2023 marks the end of a 20+ year run of cloud ERP apps as all of these are due for some massive reinvention and re-imagination, due to the all-consuming change capabilities that AI will enable. At the same time, the clock has run out for old-school vendors to get their legacy customers just to move to the cloud. It’s laggards and leaders time in ERP. Here are those stories and more that defined 2023 in Cloud ERP.

Standing out from the old school - how Sage is steering its own course

Those old school vendors have finally decided that on-premises customers are a drag on development, costly to support, have a ton of customizations, and, are a laggardly bunch when it comes to adopting new technologies. Those older customers also make it hard on the vendor to sell them upgrades, new capabilities (e.g., RPA, AI, etc.) and net-new cloud apps. Wall Street has been hammering on these vendors to get more of their customers onto the cloud and sell them more subscriptions, modules and services (Wall Street wants to see subscription revenues not maintenance revenue). When vendor executives can’t explain why their old customers won’t move to the cloud, they look bad before the Wall Street crowd.

Why? Brian wrote about ERP vendor Sage taking a very different approach to its products, migration and AI developments. It’s not forcing upgrades of older products nor is it forcing those users of older products to migrate just to get access to the new capabilities. In contrast, some of Sage’s competitors are going the opposite direction and saving the AI stuff for the cloud solutions – a strategy that triggers time-consuming, risky and expensive forced upgrades to other products.  Sage’s approach may be a winner that other ERP vendors should have considered. 

The principles of customer-centric ERP - how does AI fit in? Acumatica's Ali Jani shares field lessons

ERP must either change, or be sidelined. These days, when I am interviewing cloud ERP customers, my go-to question is: how is your ERP system helping you to serve your customers better? It's not a question ERP customers - or vendors - are historically used to answering, but it's the one we must keep front and center now.

Why? Since I wrote Extracting value from cloud ERP in a customer-first world - what should we be pushing for? two years ago, the biggest shift in the ERP market is obviously the vendor push around AI - generative AI in particular. But it's early days - the true impact of generative AI on cloud ERP is yet to be seen. The overriding shift in ERP isn't AI - it's providing a greater value to stakeholders, both internal and external. This discussion with Acumatica's Ali Jani sketches out some of the key principles of what you might call customer-centric ERP. In particular, pushing towards a continuous feedback loop with customers - focused on industry ERP solutions - jumps out. [Jon]

It's a bad time to buy software - here's why!

The software market is changing and advanced technologies like AI/ML/LLMs are triggering a lot of vendor product roadmap, technology, security and other changes. But is this the time to buy application software? Is it okay to buy a module or two?

Why? With great change comes great uncertainty. As Brian wrote, ERP customers and vendors are not exactly clear what new AI capabilities should cost and how these capabilities will change processes, usage or adoption. In fact, major chunks of old apps may get replaced by AI capabilities. Another diginomica piece questioned whether some new AI apps should cost anything at all.  And, no one knows what products whose code was predominately written by AI tools should cost. We’re in the early days on this rapidly evolving issue and market clarity may take some time.

MACH early adopters beat a path to the composable future of ERP 

Rather than dividing the IT landscape into back-end monoliths and front-end platforms, why not build a single architecture composed of autonomous services? Within this unified landscape, each transactional service forms part of the system of record... Some early adopters are starting to replace conventional ERP systems with more composable alternatives.

Colleague Phil Wainewright crafted one of our most notable pieces on future ERP directions - backed up by early adopter customer examples. He cited three different scenarios: 1. Build your own - one customer (Boohoo Group) built their own composable ERP system. 2. Tie to customer-facing systems - Nudie Jeans "uses a Sitoo point-of-sale system and the Centra headless e-commerce platform as its customer-facing transactional systems." 3. Adapt your current system into services.  I don't think most enterprises will choose to build their own composable ERP system, but it does put ERP vendors on notice: watch out, or your transactional footprint will shrink,  as customers build out composable apps, microservices, and pull in cloud services. What do all these customers have in common? A push towards modernization that does not center around their traditional ERP vendor. Incumbents, consider that a 2023 wake-up call. [Jon]

Checking out Sphera’s full ESG offering  

ESG continues to be a growing software category. But the relative newness of most ESG solutions means there are many firms with niche, small solutions and few with a large suite of ESG capabilities. Sphera stands apart from so many competitors due to long life, numerous acquisitions and a lot of experts on its staff. Here’s a quick look at Sphera.

