OM in the News: Exciting New Trends in ERP

Enterprise resource planning (ERP) solutions, our topic in Chapter 14, have grown from back-end processes like accounting, HR, purchasing and supply chain management to front-office functions such as sales force automation, marketing automation and ecommerce. Businesses rely on ERP to not only cut costs by eliminating redundant processes and automating mundane tasks but also to provide employees access to critical information to make better decisions, faster.

As companies increasingly rely on ERP, these systems continue to evolve to incorporate new technologies and support a broader range of functions. Oracle NetSuite identifies several major trends this year.

1. Cloud ERP Historically, many organizations used on-premises ERP applications. But businesses are adopting cloud ERP to take advantage of lower costs and the ability to easily add users and functions to accommodate business growth.

2. Two-Tier ERP Historically, many companies tried to deploy a single ERP system for both the headquarters and all regional offices and subsidiaries. Two-tier ERP is a strategy that enables organizations to leverage their investment in existing ERP systems at the corporate level (tier 1), while subsidiaries and divisions operate using a different ERP solution (tier 2), which is often cloud-based.

3. Digital Transformation Digital transformation refers to integrating digital technology into all business functions to improve daily operations. The integration of ERP with IoT devices and the adoption of AI and advanced analytics are part of this change.

4. Other Technology Integrated With ERP Companies are integrating their business applications with other new technologies to improve core processes. For example, retailers use warehouse management systems that collect data from mobile scanners and smart conveyers to track the movement of goods within the warehouse.  We also see a greater connection between social media and ERP.

5. Personalization Historically, ERP platforms with complex languages were difficult to customize to the specialized needs of each business. But organizations can now take advantage of what are called “low-code” platforms.

6. AI-Powered Insights and Improvements Artificial intelligence and machine learning capabilities embedded into ERP systems work behind the scenes to help meet increased demand for personalization and improve a broad range of business processes.

7. Predictive Analytics The hunger for AI-infused ERP highlights organizations’ increasing desire to mine their operational and customer data for new and relevant insights that will increase the top and bottom lines. (See Module G of your text).

Classroom discussion questions:

1. Why have ERP systems seen these major changes?
2. What is the advantage of a 2-tier ERP?