ERP And Business Intelligence: Why Your Business Needs Both

Data mining

Data mining is performed by using databases, machine learning, and statistics. It helps in uncovering trends in large datasets.

Performance metrics and benchmarking

Performance metrics are determined by comparing current performance with historical performance data in order to track performance that went against goals along with possible reasons behind the same while using customized dashboards.

Advanced reporting

Advanced reporting features that boast interactive charts and graphs, making it easy to be shared with key stakeholders to make decision easily.

Querying

BI makes query easy. Thus, when you ask a data-related question, BI pulls out the answer from data sets.

Descriptive analytics

BI uses preliminary data analysis for finding out analytical answers.

Statistical analysis

BI takes out the results from descriptive analysis and uses the results for exploring data using statistics for finding answers to several why and how questions.

Visual analysis

Through visual analysis BI explores data via several tools such as visual storytelling, which enables better access to insights while keeping the flow of analysis.

Data visualization

This is the method of turning data into visual representation, such as graphs, histograms and charts.

Data preparation

This method includes compilation of data sources, identification of measurements and dimensions and preparation of data analysis.

Business Intelligence statistics

The above picture depicts the market size of Business Intelligence and analytics software. By the end of 2023, the market is forecasted to cross $16.39 million mark. And by 2026, the numbers are expected to soar and reach $18.5 million, providing a better opportunity for BI and ERP integration to offer businesses a new peak of success.

What is an ERP system?

ERP, Enterprise Resource Planning, systems are a software solution that help a company in managing their resources. These resources can include employees, finances, materials and so on.

Some of the primary components of ERP solutions are Customer Relationship Management (CRM), Human Resource Management (HRM), Financial Accounting & Reporting (FAR), Supply Chain management (SCM), and Project Management. Apart from these primary components, ERP systems can also be used for warehouse management, inventory management, asset tracking etc.

An ERP system includes multiple modules, each of the module is capable of taking care of several daily activity of a business. Sales, marketing, manufacturing, purchasing, day-to-day expenses are some of these activities that can easily be managed with the help of an ERP system.

Emergence of ERP systems

Traditional systems, which can be considered as the very first form of ERPs, were used only by the large organizations. Organizations with bigger budgets and bigger operations were the only one to be able to afford these systems.

However, when small and medium-sized businesses started emerging, the industry started requiring a much comprehensive and easier system to be used for managing the business without having to invest a hefty amount.

ERP systems first emerged from Material Requirements Planning (MRP) software and from there it started evolving and took the shape of what it is today. These days, ERP systems are more dynamic and capable of adapting to the needs of an organization regardless of the size.

Types of ERP systems

Enterprise Resource Planning (ERP) systems are software solutions that help organizations manage and integrate various aspects of their business processes, such as finance, human resources, procurement, supply chain, manufacturing, and more. Hence, it is very natural for the software to be offered in different categories. There are a number of types associated with ERP systems, which can be categorized based on different criteria. Here are some common ways to categorize ERP systems:

Based on Deployment

• On-Premises ERP: These systems are installed and run on the organization's own hardware and servers. The organization is responsible for maintenance, upgrades, and security.
• Cloud ERP: Cloud-based ERP systems are hosted on remote servers and accessed through the internet. They offer scalability, flexibility, and reduced IT infrastructure costs.

Based on Size and Complexity

• Small and Medium-sized Business (SMB) ERP: Designed for smaller organizations with simpler requirements. These systems are typically more cost-effective and easier to implement.
• Enterprise ERP: Tailored for large, complex organizations with extensive needs. They often support multiple locations, business units, and international operations.

Based on Industry Vertical

• Industry-Specific ERP: These systems are customized or specialized for specific industries like manufacturing, healthcare, retail, or education. They often include industry-specific features and best practices.

Based on Functionality

• Core ERP: These systems cover essential functions like finance, HR, and supply chain management.
• Extended ERP: These systems go beyond core functions and may include customer relationship management (CRM), business intelligence, e-commerce, and other specialized modules.
• Open Source ERP: ERP systems that are built on open-source technologies and can be customized and extended by the user or developer community.

