Why do we need Business Intelligence, we have an ERP?
- Vikram Kole
ERP systems are known to generate lots of data, but not a lot of information (data rich and information poor). 1KEY Business intelligence is the solution to this problem. ERP does not contain all the information that is needed for business and hence disparate data sources thrive in form of spreadsheets or applications. For example, it does not include the results of a customer survey or secondary sales data at channels or vendor data. ERP systems force firms to re-engineer current practices to fit within the processes described by the ERP modules. Letting one ERP vendor provide most or all of a firm’s enterprise systems is an attractive but risky proposition. “If you depend on a single vendor, you get a common architecture, lower support costs and cheaper seats,” argues one analyst “On the other hand, upgrades become a bear because you have to do everything at once and maintain relationship with them constantly”. Your company may be among those falling prey to the limits of spreadsheets due to ERP reporting limitation and manual processes as you work to improve information visibility and achieve compliance. It is important that you be able to trust your data and avoid any inconsistencies in your reporting definitions and calculations due to spreadsheet use even after and ERP deployment. If your existing ERP systems and processes are slowing you down, external reporting and MIS may be problematic. Often the accountants struggle for weeks to consolidate multiple levels in their organization using their ERP. Adjusting entries are booked in ERP and need to be replicated multiple times for each level. Then something changes in one of the subsidiary companies, and more changes are required at each level in the process. Inter-company eliminations cause delays while the accountants reconcile the differences between the companies using spreadsheets. The spreadsheets are fragile and only one person in the company is entrusted with them. But even that person breaks into a sweat when there is reorganization and the consolidation spreadsheets need to be redone. There are lots of links between all the spreadsheets and one change could cause cascading errors in unsuspected places. Then when it’s all done, the CEO asks for a breakdown of one of the numbers. It seems like a reasonable request, but the accountants are unable to comply on demand. But, even today and even in the largest and most sophisticated companies, the most popular feature in any ERP system is “Export to Excel” – canned reports usually miss the mark for the needs of individual users without additional massaging. Frequently, individual spreadsheets end up acting as central repositories for critical corporate information.
ERP comes with a reporting toolset and predefined set of reports with general purpose query tools to generate reports with data within ERP database. These tools are difficult and confusing to use and rely on IT team to deliver the on demand report which will take time where only thing that matters user is answer question of the moment. ERP provides acceptable day to day operations reporting but if business requirement changes these static ERP reports needs to be changed. While changes in the required report may take developers weeks, month or years or may never change and users demand it now. Business is ever dynamic with new product lines, new production methods, new distribution channels and ever demanding customer needs cannot be fitted in a rigid ERP system. Since it is impossible to predict the business it is impossible to define reporting needs for next coming years today. By using 1KEY BI and getting reporting done from an external system you are giving power to user to define and generate ad hoc reports while freeing valuable IT resources. It will quench the ever demanding thirst of users and empower them to turn data into meaningful business decisions.
Difference between Transaction System and Information System
Companies are investing millions of dollars in ERP solutions or have invested till date to improve the way they conduct their business. While ERP provides significant benefits organizations are finding that, in order to achieve critical decision making business goals, they often need to supplement it with additional external reporting capabilities for it end users. With the wealth of data entered and stored in ERP databases the ability to analyze and interpret the data is significant for management reporting. With Business Intelligence tool 1KEY it has greatly alleviated the backlog of report requests and has provided users with decision making information in a timely manner.
Posted on March 15th, 2008 by Vikram Kole
Filed under: Business Intelligence, CIO Community, View Points & Perspective
This is a good post. I wrote a post on analytic applications that received some interesting feedback. Your readers might also find it useful: http://www.lucidera.com/blog/index.php/2007/11/28/what-is-an-analytic-application/
Keep up the great blogging!
Darren
Hii.,
I got some more information on the history of the word ERP=that stands for Enterprise resource planning..! which i would like to share…….
The initials ERP originated as an extension of MRP (material requirements planning then manufacturing resource planning).[2] ERP systems now attempt to cover all basic functions of an enterprise, regardless of the organization’s business or charter. Non-manufacturing businesses, non-profit organizations and governments now all utilize ERP systems.
To be considered an ERP system, a software package must provide the function of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package.
However, the term is typically reserved for larger, more broadly based applications. The introduction of an ERP system to replace two or more independent applications eliminates the need for external interfaces previously required between systems, and provides additional benefits that range from standardization and lower maintenance (one system instead of two or more) to easier and/or greater reporting capabilities (as all data is typically kept in one database).
Examples of modules in an ERP which formerly would have been stand-alone applications include: Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM), Human Resources, Warehouse Management and Decision Support System.
In reality it is very questionable how many ERP implementations achieve the expectations. It is impracticle to find a single solution that suits all your processes in all departments. Mostly what we see is organizations changing their processes to match their million bug investment rather than ERP software adapting itself to organization business processes.
This mean you are obviously loosing your competitive advantage which is defined by you process uniqueness.
Yes I agree BI can fix some stuff for these headless fat chicken organizations, but what you need is a more agile mechanism to manage your processes. BPM concepts bring some light to the grounds, but have to wait and see.
I completely disagree with Hasith in his perspective that you lose competitive advantage defined by your “process uniqueness” by moving to an ERP System.
It is organizational hubris that makes people think their methodology or process of doing business is unique.
For almost every industry and every company there are basic functions that must be performed…
-create products
(or outsource them or buy them from vendors),
-identify and manage customers,
-take orders,
-process orders,
-ship products,
-invoice and
-receive payments.
All of those are essentially commodity functions. If they are standarized across an organization though a well designed ERP system (that leverages the same sets of master data) they’ll provide a high degree of efficiency. It’s when the organization tries to be “fancy” and breaks far outside the norm that complications and complexities arise both in the business and in the system itself.
ERP implementations often don’t provide the benefits, not because they are too complex, but because the business creates complex requirements that generally don’t make sense, and the business thinks that they way they’ve been doing business is the “ONLY WAY”.
i.e give a 3% discount to customers that start with “Z” but only on tuesdays when it’s raining… or create a process that delivers to strategic customers faster than to non-strategic even if the order came in 10 days later than the non-strategic customers order…and the product has a 10-day lead time….thus bumping the non-strategic order out to 20 days…forever losing them as a potential strategic customer.
Solution is to leverage as much standard process as possible – and focus competive advantage on things like strategic and analytical Business Intelligence, on Selling techniques or marketing techniques, cost saving and outsourcing techniques, drop ship processes and inventory control. The low cost provider (not low price) strategy is one of the hardest to to match.
This information ‘Why do we need Business Intelligence (BI), when we already have an ERP?’ really saved me some time from all the scouring I would have had to do!