11 ERP trends for 2023 and beyond
Over the last 24 months we’ve seen a level of disruption no one could have forecast: an ongoing pandemic, war in Europe, climate disasters, inflation, and in many countries, political chaos. We’ve been living in a “permacrisis” – an “extended period of instability and insecurity” so inescapable that in 2022, Collins Dictionary named “permacrisis” its word of the year. There is no going back to normal. This is normal now – and tomorrow’s normal will look different again.
The businesses that have been able to survive and thrive in this period are the ones that have been able to adapt to change very, very quickly. Usually, the way they’ve been able to do this is with a modern ERP system that can help them innovate, decide, and adapt at a rapid clip – with confidence. These systems are incredibly agile – and incorporate the latest trends to keep the companies that use them on the leading edge.
Here are the top 11 ERP trends for 2023 and beyond:
Trend #1: The future of Cloud heats up (even more)
Cloud ERP adoption has exploded in recent years and it’s showing no sign of slowing down. The global market is expected to nearly double, growing from $64.7 billion in 2022 to $130 billion by 2027. The benefits of cloud ERP have long been understood – however recent, pressing concerns are causing demand to spike even more.
For example, many companies are struggling to compete and stay profitable in fast-changing industries – and as a result, they are under intense pressure to transform. They need to think outside the box, adopt new business models and lines of revenue – and they need to be able to pivot on a dime. Since cloud ERP software touches nearly every aspect of a company, it’s the fastest path to complete digital transformation and new, more advanced business capabilities.
The changing world of work – including talent scarcity, the Great Resignation, and remote and distributed workforces – is also driving cloud ERP adoption. Employees and contractors expect to be able to work from anywhere, easily and securely, with modern tools that are a pleasure to use. And organizations expect to be able to do more with less people by automating processes and gaining new efficiencies. These are no longer nice-to-have’s. They’re musts. Businesses are rushing to meet these expectations with cloud ERP. And SaaS ERP vendors are delivering with cloud capabilities to meet those demands – the future of cloud ERP never looked so good.
Lastly, organizations are turning to cloud ERP in greater numbers to standardize. A lot of what they do, they have to do just to be in business – like paying taxes and managing accounts receivable. By using cloud ERP to standardize their core processes, they can free up more time to focus on what differentiates them now, and what might differentiate them tomorrow.
The year 2021 saw the ERP software market grow 11% to a market size of $44.4 billion in total software revenue. Most major providers saw improved revenue growth as end-user activity for new and expansion ERP activity started to recover.
Trend #2: Mobile ERP evolves into multi-device experiences
Mobile ERP is nothing new – it’s been around for decades. However, it’s evolving from basic apps into smart, multi-device experiences. With this more advanced form of mobile ERP, a user’s tasks and to-do’s follow them across all the devices they use as they go about their day: a laptop, desktop, mobile phone, smart home speaker, smartwatch, smart TV, or almost anything else that can connect to the Internet. And the system knows where they left off, so the experience is seamless.
For example, if John from finance is traveling, the system knows who he is, what role he has, what authorization he has, and where he is (assuming he’s opted in). So if he’s about to board a plane and needs to approve a budget, the system can automatically send an alert to his Apple Watch and he can approve it with a tap.
Trend #3: Integration with AI and IoT
Nobody goes out to buy “AI-powered ERP” – that’s just tech marketing. Artificial intelligence and machine learning are much more subtle than that. They work behind the scenes to improve everything, from insights and user experiences to automation and business processes. In the past, a lot of this was achieved through add-ons and integrations, but now many ERP vendors offer these capabilities built right in as a part of the ERP technology stack.
When combined, ERP and the Internet of Things (IoT) also offer a wide range of business benefits. For example, data from mobile scanners and smart conveyor belts can be used to track goods within a warehouse. Cars can provide real-time information back to manufacturers, who can then identify and fix problems before they happen. Smart shelves in retail stores can automatically place orders when inventory gets low. With so many different actors and data sources, it’s essential that a business has confidence in the integrity of its IoT data – before it’s used to shape decisions and actions. This is where ERP comes in. The IoT on its own is fascinating, but the data needs to be fed into an ERP system to really make the magic happen, with trust and confidence.
Trend #4: More powerful ERP analytics
ERP systems have always collected data and provided basic reporting capabilities, but now they have evolved far beyond “basic”. AI-powered analytics, data visualization tools – and even what-if analysis – have replaced the dashboards of days past. We’ve shifted from “what happened?” to “what’s happening” to “what would happen if?”
Conversational, message-based analytics have also come to the fore. Now, instead of a user having to mine their data, they can simply ask questions such as, “What does my sales forecast look like for next month in North America?” or “What impact will the weather have on my supply chain in Asia?” ERP analytics can also act on commands, like “Optimize my transport routes to minimize carbon impact.”
Today’s powerful ERP technologies and analytics not only provide the data, but also guide users in their tasks, provide context-rich insights, and flag anomalies – sending an alert and “inviting” the user to participate in the process when an anomaly is seen. We have evolved to the point where, with good ERP analytics, the system can even autonomously act on a user’s behalf.
Trend #5: Hyperautomation
During the pandemic, there was a surge in automation as companies tried to make everything as contactless, safe, and efficient as possible. Hyperautomation – where businesses automate as many processes as they can using AI, machine learning, and robotic process automation (RPA) – evolved from a niche trend into the mainstream.
Hyperautomation is irreversible and inevitable. Everything that can and should be automated will be automated.
