There have been substantial changes in the enterprise resource planning (ERP) software market in recent years, said Richard Murphy, head of business solutions at Datapac. And one of the most notable shifts, he said, has been the widespread adoption of cloud-based ERP solutions.
“This shift is driven in large part by the need for greater flexibility, scalability, and cost efficiency. Additionally, there’s a growing emphasis on integrating advanced technologies like AI, machine learning, and analytics into ERP systems to enhance decision-making and operational efficiency.”
The market has also seen a move towards more modular and customisable solutions, allowing businesses to tailor their ERP systems to their specific needs rather than adopting a one-size-fits-all approach.
“Microsoft Dynamics 365 Business Central, for example, is built on modular and customisable architecture, which is designed to be flexible, enabling organisations to select and implement only the modules which are relevant to their business operations,” said Murphy.
As a result, organisations can select from a variety of modules such as finance, sales, supply chain, project management, manufacturing, and more.
“Not only does this approach provide cost-saving benefits as it reduces the need for businesses to invest in unnecessary functionalities, but its modularity also empowers businesses to add features and capabilities as their needs evolve without disrupting the core system,” he said.
While moving to the cloud has become a compelling option, it is not a one-size-fits-all solution. Solutions like Microsoft Dynamics 365 Business Central are in the cloud, but also allow for traditional on-premise deployment for organisations that prefer that option.
Businesses in highly regulated industries or those with stringent data sovereignty requirements, for example, might prefer to keep their data on-premises, while some will not want to abandon significant investment in existing systems. Still, the general direction of travel is toward the cloud.
“For a significant number of businesses, the cloud offers unparalleled flexibility and scalability. It allows companies to adjust resources as needed without major upfront investments in hardware or infrastructure,” Murphy said.
This agility can provide a substantial competitive advantage in today’s rapidly evolving business landscape, he said, and, in addition, the cloud model opens up the integration of ERP for smaller organisations.
“One of the most significant benefits of cloud ERP is cost efficiency. Cloud solutions operate on a subscription-based model, converting large capital expenditures into manageable operational costs. By shifting to the cloud and outsourcing support and maintenance to an experienced provider, organisations can avoid the high costs associated with maintaining on-premises servers and software, such as hardware upgrades, energy consumption, and IT personnel,” Murphy said.
Naturally, selecting an ERP vendor is a critical decision that can significantly impact the success of an organisation’s operations and strategic goals. The first step, Murphy said, is to clearly define their business requirements and objectives.
“Several key factors should be taken into account when evaluating ERP vendors. Firstly, consider the vendor’s industry expertise. A vendor with experience in your specific industry will better understand your unique challenges and requirements. For example, Microsoft Dynamics 365 Business Central offers industry-specific solutions that cater to various sectors, providing tailored functionalities and best practices.
“Equally important as the vendor and underlying software architecture is the partner selected for implementation, development, and ongoing maintenance. Datapac has decades of experience in successful implementations of bespoke ERP solutions, both on the Microsoft Dynamics 365 Business Central platform and its predecessors Microsoft Dynamics NAV and Navision,” he said.
Scalability is another extremely important factor: as an organisation grows the ERP system should be able to grow with it. In addition, integration is crucial.
“Look for vendors that offer robust integration tools and APIs. Microsoft Dynamics 365 Business Central, for instance, integrates natively with other Microsoft products like Office 365, Power BI, and Azure, as well as third-party applications. This integration facilitates smooth data flow and enhances overall operational efficiency.”
ERP systems, which traditionally serve as comprehensive systems of record, are driving a growing interest in AI, Murphy said.
“This interest is largely because ERP systems aggregate vast amounts of data across various business functions, creating a rich repository of information that is ideal for AI analysis.”
Selecting an ERP vendor is a critical decision that can significantly impact the success of an organisation’s operations and strategic goals
AI is being integrated into ERP systems in several transformative ways. For example, predictive analytics, where AI algorithms analyse historical data to forecast future trends.
“In Microsoft Dynamics 365 Business Central, AI-driven features can predict inventory needs based on past sales data, helping businesses manage stock levels more efficiently and reduce waste,” Murphy said.
“We’ve also seen an increase in interest in machine learning solutions in areas like Document Capture and recognition for Accounts Payable workflow, and there are certified add-on solutions available in the Microsoft AppSource to further enhance the functionality of the ERP solution.”
AI enhances decision-making by providing actionable insights derived from complex data analysis, identifying patterns and anomalies that might not be visible through traditional data analysis.
“These insights allow decision-makers to act proactively rather than reactively. AI contributes significantly to strategic planning and performance management by offering deep analytical capabilities,” Murphy said.
Integrating AI with ERP systems does come with challenges, though.
Data quality and consistency are critical, Murphy said, as AI algorithms rely on accurate data to produce reliable insights. Indeed, businesses must ensure their data is clean, well organised and comprehensive, Murphy said, and there can be a steep learning curve associated with understanding and implementing AI technologies.
“Companies might need to invest in training and potentially new roles to manage AI initiatives effectively. Moreover, integrating AI into existing ERP systems might require technical adjustments and a clear strategy to align AI projects with business goals,” he said.