The Moat is a Tollbooth: Why the AI Panic Around ERPs is Only Half Wrong
A pragmatic response to Josh Bersin’s defense of enterprise software.
tldr;
Josh Bersin published a piece today arguing the market is irrationally punishing enterprise software (like Workday) over AI fears.
He is right that an AI agent cannot replace a core HRIS because payroll and compliance must be deterministic.
However, the "decades of business rules" he points to as a protective moat are exactly what make the native UI unbearable for high-volume hiring.
The future isn't AI replacing the ERP. It is AI hiding the ERP from the user completely.
Josh Bersin dropped a great piece this morning pointing out a massive disconnect in the stock market: tech giants building AI infrastructure are soaring, while enterprise software stalwarts like Workday, SAP, and Salesforce are getting punished.
The prevailing market narrative is that AI agents are going to eat the ERP.
Bersin correctly calls this out as irrational. You cannot just point Claude at a Workday tenant and say, "rebuild this." He quotes Aneel Bhusri, who hit the nail on the head: AI is non-deterministic. Enterprise software must be deterministic. If you are running payroll for 300,000 employees, you cannot have an LLM creatively hallucinating someone's tax withholdings.
The math has to be absolute:
Bersin argues that these enterprise systems are protected by a massive, impenetrable moat built on "decades of industry business rules, financial workflows, and HR... processes."
He is absolutely right about the moat. But viewing this entirely from 50,000 feet misses the reality on the ground.
For the people actually using the system, that moat feels like a ten-lane tollbooth.
Those decades of deep, complex business rules are exactly why a 19-year-old applying for a pharmacy tech job abandons the native "Candidate Home" login screen after four seconds. It is exactly why a retail manager covering a cash register wants to throw their laptop out a window when forced to execute a 14-step "Create Job Requisition" business process (or even a 4-step “Start Job Requisition” process).
We have reached a tipping point where the structural integrity of the database is actively at war with the required velocity of the business:
This is why the market should be at least a little spooked.
The disruption coming for enterprise software isn't that AI will replace the database. It is that AI is going to completely bypass the UI.
Instead of forcing users into the ERP, Pragmatic Architects are moving toward decoupled architectures. We are actively buying Experience Layers (like Phenom and their AI agents) to sit directly on top of the core system. We willingly pay an "Integration Tax" to build a frictionless, consumer-grade front door so our retail candidates and busy managers never have to interact with the heavy, compliance-driven native system.
(I'll be diving deep into the exact mechanics of how we architect this separation in a few weeks after IAMPHENOM, but the philosophy is already steering our roadmap).
Enterprise software isn't going anywhere. We will always need the deterministic engine to keep us out of jail and make sure the paychecks clear.
But if the big vendors think their "decades of business rules" are enough to keep users happily logging into their native platforms, they are kidding themselves. The future of HR Tech is the ERP becoming headless infrastructure, buried so deep under AI agents and conversational interfaces that the end-user forgets it even exists.
— Mike
Director HR Tech | Pragmatic Futurist