USAGE OF ARTIFICIAL INTELLIGENCE IN ERP SOLUTIONS
“Those who rule data will rule the entire world.” These are the famous words of Japanese technology entrepreneur and Founder of Softbank Group, Masayoshi Son. No doubt, the current business world is ruled by data. But raw and unstructured data is of little use to any enterprise. In this perspective, the traditional Enterprise Resource Planning (ERP) system that manages daily business activities of various fields including finance, operations, sales, and human resource management is becoming increasingly seen as less useful to handle present-day business complexities. This is primarily because of the inability to draw insightful inferences. To overcome this shortfall, ERP systems globally are being made smarter by leveraging the power of artificial intelligence (AI). According to global consulting major Gartner, ERP systems have entered into their fourth era of development, characterised by AI-driven, superior data-centric, agile and customer-facing systems. Gartner predicts that 65 per cent of organisations will use smart ERP applications, which has the attributes of the fourth era, for strategic planning to predictive forecasting by 2023. Therefore, ERPs are no longer another software platform but are intuitive strategic tools for efficient business planning and forecasting.
Multiple factors, varied use cases driving the trend:
The dawn of the digital era has come with its own set of dynamics. In today’s world, consumers are purchasing products from ecommerce platforms, logging into various app-based platforms for education, entertainment, and healthcare needs. In an app-heavy environment, where consumers are accessing all digital platforms through mobile phones, businesses need to be agile to understand spending behaviour for innovating new products and services. Moreover, the attention span of consumers is falling due to multiple choices. In this intensively competitive business environment, businesses have to be fast enough to attract the new-age consumer. Therefore, ERP systems need to be smart and agile.
Hearteningly, the journey has already begun. The use cases of smart ERP systems powered through AI are rising. The most familiar application of smart ERP is being done in customer service. The ERP system is integrated with AI-powered chatbots that answer customers’ queries seamlessly. Such chatbots are smart enough to gauge a customer’s requirement through his queries and guide it to the most relevant products or services. Thus, it saves costs for enterprises along with freeing up human resources for other critical jobs.
AI-powered ERP is enabling the handling of entire supply chain management seamlessly with accurate forecasting. AI models analyse historical data collected through ERP systems, gauge the current conditions, and can provide accurate predictions on demand. It, thus, helps raw material supply and management and avoids under or overproduction. Many manufacturing giants are using AI algorithms to track an item from the manufacturing stage until the moment it is sold. ERP systems usage in the sales space is also evolving. With the use of AI, a more granular analysis of sales can now be done for better forecasts. It, in turn, translates into better sales targets and improve employee performance.
Accurate sales forecast leads to better marketing strategies for richer customer experiences. Marketing tools are leveraging the volumes of data generated from AI-powered ERP systems to make tailor-made marketing messages. Customer insights from social media, customer service interactions, and product quality systems also help in redesigning the narrative in case the initial messaging doesn’t find many takers.
At a time when the demand for good talent is at all-time high, ERP systems are leveraging AI to provide insightful inferences about employee behaviour. These insights not only help improve employee productivity but also able to take remedial measures to reduce discontent. Moreover, many HR functions are automated through smart ERP systems. Finance and accounting are other major areas wherein intelligent ERP system is making deep changes. From automating repetitive accounting functions, improvement in transaction processing time, to verification of financial statements, AI is also enabling organisation to flag up anomalies in financial transactions before these lead to bigger issues.
Digital era, Industry 4.0 requires smart ERP:
Industry 4.0 and digital transformation in the services sector can only be realised through the integration of AI in ERP systems. The role of central data collection through ERPs will slowly give way to customer-facing interactions through intelligent inferences. With rising applications, PwC’s Global CEO Survey finds out that 85 per cent of the CEOs are convinced that AI integrated ERP will have a significant impact on companies and their business models over the next five years. As digitalisation grows among organisations, this transformation is already underway.
The above article is authored by Raj Darji, Founder and CEO of Aarav Solutions.