8 ERP Trends for 2022
Enterprise resource planning (ERP) solutions have matured and expanded their reach to support most business functions, from back-end processes such as accounting, HR, procurement, and manufacturing to front-office functions such as sales force automation (SFA), marketing automation , and ecommerce . Businesses rely on ERP to not only cut costs by eliminating redundant processes and automating mundane tasks, but also to give employees access to critical information to make better decisions, faster.
As companies increasingly rely on ERP to run their business, these systems continue to evolve to incorporate new technologies and support broader functionality. In this article, we'll cover eight key trends to watch in 2022 and beyond.
Key takeaway
· Businesses continue to move to cloud ERP. The global cloud ERP market is expected to grow 13.6% annually and reach $40.5 billion by 2025, according to Statista.
· Artificial intelligence (AI), and machine learning in particular, helps optimize more business processes, provide new insights, and create personalized customer interactions.
· ERP is increasingly integrating with other technologies, such as internet of things (IoT) devices and social media, to automate even more and provide greater visibility and better customer experiences.
· Solutions that can support remote work have become increasingly important as organizations increasingly rely on distributed workforces in the wake of the coronavirus.
8 ERP Trends for 2022
1. Cloud ERP
Historically, many organizations used on-premises ERP applications and were reluctant to entrust core business applications to the cloud, but that is changing quickly. Businesses adopt cloud ERP to take advantage of simpler implementation, lower costs, elasticity (i.e., the ability to use only the resources needed at any given time), new functionality, less need for internal IT resources, and the ability to easily adding users and functionality to accommodate business growth.
The pandemic has further highlighted the value of cloud ERP and accelerated the shift away from on-premise software, in part because cloud-based applications allow employees to complete their work from anywhere with an internet connection—they don't need to be in the office. Some CFOs looking to cut costs amid economic uncertainty are actually increasing investments in cloud ERP to drive savings and better support their remote workforce. A 2020 survey of financial executives showed that 20% expect to spend more on cloud ERP technology.
2. Two-Tier ERP
Historically, many companies have tried to implement a single ERP system for headquarters and all regional offices and subsidiaries. In practice, however, that approach is often expensive and very challenging to implement; subsidiaries often have specific requirements, do not need the full functionality of enterprise systems and struggle with a one-size-fits-all approach.
That's why two-tier ERP is one of the top ERP trends in 2021. Two-tier ERP is a strategy that allows organizations to leverage their investment in existing ERP systems at the corporate level (tier 1), while subsidiaries and divisions operate using the system existing ERP. different ERP solutions (tier 2), which are often cloud-based. Larger companies can continue to use their core ERP systems for finance and other core processes, while smaller business units shift to solutions that meet their specific needs. The effectiveness of this approach depends in part on the ability to exchange data between tiers—some tier 2 cloud solutions include built-in capabilities for integration with enterprise ERP systems.
There are a number of benefits to this approach. This is often cheaper than retrofitting a company's ERP system to work for the entire business. Tier 2 solutions may be simpler to implement and provide subsidiaries with more flexibility to respond to changing business conditions. Additionally, a two-tier approach may be more suitable for organizations in a high growth mode. As Gartner says, large organizations should "assess whether a two-tier ERP strategy will offer more business benefits than a single-tier strategy, especially by modernizing potentially fast-growing small business units."
3. Digital Transformation
Digital transformation refers to integrating digital technology into all business functions to improve daily operations. This approach can often increase revenue and competitiveness while increasing employee productivity and improving customer service and communication.
Since an ERP suite typically touches most areas of a company, it is a logical place to start facilitating this transformation. Indeed, Accenture's 2020 ERP Trends report found that three-quarters of UK businesses are using cloud ERP as a gateway to modernization. Some of the trends highlighted below—including the integration of ERP with IoT devices and the adoption of AI and advanced analytics—can be considered part of this digital transformation.
4. Other technologies that are integrated with ERP
While modern ERP is a key element in a company's digital transformation, it is only part of a larger technology investment. Companies are integrating their business applications with other emerging technologies, including IoT, to improve core processes. For example, retailers use warehouse management systems that collect data from mobile scanners and smart conveyors to track the movement of goods within the warehouse. Some companies integrate ERP with ecommerce to improve online order workflows, automatically trigger order fulfillment, update inventory levels, and record payments.
