Ask any consultant a yes/no question and the answer you get is ‘maybe’. I guess the same is true for this topic. The world of ERP is moving faster than ever, and Microsoft Dynamics is one of the leading and most innovative platforms in the ERP space. But does that mean that we can forget the old world of ERP?

Or, do we evolve rather than revolutionize ERP, even with introductions like AI-led ERP, Low/No Code, new reality dimensions, and a new way of looking at shared data leveraged by specialized applications?

At Avanade, we often reflect on the vision on ERP, and we believe that ERP will both drastically change and remain largely the same.

Don’t forget the foundations
Have you ever seen a headline like this in a release note? “We did not extend our tools, did not introduce new innovations, but we improved our cores and made the foundations of our ERP system better.”

I haven’t, and that’s a shame. A focus on new innovation is essential and new technology must be embraced, but not without losing the focus on the foundation and core of the technology. As System Integrators, we need to add three key ERP implementation foundations as a prerequisite for innovation: Deep functional knowledge, deep technical know-how and quality of delivery.

You can have the smartest AI in the world, but will it deliver a multi-country ERP rollout for you, setting each of the thousands of parameters that are right for your business? Who will define how the latest legislation for your country can be reflected in your application and who will ensure your ERP platform enables your business to differentiate? Can we build advanced extensions and enterprise critical integrations with just No/Low Code? Who can tell if any automated code is not a big hallucination or a source for unrepairable data inconsistencies? And how can you implement a complex system coming close to open-heart surgery for your company if you only use tools that scrape knowledge from the public internet? And can we purely innovate on Edge additions without maintaining and improving the cores of our Dynamics solution?

We strongly believe that innovation is critical, and that AI-led ERP is the future, but not without a continued focus on foundational technical and functional knowledge and a solid implementation framework; it is not one or the other, rather a mix of both, just like Augmented Reality is so much better than Virtual Reality. Solid foundations are fundamental to the ability to innovate and advance to the next era of ERP. And there is plenty to look forward to, as we see happening around us.

AI-led ERP
The first steps towards (Gen) AI in Business Applications have been taken with CRM applications, which are a natural fit using Gen AI for processes like customer service and opportunity management. But ERP in general is not far behind and Microsoft ERP is miles ahead in comparison to their competitors, having the advantage that they own both the business platform (Dynamics 365) and the Azure Platform where AI is born.

AI, not only the Generative type, will change how we interact with data, execute business processes and gain valuable business insights. The end of manually updated delivery schedules, hard coded master planning, complex inventory statistics and manually created business documents like sales orders is near. In years from now systems will interact without the need for human intervention and predictive insights will help to fine tune business operations, all based on the rich set of data contained in any business application.

While this change won’t happen overnight, it does require organizations to ready themselves. AI can only be as good as the quality of your data and your ability to responsibly release your data to the required learning models. This focus on quality will make the difference between hallucinated and celebrated AI.

It may be hard to believe with the enormous market focus on AI, but this will not be the only disruption for ERP platforms. There is more to consider, starting with the way a new ERP application is delivered.

Next week, we’ll share the second of these articles, where we’ll discuss some other aspects that are critical to the evolution of ERP – agility in delivery, overcoming complex last mile requirements, the need for interconnectivity, and balancing global goals with local needs.

So, while it may be the end of an era as we know it for ERP, a new opportunity has arrived. Continue to focus on the fundamentals of business operations and you will be well placed to benefit from the AI driven (r)evolution.

Contact us to learn how we can help you to strike the right balance between the core foundations of ERP, and the new era of AI.