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Use BI to Get More Value from ERP

Data, BI and Value, Let's Get Real

Editor's note: DM Review welcomes David O'Connell to our roster of online columnists. He will share his expertise and research findings in the area of finding value in data in his monthly column enitled, "Data, BI and Value, Let's Get Real."

People generally think that supporting ERP is a cost of doing business. Not so. There is data flowing over those systems, and that data contains value - business intelligence (BI) is one of the best ways to get at it.

Stranded Value

ERP systems are the best observers of your company's activity. They collect critical data points such as who your customers are, what they buy, when they buy it and what kinds of problems you may be having - even if you don't know it yet. This means that if you aren't using BI to analyze the data in your ERP system, you may be leaving ROI on the table

How to Get at It

Predictive analytics is one of the best ways to turn ERP data into actionable information. Both traditional BI vendors such as Cognos, SPSS and SAS and more horizontal solution providers such as Unica and Oracle have developed offerings that can be integrated into ERP systems. These vendors also provide solutions that integrate analytics functionality into line of business applications such as call center, marketing and fraud detection.

BI and predictive analytics can also leverage any investments you've made in service-oriented architecture (SOA). SOA services are highly customizable. So if they are already being used to integrate your enterprise applications, they can also be customized to monitor the business activity flowing over those systems. Both Cognos 8 and Business Objects XI are built on SOA. SOA adoption initiatives often get stranded in localized deployments with no visibility or scale. What better way to broaden SOA usage than exposing available services that can be used with both BI and ERP?

ERP vendors often bundle BI solutions into their enterprise packages at little or no cost. This is a tempting short cut to ROI on a BI/ERP project. But while the costs may be low, the benefits may be even lower. BI solutions from ERP vendors are terrific at analyzing data in a monolithic environment. But hardly anyone has a monolithic environment. Compared to their ERP rivals, best-of-breed BI solutions have two big advantages - they integrate with other applications far more readily and can draw data from more types of sources. This means that it's worth paying a little extra if you want to extract hidden data from different data silos.

Data Wants to Be Free, Sort Of

Once you've tapped into your ERP and operational data, you need to make it available in as democratic a way as possible. Creating canned reports for departments with predictable data needs is easy, though labor-intensive. But for many types of data, only the end users know how they are going to use the data, and even they might not know what data they will need or what analyses they will perform. User-driven and ad hoc reporting are the best ways to solve this problem. Freeing up the data from your inventory records and then giving your purchaser the tools to build their own dashboards may mean that you drive harder bargains next time you go shopping for raw materials.

Trillium Healthcare has a great example of democratizing data in the right amount. When this healthcare provider deployed Cognos Healthcare Performance Management, it created a small body of canned reports for its business analysts. But it also exposed virtually all of the non-clinical data in the cubes to these analysts. Because the Cognos solution makes it so easy for users to drill down and across data, these analysts perform their own ad hoc analyses and reporting, which has reduce the workload on the hospital's report building staff by 20 percent.

The Things You Can Do with It

Viewing all of the tactical data in your ERP system gets you out of reactive mode. It lets you fix problems before they hurt your company and it lets you find ways to improve workflows even if they are already running well. In fact Nucleus Research has seen customers use predictive analytics modules to identify customers whose sales levels are declining in order to detect customer satisfaction problems and prevent churn. Other customers use this kind of visibility to combine steps along the value chain and eliminate workflows.

Getting visibility into ERP data also helps you fight fires that might otherwise be disastrous. When Avaya faced a supply chain disruption because one of its suppliers had a problem in one of its own factories, they integrated their Cognos BI with their SAP ERP system. Because Cognos integrated readily with multiple instances of multiple ERP systems - even over Avaya's firewall to partners - Avaya was able to rapidly identify what sales and customer relationships were at risk, procure alternate supplies and manufacturers, and proactively manage customer relationships.

Be the ROI Hero

Using BI to increase the benefits from ERP isn't just good for business - it's good for your career. If you can transform your ERP system from a cost of doing business - think about those annual maintenance fees - into a strategic asset, you are bringing new value into your company and increasing the ROI on existing systems, be they ERP, SOA or any other enterprise application. You are also creating tighter integration between your IT department and the rest of the company by giving them more of the data they need to do their jobs better. All of this can be converted into more control over projects, budgets and staffing.


David O'Connell contributes to Nucleus Research's industry-leading body of research by performing interviews, writing research reports and building ROI tools. O'Connell follows a number of sectors, including integration, collaboration, business intelligence and workforce management. As a former commercial banker, O'Connell is particularly skilled in evaluating how solutions impact the roles of the CFO, controller and treasurer, and has been writing and presenting technology-oriented business cases for more than 10 years. He is the author of numerous ROI reports, evaluation reports, tools and case studies. You can reach him at doconnell@nucleusresearch.com.  

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