Businesses are almost getting used to the fact that, in addition to the years of covid and the war going on next door, they have to survive in an incredibly volatile business environment. At the same time, rampant inflationary pressure, supply chain problems and employees’ expectations for remote work are strengthening up-to-date, data-based decision-making and, with it, digitalization projects.
The size of the market is constantly increasing
In recent months, there has been an amazing level of interest in technologies such as AI, which also strengthens the already obvious expectation: if you do not want to jeopardize your market position, you must digitize your business process.
At the same time, a number of large ERP solution providers will stop the legal follow-up and further development of old versions between 2023-27, which causes excitement even among companies that are not about to introduce new ERP systems. Although the technical conversion projects recommended by suppliers as a quick solution promise quick and painless results, they do not take into account that the business processes established 8-10 years ago are no longer real, so sooner or later they will also need to be comprehensively repaired.
Because of this, the market demand for ERP experts is constantly increasing, and with it, the daily fees are also increasing drastically, which makes the projects more and more expensive.
Based on this year’s experience, the economic stagnation was not really tangible in the ERP profession. At the same time, based on the forecasts, smaller ERP solution companies with a weaker financial background may be weakened by this crisis just as it happened during the 2008 crisis, this is especially true for undercapitalized Hungarian software houses.
The cloud is above everything
Today, not only large manufacturers such as SAP, Oracle or Microsoft recommend various forms of cloud solutions to their customers, but even the solution providers of manufacturing companies, such as IFS, have also voted in favor of the cloud.
It is clear that remote work and maintaining productivity have become much easier with the use of these options. The numbers show that, at an international level, large companies are increasingly switching to cloud or hybrid solutions, especially in segments that require greater flexibility.
These modern ERP packages run on Enterprise Application Platforms (EAPs) that provide state-of-the-art technology for digital transformation. Much of the productivity gains delivered by cloud-based ERP are due to the technology and capabilities of EAP. Key features of EAP include customizability through low-code/no-code development and integration, AI/ML data analytics, process automation, and user-friendliness.
At home, lagging a little behind international trends, the rate of cloud introductions is constantly increasing, although the SME sector is also a tough nut to crack on this topic. Of course, this type of scalability would be a great opportunity for companies in need of restrictions, even leading to serious savings: with a cloud-based solution, we can flexibly change the number of users, thus saving even very serious costs, and the rise of remote work and the need for mobility are also in this direction shows Let me quietly note that every company needs a thorough data cleaning project before moving to the cloud, otherwise you may be in for some nasty surprises due to the costs arising from the related faulty surveys.
Artificial intelligence or machine learning? Everything is needed, and as soon as possible
The real reason for the development of ERP systems was the need for company managers to see valid data and be able to use them to create complex reports, forecasts and other decision-supporting information products. However, the use of third-party reporting solutions has increased in recent decades, because many programmed and customized reports were incredibly ineffective.
The biggest promise is that AI and ML together will expand the data analysis capabilities of ERP solutions, satisfying the voracious desire for instant “I need to know everything and immediately to respond quickly to the data needs of management and owners”. From 2024, AI-driven analytics, data visualization and analysis tools are expected to replace static dashboards with intelligent advice and simulation and forecasting capabilities in more and more ERP solutions. It is expected that more and more ERP manufacturers will integrate AI-based solutions that will even be able to find abuses, or even put sophisticated tools in the hands of management in inventory optimization solutions or in the field of predicted maintenance tasks.
Fusion of ERP and MES
It is great news for manufacturing companies that more and more large ERP solution providers are expanding the boundaries of their ERP solutions compared to previous versions. The so-called extended scope of operation defines the next generation of ERP systems. This includes merging ERP and Manufacturing Execution Systems (MES) to create a seamless connection between so-called shop floor operations and enterprise-wide information management. In addition, the continuous evolution of ERP technologies culminates in enhanced functionality, including user-friendly interfaces and advanced customization options. These developments allow businesses to respond more quickly to changing market demands and explore new growth opportunities.
The combination of ERP systems and Manufacturing Execution Systems (MES) extended operations beyond the legal boundaries of the company. The car factory using the integrated system can not only manage its expected orders and sales orders – even the entire functionality of the existing CRM – within the ERP, but it can also manage real-time supervision over its assembly lines for better production control and quality assurance.
The human factor is the real X-factor
I have been saying for quite a few years now that it is an illusion to believe that digitalization will automatically solve all our problems regarding our internal company processes: digitalization transformation projects are always complex, business development projects and never just matters involving IT.
Company managers have never had such a difficult task: the noise is enormous, technological innovations are constantly pouring into the market, and most CEOs have no idea what strategic steps they should follow with their company.
The technologies and capabilities listed above do not replace people, but complement them. There are huge opportunities for improvement in productivity and decision-making processes. As new technologies emerge, it is important to invest in people to understand their capabilities and limitations. Starting in 2024, it is more important than ever to invest in training and supporting employees as they explore these technologies. Organizations that invest in their people will succeed; those who don’t run the risk of making costly mistakes and falling behind the competition.
To sum up, I think that 2024 will be a difficult, but at the same time very interesting, year full of technological leaps on an amazing scale for all players involved in the ERP market: software manufacturers, software distributors, customers and independent ERP consultants.
About the author:
Alexandra Kulcsár is the owner of the independent IT consulting brand norexerp.hu, a technology and supplier company, and the expert who runs the Computerworld online ERP blog. He uses his experience gained in 130+ ERP projects over 26 years at Hungarian and international production, trading and service companies. Alexandra is a guest lecturer at several universities and a METU Executive IT MBA instructor. Do you have questions about your company’s ERP project? Write it firstname.lastname@example.org to e-mail address.