Your back office may not be the face or the heart of your business, but it’s definitely the brain. Without these critical, administrative functions being performed constantly in the background, your production and revenue would quickly grind to a halt. And this is why effective enterprise resource planning (ERP) systems are crucial in keeping your organization thriving.
The importance of ERP software is likely why Technology Evaluation Centers (TEC) reported back in 2002 that among the businesses it had reviewed, nearly 50% intended to or had already begun to either acquire new or upgrade existing back office systems. It’s also likely why Mordor Intelligence estimated that the North American ERP market size will grow to $24.41 billion in 2025 and reach $39.35 billion in 2030.
And artificial intelligence (AI) is the future of ERP. Several of the major platforms — SAP, Oracle, Microsoft — have already invested heavily in this technology, incorporating AI-powered features into their product sets. And smaller, more focused solutions have also followed suit. In this article, we’ll explore the intersection between these two acronyms in more detail, including what that looks like in practice, the challenges it can create, and the benefits it may offer.
What is AI in enterprise resource planning (ERP)?
In more detail, an ERP solution is a centralized, holistic platform of specialized management applications used to control common business processes, such as financial accounting, human resources, supply chain management, manufacturing, order processing, and customer relationship management.
Given the nature of these tasks — being both data-intensive and consisting of multiple, repetitive operations — the use of AI to accelerate and improve functions has become rather commonplace. Typically, this will manifest as either automated ERP workflows, predictive analytics, or the creation of virtual agents. However, there are plenty of other operations that AI can and does support.
Types of AI technologies in ERP
The term “artificial intelligence” generally applies to any systems or technologies that can accomplish tasks that previously required human mental labor or reasoning to complete. Some of the more common capabilities you’ll find active in ERP systems include:
- Computer vision: Algorithms that can review, understand, and act on the contents of a digital image without direct human input
- Generative AI: An AI model able to create new content — text, image, audio — by modeling patterns from existing data
- Machine learning: Arguably the key technology of AI, it allows the platform to learn from available information and incrementally improve its performance on set tasks without additional programming
- Natural language processing (NLP): Specialized algorithms that can understand and interpret normal human language, making it easier to give instructions, modify operations, or ask questions of the system without extensive training or programming skills
- Predictive analytics: Solutions that detect trends in historical data and map those patterns onto highly accurate forecast models
- Robotic process automation (RPA): Software systems that take over the mundane, repetitive tasks — such as data extraction, document validation, or report creation — in a given workflow, often completing them in seconds
- Virtual assistants: Conversational chatbots capable of poring through vast catalogs of data to answer common questions or assist users in real time with routine tasks or procedural issues
How AI is enhancing the A/R function within ERP systems
How these technologies manifest will vary depending on the ERP discipline in question. For instance, in a supply chain management context, computer vision might be used to conduct inventory counts by analyzing photographs of warehouse floors. While for asset management, this technology can help identify equipment damage or other maintenance issues in remote locations via drone footage. These capabilities can be delivered within the system natively or via third-party tools thanks to ERP integration.
Of course, we here at Invoiced (a Flywire company) are focused on company financials, particularly accounts receivable (A/R). So, as a use case to help demonstrate the impact that AI can have on your back office, we’ll take a closer look at its influence on billing and collections efforts, specifically. This may manifest as:
- Workflow automation that creates, tracks, and follows up on invoices without direct human intervention
- Image recognition that extracts the relevant financial details from scanned or photographed order forms
- Generative AI that composes personalized dunning messages
- Predictive analytics that can accurately forecast cash flows or determine the credit risk and the probability of repayment of potential customers
- Algorithms that review and rationalize incoming transactions, splitting them across accounts, invoices, and balances as needed, even for short payments
- Pattern detection that monitors operations in real time to identify billing anomalies and other potential fraud
- Virtual assistants that can answer common account questions and assist with transaction issues
It should come as no surprise, then, that we’ve designed our Accounts Receivable Automation software to operate as one of these integrated third-party tools. Alongside our open application programming interface (API) access, we also provide broad integration capabilities that let you benefit from smarter A/R inside your existing ERP investment — no need for a significant system change.
Benefits of AI in ERP
Introducing artificial intelligence into your back office will transform your enterprise resource planning from a static system into one that is actively learning, anticipating, and adapting over time. And these constant changes will help bring more value to your day-to-day operations, unlocking new efficiencies, discovering new ways of working, and creating new opportunities to boost your cash flows.
1. Get more work done while tying up fewer resources
AI can dramatically accelerate your process workflows by automating and taking over repetitive or time-consuming tasks, often completing them in moments. And with the technology now handling these efforts, you can free up your staff to focus on more strategic operations like planning, problem resolution, or customer management.
2. Simplify your planning and budgeting efforts by recognizing historic patterns
There are trends hidden in your data that even the most savvy of employees will never find. But the pattern detection offered by artificial intelligence can and will. Even better, by leveraging predictive algorithms, AI-powered ERP systems can typically build highly accurate behavioral forecasts that you can apply to your customer base, your revenue streams, and your supply chains, making it far easier to prepare for the future.
