Like most technology applications, Enterprise Resource Planning (ERP) platforms are continually being improved and enhanced to ensure optimal usage and functionality for users. NetSuite, for example, releases two new updates automatically every year. All customers are always on the same version of this cloud-based platform, which continuously drives innovation across each of its twice-yearly releases.
“As companies increasingly rely on ERP to run their businesses, these systems continue to evolve to incorporate new technologies and support a broader range of functions,” NetSuite points out.
Here are six key ERP trends to keep an eye on as 2023 winds down and we move into 2024:
- Cloud ERP will more than double in size by 2030. According to The Insight Partners, the cloud ERP market was estimated to be worth $59.12 billion in 2022 and is poised to reach $138.34 billion by 2030, growing at a compound annual growth rate (CAGR) of 11.2 percent. Much of this growth is being driven by increasing demand for advanced systems for analyzing business operations in real-time and growing digitalization by small to midsized organizations. It’s also being driven by a desire to move away from monolithic legacy systems that don’t integrate well with more modern applications. “Historically, many organizations used on-premises ERP applications and were reluctant to entrust core business applications to the cloud, but that’s changing rapidly,” NetSuite points out. “Businesses are adopting cloud ERP to take advantage of a simpler deployment, lower costs, elasticity (i.e., the ability to only use the necessary resources at any given time), new functionality, less need for internal IT resources, and the ability to easily add users and functions to accommodate business growth.”
- Tighter integrations between ERPs and third-party applications. Modern ERPs are often just one part of a bigger investment in technology that companies make as they move further along in their digital journeys. “Companies are integrating their business applications with other new technologies, including the Internet of Things (IoT), to improve core processes,” says NetSuite, which offers an application programming interface-based (API) platform that integrates well with outside applications. For example, retailers use warehouse management systems (WMS) that collect data from mobile scanners and smart conveyors to track the movement of goods within the warehouse. Other companies integrate ERP with e-commerce platforms like Shopify Plus to improve online order workflows, automatically trigger order fulfillment, update inventory levels, and record payments.
- More companies explore two-tier ERPs. Two-tier ERP is an approach that uses two systems to address the needs of large businesses with multiple locations and/or subsidiaries. Under this strategy, headquarters will use a Tier 1 ERP that may be highly customized and has the functionality to run a large, global company, while subsidiaries or smaller business units use a less resource-intensive Tier 2 ERP that better suits their needs. With two-tier ERP, the business integrates the two ERP systems such that information automatically flows between Tier 2 and Tier 1. “Historically, many companies tried to deploy a single ERP system for both the headquarters and all regional offices and subsidiaries,” NetSuite says. With a two-tiered ERP, larger companies may continue to use their core ERP system for financials and other core processes, while smaller business units turn to solutions that address their specialized needs.
- Using ERP as a budgeting and financial management tool. Software Connect says businesses looking to fight inflation and other budgetary issues can use ERP to highlight their current spending patterns to find areas of waste. “Financial reporting modules provide real-time data and insight on recent expenditures, past revenue, and estimated budgets so you can clearly understand all your spending,” the software review site adds. Some of the ways that NetSuite helps companies set and stick to budgets in any business conditions include: providing a single source of truth for financial data, which can help improve budgeting accuracy and efficiency; providing more accurate forecasting of future revenue and expenses; and generating multiple budget scenarios that companies can use to assess the financial impacts of different factors (i.e., changes in input costs or sales volumes).
- Everyone wants mobile apps. Platforms like NetSuite are evolving to provide on-the-go access to critical business data, allowing employees to conduct both back-end and front-end tasks no matter where they are, from the warehouse floor to a retail checkout terminal to an airport. And, similar to how the cloud expanded ERP access online, mobile apps allow users to perform remote work on devices like smartphones and tablets. And as more businesses adopt hybrid work-from-home schedules, employees can remain in touch with work in various different ways. “Even if a workplace requires in-person work, mobile apps allow for greater connectivity between companies and their partners, vendors, and suppliers,” Software Connect adds.
- More artificial intelligence (AI) in ERP. In today’s digital age, important business decisions can’t wait. Fortunately, a rise in AI, machine learning, and other automation techniques make it easier than ever for businesses to keep up. “As a result, ERP has become more intelligent than ever by incorporating these new technologies into business workflows,” Software Connect states. “Constantly evolving algorithms create ways to predict business outcomes faster than ever before, allowing for better decision-making based on better analysis. Many ERP solutions now offer machine learning capabilities, sometimes directly paired with AI, as part of a fully comprehensive predictive analytics module.”
These are some of the top trends that we’re seeing right now in the ERP market, and that companies should be paying attention to as they make their technology decisions for 2024 (and beyond).