Wolf&Grayson EditorialERP is evolving faster than most companies are prepared for. What began as a back-office record-keeper is now emerging as the decision-making core of the enterprise. At the center of this transformation is AI, not as a bolt-on, but as a foundation. Daniel J. Jacobs, a veteran CIO and transformation advisor, has spent two decades guiding organisations through complex IT change. He’s delivered cloud and AI-integrated strategies for high-growth, private equity-backed firms across nine countries. In his view, this ERP-AI convergence isn’t just a technological leap, it’s a cultural and strategic reckoning.
“ERP is no longer just storing information,” Jacobs says. “It’s interpreting it. Prioritising it. And recommending what to do next. That changes everything.” At a recent closed-door panel with ERP vendors, independent advisors, and CIOs, Jacobs joined a conversation that cut past product demos and went straight to the boardroom realities. What emerged was a consensus: AI isn’t the future of ERP. It’s already here, and most leadership teams are still catching up.
AI Is No Longer a Layer, It’s the Core
For years, AI was seen as an enhancement, a reporting tool, a chatbot, a nice-to-have. But that’s changed completely. “AI is now woven into the operating fabric,” Jacobs says. “Dashboards are being replaced by natural language prompts. Executives aren’t waiting for reports, they’re having conversations with their systems.”
Across finance, procurement, and operations, embedded AI now identifies anomalies, flags risk, and explains cash variances in real-time. A CFO can ask a voice assistant, “Why is our margin down in region 3?” and get a contextualised answer within seconds. But with that capability comes responsibility. “If AI is driving insights that affect spend, hiring, or compliance,” Jacobs notes, “it needs to be governed like any high-impact employee. With role-based access, audit trails, and escalation paths.”
Cloud Is No Longer a Differentiator, It’s the Baseline
Modern ERP doesn’t run without the cloud. That’s not hype, it’s reality. At the panel, one vendor described how quarterly ERP updates now apply even to customised modules with no downtime or disruption. Jacobs calls this shift the “zero-friction upgrade era.” It enables continuous learning cycles that AI depends on. “Whether you’re lifting and shifting or rearchitecting, the message is the same: without cloud, AI doesn’t scale. Governance doesn’t hold. Visibility breaks down.” The future isn’t hybrid by design, it’s hybrid by transition. “Cloud isn’t your competitive edge anymore,” Jacobs adds. “It’s the price of admission.”
Embedding AI Without Replacing Humans
One of the most striking takeaways from the panel was a term Jacobs coined: AI adjacency. Instead of aiming for full automation, leading organisations are embedding AI into the workflows people already use without removing human judgment. “These adjacent use cases are high-value and low-friction,” Jacobs explains. Examples include analysing ERP customisations before a migration, generating financial summaries on demand, and triggering exceptions in workflow approvals. They don’t require cultural overhaul. And they build trust gradually, something Jacobs says is non-negotiable. “The fastest way to derail an AI rollout is to make people feel displaced. The smartest leaders use AI to enhance human confidence, not replace it.” MIT Sloan backs this approach. In its 2024 study, ERP platforms using adjacent AI capabilities saw finance cycle times drop by 22%, but only when paired with strong governance. (MIT Sloan, “How AI Changes the Dynamics of ERP Adoption,” Mar 2024)
Trust Is the Fragile Link That Breaks Everything
“Trust came up in every conversation,” Jacobs recalls. “Even the best systems fail if users don’t believe what they’re seeing.” One case highlighted a global firm that rolled out AI-generated financial recommendations. Within 60 days, nearly half the finance team reverted to Excel. Not because the insights were wrong, but because the logic was opaque. (MIT Sloan, “Trust in AI-Driven Finance,” Oct 2023)
The fix? Explainability. Modern platforms are starting to provide override options, decision pathways, and user-controlled outputs. It’s not about eliminating judgment. It’s about supporting it with context and clarity. “People don’t follow black boxes,” Jacobs says. “They follow systems they can question.”
Legal and Governance Risk Are Growing Quietly
Behind the excitement about AI, there’s a risk most boards haven’t fully accounted for: contractual liability. Several experts at the panel flagged new dangers hiding in vendor contracts. These include indemnity clauses that shift liability for AI errors to customers, vague language around how training data is used, and no clear accountability for AI-generated inaccuracies. Jacobs is direct: “If AI touches your data, decisions, or approvals, it should be treated like a human hire. That means vetting access, defining escalation paths, and demanding clarity in contracts.” In his advisory work, Jacobs encourages firms to include AI-specific clauses in RFPs and service contracts. “It’s not just about buying software. It’s about protecting your organisation.”
What Boards Must Ask Before Moving Forward
The panel concluded with guidance not on technology, but on leadership mindset. Jacobs summarises the five essential questions boards and CIOs must ask. What’s the business intent behind this transformation? Do our providers share our risk appetite and values? Can our teams understand and explain the system’s outputs? Are our core processes stable enough to support automation? Will this ERP strategy still make sense a decade from now? “Too many leaders optimise for the quarter,” Jacobs warns. “But the ERP you choose today will shape how your business thinks, moves, and decides long after this AI cycle passes.”
ERP isn’t just software anymore. It’s becoming a reasoning engine, a system that advises, explains, and acts. That evolution demands more than technical readiness. It demands a new leadership contract. One grounded in governance, cultural fluency, and strategic foresight. “If you’re not ready to lead it,” Jacobs says, “you’re not prepared to run it.”
To explore how prepared your organisation is for ERP-AI convergence, Jacobs offers a free ERP Governance Maturity Assessment for boards and CIOs. For more insights, follow Daniel J. Jacobs on LinkedIn or visit his website.
