Unleashing the power of Generative AI for cloud ERP

A human brain with a memory board inside it. SAP AI Cloud

Technology evolves in cycles. We have recently lived through the SaaS and public cloud cycle, which has accelerated innovation and business outcomes dramatically over the last decade.

We are now entering the next innovation cycle driven by Generative AI, a powerful technology with potential far beyond the already impressive capabilities we see today.

Like the revolution in cloud technology, the closer AI is to business processes, the more transformative it will be. In the context of ERP, generative AI will usher in a wave of innovation that will dramatically change how businesses run.

The Future of Generative AI and ERP

SAP envisions an ERP system of intelligence that will fundamentally change the way companies operate. By making AI the engine that powers ERP, organizations can run their core processes while the system adapts, adjusts and uniquely optimizes for company-specific circumstances.

In this era of AI, processes are continuously learning and autonomously optimizing based on the real-time data in the context of the business. And contextualized insights are just a prompt away.

In order to meet this vision, Business AI needs to be relevant, reliable, and responsible. Systems will need to be:

  • Future-proofed with the most relevant AI experiences delivered in the context of the business solutions and with industry specificity.
  • Based on the unique business data with process context that delivers the most reliable business AI. Your AI is only as good as your data, and there is no room for errors or AI hallucinations when it comes to your most mission critical processes.
  • Responsible AI which has the highest levels of concern for security, privacy, compliance and ethics. Ironically, the more responsibly AI is built and delivered, the freer an organization is to use it.

SAP is delivering on these principles across our cloud ERP and enterprise applications.

So, what is Generative AI?

To keep it simple, generative AI is where computer algorithms are used to generate responses that resemble human-created content, in the form of text, images, graphics, music, computer code and more. The foundational AI models powering these outputs learn from training data that informs and shapes the results.

By analyzing the patterns and structures within the training data, Generative AI has the capacity to create descriptive, easy to understand content, along with analysis and actionable outcomes.

Generative AI in ERP

By harnessing the power of Generative AI in ERP systems, businesses can enhance their operational efficiency, optimize decision-making processes, leverage predictive algorithms and unlock new possibilities for automation and data analysis.

Generative AI will increase business agility, connecting dots across the organization to identify and recommend process efficiencies plus also deliver new insights.

Add to that the ability to ask questions and get an immediate response regarding finance, geographical, environmental or other needs, means game-changing opportunities for interacting with business systems.

Let’s look at a few examples where Generative AI can help:

  • Improved User Experience and Productivity – Generative AI can enable users to interact with ERP systems using natural language commands and queries. Any user can ask a question and get a response that leverages all available documentation and data.

A great example of this is a use case to help companies comply with the EU sustainable finance framework – called the EU taxonomy, this is a legal document which can be difficult to understand, and complicated to find the criteria for each business activity.

This has been in place since January 2023 and affects companies with more than 500 employees operating in the EU.

Large Language Models (LLMs) can be leveraged to understand the taxonomy’s legal texts, find the criteria for the corresponding business activities, and the corresponding threshold values.

Users then only have to check the AI’s suggestions, adjust them if necessary and then accept them. In this way, Generative AI enables companies to more efficiently and effectively meet sustainability reporting requirements white avoiding increased time and costs.

  • Automation of manual tasks – People associate generative AI with chat-based use cases. But there are non-obvious ways in which Generative AI can add value behind the scenes.

One example is in supply chain logistics. A lot of that work is still paper-based with freight verification and documentation literally getting tens of thousands of delivery notes that they receive daily, in different formats off the loading dock.

This involves manual review of paper documents and keying and re-keying in information about shipments. Now, we’re applying generative AI to simplify and digitize this process. AI can scan the document, apply generative AI to understand what it is, and input the information, taking a process that once took 30 minutes down to about five.

This task occurs dozens of times per day at multiple plants, meaning forecasted cost savings are in the millions of dollars.

  • Business Process Optimization – ERP systems handle a wide range of mission-critical business processes, from procurement and production to sales and customer service. Generative AI can analyze vast amounts of data that business systems generate, and identify patterns that can optimize these processes to generate ready-to-use process models, insights and KPI recommendations. This will enable businesses to uncover process behaviors and profits from best practices and AI-powered recommendations to gain faster insights, and to transform and continuously innovate. Your AI is only as good as your data – SAP systems hold the most important business data in context of the business process. This data context is essential to properly training AI.
  • Analytics and Decision Making – Generative AI is a game changer when it comes to interacting with business systems. By accessing data through natural language, everybody – from executives, to analysts, to end users – can bring analysis, collaboration, communications and decision making to a new level. This natural language approach lowers the barrier to engaging and getting information from an ERP or any other system in a more human and conversational way.

Getting Started with Generative AI in your Cloud ERP

Responsible, relevant and reliable AI capabilities delivered with SAP cloud solutions can alleviate the key business challenges companies face by enhancing employee productivity, process efficiency and business foresight.

The pace of innovation that cloud brings to all sizes of businesses and industries continues to accelerate. Only with Cloud can you fully leverage the power of AI and keep up with the latest innovations and regulations with the speed, agility and confidence you need.

Based on this, Generative AI capabilities are not available to on-prem ERP customers or those hosting their on-prem ERP on a hyperscaler. For SAP ERP customers, Generative AI innovation will only be available with RISE with SAP and GROW with SAP.

Click here to learn more about how SAP is bringing more of the power of Generative AI capabilities to the cloud but working on behalf of customers to make sure it’s also responsible, relevant and reliable. And listen to a new podcast where I further elaborate on Generative AI.

Julia White is Chief Marketing and Solutions Officer and member of the Executive Board at SAP SE.