by Neal Weinberg

Top 7 ERP trends for 2021

Feature
Feb 02, 2021
Enterprise ApplicationsERP SystemsTechnology Industry

Cloud, AI and mobility take hold, as enterprises seek improved integration, democratization of application development and a greater emphasis on customer experience.

ERP - Enterprise Resource Planning - supply chain management logistics
Credit: Thinkstock

Between the COVID-19 global pandemic and the subsequent economic upheaval, 2020 was a year when many enterprises were just lucky to survive. As we look ahead to 2021, the vaccine rollout promises an eventual return to normalcy. But organizations aren’t simply looking to get back to where things were; they are determined to re-invent their business models, revamp their processes and transform their organizations from top to bottom.

The disruption of traditional supply chains, the sudden and in many cases permanent migration of employees to home offices, the dramatic shift from in-store to online sales, and the requirement that companies deliver goods to the customer’s doorstep in a safe, contactless manner have elevated enterprise resource planning (ERP) systems from the back office to the front lines of that digital transformation effort.

Smaller companies that may not have had ERP in place are realizing that they “will be left in the dust” if they don’t get onboard with modern ERP systems, says Lisa Anderson, president of LMA Consulting Group. And larger enterprises that have been content to run their businesses on stable, older versions of ERP software are rushing to upgrade “to meet changing business needs and customer requirements,” she adds.

Here are the top 7 ERP trends that we see happening in 2021.

Cloud migrations on the rise

Yes, moving a massive, monolithic ERP suite to the cloud is about as popular as getting a root canal. But it can’t be avoided. “On-prem-only will no longer work,” says Michael Larner, principal analyst at ABI Research. “Nowadays, there’s an acceptance that cloud platforms should and will become the norm.” On the vendor side, traditional ERP vendors that might have initially viewed the cloud skeptically have fully embraced the merits of cloud-based platforms and are pushing their customers to migrate, he adds. Cloud delivers speed, agility, resilience and innovation, all critical factors as companies battle to improve their competitive positions going forward.

Migrating mission-critical apps to the cloud is a bit like changing the tires on your car while you’re driving down the road, but there are commonly accepted best practices, and there’s no shortage of third-party consultants with expertise in ERP cloud migration. Lifting and shifting legacy apps to the cloud isn’t the way to go; it’s important to refactor applications and re-imagine business processes in order to reap the full benefits of the cloud.

AI gets real

Artificial intelligence and machine learning are moving from the hypothetical phase to real-world use cases, such as fraud detection in financial services and banking, anomaly detection in business contracts and procurement to reduce costly errors, and in the form of robotic process automation (RPA) to automate routine business processes, says Forrester analyst Liz Herbert.

Larner adds that the pandemic has disrupted traditional supply chains, and AI systems are being deployed to help companies weather the ups and downs of supply shortages and delays. AI systems can help companies run simulations in order to perform contingency and emergency planning; what happens if supplier X can’t deliver products anymore, what is our Plan B? AI systems can play out unlimited numbers of scenarios and come up with alternatives and workarounds that could turn out to be lifesavers for the business.

Mobility becomes a must-have

Developing mobile ERP applications is critical in today’s business environment. Companies need to take core ERP data and make it accessible to employees no matter where they are working. For example, in a manufacturing scenario, companies want to have as few people on the factory floor as necessary because of the pandemic, but employees are still required to handle functions such as monitoring workflows and troubleshooting ERP processes. That functionality needs to be done remotely, via mobile apps that deliver ERP data to the appropriate employees on their device of choice.

ERP app stores are open for business

We tend to associate app stores with smartphones, but the major ERP vendors have created app stores that enable customers to quickly and easily download and deploy peripheral applications and add-ons to their core ERP modules. In fact, Forrester’s Herbert says that app stores are already delivering around 5% of new ERP apps, and that number is expected to increase. The benefits of using an app store are that the new applications can be downloaded quickly, easily, in a self-service manner, with the knowledge that the app is fully integrated with the larger ERP suite.

Integration PaaS arrives

The lines are blurring between ERP and CRM, with ERP vendors offering modules once considered the purview of CRM, such as marketing, and CRM vendors encroaching onto ERP strongholds, like billing. Most companies today have a mix of both, not to mention collaboration platforms such as Microsoft Teams or Slack. And those apps are running all over the place — on-prem, public cloud and SaaS.

That’s where integration systems come in, providing an overarching platform that integrates data and applications across the hybrid IT landscape in order to break down siloes and boost productivity. Vendors who offer what Gartner calls enterprise integration platform-as-a-service (iPaaS) include major ERP companies such as SAP and Oracle, along with players such as MuleSoft, Jitterbit and Dell Boomi. (Salesforce recently bought MuleSoft.)

Low-code, no-code to the rescue

It would be great if companies had the time and the IT expertise to customize each ERP app, but that’s not the reality today. LMA’s Anderson points out that smaller companies don’t have the skills to customize ERP systems; they just want something that’s essentially plug and play. And larger organizations are focused on deploying new ERP modules at the speed of business, which means they want to do as little customization as necessary.

ERP vendors have gotten the message, and they are standardizing their offerings so that significant customization efforts are not required, Forrester’s Herbert adds. Industry-specific versions are also being released, which also reduces the need to customize. (For example, a billing module specific to utility companies.)

But there’s still some targeted customization work that needs to be done, particularly where it delivers specific differentiation or business value. That’s where low-code, no-code comes in, as a way for non-technical business leaders to quickly optimize ERP applications for maximum business efficiency. The trend toward shifting power into the hands of business users and enabling them to perform “light configuration” of ERP systems is “definitely picking up momentum,” Herbert says.

The changing demographics of the workforce, particularly in industries such as manufacturing, are also driving interest in low-code, no-code platforms, Larner adds, because older workers are retiring and the Millennials who are replacing them are demanding the ability to customize their own tools. According to Gartner, the low-code application platform (LCAP) landscape includes familiar names such as Oracle, Salesforce and Microsoft, as well as newcomers such as Zoho, Pega, Appian and OutSystems. 

Customer experience is king

On the customer side, ERP systems are adding features like automated voice assistants and chatbots to provide real-time, intelligent customer interactions. Those external-facing systems are also being connected back to ERP customer data to provide a personalized experience. In addition, ERP systems are delivering omnichannel experiences for customers so they can do business with the company on any device.

On the employee side, organizations are providing advanced experiences for factory floor workers, maintenance crews, and medical personnel such as voice activation, gesture activation and virtual reality, says Herbert. These systems enable hands-free activities and can provide valuable, real-time information for employees delivered via headsets or special glasses.

As we look ahead to 2021 and beyond, the broad IT trends of cloud, AI, mobility are sweeping across the ERP landscape. And as companies seek to reduce complexity and increase the speed of innovation, ERP and CRM integration on iPaaS platforms and the democratization of application development via low-code, no-code will play a greater role.