Monolithic, cobbled together antiquated ERP systems of record are the technology backbone of the majority of businesses today. While antiques such as jewelry, furniture and pottery may increase in value over time, systems of record have hit their demise because their design and value cannot match the digital business needs of today. The most competitive and digitally modern businesses have embraced new innovative business models unlocking the value of information. These new systems are smart; utilizing systems of record information layered with autonomic and predictive intelligence assets. IDC calls this enhanced ERP portfolio of applications "intelligent ERP," or "i-ERP," and it will run tomorrow's businesses in an increasingly digital world.
Monolithic, cobbled together antiquated ERP systems of record are the technology backbone of the majority of businesses today. While antiques such as jewelry, furniture and pottery may increase in value over time, systems of record have hit their demise because their design and value cannot match the digital business needs of today. The most competitive and digitally modern businesses have embraced new innovative business models unlocking the value of information. These new systems are smart; utilizing systems of record information layered with autonomic and predictive intelligence assets. In fact, transformation is fast occurring at the platform tier across the spectrum of core software applications, including marketing automation, service and support, commerce, and sales, but the pace is most pronounced in the ERP application suite. IDC calls this enhanced ERP portfolio "intelligent ERP," or "i-ERP," and it will run tomorrow's businesses in an increasingly digital world.
Intelligent systems or i-ERP will be distinguished by innovations at multiple levels: user experience, business process, and data. Systems intelligent or i-ERP characteristics will:
- Leverage machine learning (ML) on massive data sets to enable innovative products and services and higher employee productivity, so as to maximize return on information assets.
- Utilize cloud deployment because of the demanding infrastructure requirements to manage massive, heterogeneous data sets accessible in time to support tight decision windows.
- Enhance the business process via machine learning and predictive analytics. They are capable of learning from exceptions and adapting business rules, allowing users to discover insights, better predict and plan for outcomes, recommend next best steps, and automate processes.
- Be differentiated based on the user experience. Users will see the difference in this new generation of applications as the user experience (UX) begins to incorporate assistive, collaborative conversational styles (with a mobile-first design) driven by advances in natural language processing (NLP) and machine learning.
ERP vs. i-ERP
Successful adoption of this new style of applications depends on whether the technology will help advance business goals. Simply stated, the business goal of ERP applications is threefold:
- Drive cost reduction and process efficiency across the organization (e.g., by cutting inventory levels of cost per transaction).
- Enable or drive organizational agility (e.g., by allowing the organization more easily to scale up or down its business units and to acquire or divest units faster and cheaper).
- Identify new revenue streams and help the organization quickly mine these streams.
What differentiates the new i-ERP from the prior ERP generation can be summarized as follows:
- ERP applications are the systems designed to automate and optimize business processes, collecting data about the various aspects of the business including administrative details, transactions, and operations. These processes manage resources including some or all of the following: people, finances, capital, materials, suppliers, manufacturing, supply chains, customers, products, projects, contracts, orders, and facilities. The software can be specific to a particular industry or designed to be more broadly applied to a group of industries.
- An ERP suite or a set of ERP applications can be deployed to manage up to the entire enterprise while meeting business or organizational objectives, integrated via a common user interface (UI) accessing a common (logical or physical) data set with common definitions to coordinate end-to-end processes.
- i-ERP applications are ERP applications or suites that use machine learning and advanced analytics built on a large, curated data set to forecast, track, learn, route, analyze, predict, report, and manage these resources and business processes. They feature an assistive and conversational user experience, by automating a set of high-volume repeatable tasks and augmenting (via human-machine interaction) the performance of less frequent, more novel tasks. They are capable of processing, analyzing, and acting on massive volumes of data in real time, using in-memory computing (IMC) technologies. As a system that learns, an i-ERP application must allow for ongoing reconfiguration to enable process refinements and user experience adaptation.
i-ERP application requirements are on demand from the line of business professional. The line of business professional is no longer willing to wait for their IT counterparts to deliver progressive, information based intelligence systems. Instead they have become the buyer, particularly in CRM and HCM. Asset management, procurement, supply chain, manufacturing and finance are a bit further behind but in months, not years.
Businesses are making their i-ERP choices based on the quality of their experience because an assistive user experience is key to enabling today's knowledge workers to become digital knowledge workers. And while the best business decisions are made with data, the quality of the data or the ability of i-ERP systems and applications to deliver information based on curated data sets is quickly becoming in high demand.
i-ERP systems and applications are a disruptive event in the history of ERP. New vendors will definitely emerge. Established vendors will either continue to evolve with innovation or risk becoming irrelevant and replaced by more innovative alternatives provided either by new entrants or faster moving existing enterprise app suppliers. It is clear i-ERP systems and applications introduce new levels of uncertainty, forcing enterprises to make important sourcing choices on the basis of uncertain information about the future of their vendors and their vendors' offerings.
The Future is NOW
The description of i-ERP and the rise of the intelligent system has moved beyond awareness and into use, because the future is here. Digital transformation is upon us. New digitally based intelligent business models are enabling enhanced experiences and innovation, unlocking the value of information. The best-performing companies are ahead of their peers on their digital transformation journey. They are embracing DX strategies because these businesses understand competition will be based on digital innovation very shortly. The leaders in DX are utilizing i-ERP systems and associated enterprise applications to transform their current labor force to take on redefined, digital information–centric roles. Over the next 1-5 years and beyond, we at IDC expect the delivery and phase in of these new i-ERP systems and associated enterprise applications.
My question to you is, will you embrace the change or hide your head in the sand and hope it goes away? DX and i-ERP are not going away. Ignoring it will make your business less competitive in the market and cost even more money as you play catch up later on. But embracing DX and i-ERP systems and applications now will put you on a trajectory to control your destiny and compete in this new age. Embrace the change. You can learn more about this transformative change in much more detail here: i-ERP (Intelligent ERP): The New Backbone for Digital Transformation.