If only the sheep knew. Australia’s sheep yards are giving Facebook a run for its money by using camera systems and facial recognition to identify the parents of top wool-producing lambs. Each sheep is individually identified by face cover, neck wrinkle and body wrinkle, then tracked during mating season to record their partners in the paddock.

The project, run by Australian Wool Innovation, collects petabytes of data that are fed into Domo Data Management and Reporting. This AI-driven business intelligence tool can then calculate the value of the flock and improve the output of sheep husbandry.

Artificial intelligence (AI) is part of a wave of new technology that is transforming the crusty world of enterprise resource planning platforms or ERPs.

ERPs run multiple departments within big businesses, from accounting to supply chain to risk management and more, and enable data to flow between them. But traditional ERPs would struggle to provide the analysis and reporting required to identify an individual lamb, determine its parentage and match it to the quality of its wool.

“It’s an impossible mission for a traditional ERP, but for something like an artificial intelligence engine it’s the perfect forum,” says Peter Goes, Managing Director of Combined Management Consultants, an independent ERP advisory service that assisted with the Australian Wool Innovation project.

However, generational improvements, such as AI and the Internet of Things, are now being built into ERPs and forcing companies to review their 30-year-old systems. And as our example tracking amorous sheep shows, enterprise systems with the latest technologies can open up new ways of doing business.

Paying for an ERP

An ERP is often compared to the central nervous system of a business and switching from one ERP to another is a project that every CFO dreads. Along with software costs, such a massive project inevitably impacts operations, productivity and revenue.

Today’s ERPs have the option of different ownership models. You can still buy an ERP licence to run on your own servers, a model often referred to as on-premise. Or you can run the same licence on servers in an outsourced data centre operated by an ERP consultant, called private cloud.

The biggest news in the past decade has been the rise of cloud-based ERPs, where the software runs on servers operated by the software company itself. This is called public cloud, software as a service (SaaS) or multi-tenanted software.

At first glance, the public cloud ERP is the most attractive. A company no longer needs to worry about the capital expense of buying expensive servers or paying for IT administrators and security experts.

Under the public cloud model, the ERP software company is responsible for upgrades, so all public cloud customers are always on the latest version.

And yet companies are still buying and running ERPs on-premise and in private clouds. Oracle says its sales are equally divided between the three approaches.

One reason for selecting on-premise or private cloud is cost. ERP software companies charge a significant premium for running the software for you.

“The big factor is that people are very concerned about the total cost of ownership,” says Goes. “Our observation is that at about the 2½-year mark, an on-premise implementation and a SaaS implementation are about the same price. From there, the annual recurring fees start to really add up. On a five-year or 10-year cost of ownership, the price of SaaS shows up the difference.”

On-premise and private cloud customers pay an annual maintenance fee that is typically 20% of the initial software purchase price. SaaS customers pay about 40% of the on-premise cost as the annual subscription, says Goes.

Claus Andresen, SAP’s Senior Vice-president and Head of General Business (SME) and Emerging Markets Growth for Asia Pacific & Japan, disagrees that cost is a major driver for selecting the best model of ERP.

“The conversation for us is why do you need an ERP? Is it because you don’t know your cash flow or you don’t have visibility of cost across your supply chain? Do you want to drive automation and use machine learning to automatically reconcile invoices?” he says.

“What do you need today and where do you want to go in the future? That always has to be the roadmap for any discussion. Then you work backwards.”

As for the SaaS in-built automatic upgrades, this is not always so attractive. Smaller companies can find the testing required for the upgrade projects exhausting and don’t want to even consider planning them, says Peter Goes.

“Family-owned SME businesses often think, ‘Wow, that’s cost us a fortune and half my staff are change-weary. On-premise or private cloud installations enable the client to say, ‘Let’s not do this again for five years and we’ll just cop the consequences’.

“Then they go through a major upgrade at a point in time, once they have regrouped their resources.”

Oracle’s John Leonard, General Manager of SaaS, ERP & HCM, agrees that upgrades are a sticking point for on-premise and private cloud customers. In fact, upgrades represent the biggest cost to most businesses.

“The big dollars are not in the actual cost of the software or even the hardware or infrastructure. It is in the risk and the disruption and the cost of those upgrades.”

“The big dollars are not in the actual cost of the software or even the hardware or infrastructure. It is in the risk and the disruption and the cost of those upgrades.”

The SaaS benefit

But customers that never upgrade expose themselves to all sorts of issues around risk, says Leonard. For example, companies running their own ERP take responsibility for patching the software and defending it against cyber-attacks. This liability is easy to underestimate both in terms of risk and cost.

ERP software companies spend millions of dollars on heavily protected data centres, 24-hour cyber response teams and the latest security infrastructure to protect their public cloud customers.