Brian Burke, Gartner
The business benefits of hyperautomation are huge. Gartner predicts that organizations can cut costs by up to 30% over the next three years by using AI, machine learning, and RPA to automate processes that weren’t “automatable” in the past.
In addition to new automations, companies can improve previously automated processes in their ERP systems – gaining speed and new efficiencies from one end of the business to the other. With increased and more advanced automations, companies are also better able to handle talent scarcity – freeing up available staff and resources to focus on more value-added activities.
Trend #6: Personalization
ERP solutions are becoming more and more personalized. Not to be confused with configuration, where basic things like language, currency, and time zones are set, personalization is more about adjusting the software to a specific user’s needs – making it work for them in the best way possible.
With ERP personalization, the system is highly adaptable to an individual’s way of completing tasks. It can learn patterns, preferences, and styles of work – and even point users to shortcuts that can help them become more efficient and effective. Low-code/no-code personalization allows users to adapt the software themselves, no programmer or developer help required.
Trend #7: Composable ERP
With composable ERP, various “pieces” of the software suite are assembled as needed to address new opportunities, challenges, and threats. A better term for this is probably “re-composable business” – for the ability to re-compose a business as conditions change.
For example, if demand is spiking in a certain country, and customers are wanting more of product A than product B, composable ERP makes it possible to very rapidly source and buy more of the necessary materials, redirect workloads, move workforces, build more of the in-demand product, and ship it where it needs to go. It gives organizations an unprecedented level of agility – the kind of agility needed to thrive in highly changeable conditions.
Podcast: Composable ERP
Hear from expert, Paul Saunders, to learn about the concept of composable ERP.
Trend #8: Industry clouds are on the rise
Industry clouds combine infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS) – including cloud ERP and other vertical-relevant capabilities – into a cohesive, industry-focused solution. They are fully composable – offering the adaptability, functionality, and innovation needed to address very specific industry requirements.
For example, many industry clouds are based on the customer journey in a specific vertical. They consider questions like, “What will a day in the life of my customer look like in five years’ time?”, “How will they engage?”, “How will they choose between my offering and a competitor’s?” And then finally, “What are the business capabilities we need to succeed, based on this customer journey?” Industry clouds are the exoskeletons that bring all the necessary pieces together to provide these capabilities.
Trend #9: ERP drives more sustainable operations
Governments are starting to mandate more sustainable operations, customers are demanding them too – and it’s just the right thing to do. More than 80% of executives agree that businesses should make greater efforts to protect the environment. As a result, most companies say they’ll be carbon neutral by a certain date, but they don’t really know how to operationalize it. Environment, social, and governance (ESG) software can help businesses report on emissions, but ERP has a major role to play too.
For example, say a customer is looking for a new car. They can configure it online – choosing the leather, color, tires, horsepower, and so on. Once they’re finished configuring, the system can tell them the carbon footprint of the car based on their selections. Now imagine they can click a button that says “Optimize for sustainability” – and the system automatically recommends changes due to parts proximity, water and electricity use, and other environmental considerations. Because ERP is the digital backbone of most businesses, it’s the key for operationalizing sustainability in real and demonstrable ways.
#10: Two-tier ERP
Two-tier ERP has been around for 40 years, but it’s gaining in popularity – which makes it a top trend for 2023.
With two-tier ERP, companies use two different ERP systems to address their needs. A Tier 1 ERP with the functionality required to run a large global company is used at the corporate level. While subsidiaries and divisions run a more flexible a Tier 2 ERP that supports their specialized needs – usually in the cloud.
This approach is typically less costly than trying to retrofit a corporate ERP system to work for the entire business. It also provides subsidiaries with the ability to operate nimbly and respond to changing business conditions on the fly – while still providing the parent company with essential insight into the financials and other key aspects of their Tier 2 businesses.
The key to this approach is seamless data exchange between the two tiers. This way the subsidiaries can continue to operate efficiently – and the parent company can maintain oversight and compliance. For this reason, many companies choose the same vendor for both their Tier 1 and Tier 2 systems.
Trend #11: Collaborative ERP
Most companies have “swivel chair” collaboration with ERP today. For example, if someone is working on a purchase order and needs a colleague’s input, they have to switch out of ERP into Microsoft Teams, Slack, or Zoom, and then back again. The same thing happens when an employee needs to liaise with partners, suppliers, or customers – they are forced to toggle between different applications.
Now, some ERP systems are starting to offer better collaboration. SAP and Microsoft, for instance, have partnered up – making it possible for users to share links to live ERP data directly in Teams. And in the future, it’s not hard to imagine a Teams chat where relevant ERP data is automatically pushed to the group in real time.
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The future of ERP: What's next?
The transition to cloud ERP, integration with AI and the IoT, composable ERP – all 11 trends mentioned above – will continue to accelerate. In the near term, companies will continue to use these capabilities to improve agility and navigate the permacrisis era. They will also focus on their ability to support remote and distributed workers with easy, secure, and innovative tools.
In the longer term, ERP systems will augment human intelligence and become omnipresent companions to their users. Paul Saunders, head of product strategy for SAP S/4HANA and Chief Evangelist for Cloud ERP at SAP, predicts that future ERP systems will excel at augmenting human decision making rather than replacing it. “It's human intelligence and artificial intelligence coming together,” says Saunders. Users will interact with ERP in entirely new ways, using “intelligent connectivity” to dynamically mold the system to their needs. New technologies – like quantum computing – will also have a major impact on ERP and the way business and work gets done. As they say, the only constant is change, and we all must adapt.
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