The ERP space is vastly changing as vendors continuously improve their software solutions and the platforms on which they offer them. There was no shortage of innovation in the world of ERP in 2023 whether it was new tools, improvements to AI, or platform upgrades. In this episode of The ERP Advisor, ERP expert, Shawn Windle, and industry analyst, Rebekah McCabe, highlight the past year of ERP by evaluating major headlines, market trends, and exciting innovations that emerged in 2023.
The ERP market in 2023 was defined by major acquisitions, advancements in data-oriented solutions, the development of artificial intelligence solutions, and much more. ERP vendors put technology first this year, reimagining their technology stacks and platforms to deliver for the future of software. In this year’s report, we break down the ERP trends that emerged in 2023 and make our predictions for the market in 2024.
Acquisitions took center stage in 2023 as companies made significant efforts to grow their product offerings quickly. Larger ERP vendors, such as Microsoft and Oracle, acquired smaller software companies to expand their offerings in the small and mid-sized markets more quickly than developing their own solutions from scratch. This also enabled vendors to leverage the preexisting customer base of these software companies so they could immediately realize value.
After the pandemic, the spark of corporate-wide digitization created tremendous growth for the ERP space in 2020, 2021, and 2022. However, in 2023, interest rates and fear in the market led to an unfortunate shift that made many businesses hesitant to make any major investments in further digital transformation. Software vendors took the slowdown as an opportunity to deeply invest in their technology stacks to create greater value and differentiate themselves in the market. As more vendors become more platform-oriented, businesses will likely reorient their view on the role of technology.
Since 2020, companies have prioritized data, looking for solutions to transform how they utilize their data to make important business decisions. Previously, the focus has been just making the migration to the cloud, but many companies have already decided this is vital to their business strategies moving forward. With the cloud becoming a must, businesses are expanding the scope of their requirements to include data-specific tools that will allow them actionable insights into the data they use every day. Vendors recognized this and put significant focus on developing and acquiring analytics tools. These tools will enable businesses to do more within their preexisting technology stacks in the coming years.
Alongside the data trend, vendors began to dive deeper into providing micro-vertical solutions, as businesses themselves extend into offering adjacent services. This came in the form of vendors acquiring and developing field service tools, specialized project management tools, and other industry-specific functionality. As the market consolidates, vendors will continue to specialize their solutions to place their stakes in particular industries and markets. Part of their differentiation this year also came from their evolving AI strategies, which will continue to take shape in 2024.
The undisputed headline throughout 2023 was AI and its role within ERP. Artificial intelligence has been in ERP since the beginning, but generative AI made its debut in 2023, forcing vendors to evaluate and define their AI strategies. While generative AI within ERP is still in its infancy, vendors are working to embed the technology throughout their platforms to deliver greater value. Almost all vendors have released their own “AI assistants” or new capabilities, but we will see that functionality become more and more advanced.
Artificial intelligence won’t replace the need for human intervention any time soon, but it will immediately improve efficiency. There is a lot of functionality on the horizon in vendors’ upcoming releases and we expect generative AI capabilities to become a regular part of ERP.
Vendors’ social responsibility remained a strong priority in 2023. Social awareness played a big role in the 2023 major headlines. Vendors took hold of emerging Environmental, Social, and Governance (ESG) trends and made sure to develop company strategies geared toward sustainability and responsibility in these categories. Vendors dedicated time and resources toward initiatives in developing countries to develop talent by investing in education programs. Many vendors also developed programs with local universities to contribute to a growing workforce. Environmentally, many vendors committed themselves to diminishing their carbon footprint and developing sustainability practices/goals. By doing their part, vendors are contributing to making the world a better place for the businesses and people they serve.
2024 is going to fall into a holding pattern. With the technological booms in recent years, 2024 is going to be much more stable, with vendors focusing on enhancing and developing existing solutions, not releasing groundbreaking, never-before-seen products. The tools the vendors have will become even more precise and integrated within their platforms, delivering value like never before to customers.
AI is also going to be further developed in 2024, with vendors embedding it into solutions for analyzing and presenting data. Vendors are fine-tuning these tools to make them more precise and capable of pulling data from across modules to eliminate data silos and create a more complete picture. For our 2024 ERP vendor predictions, check out “2024 ERP Trends and Predictions Part 2” here.