Enterprise Resource Planning (ERP) used to be comparatively slow to change. However, recent technology trends have started an avalanche of fast changes in ERP that will require companies to update or be left behind within a few years.
ERP brings a mixed bag of opportunities, complexity, options and risk. Here are six of the many major changes happening in ERP in 2020 that you won’t want to miss plus 10 must-know statistics that will knock your socks off.
Trend #1 – Two-Tier ERP
Costly failures occurred in the early days of ERP when companies tried to create a single ERP system that basically only handled their back-office functions. Standing on the ashes of these failed companies were forward-thinkers who created two-tier ERP software.
Today, companies who use two-tier ERP software are based in many locations or else they are large corporations that have several subsidiaries. Two-tier ERP is the dual implementation of ERP within a company. Tier one is the “legacy application,” which is used at the corporate level. Tier two is managed by the subsidiaries.
Subsidiaries can optimize their regional back office at the tier two level to best suit their needs (regional business models, language, etc.) while being connected to the corporate office’s tier one system.
Not only is ERP becoming two-tiered, but new software programs focus on things like digital transformations, the last mile of ERP, or some other area.
As experienced by the early adopters of ERP, there are still data management-related growing pains associated with ERP. One problem is that employees in both tiers duplicate efforts. Conversely, some employees omit information related to the business, orders and financials details, which negatively affects the accuracy of corporate headquarters’ records.
Despite its problems, two-tier ERP systems are adopted by companies when:
- A small subsidiary grows large enough to need ERP software
- There is a subsidiary that has been in need of an ERP system
- An acquired company’s ERP system is outdated or unsupported
- A subsidiary’s industry is not strongly featured at the corporate level
Trend #2 – Rise of 3D printing
Three-dimensional printing, also called “3D printing,” “additive manufacturing,” or “AM,” is changing how manufacturers make complex (even large) products such as engines and seat buckles. Printers improve the parts, cut costs and boost efficiency, which enables huge amounts of well-made products to be cheaply and quickly manufactured.
Long gone are the days of plastic filament printing. Three-dimensional printers allow today’s engineers to make quick prototypes to manufacture metal components.
The automotive, consumer electronics, healthcare, and other sectors already embraced this new technology. Hearing aids, turbine blades, coffee mugs, candies, and human tissue are already being made using this new technology.
Fierce competition among aerospace and defense contractors has made it necessary to adopt any new, proven technology that would give them a sizeable competitive edge. The ability to quickly and easily create individual, specialized parts makes 3D printing a must-have technology for any large, seriously-competitive manufacturing company.
Aerospace and defense contractors invent cutting-edge aircraft and other products. Such behemoth-sized companies don’t move fast, but they do eventually make necessary changes.
In 2017, BAE Systems became the first aerospace and defense contractor to use 3D printing, creating its first 3D-designed parts for some of its military planes. The other aerospace and defense contractors have since followed BAE Systems’ lead and started to adopt 3D technology.
The only problem that 3D printing presents is, as usual, data management. Much data comes with it at every stage of production, and the software must be able to handle a great volume of data.
Trend #3 – Artificial intelligence
The common man has long feared that computers will replace humans, causing wide-spread unemployment. Indeed, today many human tasks can be done entirely by computer. For instance, there are cars that can drive themselves.
As intelligent as that is, artificial intelligence (AI) is a little different because the real goal of AI’s makers is for their computer technology to augment human activity rather than to totally replace people.
AI, also called “machine intelligence,” refers to computers that mimic human cognitive functions, such as problem solving and learning. AI had a rocky start, but increased computer power and theoretical understanding, along with huge amounts of data, in more recent years caused its revival. The time is finally right for AI.
Now connected to ERP systems, AI helps people to make decisions, work faster, not make as many mistakes. Operations research, software engineering, and computer science problems are solved partially with the help of artificial intelligence.
Improved AI will be offered in 2020 ERP software. Even parts of some tasks such as accounts payable ones will be done through an AI system.
Trend #4 – Mobile ERP
Everyone is staring at their cell phones these days. Many people take laptops and other mobile devices with them to restaurants, coffee houses, home, and back to the office.
We live in an era of instant access to information, and today’s mobile workforce expects large-company software to have a mobile app. Apps give executives and employees access to real-time company information and customer communications. ERP is indeed going mobile to meet this need.
ERP mobile apps let the workforce send push notifications, create an event, review and approve time, sales orders and expenses from the local coffee house or a backyard patio table.
Apps that are dedicated to just one activity, such as dealing with sales orders or performing customer relationship management, are common. Employees, from the warehouse to the customer’s door, have some sort of real-time information.
Companies who implement this technology will have an edge over those who don’t because more work is getting done during the day. That means it’s gets done faster and customers are happier.
Trend #5 – Direct machine integration
Ah, direct machine integration – sometimes called “IoT” or “the internet of things.” This technology refers to the connectivity of computers with machines and other things.
For instance, sensors placed on manufacturing machines can tell the manufacturer’s ERP software everything about the machine’s performance in real-time. The foreman or manager views and interprets the information. He then schedules any needed maintenance during off hours when employees are not there drawing pay.
There are much fewer surprise malfunctions and shut-downs when IoT and ERP are combined. That means that fewer human technicians are needed and employees are rarely paid for doing nothing while waiting on machines to get fixed.
IoT devices connected to ERP can create this kind of communication and efficiency in many different applications within the entire supply chain. This level of visibility all up and down the chain will make companies much more competitive.
Trend #6 – Cloud ERP
There’s nothing new about storing data in the cloud. What’s new is the ERP community’s involvement with it because, until recently, ERP users have feared placing their company data in cloud storage.
Many more companies are now moving massive amounts of ERP data into cloud storage because its obvious advantages have made those reservations evaporate. The cloud computing market will reach $258 billion by the beginning of 2020.
Having access to a global company’s ERP from anywhere in the world is the number one reason cloud ERP is being adopted. Cloud ERP gives better security of data, so it is not as risky as people think. Cloud ERP is also easier to manage and lowers costs.
One-third of company IT budgets go to cloud services now. Expect cloud ERP to continue to diversify and to offer more customization options and features in 2020.
Here are some must-know statistics:
- By 2020, the aerospace and defense industries will have experienced the highest rate of ERP software adoption growth (8.86% since 2014).
- The ERP market in Asia Pacific is expected to reach $9.77 billion by 2020.
- Fifty-three percent of businesses name ERP and CRM as priority investments.
- Twenty-nine percent of businesses fear cloud ERP is a security breach. risk
- The revenue of ERP software will reach $47 billion between 2017 and 2022.
- Cloud ERP is seeing much greater investments.
- ERP improves 95% of businesses who implement it.
- ERP implementation causes operational disruption in 66% of businesses
- A record 68% of ERP customers are satisfied with the ERP software they chose.
- ERP improves processes in 95% of the businesses that implement it.
ERP software was first implemented in large manufacturing companies to help manage their raw materials and parts. In time, more advanced technology was added to ERP systems to drive efficiencies.
Slow in the beginning, ERP is now making huge strides and drastically changing how manufacturers and other types of businesses do business. Each year now brings many more exciting cutting-edge technologies to both offices and the manufacturing floor.
ERP will continue to go through many changes in 2020. We hope we have helped you to stay informed and that you will implement the right ERP software for your company as needed.