AI Is Changing ERP. Here's What That Means for Your Next Procurement
If your municipality is planning an ERP replacement, the system you buy will look very different from the one you're replacing. Vendors have moved fast over the last two years, and AI is now being built directly into finance, HR, payroll and procurement modules. For municipalities heading to market in the next year or two, that changes what you ask for and how you prepare.
AI is moving inside the ERP
The shift is well underway. Gartner predicts that 62% of cloud ERP spending will go to AI enabled solutions by 2027, up from 14% in 2024, and expects organizations using cloud ERP with built in AI assistants to close their books 30% faster by 2028. For a municipality, the gains show up in everyday work: reconciliations, collections, spotting unusual transactions, forecasting, and asking the system a question in plain language instead of waiting for a custom report.
From assistants to agents
The next step is AI agents, tools that complete a defined task on your behalf. Gartner expects 40% of enterprise applications to include task specific AI agents by the end of 2026, up from less than 5% in 2025. In a municipal setting, picture an agent that matches invoices to purchase orders, flags a vendor payment that looks out of pattern, or drafts a variance explanation for a budget report. Staff still review and approve, and the routine legwork moves to the system.
Quick wins come first
The research is consistent on where AI in ERP pays off first. The fastest returns, typically within 9 to 10 months, come from pulling data out of documents, automating payables and receivables, and producing routine reports. Forecasting and deeper analysis take longer to mature. That's a useful sequence for municipalities: start with the high volume, rules based work your staff know well, build confidence, then expand.
Your data is the foundation
Every one of these capabilities runs on clean, well governed data. Gartner points to data quality, integration complexity and skills gaps as the main reasons most organizations are still early in using AI in ERP. ERP Today described public sector ERP and AI as "running on two clocks," with AI ambitions moving quickly while system modernization moves at the pace of procurement and audit.
This is where procurement preparation pays off. Cleaning up your chart of accounts, retiring old customizations and standardizing processes before you migrate gives the new platform a clean base, so the AI features you're paying for are usable from day one.
People make it work
The biggest barrier right now is skills. Research this year found low AI literacy is the most significant barrier to getting value from AI, and building AI and digital talent ranked as the top challenge for the months ahead. The recommended response is practical: hands on learning, sandbox experimentation, and getting more value from the tools you already own. It's the same advice we give on AI generally. Start experimenting now, while the cost of entry is curiosity and a bit of time.
What this means for your procurement
Write requirements around outcomes, and ask vendors to demonstrate AI features on scenarios drawn from your own processes.
Ask how AI features are priced, governed and audited, and where your data is stored and processed.
Build time for data cleanup and process redesign into the plan ahead of go live.
Treat staff learning as part of the project, with Finance, IT and operations sharing ownership.
These are the same themes Ben will explore in BELIEVE on September 29.
If you're planning an ERP replacement and want an independent, vendor neutral view on where to start, we'd be glad to talk. Book a call
This article was prepared with the assistance of AI.