AI in ERP: Why Should You Harness

AI is altering the way companies function, and ERP systems are no exception. AI in ERP accredits businesses by transforming operations, boosting automation of selected procedures, and refining decision-making capabilities.

Research has found that 65% of CIOs integrated some form of AI in their ERP application by the year 2022. On account of 2024, one out of six UK businesses has adapted AI technology to streamline data management and analytical functions.

This blog details AI in ERP, different types of AI present in ERP, advantages, challenges, top AI-driven ERP solutions, and effects on the industry.

What is AI in ERP?

AI in ERP incorporates artificial intelligence technologies, such as machine learning, natural language processing, robotic process automation, and generative AI, into ERP systems. It adds value by transforming the way businesses analyse, provide insight, and extract predictive conclusions.

With capabilities powered by AI, ERP software can:

• Automate processes such as payroll, inventory tracking, and customer support.
• Provide predictive analytics that allows you to plan for future trends and decisions.
• Perform real-time data management to improve efficiency and compliance.
• Reduce operational costs through automation powered by AI.

Types of AI Technologies in ERP

There are many ways AI technologies set ERP systems apart by delivering better workflows, worthy customer experience, and efficient methods of operation. Some of the main types of AI technologies in ERP are:

Machine Learning (ML): ML algorithms analyse past data to find models and extrapolate for decision-making in inventory management, sales forecasting, and demand planning.

Natural Language Processing (NLP): NLP allows ERP systems to process and understand human languages. It helps chatbots interact with customers, automates document processing, and enhances search.

Generative AI in ERP: Other subsets of AI create new content and insights on past data. It comes in handy for predictive modelling, forecasting, and content creation in ERP systems.

Robotic Process Automation (RPA): RPA automates repeated rule-based tasks like invoice processing, data entry, and reporting, enhancing efficiency with less human involvement.

How Is AI Transforming ERP Software?

AI in ERP will result in improved automation, increased decision-making, and seamless operations of the business. The firm employing AI can introduce value propositions that include streamlining processes, minimising errors, and giving real-time information.

For instance, AI in Microsoft Business Central ERP can change the logistics within the supply chain automatically depending on real-time demand forecasts or monitor transactions for irregularities in financial transactions. AI also offers security by monitoring fraudulent activities and increasing compliance controls.

Benefits of Integrating AI into ERP

The integration of artificial intelligence into ERP systems has many advantages, which are reported to drive business growth and efficiency. Some key benefits were noted when referring to AI in ERP:

Automation of Repetitive Tasks: AI automates mundane tasks such as data entry, invoice processing and report management with the purpose of reducing human work and eliminating human error.

Better Decision-Making: With real-time insights into their operations, business leaders have a better chance of making better forecasts, budgets, and strategic plans by using AI-powered analytics.

Enhanced Customer Experience: AI-powered chatbots and predictive analytical tools respond to customer requests with personalisation through relevant recommendations.

Optimised Resource Management: AI helps manage staff requirements in manufacturing, HR and supply chain.

Improve Data Analyses: AI aids the analysis of vast quantities of information to find exceptionally rare trends, spots anomalies in data and provides useable business strategies.

Cost Reduction: AI automating routine tasks that bring efficiency, among many others, will cause businesses to incur lower operational costs.

Challenges of Using AIs within ERP

While AI in ERP has the benefits, there still exist some barriers that businesses have to get around:

1. Data Security: The privacy & security aspect is vital for AI since it precisely aims at making extensive use of data, which raises concerns about data breaches and security regulation compliance.

2. Data Quality: Prediction accuracy is influenced by data quality, and all decisions made based on such data fail if low-quality data is inducted into the system.

3. Expertise & Training: AI-enhanced ERP systems need skilled personnel to manage technology-driven, including education and maintenance effectively.

4. High Implementation Costs: These involve hardware, software, additional AI modules, and expert personnel.

5. Integration Challenges: Many businesses face difficulty in integrating AI-powered ERP systems into their existing legacy software since this further requires renewed program upgrades.

Top ERP System with AI Integrated Capabilities

A number of ERP vendors have added AI to their offerings with more automation and analysis. Some of the top AI-driven ERP solutions are:

Microsoft Dynamics 365

Microsoft uses AI to enable better predictive analysis, workflow automation, and process optimisation. Through its AI-powered Copilot tool, organisations can automate mundane tasks and enhance productivity for finance, supply, and CRM processes.

Key Features:

• AI-powered Copilot for workflow automation
• Predictive insights into sales and finance
• Intelligent supply chain management

Advantages:

• Seamless integration with Microsoft ecosystem
• Strong AI-driven automation
• Excellent CRM and ERP capabilities

Disadvantages:

• Steep learning curve
• requires extensive customisation for certain industries

Oracle NetSuite

Attributed to AI capabilities, NetSuite automates accounting, enables improved forecasting, and offers real-time business insights. AI-powered chatbots and predictive analytics would allow businesses to streamline business processes and maximise customer interaction while providing insights to improve decision-making.

Key Features:

• AI-driven financial automation
• predictive analytics
• chatbots for customer service
• workflow automation

Advantages:

• Strong financial management capabilities
• Scalable cloud-based architecture
• Robust analytics

Disadvantages:

• High implementation costs
• complex customisation process

SAP S/4HANA

SAP employs different AI capabilities like analytics, machine learning, and intelligent automation to automate supply chain logic and financial management and provide intelligent decisions.

