By David Sweetman, Senior Director, Global Product Marketing SAP S/4HANA

Part 7 of the “The ERP Edge” series

ERP technology may not be new, but the debate on modernizing legacy systems is just beginning to heat up.

The tipping point for some executives is when they realize their existing ERP architecture cannot keep every aspect of their operations working well in unison. Early indicators of problems such as delays in reporting, complicated and long upgrade cycles, inconsistent data quality and integration issues are often too late, as the business is already damaged by the time they are realized.

When assessing whether an ERP is modern enough, the discussion should center around two questions:

  1. Are information silos and inconsistencies causing a lack of trust in data integrity?
  2. Is the business culture willing to address institutional and system challenges that case a fear of change?

Embracing this line of thinking encourages organizations to acquire real-time insights and act with confidence. In her market spotlight, Mickey North Rizza, program vice president of Enterprise Applications and Digital Commerce at IDC, observes that “more intelligence brings greater power to the organization and sets up competitive differentiator for the business.”

Setting the stage for consistent and trusted intelligence

Let’s face it, running an enterprise on data-driven technology alone is not enough to keep up with the competition. Data needs to be converted into insights and connections that fuel a system of automation, split-second fast and informed decision-making, and real-time adaptation to market dynamics.

As business requirements evolve, so must the underlying digital architecture that supports them. Leadership must invest in ERP capabilities to develop a more complete, connected, cognitive, and compliant system. While necessary to improve operational speed, efficiency, and reliability, each of these capabilities alone cannot ensure the company will keep up with evolving demand, ward off risk, and provide a protective barrier against disruption.

Organizations need an architecture that unlocks deep insights from across the operation. This digital landscape not only keeps data sources synchronized and insights accessible, but also accommodates business models in real time. Furthermore, when embedded with intelligent technologies such as machine learning, the ERP system becomes continuously curious. It learns from data and transaction patterns and recommends actions and changes to processes systematically and automatically.

This level of operational strength, in many cases, is found in Intelligent ERP. According to Joshua Greenbaum, principal of Enterprise Applications Consulting, the uniformity of processes and data can result in significant business value. Such outcomes may include lower operating and training costs, better process control, improved risk management, more accurate and comprehensive analytics, faster time to value, and greater user acceptance.

Securing a competitive edge with deepening digital capabilities

In the past, processes were designed and optimized based on taking on defined opportunities or overcoming challenges. For example, bidding out the shipping of products to a less-than-load (LTL) carrier makes sense when shipments have a certain weight, size, delivery date window, and destination. Determining which inventories should be shipped with this approach is best done by analyzing and defining business rules. Plus, a routine should be created to quickly and accurately find products that meet the criteria and hand them over to an LTL carrier bidding process.

But things change, especially technology. By replacing existing legacy systems with Intelligent ERP, employees, customers, and partners can benefit from a network of continuous insight and automated awareness based on real-time data, predefined business rules, and analytics connections. These capabilities pinpoint new patterns, adapt workflows and processes accordingly, and triggers notifications when potential risk emerges.

Take, for example, Karma Automotive. Using Intelligent ERP, the rising automaker of American luxury electric cars created a supply chain that revved up its transformation efforts to secure 100% customer satisfaction. By adding cloud solutions to a digital core of Intelligent ERP, Karma runs fast, efficient, and flexible operations with clear visibility into customer interactions and vehicle performance – from design to manufacturing and delivery. The business also simplified customer and dealer engagement by streamlining transactions, such as vehicle order and warranty claims.

The reason why Karma’s adoption and use of Intelligent ERP worked so well comes down to planning and architecture. The technology includes a comprehensive data set of information and holds it in memory to continuously search for patterns. Systems are then tightly integrated within themselves and with business networks to access device data for deeper insights. In the end, supply chain processes are connected, secure, and analytical enough to drive a modern era of agile and fast operations.

According to Mikael Elley, Vice President and CIO of Karma Automotive, “From order through delivery, we have one system of record, one version of the truth, and one platform to ensure 100% customer satisfaction.”

Winning the digital transformation long game

With Intelligent ERP, all companies have a distinct opportunity to differentiate themselves with best practices, insights, and awareness embedded in the applications employees use every day. That level of intelligence is what should be the basis for any real discussion on the value of modernizing ERP.

Now that’s the kind of talk businesses need to drive meaningful transformation.

Explore today’s business challenges and the best way to move with resilience and intelligence in the IDC market spotlight, “Digital Transformation in Times of Change: What Intelligent Enterprises Need from Their ERP Systems,” sponsored by SAP

This article first appeared on SAP Brandvoice, Forbes.