ERP Automation - Need, Benefits, Process & Tools

ERP automation can refer to a couple of different concepts. One is the way enterprise resource planning (ERP) software automates traditional business processes. The other concept refers to the increased automation of the features and functions of the ERP software itself. The post examines each of these two meanings of ERP automation.  

Download Our ERP Software Requirements Checklist

Software Automates Business Processes

If we examine the history of ERP, we see that the software was originally developed to automate and link together the processes of manufacturing companies. This includes processes and transactions between departments, bringing a greater level of integration across the enterprise. ERP software basically exists to automate traditional business functions and record-keeping activities.


Automation therefore integrates processes and breaks traditional silos within an organization. When workers in one silo must wait for tasks to be completed by those in other silos or when they must search to find the necessary information to complete a task, their productivity is slowed. An ERP system can automate routine business processes and store data in a centralized location, not only making the data readily accessible to all those users who need it to perform tasks, but also enabling automated communication between silos or departments.

ERP software contains integrated applications—such as financials, human resources, sales management, and inventory management, among others—that enable interactions between and across silos or departments, and the automation of those interactions. For example, as a new sales order gets processed, the software may automatically prompt interactions with the inventory, finance, and shipping departments. This type of automation of ERP software may yield multiple benefits, including fewer routine errors and unintended duplication of data, and streamlined communications, leading to time savings and lower operational costs. Also, the consolidation of data in a central database enables companies to perform enhanced data analytics, providing support for more informed business decision-making throughout all levels and areas of the organization.  

Maximize ERP Software Intelligence

Another form of ERP automation involves the incorporation of new technologies, such as artificial intelligence (AI) and other smart features, for example, the Internet of Things (IoT). These emerging technologies can be incorporated into ERP systems to provide deeper and more seamless handling of business processes. Specifically, such newer ERP systems offer ways to improve workflows, records-keeping, and forecasting abilities.

AI-enabled ERP systems are appearing in the enterprise software marketplace, and these new software solutions naturally build on one of the strengths of ERP—automating routine processes and integrating transactions between different departments or silos. AI aims to integrate these processes more tightly and enable increased automation.
 
The incorporation of AI within ERP systems may shift employees away from performing repetitive and routine tasks (for example, processing sales orders) to handling analytical and creative tasks that can’t easily be handled by AI. This will allow employees to not only build new skills and abilities that enhance personal development within the organization but also be more engaged and contribute to fulfilling the organization’s goals and ensuring its success.

AI will also be able to predict and execute basic transactions. As an example, think of the speech recognition features of modern inbound voice recognition (IVR) systems. These systems are being used by many businesses, such by banks and other financial institutions to direct callers to the proper customer service representative based on the individual customer’s need.

Applied to ERP software, AI-enabled voice interactions can serve several functions. They can provide users with hands-free operations, enhancing the accuracy and efficiency of tasks and work activities. They can be also used for voice recognition to authenticate users and authorized actions, thereby boosting security.

Another type of new technology incorporated within ERP software as a new feature is the Internet of Things (IoT). The availability of both inexpensive broadband internet and sensor technology makes it easy to place internet-connected sensors in more and more products and components, even in disposable products.

For manufacturers or suppliers, this can result in reduced maintenance, increased uptime, and longer product lifecycles. For end users, the benefits can include reduced product failure rates due to early detection of a problem and reduced operating expenses such as by powering down equipment during periods of inactivity. It can ultimately lead to improved product design because the information collected is about how products are actually being used by real-world customers. This means that IoT is poised to bring about large-scale changes at least for businesses that move a lot of merchandise, parts, or components; IoT-containing ERP may be less applicable to service-based operations. IoT allows a device to provide continuous real-time feedback at every stage of its journey—throughout the different stages of design and production within a manufacturing plant, to its use by customers and end users, perhaps interspersed with short periods of maintenance and repair, until it reaches the end of its lifecycle.
 

Recap

In short, the move toward increasing levels of ERP automation is neither new nor particularly surprising. From its earliest days, enterprise resource planning has always been driven by the goal of automating as much as possible in order to archive important data to increase accuracy and accessibility, save time and effort to enhance the efficiency of business processes, and ultimately reduce costs to drive business growth and profitability.

Rapidly emerging technologies are broadening the set of tools that software developers can incorporate into new ERP software solutions to help ERP users achieve that goal. The changes can include automation both in the sense of more efficient workflows, especially between silos or departments, and the incorporation of technologies that improve the user experience or provide highly useful data.

The future of ERP should see more enhanced technological features and the automation of more and more business processes as users work hand in hand with digital technologies to better perform their business functions, elevate their business to new standards, and outperform their competitors.  

Related Reading

TEC ERP Pricing Guide

What IS ERP? Definition and Introduction

How Much Does an ERP System Cost?

What Is ERP Testing and Why Does It Matter?