The Evolution of ERP: How 5th generation ERP previous generations is shaping business success

By Payal Nambiar, Founder and Director, B-Square Solutions

The rise of new-age technologies marks a significant evolution in Enterprise Resource Planning (ERP) software which powers modern businesses extensively. From originating as a basic tool for the automation of core functions like accounting and inventory management to delivering real-time results with technological advancements the ERP systems are now capable of addressing complex business challenges seamlessly. Today, we stand at the threshold of the 5th generation of ERP systems, which are developed to redefine the organisation operations more exclusively.

What is ERP?
ERP software is an integrated software solution that is designed to streamline and manage an organisations’ core business processes, including finance, supply chain, human resources, manufacturing, services, and procurement. An ERP is utilised as a centralised platform for data sharing and decision-making. It enhances operational efficiency, reduces manual errors, and fosters collaboration across departments.

Over the years the features of ERP systems have evolved and forayed into various modules and capabilities such as Customer Relationship Management (CRM), HRM, inventory management, project management, and quality control, among others. These features complement the dynamic demands of modern businesses.

The Journey to 5th generation ERP
However, the journey to the new-age ERP system can be categorised into several stages:

First-Generation ERP (1980s): The initial phase of the ERP system catered to automating basic functions like accounting and inventory management. They were monolithic and required extensive customisation.

Client-Server ERP (1990s): Though the second phase of ERP systems introduced new services like client-server architecture that offered better scalability and data sharing, still, they were still reliant on on-premises infrastructure.

Web-Based ERP (2000s): The third phase of ERP software simplified user interfaces and enhanced accessibility by leveraging the internet to provide real-time data access and collaboration from anywhere.

Cloud ERP (the 2010s): With the rise of parameters to internet usage ERP software was able to offer cost-effective, scalable solutions with cloud-hosting abilities which eventually eliminated the need for on-premises maintenance.

AI-Driven ERP (Present): The latest advancements in technology which came in with integrated artificial intelligence (AI) and machine learning (ML) capabilities offer predictive analytics, automation, and data-driven insights. Each of these stages addressed the technological and operational challenges of its time, paving the way for 5th-generation ERP systems.

What Makes 5th Generation ERP Different?
With the rise in popularity of modern-age technologies with AI-driven solutions and refined capabilities, ERP software has added groundbreaking features that set them apart. Here are some of the defining characteristics that the 5th-generation ERP Software incorporates:

Hyper-Automation
The new-age cloud-based ERP systems go beyond basic automation by implementing hyper-automation. This is a combination of advanced technologies like robotic process automation (RPA), AI, and ML, which enable businesses to automate end-to-end processes, such as data entry, and drive out complex decision-making solutions, which has drastically reduced human intervention.

Real-Time Data Insights and Predictive Analytics
These latest applications have taken an edge over predictive analytics by further providing real– time insights powered by advanced algorithms. Now, this software can process large volumes of data instantaneously, providing actionable insights that allow organisations to respond proactively to changing market conditions.

Enhanced User Experience with Conversational Interfaces
With the advancement of the 5th generation ERP system, the focus has evolved over user– centric design which offers intuitive interfaces that include conversational AI tools like chatbots and voice assistants. These added features offer ease of accessibility to a non-technical user.

Integration with IoT and Edge Computing
The 5th Gen ERP system integrates with IoT and edge computing devices, which allows businesses to monitor and manage real-time operations. They range from tracking inventory levels to optimising manufacturing processes based on sensor data.

Blockchain for Secure Transactions
Security is the key differentiator of the 5th generation ERP software as they integrated blockchain security which is a premium security inclusion. Hence, it ensures secure, transparent, and tamper-proof transactions, which is particularly useful for industries dealing with supply chain complexities and regulatory compliance.

Industry-Specific Customisation
Unlike older versions of ERP systems, the new version requires extensive customisation based on industry-specific requirements. They are tailored in a way to deliver out-of-the-box solutions, reducing implementation time and cost. In a nutshell, 5th-generation ERP empowers businesses with Intelligence through tools that support a data-powered operation across every department and location. It enhances workflows to smart workflows and process automation that reduce or eliminate manual touchpoints and keep tasks on target. It empowers businesses with flexible tools to help them transact the way their customers and business partners want, including eCommerce, subscription options, and customer/vendor portals. It empowers the organisation with capabilities that support growth at a global scale including multi-company, multi-currency, and multi-book plus advanced reporting and analysis functions. In addition, 5th Gen ERP applications support and advance relationships with customers and business partners at a global scale.

Future of ERP Systems
At present, ERP systems are often seen to acknowledge complex data sets within seconds and can refine them without wasting any amount of data. Yet, the next wave of the ERP system could see advanced modules and features that can breakthrough the present automation techniques navigate more businesses to an organisation. These reforms would only be possible if the generative Artificial Intelligence which is flourishing in the markets currently, would come to a stable situation and get accepted globally, so the data is often available and results would be directed to the query as asked. Additionally, global reliance on the security infrastructure could be possible with the newer reforms to blockchain security that could foster trust in an appended cloud infrastructure.

Conclusion
The 5th generation of ERP systems offers a unique perspective to businesses by incorporating new-age technologies that help businesses run more efficient processes, leverage up-to-the-minute insights from transactional and unstructured data, and stay competitive in a fast-moving environment, eventually bringing growth. These advancements combined in a packaged application offer hyper-automation, real-time insights, IoT integration, and sustainability which is a unique differentiator from its previous versions that were weaker in automation and didn’t offer scalability and secured environments. In summary, the defining features of 5th generation ERP are revolutionising how businesses operate. Organisations must embrace these innovations to thrive in an increasingly complex marketplace.