Enterprise resource planning (ERP) is a popular technology in firms that aim to gather, analyze, and share data from a single database across numerous departments, including operations, accounting, sales, and manufacturing. While ERP systems are perfect for connecting the dots between company processes to boost efficiency, staying competitive these days requires real-time data analysis and insights to help businesses make better decisions. This is where business intelligence comes in. When ERP and BI are used together, they boost a company’s agility, aid in oversight, and pave the road for business success.
What Is ERP and How Does It Work?
ERP software allows businesses to automate business processes and centralize data and controls. A modern ERP system uses a centralized database to collect data from many departments such as finance, operations, manufacturing, human resources (HR), and sales and marketing. Stakeholders gain cross-departmental insights from the central database; therefore, they can analyze various scenarios, perform Financial Planning and Analysis (FP&A), and eke out process improvements that can result in significant efficiency, cost savings, and increased productivity as people spend less time looking for data.
The capacity to improve and automate critical operational activities, including financial, supply chain, and production management, freeing up time and resources for strategic objectives is the key benefit of ERP systems.
What Is the Working Principle of Business Intelligence (BI)
Business intelligence (BI) software gives firms a holistic perspective of their operations, allowing management to make data-driven choices. BI also plays a crucial part in high-level strategy and tactical responses to market needs; it will enable organizations to run more efficiently as they focus on their competitive advantages and ultimately boost profitability.
BI helps develop dashboards, reports, user-focused IT systems, and external sources to give a detailed, transparent view of the business’s status by extracting data from a centralized repository. It generates extensive, detailed assessments that assist users in improving front and back-office processes. For instance, if a merchant has supply chain problems, BI analysis might help them identify operational bottlenecks and design a plan to reroute supplies through a more dependable path.
What Are the Main Differences Between ERP and Business Intelligence?
ERP and BI are similar in many ways, but they offer distinct advantages. An ERP system is basically a process management software that controls and combines vital business operations such as production, inventory management, financials, and supply chain management. As a unified process system, centralized data breaks down silos and fosters improved efficiency throughout the organization. BI takes this information a step further, allowing firms to collect, analyze, and contextualize data from all around the organization in order to provide actionable insights. Dashboards and other visualizations are created to make complex data easier to grasp.
Different levels of decision-making are also supported by ERP and BI. ERP systems are most useful at the operational level because they provide firms with a detailed picture of how each of their activities is working. BI constructively analyzes data hence allowing businesses to delve deeper into their performance indicators and identify trends that may then be utilized to fine-tune their strategy on a high, granular, or both levels.
BI solutions drive performance improvements while restricting costs, saving time and resources while measuring the ROI of a new digital marketing strategy, or estimating the cost reductions offered by a more real-time approach to inventory management.
OLTP and OLAP: Better when combined
A data processing system used by businesses to record transactions is known as an online transaction processing (OLTP) system. An OLTP system, such as ERP, is an example. Business intelligence. On the other hand, an OLAP (online analytical process) system allows multidimensional analysis.
ERP and BI Evolution
Manufacturing companies employed Resource Planning systems in the 1960s, which gave birth to Enterprise Resource Planning, ERP. These systems evolved into manufacturing resource planning systems in the 1980s, which helped enhance production planning. The next decade saw the introduction of the unified business management platform, which paved the way for on-premises, hosted, and cloud-based ERP to integrate business-wide activities onto one central database and make insights available anytime, anywhere.
With origins in decision-support systems established in the 1960s and subsequently refined through the 1980s, BI followed a similar path. In the late 1990s, Business Intelligence (BI) became popular as an on-premise solution; until recently, vendors began to provide cloud-based BI solutions.
ERP systems are now frequently connected with cloud-based BI. This not only relieves the stress of hosting, maintaining, and paying for on-premises equipment but also enables real-time data integration between systems resulting in better decision-making.
ERP and Business Intelligence Integration
Ideal commercial decision-making relies on data and analysis. However, the massive amounts of structured and unstructured data that firms acquire nowadays necessitate a mechanism to organize, store, and analyze to make them scalable. ERP and business intelligence integration pull everything together, allowing users to turn millions of data points into clear and actionable insights.
Forward-thinking companies seek to move away from historical reporting to predictive modeling, which has fueled the growth of ERP-BI integration. In today’s digital economy, the capacity to forecast market movements, recognize trends and patterns and proactively adjust plans are all competitive advantages.
Why is Business Intelligence necessary in ERP?
Not only are BI and ERP software complementary, but they also help each other function better. ERP systems are critical for data analysis because they help break down silos across essential tasks like finance, HR, operations, and sales. BI combines all of these data sources to create something greater by taking operational data from the ERP system and turning it into actionable insights that directly support the company’s strategic goals.
Consider a grocery store that must constantly refine its inventory and delivery procedures to keep costs down and minimize perishable product deterioration. The shop can strike the correct balance between volume, speed, and waste by having a real-time picture of its inventory, supply chain, and customer demand.
BI is no longer possible without ERP. BI software mines ERP databases and makes it easy for stakeholders across the organization to access insights via dashboards and other representations. Meanwhile, when BI capabilities are added to ERP systems, they play a significant role in strategic decision-making.
