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What is the relationship between the data warehouse and the enterprise resource planning system?

Q: What is the relationship between the data warehouse (DW) and the enterprise resource planning (ERP) system? Are they competing or complementary systems? Now that more ERP vendors are supporting performance management are they competing with BI vendors?

Anne Marie Smith's Answer:

Since the introduction of the term "data warehousing" in 1990, companies have explored the ways they can capture, store and manipulate data for analysis and decision support. At the same time, many companies have been instituting enterprise resource planning (ERP) software to coordinate the common functions of an enterprise. ERP software usually has a central database as its hub, allowing applications to share and reuse data more efficiently than previously permitted by separate applications. The use of ERP has led to an explosion in source data capture, and the existence of a central ERP database has created the opportunity to develop enterprise data warehouses for manipulating that data for analysis. So, ERP systems and data warehouse (DW) systems can be considered complementary environments. ERP vendors have started to include BI capabilities into their ERP systems in an attempt to capitalize on the need to analyze the data in an ERP in addition to or in conjunction with the data found in a company's non-ERP systems.

Tom Haughey's Answer:

Basically, there are two general relationships. First, the ERP system should act as a data source for the DW. Data should be extracted from the DWH, processed through ETL and loaded into the DWH. Second, the DWH should feed information back to the ERP system to enable it to behave better.

Here is an example. An ERP system feeds to the DWH information on orders and the customer. This information is cleansed and loaded into the DWH. While there, the customer is scored and other evaluations are performed. Recency, frequency and monetary value are calculated. The DW determines for each customer the "next logical product." It also determines Life Time Value. This information is fed back to the ERP system. The sales rep, when they are talking to the customer, can have this at their disposal when interacting with the customer. I have personally been affected by this process. To one of my customers, I was also a customer of theirs. The DWH that we designed stored recency, frequency, LTV and monetary values. It also stored average product consumption. When I called them to make a small purchase, they were able to up-sell me successfully because they had at their disposal more data about me than I had myself. An intended $50 purchase became a $500 purchase will little or no effort on their part.


Anne Marie Smith is a highly acclaimed author and speaker in the fields of data stewardship, data governance, data warehousing, data modeling and metadata management. She holds a doctorate in Management Information Systems and has taught at LaSalle University. Smith serves on the board of directors of DAMA International and is an expert advisor to DM Review's Ask the Experts. Smith is the director of education at EWSolutions, a GSA schedule partner and systems integrator dedicated to providing companies and government agencies with best-in-class business intelligence solutions using data warehousing, enterprise architecture and managed metadata environment technologies (www.EWSolutions.com). She may be reached directly via email at AMSmith@EWSolutions.com.

Tom Haughey is the president of InfoModel LLC, a training and consulting company specializing in data warehousing and data management. He has worked on dozens of database and data warehouse projects for more than two decades. Haughey was former CTO for Pepsi Bottling Group and director of enterprise data warehousing for PepsiCo. He may be reached at (201) 337-9094 or via e-mail at tom.haughey@InfoModelUSA.com.

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