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Enterprise resource planning (ERP) software, the operational backbone for businesses worldwide, is undergoing a fundamental transformation driven by artificial intelligence (AI) and cloud computing. New research from global technology research firm Information Services Group (ISG) reveals that the integration of AI, generative AI, and agentic systems is moving ERP beyond traditional record-keeping, making systems more intelligent, user-friendly, and extensible to meet modern business demands.
AI is redefining organizational interaction with core ERP software, with nearly all providers expected to incorporate AI by 2028 to reduce errors and speed up processes.
Migration to the cloud is a dominant trend, with ISG forecasting over 80% of ERP systems for non-product companies will be cloud-deployed by 2028, enabling scalability and continuous upgrades.
AI is already boosting productivity through early capabilities like anomaly detection, automated data entry, and intelligent agents that manage tasks like expense reconciliation with minimal human input.
ERP platforms are increasingly segmented by both industry and company size, with vendors embedding specific processes for sectors like healthcare and manufacturing, and tailoring solutions for large enterprises versus midsize organizations.
Reliable integration with other business systems via APIs is critical for unified, data-driven decision-making across departments like HR and supply chain.
ISG's comprehensive Buyers Guides have identified overall market leaders across four key ERP categories, providing enterprises with data for strategic software evaluation.
The evolution of ERP is being powered by two interconnected technological shifts. The foundational move from on-premises software to the cloud, ongoing since the early 2000s, provides the necessary scalability, performance, and agility for modern workloads. This cloud foundation is critical, as it supports the intensive computational demands of advanced AI models and enables the rapid deployment of new intelligent features.
Simultaneously, AI is transitioning from a novel feature to a core component of ERP functionality. According to Robert Kugel, Executive Director of Business Research at ISG Software Research, "AI is redefining how organizations interact with software, including the ERP systems at the core of enterprise operations". This shift is moving systems from passive databases of record to proactive platforms that can automate complex tasks, provide predictive insights, and facilitate natural language interactions.
ISG's research evaluated 20 major software providers across four distinct platform categories to guide enterprise investment. The assessment highlights that one-size-fits-all ERP solutions are becoming a thing of the past.
Vendors are now designing systems with deep, pre-configured capabilities for specific verticals such as healthcare, pharmaceuticals, and logistics, which accelerates implementation and reduces the need for costly customization. Platforms are also segmented by organizational scale, with clear differentiation between solutions built for large global enterprises and those optimized for midsize companies, which balance breadth of function with usability.
The research identified the following Overall Leaders in each category:
General Enterprise Resource Planning: SAP S/4HANA, followed by Oracle and IFS.
Healthcare ERP: Oracle, followed by SAP S/4HANA and Workday.
Manufacturing ERP: SAP S/4HANA, followed by Oracle and IFS.
Midsize Enterprise Resource Planning: IFS, followed by Sage X3 and Microsoft.
Adopting these next-generation ERP systems requires more than a simple technology swap. "ERP modernization requires strategic planning to mitigate risk and support broader transformation and best use of investment, resources and time," said Mark Smith, partner and chief software analyst at ISG Software Research. Success hinges on aligning a provider's AI roadmap and industry-specific strategy with an enterprise's long-term business priorities.
The transition promises significant rewards. By automating repetitive accounting and administrative functions, AI allows staff to focus on higher-value analytical work. Furthermore, the emphasis on robust APIs and integration creates a connected technology ecosystem, improving data transparency and accuracy for unified decision-making across the entire organization.
As AI capabilities mature from basic assistance toward more autonomous, agentic systems, the ERP is poised to become not just a system of record, but an intelligent, adaptive partner in operational excellence and strategic growth.
About ISG
ISG is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.
About ISG Software Research
ISG Software Research provides authoritative coverage and analysis of the business and IT software industry. It distributes research and insights daily through its user community, and provides a portfolio of consulting, advisory, research and education services for enterprises, software and service providers, and investment firms. Its ISG Buyers Guides™ help enterprises evaluate and select software providers through tailored assessments powered by ISG’s proprietary methodology.
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