Operations Management Articles

Predictive ERP – the Future of Enterprise Software

by Keean Persaud
Published on 18 June 2010

An interesting perspective on how "traditional" software like ERP, BI will evolve into more intelligent systems leveraging analytics which will be processed in the Cloud.

(Originally published by Dylan Persaud from Eval-Source on June 14th)

Imagine a world where even your home appliances are connected to the internet. Fridges that are wired predict your preferences based on past consumption and recommending similar products or brands that are similar to yours to try or just even to "top up" your current grocery inventory. If you buy filtered milk your fridge may say to pick up the same brand or try a substitute if that brand is not available.

This is the principle that is currently employed by smart retailers such as Amazon, Walmart, Target, Indigo, Barnes and Noble etc. Nearly every online site where something is purchased additional items are recommended at the bottom as suggestions. You may know these as "Customers who purchased this product also purchased this product" and several suggestions are made. The reality of cross channel retailing that suggests additional or suitable products is an intricate set of business procedures, software capabilities and data aggregation and web design. The implications; a competent BI system, database connections, several connected systems - warehouse, transportation management, procurement, website and eCommerce, and demand and forecasting planning systems are involved in this convenience. This functionality ripples down from manufacturing from seeing what is on order alway through the supply chain down to the retail level.

Predictive BI is on its way of just passing into the next phase of maturity for business intelligence software. Business performance Management has evolved to predicting what your next move is based if you feed it the correct information. "Smart systems" that "learn" from past performance can predict the future. This can be compared to artificial intelligence software where it learns from repetition and and past performance.

Now imagine "Smart ERP systems" These systems might predict proactive, preemptive actions based on conditions that you set. An example of this may be if an inventory level falls below a certain level the system automatically reorders which exists today as min/max levels if they are set. what if these systems start to predict business process flows with alerts modeled after an existing workflow. It sets up similar alerts, calculates probability of completion, calculates risk of the operation, compares the alert and sign off hierarchy to existing workflows/processes and even compare stock levels and calculates stock levels to complete, and time to complete the preset tasks. These are starting to become a slow reality in enterprise system software. The technologies of SOA, integration, collaboration and business performance metrics working in unison with some agility throughout the ERP system.

"Predictive ERP" the next wave of software evolution will definitely take it cue from the business intelligence and demand planning software that exists today. The term Predictive ERP refers to system that ascertain, calculate and predict certain repetitive behaviors that mimic existing business processes and conditions. This can stem all way the fro suggesting to apply a software patch all the way to design a workflow with alerts, event management and sign offs by supervisors. This level of intelligence should help organizations gain more ROI in their technology investment, utilize more functionality, gain operational efficiencies and maximize profit margins by process and SKU.

As ERP and all enterprise business software evolves and changes it an exciting time to see what the right software can unleash in your company. Will "Predictive ERP" systems be sold the same way they are now, how will support be handled, will ROI be measured much differently from today's technology investments, how long will this take to get there to this level, how will technology advance to support this new predictive architecture, how will implementation be differ from today - will it be more difficult or easier than today's systems, will this transfer to cloud computing and how fast. These are all questions that organizations and vendors will need to answer and collaborate on getting there to make this a quicker reality.