Next year will also see a greater connection between social media and ERP. By viewing customer and prospect social media activity in one place, companies can develop a more complete understanding of their audience that allows them to improve their digital marketing strategy and customer experience. By integrating data from social media interactions with sales order history and communications with customers, companies can gain more insight into the entire sales process and experiment with new ways to target and sell.
5. Personalization
Historically, ERP platforms with complex scripting languages have been difficult to adapt to the specific needs of each business. But organizations can now take advantage of cloud ERP platforms designed for easier configuration, or what analysts call “low code” platforms. There are also various ERP solutions tailored to the needs of specific industries.
As companies focus on providing customers with a more personalized and relevant experience, they need an ERP system that can accommodate those needs with features like highly customizable dashboards. One emerging trend is the growing popularity of AI-based assistive and conversational user interfaces such as chatbots, which can interpret user voice or text input and answer questions using customer and order information stored in the ERP.
6. AI-Powered Insights and Improvements
Artificial intelligence and machine learning capabilities embedded into ERP systems work behind the scenes to help meet the increasing demand for personalization and improve various business processes. While companies were able to add AI functionality to some ERP systems in the past, more vendors now offer ERP software with these capabilities built in.
AI can provide significant benefits to businesses, including:
More insight. As organizations collect more operational and customer data than ever before, they are relying on AI to deliver valuable business insights based on that information. AI technology scans large amounts of unstructured information, quickly identifying patterns and predicting trends that would be impossible to spot just by crunching numbers manually.
Better process. AI helps automate and improve a wide variety of processes. For example, consider a manufacturer that adopts a just-in-time inventory strategy, which aims to ship components at the last possible moment to minimize inventory carrying costs. AI, in the form of machine learning, can optimize supply delivery and labor schedules to increase productivity and lower costs. A 2019 IFS study found that 40% of manufacturers plan to apply AI for inventory planning and logistics, and 36% intend to use it for production scheduling and customer relationship management.
7. Predictive Analytics
The hunger for AI-infused ERP highlights organizations' increasing desire to mine their operational and customer data for new and relevant insights that will increase profits and profitability.
While it has always been possible to analyze ERP data to reveal what happened in a business's past, focus in 2021 and beyond using predictive analytics to uncover and address what may happen in the future. For example, software with machine learning capabilities can comb through a maintenance company's data on machine repairs to predict when a breakdown is likely to occur. Organizations can optimize maintenance schedules so that parts are repaired or replaced just before they cause problems.
8. Mobile ERP
ERP providers have been offering mobile support for some time, and mobile apps are becoming the norm. ERP solutions are evolving to provide on-the-go access to critical business data, enabling employees to perform back-end and front-end tasks wherever they are, from the warehouse floor to the retail checkout terminal to the airport. Mobile ERP can also encourage collaboration for workforces spread across different time zones.
Mobile ERP applications designed with user-friendly interfaces can help users get work done when they are away from the computer. Employees can complete tasks like expense reporting, call logging, and time tracking, and they can view the status of important workflows or approvals from their phones. Mobile ERP offers real-time data and insights and provides comprehensive benefits including always-on remote access, increased productivity, faster and more accurate data capture, and increased agility.
What's next? The Future of ERP
The transition to cloud ERP will likely only accelerate as companies realize that it is much easier to gain the speed and agility they need to compete in today's marketplace if they move their ERP and related modules to the cloud. Organizations that have invested in cloud ERP will be looking for ways to further leverage the power of the cloud.
In the near future, organizations will also continue to focus on ensuring their ERP software is optimized for remote work. That includes providing more mobile ERP functionality, ensuring secure remote access, supporting remote training, and improving workflow automation.
Another trend to watch: further expansion of ERP supply chain management capabilities to help protect organizations from supply chain disruptions or other rapid changes in global economic conditions.
As ABI Research Principal Analyst Michael Larner says, "Supply chain orchestration requires software that goes beyond a system of record and provides risk analysis and running simulations, enabling manufacturers to understand and prepare for supply chain shocks."
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