Vendor view: Five tips for integrating BI and ERP
- 25 July, 2011 07:00
The Global Financial Crisis put Business Intelligence (BI) and Enterprise Resource Planning (ERP) integration in the spotlight. We needed to know urgently what was happening in our businesses and why.
But despite best intentions, many businesses have struggled to implement BI systems. Others who have successfully rolled it out are using it in unproductive ways, often by mistaking it for a reporting tool.
This is unfortunate because, when implemented correctly, BI is a powerful instrument. One company I deal with, for example, estimates that their BI trends analysis alone has fueled growth of over 20%.
In your own business, the key to implementing BI correctly is having a clear understanding of why you’re doing so.
1. Don’t implement BI – implement an end-goal
One of the reasons that BI is notoriously difficult to get right is the fact that businesses often undertake BI without a well-defined idea of what ‘right’ will mean.
ERP systems capture an incredible amount of transactions and business data, and the role of BI is to convert these records into information that can be used by decision makers.
It’s vital to remember that the purpose of BI is to produce information and insight. Thus, deciding what insight your business needs is the first step to implementing BI.
Good questions to ask are: which business areas are you going to analyse? What are the important Key Performance Indicators? How will decision makers react to the insight your solution produces and what specific outcomes will it achieve?
Understand that BI will not solve problems in its own right. To be successful, you need to know your business and where you want to take it, then make the turn to BI.
2. Don’t delegate success
The best BI integrations emerge from deep understandings of business operations.
While BI vendors will do their utmost, this is the main reason that you shouldn’t rely on your vendor to create project success.
Instead, have someone from your own organisation at the helm to drive the project.
3. Don’t go it alone
BI is a complex arena, and multiple solution types, software packages and integration hurdles make implementation a difficult assignment.
In the same way that a maiden skipper wouldn’t sail for New Zealand without an experienced crew, those responsible for BI integrations can avoid disaster by having practiced help on deck.
Ideally, your BI vendor will be experienced not only in the particular product you’re going to implement, but also in your industry. Because BI is about business improvement, hunting for a vendor with previous exposure to your industry means that the project is more likely to be informed by relevant assumptions about business processes and KPIs from the start – making it that much more likely to succeed.
4. Avoid the ‘reporting’ pitfall
The most common error that businesses (and sadly even some BI vendors) make is using BI as a reporting tool.
Having BI to simply retrieve and report on records from ERP systems is like buying a Ferrari to keep in the garage. BI is much more powerful than that.
Whether it’s analysing historical, current or predicted sales, production costs or other forms of business data, BI provides up-to-date information on the state of the business – insights that allow decision makers to evaluate the effectiveness of processes and departments, to understand how the business is operating more broadly and to witness trends in sales as they occur.
To get the most from BI, make sure that your implementation is focused on strategic insights. It’s not about sales volumes or missed targets, but the reasons behind them.
5. Manage information security
BI is a potent instrument for analysing information about every aspect of a business. Unsurprisingly, however, the level of information it puts in the hands of users is a common concern for CIOs.
To this end, data security within BI solutions needs to be carefully managed, but remember that the benefits of improved information flow across the enterprise far exceed the risks.
Conclusion: BI is a difficult area, but it’s also one that offers enormous potential for delivering insights that can boost profits, cut costs and provide an ongoing picture of a business and its market.
With a clear set of aims and expert help where necessary, it can harness the data that resides in ERP systems and turn that latent information into valuable competitive awareness.
Ian Whiting is CEO of Markinson Business Solutions.