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Business Intelligence in ERP: Role and Benefits

  • Soumalya Bhattacharyya
  • Aug 15, 2022
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Business intelligence (BI) is the transformation of data into useful insights that facilitate quicker and better decision-making. Business intelligence ERP systems may act as the eyes and ears of your company, enabling you to track your selected key performance indicators and make adjustments when they aren't performing as they should.

 

Data and business intelligence (BI) have always been essential to firms and to making wise business decisions, but what has changed over the past several years is the enormous amount of data that can now be collected and stored. 

 

With so much data readily available, a solution must be found to arrange it all so that it makes sense for organizations. This is where business intelligence in ERP comes into play.

 

Accounting, operations, manufacturing, and sales are just a few of the departments that might benefit from enterprise resource planning (ERP), which is a standard technology used by companies that wish to collect, analyze, and exchange information across many departments from a single database. 

 

ERP systems are excellent at bridging the gaps between corporate processes to identify inefficiencies, but these days, surviving the competition necessitates even more: real-time data analysis and insights that assist firms in making better decisions.


 

Evolution of ERP and BI

 

The material needs planning methods that firms utilized in the 1960s are where ERP got its start. These systems developed into manufacturing resource planning systems in the 1980s, which aided in bettering production scheduling. 

 

The next ten years saw the introduction of the unified business management platform, which paved the way for on-premises, hosted, and cloud-based ERP to bring all enterprise-wide operations together on a single database and make insights accessible from anywhere at any time.

 

As with decision-support systems, which were first introduced in the 1960s and progressively improved through the 1980s, BI followed a similar path. Only recently have vendors begun to offer BI solutions in the cloud; BI began to gain popularity as an on-premises solution in the late 1990s.

 

Presently, BI in the cloud is often linked with ERP systems. This not only frees up resources that would otherwise be needed to host, support, and pay for on-premises equipment, but it also enables real-time data integration between systems, enabling better decision-making.

 

Integration of Business Intelligence and ERP 

 

The foundation of wise commercial decision-making has always been data and analysis. However, because of the enormous volumes of structured and unstructured data that businesses now gather, a method for storing, organizing, and analyzing this data at scale is needed. 

 

The combination of ERP and BI makes everything work together, allowing users to compile millions of data points into understandable, useful insights. The desire of forward-thinking firms to switch from historical reporting to predictive modeling has also fueled the growing acceptance of ERP-BI integration. 

 

In the modern digital economy, being able to recognise trends and patterns, foresee market movements, and proactively alter plans all provide one a competitive advantage.

 

Key Differences Between ERP and BI

 

There are numerous areas where ERP and BI overlap, yet each has its own advantages. The main function of an ERP system is to manage and integrate crucial business operations including production, inventory control, finance, supply chain management, etc. 

 

  1. Centralized data eliminates silos and fosters increased efficiency throughout the company since it is a single process system. With BI, organizations can organize, analyze, and interpret data from throughout the organization to provide insights that can be put to use.

 

  1. Different levels of decision-making are also supported by ERP and BI. The operational level is where ERP systems are most valuable, giving firms a clear picture of how each of its activities is currently working.

 

  1. BI analyses the information as well as other data, assisting businesses in delving deeper into their performance indicators and seeing trends that may then be utilized to adjust their plans at either a general level or a more detailed one, or both.

 

  1. BI systems help to increase performance while controlling expenses, including time and resource savings, whether they are used to determine the return on investment of a new digital marketing strategy or to calculate the cost reductions generated by a more real-time approach to inventory management.


 

Why is Business Intelligence used in ERP?

 

ERP and BI software work in tandem to improve one another's capabilities. ERP systems are crucial to data analysis because they eliminate silos across crucial business processes like finance, human resources, operations, and sales. 

 

Through the use of operational data from the ERP system and the advancement of that data into useful insights that directly support the strategic goals of the company, BI makes all of these information sources more valuable than the sum of their individual parts.

 

Take a food merchant as an example. To control costs and prevent the rotting of perishable goods, the shop must continually improve its inventory management and delivery operations. The store can achieve the ideal balance between volume, speed, and waste if it has a real-time picture of its inventory, supply chain, and consumer demand.

 

Today, BI is incompatible with ERP. By mining ERP datasets, BI software facilitates the consumption of insights by stakeholders across the organization via dashboards and other visualizations. However, when enhanced with BI capabilities, ERP systems play a larger role in strategic decision-making.


 

Role of Business Intelligence in ERP

 

ERP systems have emerged as a pillar for increasing the effectiveness of activities connected to data collecting. But as the majority of businesses rapidly discover, merely having an established ERP solution is of little utility. Utilizing business intelligence tools is crucial if you want the data to be useful.

