve business performance.

As a result, cloud-based ERP will become the default option for those businesses – big or small – that are looking to grow and modernise business processes in an increasingly competitive landscape.

2. An AI/ML upgrade

It will probably come as no surprise to hear that artificial intelligence and machine learning capabilities are set to play key roles in the future of ERP software. Such tools offer a huge variety of benefits, in particular the ability to automate processes, increase efficiencies, generate insights and augment human decision-making.

For example, AI can save businesses valuable time by highlighting any abnormalities in company data, rather than employees having to go through reports. Taking this one step further, AI will help to identify potential issues before they occur, preventing downtime and resulting in time, money and productivity savings.

Linked to this is the use of drones, which are quickly becoming more commonplace as inventory management tools inside large manufacturing plants. They simply read the data from RFID tags attached to machines and send this information into a connected ERP system, where AI tools generate reports on everything from inventory levels to maintenance schedules.

Finally, AI can also enable staff to make smarter decisions related to processes such as operations, logistics and manufacturing. Rather than replacing them, AI and ML tools will support humans in their roles by providing unparalleled levels of intelligence and insight.

With all this in mind, the integration of AI and machine learning tools with ERP software will accelerate in 2019 as businesses embrace the range of benefits on offer. 

3. ERP moves to the edge

With the growth of the Internet of Things (IoT) showing no signs of slowing, manufacturers will invest more in ERP “edge solutions” to extend their core systems and boost their productivity in 2019. This will streamline communication between the ever growing number of IoT devices and help to make sense of the data being collected.

Linking edge solutions to internet-connected devices and products means IoT data can be automatically funnelled into the main ERP system. This, in turn, gives businesses better oversight into their supply chain operations and speeds up the decision making process.

It can also improve business intelligence. By moving parts of ERP to the edge, businesses can monitor machine operations from anywhere in the world and perform real-time analysis to track maintenance and minimise disruptions. This insight helps managers make better tactical decisions and lets them know exactly what is going in across the entire supply chain.

Along with these benefits, IoT-based edge solutions will continue to become more affordable over the coming months, all of which will drive more and more manufacturers to implement the technology in 2019. Those that don’t, will likely find their competitors gaining the upper hand.

4. Data, data everywhere

We all know that data has become one of the most valuable assets for businesses in all industries and something that organisations now depend on. Therefore, having an ERP system that is data-driven and that offers the ability to access, analyse, and present that data in ways employees can make sense of will be more important than ever in 2019.

Simply collecting large volumes of data is no longer enough. Organisations have to be able to use this data in the right way if they want to capitalise on the various operational benefits it has the potential to provide. For example, using analytics tools connected to their ERP software, firms can make predictions and forecasts that inform their future business strategies and meet customer needs.

Leveraging data is also essential for identifying any inefficient processes, something which more and more businesses are doing. Over the coming months, using data to improve internal procedures will be key to staying ahead of competitors and ensuring optimum levels of productivity.

So, in 2019, organisations won’t just be collecting data through their ERP system. They’ll be using it to drive their operations, respond to market changes and – perhaps most importantly – inform future strategy. Data cataloguing will also take on even more importance in 2019, as understanding where the data has come from and how it has been aggregated will help build confidence in data-driven decision making.

5. Blockchain emerges

It’s no secret that blockchain is garnering interest in many areas of enterprise software as the technology continues to develop, and ERP is no exception. Although still in its relative infancy, new use cases of blockchain in ERP will emerge over the coming months, especially when it comes to transforming manufacturing.

Supply chain management is already proving to have significant potential as an early application of blockchain ERP due to the visibility and traceability it provides. For example, inventory management has traditionally been a complex and laborious process, especially for global organisations, but blockchain has the potential to significantly streamline operations by uniting supply chain networks through a decentralised system.

On the visibility side, blockchain ERP systems can enable everyone involved to track the product’s journey from the manufacturing floor to the retailer’s shelf, without having to worry about records being lost or tampered with. Nowhere is this more prevalent than in the food and beverage space, where blockchain will provide transparency and product provenance that is validated from farm to fork. 

They can also automate business processes through the use of ‘smart contracts,’ which essentially enforce a relationship with cryptographic code. Similar to setting up automatic payments, smart contracts will remove the need for businesses to send invoices and chase payments, saving significant time and ensuring that everyone is paid promptly.

It’s still early days, but the ability of blockchain ERP to strengthen the integrity and automation of supply chains is already becoming clear, which will help it emerge as a hugely compelling option for businesses as we move through 2019.

Ultimately, these trends present a huge number of opportunities for businesses over the next 12 months. The future of ERP software is looking very bright, with the potential to transform business operations. As such, the question businesses should be asking themselves is not whether they are ready to embrace these developments, but whether they can afford not to.

By Robert Sinfield, Vice President, ERP, Sage.

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