Key Features:

• AI-enhanced supply chain optimisation
• Real-time financial insights
• Intelligent automation for business processes.

Advantages:

• Real-time data processing
• Industry-specific modules
• Excellent scalability.

Disadvantages:

• High implementation and maintenance costs
• Complexity in customisation

Acumatica

The ERP solution brings AI-driven business intelligence, workflows, and predictive analytics to small and medium businesses, among other things, to allow them to make decisions much more effectively.

Key Features:

• AI-driven business intelligence
• Automated workflows
• Predictive analytics tailored for SMEs

Advantages:

• Affordable for small and mid-sized businesses
• Strong mobile-friendly cloud-based platform

Disadvantages:

• Limited AI features compared to larger ERP providers
• Smaller user community

Workday

Workday's AI tunes the HR processes, employee analytics, and predictive modelling. It gives organisations intelligent automation of talent management and workforce planning.

Workday uses a number of AI capabilities to improve HR processes, employee analytics, and predictive modelling to help organisations realise successful automation of workforce planning and talent management.

Key Features:

• AI-powered HR automation
• Workforce analytics
• Predictive talent management

Advantages:

• Strong focus on HR and finance automation
• User-friendly interface
• Excellent compliance support

Disadvantages:

• Expensive subscription model
• Not ideal for complex manufacturing operations

Infor CloudSuite

Designed for industry solutions, Infor CloudSuite combines AI-fueled data analytics, automated processes, and machine learning for optimising manufacturing, healthcare, and supply chain procedures.

Key Features:

• AI-powered data analytics
• Process automation
• Machine learning for manufacturing and healthcare

Advantages:

• Industry-specific customisation
• Strong AI and ML capabilities

Disadvantages:

• Limited third-party integrations
• High licensing costs

Epicor ERP

Epicor applies AI-powered automation and predictive analytics to enhance manufacturing, demand planning, and finance management and, therefore, is the most suitable for large and mid-market businesses.

Key Features:

• AI-driven automation
• predictive analytics for manufacturing efficiency
• intelligent demand forecasting

Advantages:

• Strong industry focus
• Robust analytics
• AI-driven supply chain management

Disadvantages:

• Requires extensive training
• UI can be outdated

IFS Cloud

IFS utilises AI to implement smart asset management, predictive maintenance, and Enterprise Resource Planning for aerospace, defence, and construction sectors.

Key Features:

• AI-driven asset management
• Predictive maintenance
• Industry-specific AI solutions

Advantages:

• Excellent for industries
• Strong AI-powered automation

Disadvantages:

• Higher costs for small businesses
• Complex customisation process

AI Agents: Remove Manual Intervention while Using ERP

AI agents are the new-age digital personnel inside ERP with intelligent automation and decision-making prowess. They carry out tasks beyond the capability of common automation tools by understanding the context of business tasks that happen between ERP modules.

For example, in Microsoft Dynamics 365 Business Central, AI agents can autonomously perform tasks, respond to events, analyse problems, and effectively respond to error conditions based on user input and contextual information available within the Business Central environment.  

Potential Applications for AI Agents in ERP:

• Automating Sales Order Processing
• Enhancing Customer Support
• Monitoring Financial Transactions
• Managing Inventory Reorders
• Coordinating Maintenance Schedules

Impact of AI-Enables Software in Different Sectors

The application of AI in the implementation of ERP can transform various industries by automating processes for improved efficiency and innovation. Here are ways AI is impacting some major sectors:

Retail

Retail giants such as Walmart are using AI-enabled ERP systems to gain advantages in inventory management, stock replenishment automation, and customer experience enhancement. AI-powered cameras and sensors in retail understand purchasing patterns to tailor stocks for lesser inventory wastage.

Manufacturing

Companies such as Mitsubishi Electric utilise AI-powered ERP solutions to pursue JIT manufacturing, which leads to production efficiency improvement, less downtime, and increased predictive maintenance ahead of time for repair requirements. The AI-powered analytic processes have helped immensely in proper resource utilisation that drives down production costs for manufacturers.

Banking & Finance

AI-enabled ERP offerings are rendering an appreciable role in decision-making regarding financial matters like fraud detection and risk management. For instance, TD Bank employs AI-enabled ERP to automate customer interaction, fine-tune financial planning, and improve regulatory compliance.

Human Resource Management

AI is changing the face of the HR organisation by automation of hiring, payroll processing, and monitoring employee performance. Over 81 per cent of HR leaders have tried AI, and 76 per cent of Chief Human Resource Officers feel that AI is essential to the future of HR functions.

Supply Chain Management

AI makes the supply chain more proactive in demand forecasting, logistics optimisation, and risk mitigation. Companies leverage AI-powered ERP to streamline warehousing, inventory management, and supplier coordination.

Make the Best Out of AI with Dynamics Square

Integrating AI into your ERP system can significantly enhance your business operations, and Dynamics Square offers tailored solutions to help you harness these benefits. We are the #1 Microsoft Solutions Partner in Birmingham with 150+ Microsoft-certified consultants, helping you with the following:

• Enable utilisation of AI in ERP implementation for improved productivity and efficiency.
• Infuse Microsoft Copilot with your existing Dynamics 365 solutions.