3 Ways AI (Artificial Intelligence) Will Impact ERP Systems

What is AI

AI, or artificial intelligence, employs machine learning. With AI, software applications do not have to be explicitly programmed to do specific tasks. AI uses so-called unsupervised algorithms, a programming technique relying on repeated inputs that make “intelligent” predictions and responses.

AI is in use today

Many companies are already using AI. According to a recent article by Satya Ramaswamy on the Harvard Business Review website, the top 4 ways companies are using AI are to:

1. Detect and defend against security incursions
2. Resolve customer/user technology problems
3. Reduce production management work through automation
4. Measure internal compliance in using approved technology vendors

Only a few of the companies Harvard surveyed were using AI for job elimination. The typical approach was to find ways AI can do more work with the same number of people. Ramaswamy’s suggestion in finding quick applications for AI is to use AI for immediate impact on reducing costs and increasing revenue. Also, concentrate AI in back-office functions of IT and finance/accounting.

“Computers today,” says Ramaswamy, “are far better at managing other computers…than they are at managing human interactions.” Yes, AI and automation will eliminate some jobs, but organizations would be smart to concentrate now on where their networks and computers already interact.

So, how will AI impact ERP systems?

The potential application of AI with ERP will increase as AI technology continues to be developed. We have highlighted below some recent observations and predictions on how AI and ERP will continue to emerge:

1. Three AI technologies are on the cusp of having a significant impact on ERP systems.

This Toolbox.com blog discusses how AI is “finding its way into many applications,” and ERP solutions “are next on the list.” Those technologies are:

• Cognitive automation, which focuses on job duties that are knowledge-based, for example, answering customer support requests. An ERP with cognitive automation can “emulate a human employee’s thought process” and make decisions.
• Intelligent automation, which goes one step further and is not limited to routine and predictable tasks. This technology uses natural language processing and does not require structure to answering requests and questions.
• Computer vision, whose goal is to apply machine learning and similar functionality to visual inputs like images and videos. Examples are tracking trends through graphs and charts or automatically tagging employees in company photos and video alerts.

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2. AI solutions will impact the core of day-to-day business operations.

Bas de Baat, an IT industry Advisor, writes in his article on CIO.com that AI will undoubtedly “have a profound impact” on the footprint of ERP solutions in the foreseeable future. He predicts that AI will enable organizations to further optimize their business process operating model. The process includes software applications as well as governance and technology infrastructure.

To keep up with AI, organizations, according to de Baat will have to orchestrate a transformation and revamp their IT strategies. The strategy must recognize and adopt AI into their ERP planning. AI and ERP must be integrated “because they cover the same spectrum.”

The author provides several examples of industry AI pairing with ERP:

• KLM airlines uses deep learning and natural language processing and has accommodated over 60,000 customer inquiries with automated responses. The number keeps growing as the AI functionality continues to learn and improve with use. The process is not totally without human interaction with the customer, but most inquiries are routine and handled quickly.
• One AI-enabled ERP solution integrates customer interaction with managing work orders. The AI solution recognizes and learns as work order history accumulates in the system. Again, the system gives a proposed answer to the customer and helps with planning the work based on schedules, availability of parts, technician skills, etc.
• Equipment maintenance is another example where AI can latch onto ERP solutions. A service technician can use a digital device to get at the root causes of equipment performance problems. The device has gathered everything about the equipment’s performance and maintenance history and has gathered data from every source, including the manufacturer and similar equipment on site.

3. AI will add value to existing ERP

According to this piece posted by Nathaniel Lewis in ERP News, it may not be too far in the future until “your business begins utilizing its functionalities to satisfy your own ERP needs.” Machine learning will be applied to an AI-enabled ERP application to:

• simplify routine, time-consuming tasks
• lower operation costs
• eliminate human error

ERP software automates everything from supply chain to manufacturing, distribution, and sales. Add a dash of AI, and you have a recipe for self-sustaining growth that adds increased value to ERP.

Also, apply AI data-mining capabilities to the massive amounts of structured data that ERP produces, and you have a potential for transforming the data into actionable business intelligence.

All in all...

ERP is at the center of any organization’s automated effort. AI will take ERP another step forward, and add value in terms of improving process, saving time, and increasing the bottom line of the organization. AI is a natural partner to ERP. In the words of one blogger at SolutionsReview.com, “The future is here, embrace it.”