Why? If you didn’t notice, ESG articles were a strong second to AI-based stories on diginomica. It’s a topic of growing regulatory, consumer, legal, risk and other importance. As Brian wrote , ESG also has a profound role in the product roadmaps of ERP, HR, Finance, Operations, EPM and Risk Management solutions. It is, in fact, an enterprise set of requirements and warrants lots of coverage. This year’s coverage was intense and it showed the newness and incompleteness of many potential solutions whether they come from standalone or ERP vendors. 

IFS to acquire Poka - there is no Industry 4.0 without the connected worker

With generative AI on the horizon, IFS customers are doing two things: connecting their workers, and connecting their machines. You're not going to have effective AI if your shop floor is a data black hole. IFS customer KLN Family Brands is a good example. As KLN Family Brands' Drew Johnson told me, they plan to partner with IFS on AI-based initiatives. But if you don't have sensors on your most important shop floor equipment, how can AI help with predictive maintenance?

Historically, ERP systems weren't really about talent management. They also weren't considered modern data platforms. But in the era of AI, companies need both. They need connected workers, and they need a data platform to support their future AI ambitions - not to mention better analytics. This IFS story, fresh off the back of an IFS Connect event, brought these themes together, and illustrated how the connected worker links up with the connected shop floor. [Jon]

Modern ERP is about serving your stakeholders - Oracle customers make the case for a different kind of ERP, and how AI fits in

I press this question in almost every use case interview: how has this project helped you serve your own customers better? Now there is an obvious follow-on question: AI. To what extent do you think AI will help you on this mission? Do the AI plans/roadmaps of your application vendors stack up with your needs - or will you be looking at other options, e.g. AI specialist firms or internal development? I asked those questions of several Oracle customers.

At CloudWorld 2023, I conducted in-depth use case interviews with several customers who could speak to the benefits of being live on Fusion Cloud - and what a modern ERP transition looks like. But now there is another big question: how will AI fit into this mix? These customers shared reactions to a fresh wave of Oracle gen AI announcements. [Jon]

Exit Ceridian, enter Dayforce (and a pile of generative AI announcements)

It’s been some time since I experienced so much news crammed into just a few hours. That actually bodes well for Dayforce and makes other vendors’ content at recent shows seem weak in contrast. Kudos to Dayforce.

Why? The second half of 2023 was full of ERP vendor admissions of awe, amazement and giddy excitement of what AI, especially Generative AI, could do and how that will help their applications and customers. Most of the discussion focused on the AI potential with exact product roadmaps, release dates, prototypes, etc. rarely visible. 2023 was a year when vendors were clearly scrambling to rewrite their product strategy and development plans. One vendor stood out to Brian, Dayforce (nee Ceridian) due to the sheer number of AI-powered product announcements they made and the specificity of their availability through 2024.

Workday AI/ML Innovation Summit - how Accenture shifted to a skills-based organization with Skills Cloud

Building an enterprise around skills goes beyond HR. It is the future - and some Workday customers are far enough along to share instructive stories. Oh, and this is not far from cutting edge AI anyhow. Behind a skills-based approach to workforce development is a seemingly mundane thing called a skills ontology. But a proper skills ontology is loaded with relevant data. AI is only as potent as the data that powers it.

Why? One of the standout use cases I heard this year brings home that new ERP customer lesson: want to change your organization, or your business model? It starts with a modern approach to data. I'm sure Accenture will bring even more AI capabilities to bear on its Skills Cloud, but the point is: this is where it all starts.

SAP TechEd 2023 news analysis - what did we learn about SAP's AI strategy, pricing, and developer engagement?

As Thomas Saueressig, Member of the Executive Board of SAP SE and leader of SAP Product Engineering noted, SAP believes it can improve upon the enterprise relevance of Large Language Models by utilizing LLMs in conjunction with SAP's own "foundational model," trained on anonymized opt-in data of "thousands" of SAP customers, and infused by real-time customer data via a vector database.

Why? Though I wasn't enthusiastic about all aspects of SAP's generative AI approach unveiled during the fall event season, I thought SAP did the best job of providing specifics on how its "Business AI" would deliver a different result, via a different kind of AI data architecture than the consumer tech/ChatGPT side - a data architecture that prioritizes enterprise, industry, and customer-specific data. These are the kinds of specifics we'll be looking to hear from all cloud ERP vendors in 2024. [Jon]