In addition, any company that decides to forgo improvements to its software cuts itself off from millions of dollars in R&D spent by technology companies.

“You are paying a maintenance fee for those new features. You want those future innovations. That's one of the reasons why you've selected that vendor,” says Leonard.

Upgrades are also less of an issue for public cloud users, as they may occur as small weekly events rather than a once-a-year overhaul. Leonard says it is more accurate to say that public cloud receives updates rather than upgrades. He compares it to owning an iPhone that, overnight, starts showing real-time traffic updates on its mapping app.

“That wasn’t a feature I turned on. That’s actually machine learning that came as part of the updates. It effectively means my iPhone is an appreciating asset,” he says.

“The same construct works in SaaS. We do updates, not upgrades. That isn’t the same as what I would call a disruptive, on-premise upgrade. Those are really, really big differences.”

Another point of resistance for public cloud is the ability to build custom features. Software companies talk about the public cloud being configurable rather than customisable.

But when you are relying on one big piece of software to run most of your operations, it becomes vitally important for the software to tightly match your processes. If the ERP doesn't have a configuration option that you require, it can be a showstopper.

Here again, there are different approaches to achieving the same goal, according to Oracle.

A company can create an extension for Oracle’s public cloud ERP using Oracle’s software development platform, also known as PaaS (platform as a service).

So using SaaS and PaaS together gives you the same or greater customisation than is possible with on-premise ERP?

“Absolutely,” says Oracle’s Leonard.

Don’t change the suite – add a component

Changing to a new ERP is a massive project. Instead, why not keep your old ERP and add separate tools for your business processes? (A little like adding new cushions to your lounge suite to support your back, rather than buying a whole new lounge.)

Technology constantly swings between recommending a fully featured suite and building your own stack of components. The argument for the suite is less complexity and fewer headaches; components, however, will give you newer features faster.

Salesforce, which started out selling its highly successful cloud-based customer relationship management (CRM) software, has now replaced the sales function in many ERPs. In fact, the term ERP today refers more to finance and inventory rather than customer relationship management or human capital management (an industry term for human resources).

The ERP industry is indeed experiencing a swing from suites to best of breed in separate components, says Gary Katzeff, Sage’s General Manager, ERP, Australia & New Zealand.

“There are absolutely pros and cons (to both approaches). But if a vendor can provide, say, 80% of your requirements out of the box in one solution, then you generally will get a better experience as a customer than if you have to pull together multiple solutions.”

ERP software companies are creating more modules designed for specific industries to hit that 80% threshold. For example, Sage’s cloud-based accounting and finance management software Intacct has enjoyed success in the not-for-profit sector by focusing on multidimensional reporting and faster consolidations.

Intacct has a grants module that tracks government grants and funds management. It also integrates with Salesforce to handle directed donations from individual donors.

If the weakness of suites is slower and lumpy innovation across modules, in components the problems are typically in the complexity and cost of integration. Here again, there is good news. Integrations are getting easier thanks to standardised application programming interfaces (APIs) on public cloud applications.

Platforms such as Boomi and Jitterbit reduce much of the complexity involved in maintaining connections between enterprise systems. Whenever a major component, such as a CRM, receives an update and requires a change to the API, Boomi updates its API connector once on its platform for all users.

“At the moment that type of thinking is still pretty young. A lot of people don't know that option exists and they are still thinking they have to write code to integrate applications,” says Peter Goes.

The biggest challenge for a component approach is deciding which application will store the master records for your transactions and products. If you add another system that also wants to store master data, it can lead to horrible integrations and ongoing reconciliations, Goes adds.

“You can do best of breed, but it requires a really good solution architect to make sure you're not walking into any of the hype.”

“You can do best of breed [for components] but it requires a really good solution architect to make sure you’re not walking into any of the hype.”

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What you need to know about some of the most popular ERP systems

The table below outlines some of the key facts about eight of the most popular ERP systems. The options listed here are by no means exhaustive. A product’s inclusion should not be regarded as an endorsement by Chartered Accountants Australia and New Zealand. Information included in this guide has come from the relevant vendors or associated websites.

