Enterprise software executives are celebrating freedom from a costly trap. For decades, ERP vendors forced clients into expensive upgrade cycles every three to five years. Now, agentic AI is breaking this model entirely.
Joe Locandro, Executive Vice President and Global CIO at Rimini Street, has witnessed this transformation firsthand. With 25 years navigating enterprise software across airlines, utilities, and manufacturing, Locandro calls the shift revolutionary. “You can start flowing new processes and innovations without changing the core,” he explains.
The numbers tell the story. Companies previously spent millions on upgrades they didn’t need, rebuilding functionality they already had. The alternative was unthinkable: being left behind on unsupported legacy systems. This vendor-controlled cycle disguised revenue-driven upgrades as necessary innovation.
Why Traditional Upgrades Are Dead
Until recently, enterprises had no choice. Vendors made innovation synonymous with upgrades, creating artificial urgency through discontinued support threats. “Every three to five years you had to do this massive upgrade,” Locandro reveals. “That’s been a well-trodden path for CIOs for the last 10-15 years.”
Agentic AI demolished this model. The combination of generative AI and autonomous agents creates capabilities built on top of existing ERP systems. No rip-and-replace migrations. No vendor-dictated timelines. No years-long implementations.
Suddenly, that “legacy” ERP system becomes a perfectly functional foundation for transformative capabilities. Companies can innovate on their own terms, using existing customizations as advantages rather than liabilities.
Strategic Capital Transformation
The paradigm shift centers on opportunity cost of capital. “Do I spend more money upgrading a system over three to five years? Or do I spend it on plants, equipment, and factories to upgrade output?” Locandro asks.
Third-party support providers now offer 5-10 year maintenance windows, giving companies time to strategically plan their next moves. This approach fundamentally alters enterprise software economics.
Companies already trapped in vendor-mandated migrations face particularly stark choices. SAP’s clean core requirements for cloud deployment exemplify the challenge. “Companies that decided to migrate two years ago, before the ChatGPT-led AI boom, find it very, very difficult to unravel the customizations,” Locandro argues.
Market Impact: From Records to Actions
Agentic AI transforms ERPs from simple systems of record into systems of action. Zhipu AI’s ComputerRL framework demonstrates this evolution, achieving 48.1% success rates on complex automation tasks – surpassing OpenAI’s models at 42.9%.
The technology operates across platforms, extracting value from data wherever it lives. Instead of vendor-specific AI working only within silos, platform-agnostic AI orchestrates across any system, creating capabilities no single vendor can match.
Gartner predicts 15% of day-to-day work decisions will be made autonomously through agentic AI by 2028. This projection carries particular significance for procurement and supply chain operations, where complex trade-offs between cost, quality, and delivery timelines happen continuously.
Event-Driven Enterprise Revolution
Traditional ERP systems operate in request-response mode, struggling with fast-moving business demands. Event-driven architecture changes this paradigm completely. ERPs become responsive to business events as they occur, automatically initiating procurement, checking supplier availability, and negotiating delivery timelines when stock drops below safety levels.
The true power emerges when agents in different systems communicate directly. A CRM agent detecting a large custom order can instantly communicate with ERP agents to confirm material availability, delivery schedules, and pricing approvals in real time.
Investment Market Signals Major Shift
Financial markets reflect this transformation. Established ERP players face declining valuations despite revenue growth. Investors question traditional licensing models when AI agents deliver orchestration and automation at a fraction of legacy costs.
Rillet, an AI-native ERP startup, exemplifies this trend. Their programmable general ledger automates critical workflows around close, reconciliations, and reporting. Since emerging from stealth in 2024, Rillet serves over 200 customers and doubled ARR quarter-over-quarter, acquiring customers from entrenched incumbents – a feat previously considered impossible.
What Business Leaders Must Know
CIOs now have genuine alternatives to vendor roadmaps. Building new technology on top of existing systems offers faster time-to-value than traditional upgrades. “Your underlying ERPs will be plug-and-play in the future, as you build more functionality outside the core,” Locandro predicts.
This shift requires strategic thinking about long-term benefits and AI integration risks. Vendor-reactive AI development could limit capabilities across diverse systems. Smart leaders evaluate existing infrastructure’s potential for integrating agentic AI, reducing reliance on costly upgrade cycles.
The ability to innovate without excessive upheaval promotes sustainable growth. Companies can focus funds on growth areas like equipment and expansion rather than mandatory software updates.
Future Landscape: Intelligence Everywhere
Looking ahead, the fundamental economics of enterprise software are changing. When intelligence can be layered on any system, when data can be accessed directly rather than moved and processed, and when workflows can be reimagined rather than just automated, old ERP sales rules no longer apply.
The question isn’t whether the forced upgrade model will survive, but how quickly enterprises will realize they no longer need to be hostages to vendor timelines.
As Locandro’s insights demonstrate, adapting to agentic AI isn’t just an option – it’s a strategic imperative representing fundamental shifts in IT landscape operations, increasing efficiency while reducing costs over traditional ERP-dependent frameworks.
Are you ready to break free from forced upgrade cycles? Share your biggest ERP challenge in the comments.
