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Why do companies need both ERP and Business intelligence?

Business intelligence
Reading Time: 5 minutes

Summary: Enterprise Resource Planning (ERP) software has been helping companies across industries by increasing their efficiency, improving productivity, eliminating wastage, and reducing costs. It also allows businesses to store critical business data at a single repository and share it with stakeholders spread across numerous geographical locations. But these features no longer provide competitive benefits because ERP systems have become very common today. Therefore, you need something that will keep you ahead in the league. And fortunately, Business Intelligence (BI) allows you to do just that. It updates the senior management about the changing market trends and customer preferences, enables taking critical decisions faster and smarter, and forecasts which products customers are most likely to purchase in the coming times.

ERP

What is ERP software?

ERP software allows businesses to automate critical business functions, including production & manufacturing, sales & marketing, warehouse & logistics, supply chain management, finance & accounting, customer relationship management, and sending and receiving business quotes quickly.

ERP’s central database allows businesses to collect, access, and share crucial information with stakeholders anytime, anywhere, and through any connected device. As a result, the speed at which companies can share valuable insights has dramatically increased. Moreover, financial planning & analysis (FPA), scenario planning, and forecasting allow organizations to cut costs, increase productivity gains, and spend much less time searching for critical data. 

As a result, employees can focus on mission-critical tasks and the business can dedicate more resources for accomplishing strategic endeavors. 

<<<Also Read: How can Business Intelligence significantly improve your ERP software?>>>

What is Business Intelligence?

Business Intelligence has recently come into the picture, and it’s already enabling businesses to get a comprehensive view of their operations. BI allows business leaders to make decisions based on real-time data. It also plays a crucial role in brainstorming high-level strategies and tactically responding to changing market conditions. As a result, organizations can better focus on their competitive advantages, ensuring an increase in productivity and profitability over the short- and long term.

What are the features of Business Intelligence?

Essential BI features are listed below:

  • Provides a transparent view of the company by generating reports, dashboards, and external resources.
  • Performs data crunching and analysis, allowing users to significantly improve their front and back-office operations.
  • Suggest multiple ways of solving a complex business challenge based on factual data.

For example, if a vendor/supplier/distributor is experiencing shipment delays. BI can identify bottlenecks and recommend a better route for shipments to reach their destination quickly.

<<<Also Read: Business Intelligence Solutions for Optimum Business growth>>>

What are the most substantial differences between ERP and BI?

There are many similarities between ERP and BI, and therefore, several ERP vendors provide BI as an ERP module at no extra cost.

However, the primary difference is that ERP software collects and shares critical data from various business departments, thereby destroying information silos and promoting inter-departmental efficiency. On the other hand, BI uses data-crunching techniques to analyze this data and produce valuable insights that enable senior leaders to brainstorm effective strategies. It also uncovers market trends that would otherwise be oblivious to the human eye, delivers a comprehensive view of essential business metrics, and enables businesses to fine-tune high-level strategies to ensure better productivity.

BI’s other benefits are getting an approximate estimate of the ROI of digital marketing strategies, calculating cost savings by implementing a real-time approach to managing inventory, and analyzing the exact quantity of crucial resources that might be required in the coming months.

ERP + BI: The future is both together

Before moving forward, you need to understand two concepts: Online Transaction Processing (OLTP) and Online Analytical Process (OLAP).

ERP software is built on the OLTP model that allows businesses to store data by recording transactions. 

On the other hand, BI is built upon the OLAP model enabling businesses to analyze business decisions through multiple lenses. 

The table below explains the differences better.

Business intelligence

What is the need to integrate ERP and BI?

Today, businesses have to collect critical data, structured and unstructured, across multiple fields to make sound decisions. But the presence of vast amounts of data makes it challenging for employees to derive valuable insights. This is where ERP and BI play a pivotal role. They collect data from millions of data points, providing clear and practical insights to users. 

Another point why the popularity of ERP and BI is rising is that they allow organizations to use predictive modeling instead of historical reporting. It’s because predictive modeling helps to spot invisible market trends, proactively respond to customer queries, and better capitalize on today’s digital economy.

The following example will better explain the need to integrate these two technologies.

Consider a potato chips manufacturer decides to start a factory. Then, they need to take care of the following things:

  • Ensure potato chips are manufactured in different flavors to increase market share.
  • Check that an adequate quantity of potato chips are manufactured within the pre-defined time
  • Ensure potato chips reach consumers spread across a vast territory while keeping the delivery cost in check.
  • Make sure that the quality of potato chips remains intact for an extended period.

The above four points ensure that ERP and BI are interdependent software solutions. It’s because the ERP system collects and stores data in a single repository, and then the BI software pulls each data point, analyzes it, and provides valuable insight. The best part is that the end-user can read this data using easy-to-understand dashboards and visualization techniques.

<<<Also Read: ERP: Putting intelligence at the crux of your manufacturing business>>>

Top 6 Benefits of Business Intelligence in ERP

BI turns data into easy-to-understand visual analysis that allows the senior management to make better decisions. But there are several other benefits also:

  1. Customized data: Although all business stakeholders collectively work to enable the organization to achieve its long-term goals, individual stakeholders might have their requirements and data analysis mandates. Integrated BI-ERP software empowers every team to generate dashboards and reports for accomplishing their tasks within the pre-defined duration.

 

  1. Real-time decisions: Traditional ERP systems follow a retrospective reporting form that considers historical information. But today, managers need a proper understanding of changing market trends and customer preferences to make real-time decisions. This is where BI comes into the picture. It analyzes data in real-time, allowing senior management to make crucial decisions quickly and efficiently.

 

  1. Increase in efficiency: Integrated BI-ERP system allows companies to organize and analyze vast data sets from numerous sources in real-time. This way, companies can significantly increase operational efficiency, which has always been a point of contention with traditional ERP software.

 

  1. Predictive capabilities: ERP leads the way to offer insights into historical performance. And BI takes it a step further by providing predictive analytics and modeling that forecast what the future holds for the organization. Together, they offer a comprehensive view of its previous, present, and future performance.

 

  1. Data collection & analysis: ERP systems generate and collect vast amounts of data about a company and store it in safe and secure repositories that can be shared and accessed by relevant business stakeholders. On the other hand, BI derives in-depth and valuable insights from that data. 

 

  1. Reports: BI allows ERP software to accelerate the report-generation process and generate simple dashboards that are easy to interpret and analyze. Simple dashboards allow employees to comprehend critical business data irrespective of where they stand in the hierarchy.

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At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. You can also write to us at sales@sagesoftware.co.in.

Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.

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