3. Equip your staff to make smarter, data-driven decisions in the moment
Considering every factor and weighing every bit of information in a critical decision can sometimes be an inhuman task to accomplish. Fortunately, AI decision engines can evaluate not only your existing records but also real-time data streams to help your staff make the right choice in compliance with established policies and guidelines.
4. Deliver a personalized customer experience no matter the size or frequency of your sales
By understanding and analyzing the context and tone of incoming messages, generative AI and NLP make it possible for your ERP platform to deliver more relevant, human-like interactions to both current and potential customers. These communications consider the unique needs, expectations, and situations of individual buyers, helping to create a more engaging experience and deliver higher-quality service.
5. Identify and react to problems before they become worse
By monitoring data in real time across various functions, AI can readily flag anomalies or process deviations for immediate review by your staff. And this early detection empowers you to investigate and resolve these potential problems — such as fraud, compliance issues, or process failures—before they can snowball and cause greater damage.
Challenges of AI in ERP
While there are plenty of advantages to infusing ERP with AI, there are also potential drawbacks that you’ll need to consider and offset if you pursue this technology.
1. Your decision-making will still be limited by your data
Any detected pattern or predictive forecast that AI can generate will only be as good as the information you have at hand. So if you have outdated systems in place that gather limited process data. If you store records in isolated silos or are plagued by frequent input errors and data corruption, investing in artificial intelligence may prove a financial waste.
2. Complex technology often requires complex support
Whether you’re gaining AI capabilities directly from your ERP platform or third-party tools, your IT staff will likely need additional training on how to manage and support these sophisticated applications and systems. You’ll also need to create a more tightly integrated architecture, which can raise operating costs and require investment in new software.
3. Making your data more accessible makes life easier for your staff, but also for criminals
While there are clear benefits to ERP integration, providing convenient, centralized availability to your records and other systems raises concerns around data privacy, regulatory compliance, and overall security. To offset these risks, you’ll likely need to dedicate additional resources to your anti-fraud and policy enforcement efforts.
Is your ERP system ready for AI?
Before investing in AI for ERP, you should thoroughly review not only your existing back office systems but also your data policies. After all, your readiness for AI depends much less on your existing platform and much more on the integrity of your underlying information and records.
Do you consistently collect clean, accurate, and structured data from your ERP operations? Is this information readily available in centralized data pools? Can it be accessed in real time? If you can’t answer yes to these questions, you should invest in better data management and governance systems first.
However, if you’ve modernized your data ecosystem, you’re likely ready to move forward with ERP integration and artificial intelligence. And while many current platforms offer embedded AI features, they may not address your specific business needs. Fortunately, third-party applications — like our software — exist to fill in those gaps.
Invoiced: Intelligent A/R automation with ERP integration
With our Accounts Receivable Automation solution, you can accelerate your invoicing, collections, and financial reporting efforts while freeing up staff to focus on other key tasks. And our software’s mapping function lets you proactively identify data flows and process dependencies across your accounting and broader ERP systems.
We also deliver broad integration support with our ERP Connect toolset, which lets you sync your invoices, customer data, contact information, credit notes, payments, estimates, and more across all your back office systems. At the same time, our CashMatch AI and Remittance Advice AI functions streamline payments processing, ensuring that incoming funds are properly distributed to the appropriate invoices, accounts, and balances, regardless of complexity.
So if you’d like to see a concrete example of how AI can benefit your ERP efforts, schedule a demo of our software.
AI in ERP FAQs
1. What is AI in ERP systems?
Artificial intelligence reflects specialized software and other tools that can complete tasks that traditionally have required human reasoning and decision-making to accomplish. In an ERP context, these AI-performed tasks relate to the common business management functions (e.g., accounting, production, supply chain, human resources) required to support day-to-day operations.
2. How is AI used in ERP?
While there are many potential use cases, artificial intelligence is typically used within an ERP solution to automate processes, aid with forecasting, identify patterns in historical data, personalize customer communication, and improve decision-making.
3. How does AI improve ERP systems for finance teams?
The automation capabilities made possible by AI allow finance teams to offload repetitive, time-consuming tasks, thereby freeing them up to focus on more strategic efforts. At the same time, these augmented ERP systems provide staff with real-time insights and predictive analytics that can help them simplify decision-making, improve forecasting, and react more quickly to potential fraud, compliance issues, or other problems.
4. What are some real examples of AI in ERP?
- Using generative AI and virtual assistants to manage dunning efforts, providing personalized, relationship-appropriate messages to encourage prompt invoice payment
- Leveraging predictive analytics to create more accurate cash flow forecasts that consider market trends, supply chain shortages, and seasonal patterns in their projections
- Enabling predictive maintenance for equipment by analyzing photographs and sensor data to flag likely failure points
5. Can Invoiced integrate with my ERP system?
Invoiced offers broad integration support for most major ERP and sales platforms. We also provide open application programming interface (API) access, allowing you to surface our capabilities within your existing systems.
6. Does Invoiced use AI inside the ERP system?
Absolutely. Our CashMatch AI algorithm can help ensure that you direct incoming payments to the proper accounts and invoices every time. Meanwhile, our Remittance Advice AI can proactively review, comprehend, and act on any attached remittances.
