Is ERP Smart Enough for the IoT?
By Technology Evaluation Centers
As the cost of computing continues to decrease, more smart and connected devices will be produced, fueling the rise of the Internet of Things (IoT). Several industries are already embracing the IoT with open arms, generating innovative platforms and products so that businesses and individuals can maximize the power of it. This era of interconnectivity has disrupted traditional business methods and changed the way we interact with technology—so what will happen to traditional technologies, such as ERP systems, that businesses have run on for decades?
In the era of IoT, ERP systems will have to change—not just by layering with add-on applications, but by adapting the approach and concept of the overall system. “With the IoT, ERP systems need to become agile and intelligent, and process real-time data while minimizing the dependency on user interactions. For example, in the retail industry, live point of sale (POS) data streams and shelf device sensors can mitigate forecast inaccuracies and automate inventory management, and predictive maintenance alerts could eliminate equipment breakdowns—ERP systems of the near future will have to support that,” said Predrag Jakovljevic, Principal Analyst at Technology Evaluation Centers.
More Machine Talk, Less Human Interaction
Once upon a time, personnel were in charge of managing inventory and monitoring performance of machines. A centralized system called an ERP facilitated this process for them and provided forecasting and other analytical reports to optimize the processes. In the era of IoT, machines and products have sensors or tracking devices and are Wi-Fi enabled so a repair alert can be transmitted directly to the service crew and parts or stock can be ordered when running low—with no or little human interaction.
To ensure they are a part of the digital transformation that IoT is bringing, some ERP software providers have launched their own IoT platforms and services, but continue to leverage their existing enterprise applications to serve as the central communication interface among people, between people and devices, and device-to-device. For instance, ERP market leader SAP launched its digital innovation system Leonardo, aimed at enabling the intelligent enterprise—made possible by combining the power of its IoT technologies with the analytical, organizational, and structuring capabilities of its enterprise applications.
Faster and More Furious
IoT-enabled products and devices are built with embedded sensors to track data—from system performance to a user’s interactions with the product or device—in real-time. This adds up to a huge amount of data even after a short period of time, which would be difficult for a traditional ERP system to handle.
The power of a traditional ERP needs a major boost to be able to mine and process large amounts of real-time data and to convert it into something useful for businesses. Moreover, ERP systems need to acquire IoT-like capabilities or, at a minimum, be able to integrate with IoT platforms already on the market to ensure a business’ system infrastructure is fully equipped to compete in the digital economy. For instance, PTC, a pioneer in the IoT era in the PLM software sector, has acquired and integrated applications to provide a complete set of solutions for managing smart, connected devices and the large amounts of data they produce.
Powered by Artificial Intelligence (AI)
“The IoT and the Industrial Internet of Things (IIoT) will bring never before seen levels of intelligence and insights for businesses—from the operation of products and assets, to the current global position of a manufacturer’s supply chain, to the status of employee activities, all in real-time. These insights will enable ERP systems to provide more value than ever before,” said Ted Rohm, Senior ERP Analyst at Technology Evaluation Centers.
The expectation is that not only will an ERP system be able to process the large amounts of data produced by IoT-enabled devices, but to analyze it into meaningful reports and actionable insights for businesses—what was once a company’s central system of record will become its central system of intelligence.
ERP software providers will have to think about the various angles, trends, and perspectives that a business can take with the data to improve processes and increase profitability, and develop their solutions around that. Cloud customer relationship management (CRM) market leader Salesforce developed its AI-technology portfolio Einstein so that key business processes such as CRM could be significantly improved by leveraging the predictive capabilities of AI based on a company’s unique data and processes.
The IoT has disrupted the traditional way of doing business—for businesses to adapt to this new world and stay competitive, they need supporting software and technology solutions. Where an ERP system once helped automate manual processes, served as the central source of information, and organized unstructured data, now it will have to be a smarter, faster, and more agile system that can foster a company’s digital transformation.
About Technology Evaluation Centers (TEC)
Technology Evaluation Centers (TEC) is a global consulting and advisory firm, helping organizations select the best enterprise software solution for their needs.