How AI Will Impact ERP Software
There are a myriad of ways that artificial intelligence technology will impact our world in the years to come. One of those is the introduction of more automation to the enterprise resource planning (ERP) packages that companies use to run their businesses.
The global ERP market is estimated to generate between $44 billion and $54 billion per year in revenues for vendors who develop the software, a number that is projected to grow to about $100 billion by the end of the decade. The big dogs, such as Oracle, SAP, and Microsoft, gobble up their share of the market, but there’s still plenty left over for more specialized ERP firms, such as Unit4, which develops standalone HR and financials packages in addition to ERP.
Mike Ettling, the CEO of Unit4, recently shared with Datanami his thoughts on how emerging AI technologies will impact the ERP market. The way Ettling sees it, ERP developers are already tapping into the transformative capabilites that machine learning (ML) and AI will introduce, and it will have an overall positive impact on how business gets done.
“With the arrival of new technologies such as ML, under the umbrella of AI, new automation opportunities are arising, forcing the concept of digitization to evolve and be redefined,” Ettling says. “Such new technologies are heralding an era of transformation which, through automation, will deliver additional value in the form of increased productivity–freeing up time to focus on what matters, driving future business growth.
“ERP software, infused with AI-relevant technologies, has the potential to simplify business processes,” he continues. “As a result, introducing such technologies to both complement and supplement ERP software, and integrating the two, can make ERP even more effective.”
Ettling, who joined the Dutch company in 2019 from SAP, where he was president of the SusccessFactors division, sees AI being adopted in several specific ways, including augmenting human employees and in some cases replacing them.
“Augmentation will happen through predictive analytics, providing better projections of business performance, especially in Financial Planning and Analysis,” he says. “Internal workflows in ERP will gradually be automated and eliminate the need for user involvement. Users will be required to solve exceptions, where automation cannot progress the workflow, but will not be required to handle either data maintenance or data entry.”
For example, timesheets will be completed automatically using a combination of project data, previous projects, and receipts, Ettling says. Similar, expense reports will be filled out automatically through integration with travel systems, project information, credit card integrations, and OCR of paper receipts, he says. Some of the coding procedures that are currently done manually in the accounts payable process can also benefit from AI automation, he says.
Unit4 has already adopted AI in its products, which generates hundreds of millions of Euros in revenue for Unit4 annually. Much of this AI development work is accessible to Unit4 customers through its Smart Automation solutions, which automates manual processes that have historically been time-consuming, such as data entry, compliance checks and expense reporting, thereby freeing up employees to focus on higher-value projects, he says.
“Our Smart Automation Service, which includes AI-relevant technologies, enhances the customer experience through access to real-time analytics and insights,” Ettling says. “With this data, customers can quickly identify areas for advancement and make faster, more effective decisions based on trends in project performance. They can also respond to customer needs and resolve issues more efficiently.”
In the future, Unit4 plans to integrate with “hot technologies,” such as ChatGPT, Ettling says. “AI and integration with ChatGPT, for example… will undoubtedly form a key part of our solutions and we are already working on a number of innovations that leverage these,” he says.
But will AI spell the end of ERP? Tom Siebel, the CEO and founder of C3.ai, made that prediction to Datanami back in 2017, when he said AI would be a “100% replacement” for not only ERP but also supply chain management (SCM) and customer relationship management (CRM), which make up the big three categories of enterprise software. Ettling does not agree with Siebel.
“ERP software will never disappear, just like accounting or banking, or any other financial solution,” he says. “However, it will evolve. Most, if not all, enterprise software in existence today is over 20 years old. And, over the course of the last two decades, we’ve seen increased digitization, with a shift from paper-based to electronic business processes.
“The adoption of the cloud facilitated even further advancements in modernizing arcane processes, which has allowed us to morph ERP from a manual data entry and maintenance system to a fully automated insight system,” he continues. “By applying relevant technologies under the AI umbrella, it has made ERP pervasive rather than invasive. In the future, users won’t even notice they’re interacting with an ERP system, but it will still exist as a crucial system for insight and knowledge about the business.”
AI technologies are only as smart and effective as the people who develop them, Ettling says. Unit4 works closely with “people-centric organizations,” he says, and since AI can potentially replace human workers, it poses a bit of a dilemma.
“[I]t will be interesting to see how the relationship between AI, business and people evolves,” he says. “Ultimately, removing the human out of the equation can, and will, reduce overall customer service and experience, so there must be a continued balance between people and technology for the future.”