ERP Suites vs. Best-of-Breed

• ERP Suites: Comprehensive systems that cover a wide range of business functions within a single software package. All modules are integrated, which can simplify data sharing and reporting.
• Best-of-Breed: Organizations choose specialized software for different business functions (e.g., separate HR, CRM, and financial systems) and integrate them to meet their specific needs.
• Mobile ERP: These systems are designed to be accessible and usable on mobile devices, enabling users to access and input data while on the go.

Legacy ERP vs. Modern ERP

Legacy ERP systems refer to older, often outdated systems, while modern ERP systems leverage the latest technologies, including cloud computing, artificial intelligence, and real-time data analysis.

Custom ERP

Some organizations opt to build their ERP systems from scratch or heavily customize existing ERP solutions to precisely meet their unique requirements.

Two-Tier ERP

Large organizations may implement a two-tier ERP strategy where they have one primary ERP system for core functions and a separate, often simpler, ERP system for subsidiary or regional operations.

The choice of ERP system depends on an organization's size, industry, specific business needs, budget, and technological preferences. Selecting the right type of ERP system and its features is crucial to improving business efficiency, data accuracy, and decision-making capabilities.

Why should BI be integrated in ERP systems

Business Intelligence (BI) and Enterprise Resource Planning (ERP) systems serve distinct but complementary purposes within an organization. Integrating BI and ERP systems can offer several advantages:

Enhanced Decision-Making

BI tools provide advanced data analysis and reporting capabilities, allowing users to extract actionable insights from the data stored in the ERP system. This can help decision-makers make informed and data-driven choices.

Real-time Data Access

Integrating BI and ERP systems can provide real-time access to critical business data. This enables users to monitor and react to changes in the business environment promptly.

Data Centralization

ERP systems store a vast amount of data about various aspects of an organization, including finance, inventory, human resources, and more. Integrating BI and ERP systems allows organizations to centralize data, making it easier to access and analyze.

Customized Reporting

BI tools enable users to create customized reports and dashboards tailored to their specific needs. This flexibility can be invaluable for different departments within an organization, such as sales, finance, or production.

Predictive Analytics

BI tools can incorporate predictive analytics, which can help organizations forecast future trends, identify potential issues, and optimize processes. This is especially useful for demand forecasting, inventory management, and financial planning.

Improved Data Quality

Integrating BI and ERP systems can help improve data quality by providing tools to cleanse, validate, and standardize data. This ensures that the data used for analysis is accurate and reliable.

Cross-Functional Insights

ERP systems typically focus on specific business functions (e.g., finance, supply chain, or human resources). By integrating BI, organizations can gain cross-functional insights, uncovering connections and dependencies between different areas of the business.

Self-Service Analytics

BI tools often offer self-service capabilities, allowing non-technical users to create their own reports and conduct ad-hoc analyses. This reduces the burden on IT departments and empowers business users.

Scalability

As an organization grows, its data and reporting needs may evolve. Integrating BI into ERP systems can provide a scalable solution to accommodate increasing data volumes and more complex analytical requirements.

Competitive Advantage

Leveraging BI and ERP systems can give organizations a competitive edge by enabling them to make faster and more informed decisions, optimize processes, and adapt to changing market conditions.

While there are clear advantages to integrating BI and ERP systems, it's essential to plan the integration carefully, ensure data security and privacy, and provide appropriate training and support to users. Additionally, the specific benefits may vary depending on the organization's size, industry, and unique requirements. 

Analysis

From the above points it is clear that BI and ERP have their very own way of improving your business. However, those work the best when two of the systems are integrated with each other. There are so many benefits that you can acquire by implementing both of the systems in the course of your business. Thus, opting for an ERP system, which is powered by Business Intelligence can certainly be a wise move for your business.  

You can also read Why Business Intelligence (BI) Needs To Be Integrated With ERP Systems for learning about how BI and ERP integration works to benefit your business.