Practical Digital Transformation: The Role of Enterprise Applications in AI Readiness

This IDC Perspective examines how enterprise application modernization enables practical digital transformation across the enterprise. Many organizations continue to underutilize ERP, CRM, HCM, and supply chain systems while simultaneously pursuing AI-driven innovation initiatives. As enterprise application vendors embed generative AI and agentic AI automation capabilities into modern SaaS platforms, organizations running legacy versions of these applications will struggle to adopt these innovations. This document guides CIOs through the strategic and operational considerations for modernizing enterprise application environments so they can take advantage of embedded AI capabilities and translate digital transformation investments into measurable operational outcomes."Many organizations are pursuing AI initiatives while still operating legacy versions of enterprise applications that limit their ability to adopt the embedded AI capabilities vendors are introducing into modern SaaS platforms," says John Bermudez, adjunct research advisor for IDC's IT Executive Programs (IEP). "Upgrading and modernizing ERP, CRM, HCM, and supply chain systems is increasingly becoming a practical foundation for organizations seeking to translate AI innovation into real improvements in operational performance."