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Teaching and Research Associate at the Industrial Engineering Laboratory of the National Technical University of Athens
The Road to ERP Systems of Today
The Enterprise Resource Planning systems, or in short ERP, are considered in our days as essential tools for small, medium, and large companies in order for them to operate effectively towards reaching their goals and their mission. Prior to the year 2000, a lot of businesses globally and in Greece have adopted the logic of integrated business process support through the utilization of ERP systems, most notably the systems of SAP and Oracle.
The big expectations for the improvement of business operation through those systems were in some cases proven complete effective while in others it was seen as partially effective. In some cases, it was even regarded as an implementation failure. Notably, some companies successfully implemented the full functionality of the ERP systems and for the complete range of their business processes, even those of the “production planning and control” which are regarded as the most difficulty adapted and implemented in such systems. In many cases, ERP systems were used just as management and administrative tools focusing on controlling the financial processes and achieving compliance to regulations. Anyway, it has been realized that ERP systems can handle the integrated management of information and assist businesses in this direction. So, all members and stakeholders of a company can communicate in “the same language” through the utilization of shared data and all company’s departments can have a unified knowledge for critical factors such as the cost.
Over the years, the software has been improved, the ERP implementation consultants have gained significant experience and companies have realized the benefits from adopting ERP systems. In this regard, many businesses of different sizes continue to utilize ERP information systems in order to upgrade their capabilities, their efficiency, and most notably the ability to satisfy their customers, which is of great importance nowadays.
Satisfying Modern Needs and Expectations of the Users
The advances of computers and information technology have played an important role in the transformation of ERP systems and in their ability to adapt to a company’s needs. Modern businesses face needs such as fast data processing, handling of big data, the ability of ERP system to adapt to organization’s particularities, the integration of an ERP system with other specialized enterprise software, the flexibility to adapt business processes and enterprise operation to the changes, the ease in implementing and maintaining of the information systems, the usability and reliability were boosted through new technological advancements.
One of the most important features that characterize a modern company is the ability to adapt to changes that come from external factors, directly (e.g. competitors, clients) or indirectly (e.g. financial situation, unanticipated events such as the current pandemic). Inevitably, this necessity creates expectations derived from the capabilities of the ERP systems. Towards this way companies today search for ERP systems that enable the transition to digital transformation, they adopt technological excellence and modern approaches like cloud computing. In addition, companies require ERP systems to be specialized in solving enterprise problems through the analysis and utilization of data, to endorse the automation of simple or bureaucratic steps, and to effectively support decisions that take place in critical steps of the business process. Finally, ERP systems need to promote timely action in any business scenario and every problem of the enterprise’s operation.
These needs and expectations of businesses have created new requirements regarding the functionality of the ERP systems and the way that software providers offer their solutions. A characteristic example of this is the transition to enterprise solutions offered as a service (software as a service) and not in the traditional sense of systems that operate in the company’s servers and require user licenses. Companies can purchase services for ERP systems’ functionality that can operate remotely through the cloud. This idea has existed for several years before but businesses had quite a lot of concerns regarding the security and protection of their data, concluding to very few possibilities for companies to utilize such services for their ERP system. Nowadays, the aforementioned idea has matured as a practice that gets adopted by many companies, most of them are the pioneering ones focusing on innovating approaches, mainly in collaboration with new ERP software providers.
Established ERP software providers gradually lead their solutions to the same business model extending the functionality of their ERP systems and unifying them in the cloud with other solutions such as business intelligence systems and business process automation systems. So, extended but integrated platforms are created, where users can choose, implement or adjust certain innovative systemic improvements for the adoption of current trends, like predictive analytics and the recognition of the value instead of the cost of the business processes. This extended functionality of the integrated platforms is offered as a service by ERP software providers.
Future Transformation of ERP Systems
In order to achieve state-of-the-art functionality and new capabilities that are adapted to companies’ requirements, the providers of ERP systems have made a significant effort in adopting modern technologies of machine learning and artificial intelligence, of the blockchain, of the internet of things, and the big data analytics.
For example, incorporating artificial intelligence into ERP solutions can be proved beneficial for companies that can create value through automation of processes and through the pinpoint of trends from past data in order to provide an innovative and intelligent approach to predict the future in order to make strategic decisions.
Also, through the internet of things (IoT), the data collected from several different sensors and devices can be sent to the ERP system in real-time. The analysis of these data collected, integrated with other enterprise data, can assist business process measurement and improvement, estimation of the trends, prediction of problems and risks, and in general getting better-documented decisions and achieving lower costs.
Finally, blockchain, which has been gradually utilized in the operation of enterprise systems, can enhance ERPs in functions where traceability is important, such as financial control or supply chain management. The capabilities of security and transparency of the transactions offered by blockchain technology are very useful in these functions.
It is all these new technologies that are expected to guide the transformation of ERP systems in the coming years. Well-established ERP vendors have already turned their attention to innovations that incorporate these new technologies, while there are new "players" in the market proposing solutions that have already incorporated some of these technologies. Such new ERP solutions cover specific business trends and initiatives like process automation, production transformation using robots, product traceability, or e-commerce global support.
Modern ERP solutions are developed based on flexibility in adapting to new needs, extensive use and utilization of mobile devices and the internet, improved usability and user experience. At the same time, of course, there are well-established and widely tested solutions of ERP systems that provide functionality adapted to business processes, integrating into a single environment several subsystems (modules) such as finance, production, inventory, maintenance, supply chain management, and more.
The big future bet for ERP system providers is to offer the promising unified business operation through the integration of business process-oriented ERP systems with other enterprise systems and additional functionality that incorporates the modern technological trends of data analytics, secure and decentralized data access, process automation, and intelligent operation.
In any case, the immediate future of ERP systems is the provision of these integrated solutions in the cloud, as customized and specialized services to businesses (software as a service). These services of cloud ERPs are not limited to supporting the execution of processes but cover comprehensively all the needs of organizations for business process management (BPM). It is clear that business processes are emerging as never before as the epicenter of the development and delivery of these services.
ERP system providers have been working feverishly in recent years towards the transformation of their solutions, through extensive research and development, but also through mergers, acquisitions, or partnerships. The pandemic and the requirements for flexibility that emerged from it have accelerated software companies’ efforts. The results of these actions are expected to be fully apparent in the coming years.
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