 

Business intelligence is crucial to ERP for the following reasons:

 

  1. Data Warehousing

 

Even a small ERP solution has a tendency to produce enormous volumes of data every day. And if this data is not also categorized and processed, you end up with a massive data repository that has little real-world application. More proactive data warehousing is required in this case, which falls under the category of business intelligence.

 

  1. Legacy

 

Data left over from earlier software or processes, or "legacy data," is another crucial component of a company. While businesses are aware of the value of historical data, they frequently struggle to draw conclusions from it. Once more, the only way a proper analysis can be done is through business intelligence tools.

 

  1. Elimination of guesswork

 

With the correct BI technologies in place, businesses can stop relying on their "gut instinct" to make critical strategic choices. With the help of business intelligence, it is possible to extract accurate information from data and analyze pertinent trends and patterns.


 

Benefits of Business Intelligence in ERP

 

Beyond transforming data into visual insights that guide decision-making across the enterprise, BI improves ERP systems in a number of other ways. Here are seven of the main advantages of ERP-BI integration in more detail:


The image shows the Benefits of Business Intelligence in ERP which includes Data collection and analysis, Customized Reporting, Forecasting capabilities, Real-time judgments and Risk Minimization.

Benefits of Business Intelligence in ERP


 

  1. Data collection and analysis

 

ERP systems produce huge amounts of raw data, and there is always more value that can be extracted from it. Businesses may obtain comprehensive insights from their data within their ERP platforms thanks to BI integration.

 

  1. Customization

 

Individual stakeholders may have their own data analysis mandates and expectations, even though all teams within a company are working toward the same objective. Each team can produce the reports and dashboards they need to achieve their goals thanks to an integrated BI-ERP solution.

 

  1. Forecasting capabilities

 

While BI makes it possible to do predictive analysis and modeling, historical ERP data provides insights into past performance. They give businesses a complete picture of their past, present, and potential future.

 

  1. Real-time judgments

 

Traditional reporting is retroactive, but as was already mentioned, firms must become more predictive to remain competitive. To support better, quicker decision-making, BI delivers data and analytics in real time.

 

  1. Comprehensive Insights

 

Businesses don't have to switch back and forth between platforms to evaluate their performance when BI and ERP are connected. There is a single location with all the required data, ready to be utilized for straightforward reporting, predictive modeling, or to respond to particular questions.

 

  1. Efficiency

 

Businesses may aggregate, arrange, and analyze big data sets from several sources in real time thanks to BI integrated into ERP. With this increase in speed, a key obstacle that has historically limited company agility is removed.

 

  1. Reporting

 

Creating reports is the first stage in processing data. It displays data with varying degrees of interaction, including choices for filtering, sorting, and drilling down. Additionally, there are certain other features that let the user personalize the data for deeper insights.

 

Reporting is improved by BI by enabling teams to use greater datasets for more in-depth studies and by accelerating the report generating process. Furthermore, straightforward dashboards enable authorized people across the firm to view reports regardless of their degree of technical ability.

 

  1. Cost Reduction

 

There are expenses related to the management and deployment of BI, but the ROI is significant enough to cover them. Costs for data collecting, report preparation, programming, and IT training are reduced.

 

  1. Risk Minimization

 

Naturally, there are some dangers associated with doing company, but the BI reporting tools will assist in lowering those risks. The BI solutions aid the firms in fully comprehending the facts by offering real-time, very accurate reports. In the end, it assists in doing away with the necessity for speculation.

 

Also Read | Applications of Business Intelligence


 

Future of Business Intelligence in ERP

 

The two technologies will get progressively more entangled as ERP and BI develop. Decision-makers will depend more and more on real-time insights into their operations, and data and analytics will play an ever larger role in determining company strategy.

 

ERP and BI working together will also encourage improved teamwork. Data silos between functions are eliminated by ERP systems, and decision-makers may pool their resources and collaborate to achieve shared objectives thanks to BI.

 

The best ERP systems assist businesses in maintaining control over their data and processes. To organize and analyze huge data sets, however, in order to make them comprehensible and useful, BI is required.

 

These beneficial features are brought together, in one location, in real time, and at the disposal of the entire business with an integrated ERP-BI system. Trendspotting, which provides companies time to proactively adapt their plans, and improved reporting based on bigger data sets are further advantages.

 

While we speculate about BI's future, it is crucial to realize that the business intelligence software market is expanding quickly. The BI tools will soon support cooperation by becoming more collaborative.

 

Additionally, the integration of third-party systems with BI will increase, making it easier to process data and respond to useful insights. The technical infrastructure will be improved to enable business intelligence systems and will be able to handle enormous amounts of data.

 

When you combine the power of ERP and the power of BI, you have access to insight that is data-rich and can help you make choices more quickly and intelligently. One of the main motives behind ERP adoption in business intelligence is increased data insights.

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