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Intelligent ERP is the way of the future, and that future is now.
Businesses need to understand this change as it's happening to make smart decisions regarding their systems and processes, according to IDC analyst Mickey North Rizza, who presented the "Intelligent ERP: The Front End of the Future" session at the recent IDC Directions conference in Boston.
"What I'd like you to realize [is], from a business standpoint, we have a huge rate of change going," said North Rizza, IDC program vice president of enterprise applications and digital commerce. "Our technology systems are keeping up to date, but we haven't updated [them] because we've spent millions and, in some cases, billions of dollars for these systems, whether it's ERP or another kind of business application."
The business world is already tilting in the direction of intelligent business applications, according to North Rizza. IDC research indicates that 35% of business leaders will demand intelligent business applications by the end of 2018 because they want to improve their business processes and their mix of resources. The main motivating factors are reducing complexity in business processes and the amount of time spent on tasks to get more value.
Reducing the sales cycle time
Introducing intelligence into business applications can greatly reduce sales cycle times. The applications can take all the data sets about products, markets and sales areas and analyze them in real time, and also learn the process as it goes on.
"The application can work faster and on a real-time basis to take a lot of data, learn how to [use] it and put it together for you," North Rizza said.
There are three main characteristics that make up intelligent ERP systems and next-generation enterprise applications, North Rizza said. They will use machine learning and advanced analytics to build on and learn from data sets, they will be assistive and conversational (think Alexa and Siri), and they will be built on massive amounts of data in real time. These three pillars will make applications that can automate routine tasks, are simple to use and can process data at very high speeds.
Intelligent ERP systems are all about automation and augmentation, where the number of steps in a business process can be reduced, and those remaining steps can be augmented by continuous learning in the system.
Let the system do the tedious stuff
One simple example, North Rizza explained, is invoice matching, where an invoice, purchase order and receipts have to be reconciled for the invoice to be paid. Any system of record can do that now, but an intelligent ERP system can take the process further after making the match, and can pay for something with a discount factor. Intelligence takes care of things in the process, where you may normally need to consult with a finance department to pay the invoice.
"The system will do it for you," North Rizza said. "It's predicting when you can pay something based on cash flow and when you get it."
Data is another key factor in an intelligent ERP system. In a supply chain application, for example, data from an intelligent ERP system can tell you things about a shipment that were not possible before, and this can help drive better business decisions.
"If you're shipping a product, and you're on the logistics side, you'll want to know if there's a weather issue, a traffic issue or any other issue that's going to impact you from getting those products to where they're needed," North Rizza said. "There's a lot of that out there, but if I know it immediately, and I know it personalized to my job every day, I've become more efficient. It's about bringing the variables together and changing not just the way we do business, but the way we think about doing business."
Intelligent applications change the nature of work
Intelligent ERP systems will affect the user experience and the way people do their jobs, according to North Rizza.
In older systems, people would talk about the information in the system primarily from a process standpoint, and getting the information they need to do their job. Now, because the systems will do much of those processes, people's interactions in the workplace will be at a higher level. They can talk more about what information means rather than just the information itself. This means people will need to look at information differently, North Rizza said.
"It's really about doing business from a different perspective that doesn't need human intervention," she said. "Some may say, 'the risk is that it's going to be wrong,' but there's really risk now that we're wrong.
"Every day, we have coaching sessions about how to read pieces of information and how to pull it together differently. One of the things that we see going on [is] a lot of [the] aging population spending time on knowledge management to help teach these business processes and put them into the product so that the next generation can use them quickly and easily without all that knowledge."
The business and IT sides of an organization must work together better than they have for there to be a successful transformation to intelligent ERP systems. North Rizza said that line of business is driving the adoption of intelligence in systems more than IT at this point, illustrated by an IDC study that indicated that fewer than 13% of IT professionals are acting as change agents in helping to get to the next level of digital transformation. Intelligent ERP must be at the core of a digital transformation strategy, and IT needs to be an essential part of that.
"That study highlights even more that most IT folks are doing projects or they're staying focused on the current systems, so they can't get out of their own way to help the line of business buyer," North Rizza said. "This is important for two reasons: If you're a practitioner, you've got to start working with IT and telling them what you need; and second, it you're a vendor, you've got a gold mine if you go after the right group here."
Employees need to evolve skill sets
North Rizza also warned that the factors that make intelligent ERP systems valuable, and perhaps inevitable, will affect the employees of the organizations that adopt the systems.
When systems need less human intervention to perform business processes, organizations will have to decide what to do with the employees who once did those tasks. The essential choices are to run leaner and save the costs that were associated with the employees who are no longer needed, or to redeploy the employees to jobs where they can perform higher level functions. It's inevitable that employees will need to evolve their skill sets to adapt in the new landscape, according to North Rizza.
"If you look at it from a supply chain perspective, you need fewer people to do what you really need, but that also means that these people have to go somewhere," she said. "They're going to retire, they're going to take a new job somewhere else where the industry or business hasn't caught up with them, and they have to focus and change their shift.
"The pace of change is very fast here. It's here, and there's no going back."
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