7 ERP Business Intelligence Benefits
Apart from translating data into visual analytics that influence decision-making across the enterprise, BI improves ERP systems in various ways. Here are seven of the most important advantages of ERP-BI integration:
- Analyzing and aggregating data: ERP systems generate massive amounts of raw data, and there is always more value to be extracted. Businesses may gain in-depth insights from their data immediately within their ERP platforms through BI integration.
- Customization: Individual stakeholders may have their own data analysis mandates and requirements, even though the company is working toward a single goal. Each team may generate the reports and dashboards they need to fulfill their goals with the help of an integrated BI-ERP solution.
- Predictive capabilities: Historical ERP data provides insight into historical performance, whereas business intelligence (BI) allows for predictive analysis and modeling. They provide businesses with a holistic view of their past, present, and potential future.
- Decisions are based on real-time: Traditional reporting is retrospective, but firms must become more predictive to remain competitive. That’s where business intelligence (BI) comes in, delivering data and analysis in real-time to help you make better, more accurate, and faster decisions.
- Comprehensive insights: Businesses don’t have to switch back and forth between platforms to assess their performance when BI and ERP are connected. All of the relevant information is in one location, ready to be used for basic reporting, predictive modeling, or answering particular questions.
- Efficiency: Companies may combine, manage, and analyze enormous data sets from numerous sources in real-time with BI linked into ERP. This increased speed eliminates a significant stumbling block that has previously inhibited corporate agility.
- Reporting: BI improves reporting by allowing teams to use larger datasets for more in-depth analysis while also speeding up the report creation process. Furthermore, simple dashboards make reports available to authorized individuals across the enterprise, regardless of their technical proficiency.
ERP with Business Intelligence
An integrated approach to ERP and BI can help businesses of all sizes and industries. As retailers transition to the digital market, they can adjust their inventory and marketing methods. B2B technology firms can improve their understanding of how marketing impacts revenue at each funnel level and then optimize their ad expenditure. The list could go on and on.
Benefits also cross roles. CFOs are now involved in activities to increase revenue, customer experience, and even product lines. They can use real-time BI dashboards while also assisting line-of-business leaders in playing a more strategic role in boardroom investment choices.
Operation managers can create new relationships between production processes and product quality, allowing them to alter their strategies to achieve the highest quality at the lowest cost. Customer experience leaders can analyze data from physical and digital sales channels to verify that they are providing a consistent experience.
In a nutshell, BI combined with ERP allows decision-makers to delve down into data and see how their operations fit together. Instead of waiting for the market to dictate their next steps, companies may ask pertinent questions, uncover the fundamental reasons for changes in sales or performance, and address issues proactively.
ERP’s Business Intelligence Future
The two technologies will become even more interwoven as ERP and BI mature. Decision-makers will increasingly seek — and rely on — real-time insights into their operations and data and analytics will play a bigger role in defining company strategy.
A combination of ERP and BI will help teams collaborate more effectively. ERP solutions break down data silos across departments, whereas BI enables decision-makers to pool their resources and collaborate on common goals.
The most effective ERP systems assist businesses in keeping track of their data and activities. However, to make massive data sets intelligible and actionable, BI’s analytical capabilities are required. An integrated ERP-BI solution brings all of these essential functions together in one place, in real-time, and at the fingertips of the entire company. Trendspotting allows organizations to change their strategy ahead of time, and increased reporting based on larger data sets are two further advantages.
ERP and BI enable firms to make better-informed decisions faster, increase business governance and compete more effectively when used together.
Frequently Asked Questions about ERP and Business Intelligence
Q: What are the phases of business intelligence?
A: There are four stages in the development of business intelligence. The first step is to collect information. Thereafter, the data is combined and purified in preparation for analysis. The analysis, dashboard, KPIs, or reports are then created. Finally, reports and dashboards are shared with key stakeholders across the organization after they are completed.
Q: What is a business intelligence example?
A: Business intelligence is beneficial for a variety of reasons. It’s extremely useful for forecasting because a store could use business intelligence to better estimate demand over time using historical data and real-time market conditions.
Q: What is the difference between OLTP and ERP?
A: An online transaction processing (OLTP) system is a data processing system that allows businesses to keep track of transactions online. An ERP system is a perfect example of OLTP. On the other hand, business intelligence is based on an OLAP (online analytical process) system that allows for multidimensional analysis.
Q: What is ERP in manufacturing?
A: ERP software improves the efficiency of manufacturing and production processes by providing organizations with greater insight into their HR, supply chain, production, and quality assurance systems. They also encourage more openness and communication among the teams participating in the production process.
What next?
Taking Your Business to the next step can only come to reality if you have the right expertise to deliver outstanding solutions. At Seibert Consulting Group, we specialize in delivering modern solutions to businesses that aim at taking full advantage of the eCommerce platform. We always customize our solutions to align with Your Business’ requirements and goals. Let’s start talking about your project and find out how we can help Your Business grow. Get in touch with us via our chatbot or email hello@seibertconsulting.com and via our direct line at 760-205-5440.
