Many of our blogs talk about the significant advantages of modern ERP and associated digital transformations. Among those advantages, we have discussed how business intelligence is a key ingredient of an effective digital transformation.
The last few decades have seen tremendous progress in software development and information technology enabling access to sizable amounts of stored data. Many organizations began their ERP initiatives with the goal of automating accounting software and back office functions. We know these scenarios were just the beginning. The evolution of Customer Relationship Management (CRM) tools are a good example. CRM began as a way to track customers, and has evolved into forecasting, lead management, quotes/proposals, etc.
The plethora of data in the top ERP systems presents the challenge of figuring out how to use all that stored data. Ways to get value out of it – like data mining, querying, analysis, etc. View it as business diagnostics – like the app they run to see what’s wrong with your Land Rover. A very basic definition of Business Intelligence (BI) is to harness and interpret data in ways that support your company and its decision-making processes.
Out of the boardroom and onto the shop floor
Business leaders (CEO & CFO types) have always been interested in data as a way to make better decisions. Their motivation is to use data to give direction that could further improve efficiency, productivity and profitability … an earnest goal for most companies if they can corral it. It’s no longer acceptable for IT departments to “just keep the systems running,” but they are now expected to capture data for distribution within the company.
Collecting the data is not the hard part; ERP systems do that well. Accessing it and analyzing it is. In many cases you’re attempting to turn raw data into useful actionable data. If your company data was all in one place, the task would less challenging, but with silos and multiple systems it is often convoluted. This is true even for seemingly “all-in-one” systems such as SAP S/4HANA, Oracle ERP Cloud, and Microsoft Dynamics 365.
Business has always been about competition. That means understanding your clients’ wants and needs, and how to deliver solutions in ways that differentiate you from the pack. A primary goal of BI is the meaningful sharing of data to improve processes and extending that data to all levels of the organization. What may have originated in the boardroom, is transitioning to SMEs as consolidated data and passed to front line employees to make customer-centric processes and decisions.
While the need for some human interpretation will always exist, data can anticipate and illuminate trends. So, do ERP systems enable BI in meaningful ways? Probably not.
ERP and BI (Better Informed)
This is a complex topic for several reasons:
- Few companies run on a single all-encompassing ERP system, and even if so, BI functionality probably isn’t part of it. ERP and BI software are two different animals.
- It’s not unusual for multinational companies to run on different systems, or have manual spreadsheets that ERP applications don’t cross or integrate with (think disparate data).
- You’ll need a senior executive that believes better BI data will take decision making to the next level and correlate to better results. They must be willing to financially invest in it. Don’t be surprised if private equity connected execs lead the way.
- Tech literacy at senior management levels is still not common; add to that a tech environment that’s constantly changing. BI is a technology-driven process that must be maintained and managed, which is why organizational change management strategies are so important for these types of initiatives.
Most modern ERP systems contain reporting and analytics, but they are not robust BI. You will find solutions in the marketplace like Microsoft Power BI or Tableau Desktop, along with ERP databases and architectures such as SAP’s HANA platform. They are developing solutions trying to respond to increasing interest and need. Expect growing pains – Tableau renders Chinese fonts incorrectly and Microsoft is having sporadic problems with outages. Nothing that can’t or won’t be fixed in time.
The emergence and usefulness of BI is here to stay, and its origins have been around for a time. But as we view ERP software today it’s not built with true BI.
With that said, BI software typically gathers data and turns it into useable insights delivered in previously unheard-of timeliness with new levels of detail. It’s one of several “transformative solutions” we helps client with to grow (or save) their businesses. We’ve also seen it applied as an additional regulatory monitor or check. Yes, BI can also be used to reduce risks.
As ERP software continues to mature you will see BI options increase. Organizations that are dedicated to deploying BI would do well to seek the guidance of an independent ERP consulting firms like Third Stage Consulting. We are good at guiding clients though the steps to define the best digital strategies it will take to get to your goals.
Warning: data overload ahead!