Published on the 23/04/2024 | Written by Heather Wright

AI drives cloud and cloud drives changing ERP successes…

Companies are reaping big customer experience returns on their ERP implementations, but getting the wins when it comes to optimising inventory levels is proving harder.

The 2024 ERP Report from Panorama Consulting looks at the outcomes of recent ERP implementations from 130-plus respondents – and the decisions behind those implementations.

“Ninety-five percent reported customer experience benefits.”

It found every benefit category in the survey – from compliance related, to benefits related, operating and labour costs –  was attainable to well over half of the respondents who anticipated such benefits.

Ninety-five percent of those who had at least one phase live for at least a year reported customer experience benefits, up from 70 percent a year ago.

Those increased customer experience wins could lie in part with the move to cloud.

Markets and Markets Cloud-based ERP Global Market Report has forecast cloud ERP to grow from US$42 billion in 2023 to $45 billion this year, climbing to $65 billion by 2028. It attributes the growth to the need for scalability in ERP, cost reduction and resource optimisation, increased mobility and accessibility of data and growing awareness of software-as-a-service models.

Panorama’s report highlights that cloud growth. Just 21 percent of the implementations covered by the report were on-premise, with cloud – whether software-as-a-service (the leading cloud option at 71 percent, or managed services – jumping from 65 percent in last year’s report to 79 percent.

That’s attributed in part to the increasing popularity of AI, as companies seek ever more flexible and adaptable offerings to support rapid innovation. Of those who plan to deploy AI, a whopping 91 percent went for cloud ERP deployments. For those not planning to jump into the AI fray, it was a much more even split, with just 53 percent favouring cloud, versus 47 percent staying on-premise. AI’s data hunger is also a driving factor for cloud, which centralises data storage by simplifying integration.

And when it comes to the customer experience, cloud facilitates smooth integrations with customer facing platforms such as CRM and eCommerce tool, the report notes.

“This gives organisations a comprehensive view of each customer, encompassing every interaction across various touch points. As a result, organisations can personalise interactions and resolve issues faster.”

Standardisation, IT maintenance costs, and productivity and efficiency were also big winners for more than 90 percent of companies, while interactions with suppliers got a boost in 87 percent of ERP implementations.

Not so good? Optimisation of inventory levels. It was the least commonly realised expected benefit, achieved in 63 percent of implementations – a big fall from last year where it was the most commonly realised benefit.

Disruptions to the global supply chain, which saw predictive models and strategies become less effective as supply chain variables became increasingly unpredictable, and the rapid changes in consumer demand which posed challenges for organisations in terms of demand forecasting and inventory management, are likely factors, Panorama says.

“Even the most advanced enterprise systems may not have been able to keep pace with the speed and volatility of these changes,” it says.

The report notes the importance of quantifying benefits expected from a new ERP implementation up front. The most common benefits respondents quantified were related to productivity and efficiency.

“Many organisations view technology as something in the background, rather than an active driver of business objectives.

“For some businesses, the primary motivation for their software implementation is to maintain operational stability and reduce overhead.”

Those organisations prioritise investments in technology which can streamline IT operations and cut costs, viewing these outcomes as sufficient return on investment, the report notes.

In good news, 55 percent of organisations in the study managed to stay within their expected budget, and 58 percent remained within their initial timeframes, with a median project cost of US$450,000 and timeframe of 15.5 months.

Twelve percent realised the implementation under budget and just five percent said the project ran ‘significantly’ over budget, with budget overruns most commonly attributed to additional technology or project staffing needs, organisational ‘issues’ and data issues.

“As market dynamics become more unpredictable and competitive pressures mount, the importance of data-driven decision making has never been more apparent.

“The data in this year’s report reflects a mindset shift among business leaders. Organisations across industries are increasingly using technology as a strategic driver of business growth and innovation, rather than just a tool to automate processes.”