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Economic Software and AI: Soon to Be One and the Same?

Source: Äri-IT Sügis 2024

Author: Marek Maido, Marketing and Sales Manager at BCS Itera

In a time where the ERP world is undergoing significant transformation due to AI advancements, it’s crucial to make smart choices when implementing ERP, especially with future developments in mind.

Integrations and applications of Artificial Intelligence (AI) are rapidly growing in international ERP solutions.

Already in 2022, surveys in the UK showed that 65% of IT managers were looking for AI integration opportunities in ERP systems (UK Artificial Intelligence (AI) Statistics And Trends In 2024; Forbes Advisor 2024).

As of 2024, one in six UK businesses has adopted AI technology, with most citing data management and analysis as the main reason. This, in turn, means that the selection of ERP, and more broadly, HRM and CRM solutions, and their interoperability, is a fundamental basis for AI adoption.

The ERP software market is projected to reach approximately $50 billion by 2025, and 95% of businesses find that process management significantly improves after ERP implementation. Additionally, most companies acknowledge that adopting AI as part of ERP is necessary.

What Does the Growth of AI Capabilities Offer to ERP?

AI is reshaping industry processes, particularly management, by transitioning to data-driven decision-making. To enhance the capabilities of traditional ERP systems, AI-powered ERP systems utilize technologies such as:

Machine learning
Language and text processing
Process automation
Predictive analytics
Modeling
Communication management

Benefits of AI Integration in ERP Solutions

Process Automation:

AI helps automate repetitive and time-consuming tasks, such as invoice processing, accounts receivable management, customer service management, and financial data reconciliation.
At a basic level, AI helps ERP systems automate routine tasks.
AI integration also enables predictive analysis based on historical data, allowing ERP to forecast future resource needs, budget requirements, and project risks.
McKinsey research indicates that AI-enabled ERP can reduce operating costs by up to 25% (AI, Automation, and the Future of Work; McKinsey Global Institute 2018).
Forbes estimates that AI and automation reduce human errors by up to 70% (UK Artificial Intelligence (AI) Statistics And Trends In 2024; Forbes Advisor 2024).
AI-driven automation can, according to IDC, lead to a 20-30% improvement in ERP productivity by 2024 (Automation, AI and Analytics; IDC 2023).

Process Optimization:

AI integration enables flexible process implementation in ERP, adapting to changing conditions.
For example, AI can analyze supply and demand patterns and then recommend adjustments to production schedules, business processes, or inventory policies to minimize costs.
It can also identify workflow inefficiencies and propose process changes to improve operational cycles.

Personalization:

AI increasingly offers ERP users personalization options through individual preference and behavior analysis.
By tracking user roles, past data usage, and workflows, it provides tailored interfaces and information to each employee.
For instance, an accounts manager might receive alerts about overdue invoices and payment reminders, while a salesperson might receive notifications about key product stock shortages.
Gartner predicts that by 2025, 50% of large enterprises will have personalized their ERP (Use-Case Prism: Artificial Intelligence for ERP for Product-Centric Enterprises; Gartner 2023).

Security:

With growing cyber threats, AI plays a key role in strengthening security within ERP.
AI-powered ERP algorithms can detect anomalies and patterns that may indicate a security breach or unauthorized access attempt.
Capgemini reports that 60% of organizations claim AI improves their ability to respond to cybersecurity threats (Reinventing Cybersecurity with Artificial Intelligence; Capgemini Research Institute 2024).
IDC indicates that 55% of organizations will increase their AI investments for security by 2025 (Automation, AI and Analytics; IDC 2023).

Supply Chain Optimization:

AI-enabled ERPs allow for the optimization of supply chain processes in demand forecasting and inventory management.
For example, machine learning algorithms can analyze past sales data, customer behavior, and industry trends to accurately forecast product demand.
This, in turn, helps optimize inventory levels, avoiding shortages or overstocking.
AI integration also helps predict maintenance intervals and determine when equipment or assets need maintenance, minimizing downtime in the supply chain.
An Accenture study shows that 76% of supply chain executives believe AI will significantly impact business competitiveness (Reinventing business with data & generative AI; Accenture 2024).
McKinsey estimates that predictive maintenance can reduce downtime by 70% and maintenance costs by 25% (AI, Automation, and the Future of Work; McKinsey Global Institute 2018).

Data Analysis and Insights:

In a data-driven economy, businesses generate vast amounts of data from various sources.
The true value of data lies in our ability to understand it and make decisions.
AI integration in ERP enables the analysis of large datasets quickly and accurately, discovering patterns and identifying trends.
A Deloitte study revealed that 80% of business leaders believe AI improves decision-making (How teaming Artificial Intelligence (AI) with humans can help debias decision-making; Deloitte AI Institute for Government 2023).

Cost Savings:

One of the most significant benefits of AI-powered ERP solutions is the potential for cost savings.
Organizations significantly reduce operating costs by automating repetitive tasks, streamlining workflows, and optimizing resource utilization.
AI takes over time-consuming manual processes, such as data entry, invoicing, and inventory management.
A Capgemini report states that AI can lead to a 15% reduction in business process costs and up to 30% in IT process costs (Reinventing Cybersecurity with Artificial Intelligence; Capgemini Research Institute 2024).

Risk Management:

Risk management is a critical aspect of business operations, and AI integration in ERP plays a vital role in identifying and mitigating potential risks before they escalate.
AI integration allows for the assessment and prediction of risks by analyzing data and detecting abnormal patterns or deviations.

Customer Engagement and Experience:

Customer experience can determine whether a company stands out or is just one among many.
AI integration with CRM modules significantly improves communication by personalizing interactions, automating customer support, and analyzing customer data.
Using AI technologies, your organization can provide personalized recommendations, respond to customer inquiries in real-time, and gain deeper insights into customer preferences and behaviors.
An MIT Sloan Management Review study showed that 90% of executives believe AI gives them a competitive advantage (Action and Inaction on Data, Analytics, and AI; MIT Sloan Management Review 2023).

Microsoft Business Central

As businesses worldwide, including in Estonia, prepare to harness the potential of AI, it’s crucial to understand its impact on ERP solutions. BCS Itera offers Microsoft’s Business Central economic software, where the manufacturer has continuously added AI capabilities and applications over the past 4-5 years. Moreover, Business Central solution partners worldwide are offering new AI applications. Today, there are already hundreds of Business Central AI specialized applications on Microsoft AppSource.

In a time where the ERP world continues to transform due to AI advancements, it’s essential to make smart choices when selecting ERP, especially with future developments in mind.