Enterprise resource planning software is at the core of many larger businesses, but in today’s fast-moving world it is more crucial than ever that it acts as a source of data.
When we think about tools for analysing data in business today, at least beyond the level of using spreadsheets as universal tools, typically business intelligence (BI) software is the first thing that comes to mind. But BI has to get information from somewhere, and one of the best sources is often ignored.
And yet, enterprise resource planning (ERP) platforms, essentially comprehensive business management systems, provide a centralised platform for managing core business activities such as finance, human resources, inventory, procurement, manufacturing, and customer relationship management. It sounds very much like the two should have a close relationship, with ERP driving data into BI tools.
This is the case, said Padraig McCarthy, group sales director at TEKenable. ERPs are designed to help optimise processes, deliver business efficiencies and reduce costs of production, procurement, sales, marketing, employee management and distribution, he said.
“However, in doing so, there is an inordinate amount of transactional ‘real-time’ data being generated that, if harnessed properly, can serve as a vault of key business, customer, financial, employee and operational insights that will help businesses make better, more responsive and more informed business decisions,” he said.
As a result, ERP and BI tools have a symbiotic relationship in that the data generated by ERP software can be brought into BI tools to provide valuable insights to businesses.
“Business intelligence tools like Microsoft Power BI can collate, aggregate and surface the data generated by ERPs into easy-to-understand dashboards and reports,” McCarthy said.
For example, supply chain, operational capacity, stock levels and debtor issues can be quickly identified, and plans put in place to resolve or mitigate issues.
“Power BI can quickly identify trends and where performance improvements can be made across a range of departmental areas such as sales, marketing, operations, inventory management and manufacturing that will result in reduced costs, increased efficiencies, resource optimisation and better customer service,” he said.
Power BI can not only offer analysis and insights on past data, he said, but it can also be used for predictive analysis and modelling to help companies determine the ‘most likely’ future outcomes based on past and present data.
“This is very pertinent in marketing campaign management, capacity planning, customer churn analysis, asset management and evaluating the impact of external factors such as higher inflation and interest rates, for example, on sales revenue and production costs,” McCarthy said.
ERP is a key source of data that is often left untapped.
“Many organisations see ERPs just as a process management tool for the various departmental functions such as sales, marketing, finance, manufacturing, inventory management and operations and [as a result] do not delve into and analyse the transactional data being generated,” McCarthy said.
That is, in essence, an untapped Klondike of valuable business and customer information.
“Data flows through the entire lead to cash and procure to pay processes. By holistically looking at the data and its journey through the ERP system, a wealth of in-depth and actionable insights can be gleaned,” he said.
These insights can then be used to optimise process improvements, perform deep dive financial analysis, provide a real-time view of potential inventory shortages, supply chain or production capacity issues, and provide an accurate picture of the health of the business at a given moment in time.
McCarthy likened having access to this information to the well-known adage about healthcare: prevention is better than cure.
“Like our own health, prevention is better than trying to cure a problem,” he said.
“Using analytics can also highlight areas where more information is required because data is not clearly visible or obscure – and that is also an untapped source of information,” he said.
Today, most forward-looking enterprises look to the cloud for ERP as it enables a level of flexibility that is difficult to achieve with on-premise systems. And while migration is rarely popular with management – or with IT departments, for that matter – it is widely recognised as being worth the effort.
Most businesses with on-premise ERP systems are now moving to the cloud, McCarthy said, and are doing so for a variety of reasons.
“The main ones being that the rapidity of technological change means on-premise systems lag behind cloud solutions in terms of functional capability, scalability, running costs and also in terms of data and system security,” he said.
“Cloud solutions like Microsoft Business Central democratise technology and bring it to all sizes of organisations, in that technology that previously could only be afforded by large enterprises is now available to the SMB [small and medium business] sector.”
However, migrating data presents a lot of challenges that businesses need to be cognisant of and plans put in place to ensure a smooth and seamless migration as possible.
The main challenge is that data in the old system is not properly sanitised, analysed and checked for duplication, missing information, incorrect data and misspelling prior to the data migration. This problem can be solved, however.
“Close collaboration and the use of robust and proven migration tools by the people involved in the data migration project is an imperative for a successful data migration,” said McCarthy.
“Thorough testing of the migrated data by the business, functional and technical team is critical to the success of a data migration to ensure that no incorrect, corrupt, or bad data is ingested into the new system.”
While migration of on-premise systems to the cloud is challenging, the benefits are real, McCarthy said, not least because it will get the data into shape.
“It gives you a reason to cleanse your data and streamline business processes. That in itself is a good thing,” he said.
The above interview text reproduced here first appeared in Business Post on June 23rd, 2023.