(This column originally appeared in Forbes)
Here’s a real-life small business AI application with a high ROI: a showroom assistant.
Picture a salesperson in a showroom walking around with a customer. But instead of taking notes, the salesperson has an app running on their phone that’s listening — and transcribing — the entire back-and-forth conversation. At the end of the visit, the application takes all that it’s learned and — acting as a layer on top of the company’s ERP and quoting system — generates a quote. It’s more accurate and significantly less time-consuming for the salesperson. But more importantly it frees up the salesperson to do what they were hired to do: generate more sales.
This is actually happening. This is just one of the AI applications being developed by Canals, an AI software development firm. It’s not replacing a company’s existing ERP system. It’s making these systems better.
AI Software As A Layer
“Many companies are still burdened by highly manual processes, particularly in sales order entry, accounts payable, accounts receivable, and warehouse operations,” said Michael Delgado, CEO of Canals. “Many salespeople spend most of their day re-keying customer information rather than serving customers or solving problems.”
AI isn’t replacing ERP systems. It’s becoming a productivity layer that sits on top of them.
Canals — and a growing number of other software companies — are developing applications that are using AI to automate all the manual process that come with customer emails, supplier information, sales orders, invoices, remittance notices, packing slips and all the other documents that employees are manually entering into their ERP system like Epicor, Infor and SAP. Serving approximately 100 distributors, Delgado says that the company’s aim is not to substitute as an ERP system but to help employees use these systems more efficiently.
That’s because Delgado believes that AI should sit on top of ERP, not replace it.
“We’re an AI layer,” says Delgado. “ERP vendors serve as systems of record, where AI companies like ours can innovate much faster.”
AI Quantifying ROI
For AI to prove its value, there has to be quantifiable ROI. There must be a measurable level of speed and accuracy that’s driving results. But for Delgado, the ROI isn’t labor savings, it’s increased sales. For him, the faster that quotes turnaround, the more business can be won. He references one customer of theirs that saw their win rate on quotes tripling because of their automation. Most AI vendors talk about cost reduction efficiency headcount. Delgado is talking about revenue.
“It’s sales first,” he said. “You get a sales lift due to speed and accuracy.”
AI Addressing Turnover
Another advantage: continuity. Most businesses have to deal with turnover, absences and retirements, particularly in these times of an aging workforce. A good AI based system is always learning and always getting better. Delgado sees his applications as a way to capture and retain peoples’ expertise so that it can continue to benefit the company. Canal’s software makes product suggestions and helps younger or inexperienced workers get up to speed quickly. He doesn’t believe his applications eliminate employees, but rather helps companies get more work done with fewer replacements.
“To our knowledge, no one has ever lost their job because of the automation we’ve provided, but definitely folks have not had to be replaced because of the automation we’ve provided,” he said.
The technology industry is always volatile, and while Canals recently received $35 million in funding, there’s no guarantee that any small tech company will always be around. But Delgado says that shouldn’t worry his customers because, in the end and because their software is a layer if — in the worst case — if his software stops working companies can always revert back to the world they’re already in today: doing manual data entry.
AI And Continuity
Delgado believes that the future belongs to specialized AI companies like his, not generic solutions.
“Success in AI requires deep industry expertise,” he said. “Canals focuses exclusively on distributors and has built specialized knowledge around their workflows and ERP systems.”
Delgado says that AI vendors have an advantage because they can rapidly incorporate new models and capabilities, while ERP vendors must prioritize stability.
“They release a bug patch in six months,” Delgado says. “We release a bug patch in 30 minutes. “Our customers can take advantage of the latest and greatest the minute something comes out so that they’re always getting better and better and faster.”
Over the next few years, I predict a proliferation of firms like Canal’s, offering their AI solutions to businesses both large and small. Smaller companies in particularly will likely lean more into the products they provide to address specific needs. The biggest challenge facing small business owners will be choosing the right software partner. Canals has grown to about 100 employees and will need to continue to make sure their products are of the highest quality. In the end, business owners will make their decisions based on trust and reputation.
“Scaling quality is a big thing and you have to earn it every day,” said Delgado. “In this industry, everybody knows what everybody’s doing and in the end it’s all about trusting the people that are delivering what they say they’re going to deliver.”
Many businesses have spent millions implementing ERP systems. Now a new generation of AI companies is trying to make those systems dramatically more productive. If Delgado is right, the next wave of business software won’t replace ERP systems. It will sit on top of them, turning decades of stored business data into actionable intelligence.