Product/Company	Costs	Available support	Does system include modules for: Internet of Things (IoT), facial recognition, robotic process automation (RPA), machine learning, other applied AI?	Does system work with enterprise integration platforms such as Jitterbit and Boomi?	Cleansing and migrating of historical data during set-up
Wiise	Subscription packages (Lite, Business, Premium) from A$49 per user per month for Lite. A team member licence for A$19 per user per month lets extra users view anything in the package and perform limited functions. Integrated Single Touch Payroll costs from A$4 per paid employee per month. You can add or subtract users monthly. (Prices quoted exclude GST.)	Wiise partners offer direct customer support. There is also an online help library with how-tos for Wiise specific features and Microsoft-based functionality across finance and operations.	Wiise natively integrates with Microsoft Azure AI using Cortana Intelligence to apply machine learning to financial scenarios such as cash-flow management and operations such as inventory replenishment.	Wiise uses the Microsoft 365 and Dynamics 365 platform, but also has open APIs so can be easily integrated into other platforms.	Wiise Partners offer data migration as well as data purification as services. Wiise currently offers a migration service for customers on Microsoft products such as Dynamics GP, NAV and Business Central on-premise.
SYSPRO ERP	Price is based on module selection and number of users.	Mon-Fri office hours support; outside business hours support available on request. Follow-the-sun support available on request.	Yes, for all of the above.	Yes.	Yes.
Oracle NetSuite	Subscription price tailored to customer needs/timelines.	SuiteSupport Basic (includes 24/7 support for critical issues); SuiteAnswers online knowledge portal (includes help topics and training videos); and NetSuite user community (11,000 registered members) are available for all NetSuite users. SuiteSupport Premium has additional benefits.	NetSuite offers built-in process automation and workflows. Machine learning, analytics and AI is used within the NetSuite platform. IoT, biometric authentication and others are delivered via the extensive NetSuite partner solution community and/or integration with best-of-breed solutions.	NetSuite works well with all industry-standard middleware and integration platforms.	NetSuite Professional Services will assist customers with one year of historical data import as standard, using SuiteSuccess. The initial task of data cleansing is the responsibility of the customer.
Oracle Cloud Applications	Subscription price tailored to customer needs/timelines.	24/7 online support at myoraclesupport.com, Oracle Managed Cloud Service for SaaS and consulting offerings.	IoT, machine learning, AI and process automation are all available within our suite. Process automation comes from applied AI and machine learning. Robotic process automation (RPA) is not provided as that is external to the application, but Oracle has customers using RPA to complete repetitive tasks within the application. There is no facial recognition embedded within the application.	Oracle has open standard APIs available within the application so customers can decide on the integration framework they use (including the use of Oracle’s own – Oracle Integration Cloud)	This is usually done by the service integrator with the tools available out of the box. It is recommended all clients look at cleansing their data prior to the migration process. Oracle does not set any limits on how much data they can load.
MYOB Advanced	The per licence cost per month is A$104 plus GST. Additional monthly charges apply for additional storage and API usage. Implementation costs depend on complexity and are agreed with the MYOB Partner. (Prices quoted exclude GST.)	All product support is provided by certified MYOB Advanced partners.	The first delivery of AI/machine learning technology for MYOB Advanced’s core software is scheduled for late 2020. This will provide AI-assisted expense receipt capture. Further AI/machine learning capabilities will be delivered from 2021, including intelligent searching and error detection and warning systems.	MYOB Advanced includes basic enterprise integration capabilities as a standard feature. MYOB Advanced’s ISV eco-system provides many solutions to further enhance integrations from vendors including Flow, EDIsTech and B2B Gateway.	Yes. Subject to customer needs the MYOB Advanced partner will provide the services necessary to import historical data during set-up.
Epicor Software	Priced annually upfront for either Software as a Service (SaaS) deployment or on-premise deployment. (Annual maintenance fee for on-premise deployment.)	Support is included in annual software fees and consulting is available via Epicor and partner professional services.	IoT, AI, robotic process automation, machine learning and various forms of automation are supported.	Epicor works with most enterprise integration platforms including Jitterbit and Boomi, as it is an Open API platform. Jitterbit is a certified integration platform with Epicor.	Data cleansing and migration of historical data (either at summary or detail levels) can be performed by Epicor durig the implementation.
Sage Intacct/ Sage Australia	From A$11 per user per month (charged annually in advance), but price depends on the number of users and functional capabilities. Sage Intacct is highly configurable, so contact Sage Australia to evaluate your organisation’s requirements. (Prices quoted include GST.)	Sage Intacct is supported by a network of expert resellers who offer phone support, online support ticketing options and community support forums.	Sage Intacct has embedded AI capabilities that are being continuously developed (via machine learning) to streamline operations, decrease errors and reduce overheads.	Yes, Sage Intacct offers a set of Open APIs for a range of middleware providers including Workato and Jitterbit, which have built out standard recipes to common applications including SFDC and Stripe.	This is an optional professional service as part of the implementation process.
SAP Business One	From A$53 per month on a subscription or from A$1599 for a perpetual licence. Implementation services are priced depending on size and complexity. (Prices quoted exclude GST.)	Post go-live support tailored to cater for customer requirements. Online support portal at support.sap.com/en/my-support.html	Modular solutions built by SAP Business One partners can connect these technologies to the SAP Business One ERP core.	Yes. SAP Business One can connect through APIs compliant with both state-of-art standards – SOAP (Simple Object Access Protocol) and OData (Open Data Protocol).	Options available and depends on customer preference, compliance requirements, budget, etc.

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