Integrating Business Intelligence Into an ERP Implementation

After a barrage of political ads, speeches and opinion pieces over the last several months, the U.S. presidential election is finally over. During the course of our election, the accuracy of quantitative data in polls of likely voters was a key talking point among political pundits and analysts. Much work has been devoted to dissecting the data, questioning the validity of the data and drawing meaningful conclusions. After all of that, however, no one really seemed to have any strong quantitative sense of who would win the election as Election Day drew closer. In fact, although the outcome of our election may be clear by the time this blog goes to press, I and most others had no idea who would win at the time I was writing this article.

Just like politics, businesses and other organizations crave better data and information to help guide both their strategic and their day-to-day decisions. Organizations across the globe have invested billions of dollars in their ERP systems over the last 20 years, but few of them have found effective ways to make sense of the reams of operational and financial data being gathered in the system. In addition, new regulations – such as Sarbanes-Oxley – require public companies to be more transparent in their financial reporting, which not all companies can readily achieve. Clearly, this is a pain point for many organizations, which is why ERP vendors such as SAP, Oracle and Microsoft have invested heavily in acquiring – or developing their own – business intelligence capabilities.

Given the increasing importance of data and business intelligence in modern ERP software, companies are leaning on their systems to provide this level of functionality. Here are three things to keep in mind when incorporating business intelligence into your ERP implementation:

  • Business intelligence is not the same as reporting. ERP systems have always provided decent levels of reporting. In the past, most of this information was fairly superficial and more focused on supporting transactions rather than analysis or decision-making. For example, a report of open purchase orders is a lot less meaningful than predictive analytics that estimate future purchasing needs. In order to effectively leverage business intelligence, companies need to look beyond fancy end-user reports. Instead, they need to understand how information is gathered in the system and transformed into meaningful decision-making tools. As a general rule of thumb, ERP vendors that provide business intelligence or business warehouse modules are more likely to provide this functionality.
  • Flexibility is key. Different organizations have different ways of analyzing and using data, especially those in different industries, and these needs evolve over time. Therefore, it is critical that companies look to flexible business intelligence solutions within their ERP systems. ERP systems that provide multiple ways of analyzing and presenting data are more likely to evolve with an organization as its needs evolve. In addition, they help organizations adapt to the power of available information as it is collected over time. Organizations also need to look for flexibility in terms of how data is delivered (e.g., traditional reports, executive dashboards, mobile applications, etc.).
  • Define business intelligence requirements. In order to accomplish the first two points above, organizations need to define requirements related to business intelligence. While traditional requirements focus on how transactional business processes should work, business intelligence requirements require an organizational definition from a different perspective. In addition to focusing on how work is completed, ERP project teams should also decide how information will be used and decisions will be made. For example, it is helpful to define how demand will be forecasted, how inventory decisions will be made, and other more analytical and decision-based processes. In addition to leveraging these requirements during the selection stage of a project, organizations should also use them to ensure that the ERP software incorporates these functions while being implemented.

These are just a few steps to help you incorporate business intelligence into your ERP implementation. While traditional ERP initiatives focus on automating operations, newer ERP implementations need to focus just as much on how information will be used. Business intelligence, data and predictive analytics are, in many ways, the holy grail of ERP implementations, so it is important to select and implement an ERP system that supports this potential.

Find out more about choosing and implementing the right ERP software for your organization by downloading the first six chapters of my book, The Expert’s Guide to ERP Success today.

Written by Eric Kimberling

After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema, Eric realized the need for an independent consulting firm that really understands ERP. He began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. Eric’s background includes extensive ERP software selection, ERP organizational change and ERP implementation project management experience. Throughout his career, Eric has helped dozens of high-profile and global companies with their ERP selections and implementations, including Kodak, Samsonite, Coors, Duke Energy and Lucent Technologies. In addition to his extensive ERP experience, Eric has also helped clients with business process reengineering, merger and acquisition integration, strategic planning and Six Sigma initiatives. Eric holds an MBA from Daniels College of Business at the University of Denver.

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2 Comments

  1. Hi, we’ve always thought it’s best practice to leave BI for later and not mix up the 2 projects, take care of transactions first, make sure data entered is good and on time. Then move to BI, to make sense of that transactional data.
    From your article, I understand that it’s actually recommended to do both, ERP and BI, in one project, at least when it comes to collecting requirements. Are you saying that BI requirements actually can/do impact ERP requirements? Thanks a lot.

  2. Hi Akram,

    We see a lot of companies take the approach you are suggesting, but we also see many take a more integrated approach up front. It just depends on your bandwidth, level of BI understanding, and the type of external expertise you have helping you on the project. Some may find it’s better to implement core ERP first, but so much of the functionality is integrated that some companies prefer to implement together.

    Thanks for the comment and question and I hope this helps.

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