by Thomas Wailgum

ERP and BI: A Match Made in Heaven, If You’re in Data Hell

Aug 04, 20094 mins
Business IntelligenceEnterprise ApplicationsERP Systems

Now's the time to use BI tools to tap into that rich pool of data sitting unexamined on your ERP systems, says a new report from Aberdeen Group. The prize: Increased visibility into what actually makes your business tick.

Most businesses today have more data than they know how to use. And getting at that data and then presenting it in a useful manner for cogent analysis are two tasks that typically haunt organizations.

Consider the treasure troves of data found inside companies’ enterprise systems: ERP, CRM, BI and supply chain applications. But the global recession has made it a tough time to get boards to pony up blank checks for large and exploratory projects to unlock those potential data stores.

A new Aberdeen Group report, however, points out a paradox: While the struggling economy has forced businesses to attempt to cut costs and “do more with less,” by leaving this data largely untapped, companies instead run the risk of “more is less.”

For more on enterprise software, see the Enterprise Software Unplugged blog

This is exactly the place and time for BI tools to step in, write Cindy Jutras and David Hatch, two Aberdeen VPs, in the July report, “The ERP/BI Connection: Adding Value through Actionable Intelligence” (pdf download).

“BI tools have reached a level of maturity which can elevate executives from the depth of the details, bringing them to a higher operating level where they can add strategic value to the organization,” Jutras and Hatch write. “The ability to provide better decision support with integrated enterprise data is an important factor in turning data into actionable intelligence.”

“The synergistic relationship between ERP and BI,” they add, “can indeed be the perfect storm, igniting improved performance and visibility.”

Can BI Light a Spark Under ERP Data?

In many respects, companies have been facing a nasty storm when it comes to their standalone (un-integrated) enterprise systems: Many companies are “oversoftwared” right now, and there’s been a substantial backlash and pleas for real-world, usable innovation.

With BI, in particular, surveys have shown that 40 percent of executives still trusted their gut in decision making (as opposed to their BI systems), and many more are frustrated with CIOs and IT for failing to give the business what it needs and deserves with analytic and decision-making tools.

In recent Aberdeen surveys of enterprises with BI and ERP applications, BI has ranked number one (two years running) in terms of the technologies that will have the most impact in the next two to five years. Coming in second in the April 2009 survey was “Enterprise application enhancements / extensions.” According to Jutras and Hatch, that topic “refers to the ongoing improvements that drive extended value from ERP and CRM investments.”

Digging deeper into the data, Jutras and Hatch determined that BI tools were the top “enhancement or extension” that organizations planned to use to integrate systems and tap into data flows. “Think of [BI] as a layer on top of or embedded within ERP and other applications,” they write, “which wind up being giant repositories of data.”

How to Get Started

In the Aberdeen report, the analysts preach an “integration” mindset when it comes to a more perfect ERP and BI union.

“Whether BI tools are currently embedded within your ERP solution, tightly integrated, bolted on after-the-fact or non-existent, don’t treat ERP and BI as separate projects,” Jutras and Hatch write. “Take the approach of using BI as a means to extract enhanced value from data within ERP (as well as other enterprise applications). ERP can transform data into information but BI tools are required to complete the transformation from information to intelligence.”

A good first step: Form cross-functional teams for both ERP and BI projects. “When left entirely to IT, the success of projects is often measured by cost and speed of implementation,” Jutras and Hatch write. “These are important factors but using them as the exclusive measure of success loses sight of the original business goals of the project.”

There’s much more work ahead, the authors point out and fully examine in their report, but time is of the essence. “Achieving transparency and visibility is no longer simply a lofty goal,” Jutras and Hatch write, “but a core necessity of the business.”

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