ERP or AI-led Approach?

Why SMEs Should Proceed with Caution Before Choosing Their Next Big Tech Move

For small and mid-sized enterprises (SMEs) and family businesses, technology decisions can make or break growth plans. As AI gains traction, many leaders wonder: Should we skip ERP and go straight to AI-led solution? This article explores why following - not leading - might be the smarter move, and why data integrity remains the cornerstone of success.

This article requires a couple of notes for context:

• This article is focused on businesses that are still emerging from small-to-medium and there is time to plan for an upgrade of their enterprise management and reporting systems.   
• This thought process could apply to any enterprise system or indeed, core business process, where you are considering leveraging AI to transform your ways of working. 
• We are finding that often where businesses are thinking AI as the answer but often automation is what is needed and this technology has been available for years and you may already have access to it.

Success Factors

• Clear Strategic Goals: Know what you want to achieve; efficiency, scalability, or better insights. 
• Data Discipline: Regardless of the solution, clean, consistent, and well-managed data is non-negotiable. 
• Change Management: Technology is only as effective as the people and processes behind it.

Why Caution Matters

ERP systems have long been the backbone for integrating finance, HR, inventory, and operations. AI-driven alternatives promise agility and advanced analytics, but they’re still evolving. Jumping too soon can lead to fragmented systems, compliance risks, and costly rework. Gartner predicts ERP will shift toward modular, AI-enabled platforms - not disappear - by 2030. For SMEs, this means the safest path is deliberate, not disruptive. 

We should note that this article is focused on businesses that are still emerging from small to medium and have the time to plan for a timely upgrade of their enterprise management and reporting systems.   

Three Practical Tips

1. Start with Your Data

Before investing in ERP or AI, audit your data quality. Poor data equals poor decisions—no matter the tech.

• Conduct a Data Health Check: Review accuracy, completeness, and consistency across all systems. Identify duplicates, outdated records, and gaps that could undermine automation or analytics. 
• Establish Governance Standards: Define clear ownership for data entry, validation, and updates. Create policies for naming conventions, version control, and access rights to maintain integrity. 
• Invest in Cleansing Tools: Use data-cleaning software or services to standardise formats and remove errors before integrating new technology. This upfront effort prevents costly fixes later.

2. Map Your Processes

Document workflows and pain points. This will reveal whether you need ERP’s structure or AI’s flexibility. 

• Visualise Current Workflows: Create process maps for finance, HR, inventory, and customer management. Highlight bottlenecks and manual steps that slow operations. 
• Identify Integration Points: Determine where systems need to talk to each other. If processes are highly interdependent, ERP may offer better cohesion; if modularity works, AI-driven tools could fit. 
• Prioritise Critical Functions: Rank processes by impact on revenue, compliance, and customer experience. This helps decide which areas need robust ERP controls versus agile AI solutions.

3. Pilot Before You Leap

Test AI tools in non-critical areas (e.g., reporting or forecasting) before replacing core systems.

• Start Small and Safe: Choose a low-risk function—like automating expense reports or generating sales forecasts—to trial AI capabilities without disrupting operations. 
• Measure Outcomes: Track KPIs such as time saved, error reduction, and user adoption during the pilot. Use these insights to refine your approach before scaling. 
• Plan for Integration: Even in a pilot, ensure the AI tool can connect with existing systems. This avoids creating data silos and prepares you for a phased rollout.

Starter Questions to Guide Your Decision: 

1. What business problems are we solving - efficiency, insight, or compliance? 
2. How mature is our data governance? Can we trust our data today? 
3. Do we have the appetite for integration complexity and emerging tech risks? 
4. Would a phased approach (ERP now, AI later) better align with our growth plans?

Here is a Decisions Tree: 

Bottom Line

AI isn’t replacing ERP - it’s reshaping it. For SMEs, the smartest move is to follow the trend, not chase it. Whether you choose ERP or AI-first, make data integrity your north star. Technology without trustworthy data is just expensive noise. 

Ready to make the right tech move?

Don’t let hype drive your decisions, let strategy and data lead the way. Start by assessing your data health and mapping your processes to uncover what your business truly needs.

Download our Digital & AI Readiness Assessment today and take the first step toward a smarter, phased transformation. Or book a consultation with our experts to explore whether ERP, AI, or a hybrid approach is best for your growth plans.