Question

What is the potential of BI (Business Intelligence) in ERP (Employment Resource Planning) System? Refer and cite scientific papers in your answer.

Word limit 1000 words

Answer 1

BI is defined as system which collects, transforms and presents structured data from multiple sources BI systems have the potential to shorten the time to obtain relevant information and enable efficient utilization.

ERP system is defined as an enterprise-wide set of management tools which balances demand and supply, having the ability to link customers and suppliers into a complete supply chain, employing proven business processes for decision making and also providing high degrees of cross-functional integration among sales, marketing, manufacturing, operations, logistics, purchasing, finance, new product development and human resources, thereby enabling people to run business with high levels of customer service and productivity and lower costs and inventories and providing the foundation for effective e-commerce operations.

The most current information technology is to gather together all required data from the ERP system and then load them on to a data warehouse and then link to BI tools (such as OLAP, data mining, query and reporting). ERP with collaboration of BI is expected to be much more competitive and flexible in order to share information and data for decision making and control. Therefore, to have success in the ERP, the organization must have and shared knowledge on many different manifestations around the BI process since the importance of BI ERP partners has been commonly recognized.

Businesses recognize the wealth of information within the ERP systems. The main challenge lies in the ways of mining these systems. Since ERP systems were not originally designed to provide real-time reports to massive number of users, the entire system could not facilitate the decision support function. In the context of ERP, BI is the process of leveraging detailed customer behaviour information to best manage relationships for achieving maximum customer satisfaction, loyalty, retention and profitability. Thus, a key component of the BI strategy is a data management infrastructure that enables companies to recognize in real-time the changes in a customer's behaviour that can signal when there is a high probability that the customer will respond positively.
Most businesses have a good market research capability that helps them understand customers’ needs and expectations. However, just knowing customers is not enough. Companies must also know about their competitive environment. The market place makes use of application packages which are growing at a rapid pace across all business areas, especially in BI and ERP systems. This growth is occurring not only for application packages that handle business transaction processing, but also for packaged solutions that support business BI as well as data warehousing.

An ERPBI system integrates modules like production scheduling, sales management, customer relationship management, accounts receivable, accounts payable, project management, material requirements planning, inventory control, reports, general ledger etc. Many of the roles and responsibilities of business and IT need to be defined in order to make ERPBI successful. It's recommended that the following roles should be performed full-time dedicated personnel as much as possible and that each person should receive specific training.
The value of the right ERPBI system comes from the integration between modules and the ability to achieve targets, including reduction in paperwork, improved productivity, lower costs and more reliable performance.
Another value that is important but not as easy to translate into money is the value of the process being seamless and reliable. ERPBI users have the ability to maintain agreements with customers with respect to the full delivery and in a timely manner and can communicate more effectively on the progress of the project or a specific production order. Also for the other important value of improved productivity, when properly applied, the ERPBI system reduces wastage of time and material. Built-in intelligence and bases can be applied, e.g. so that similar types of production orders are combined to make more efficient use of the workforce, machines and materials. ERPBI also reduces IT infrastructure costs by integrating information and eliminating redundant data extraction processes and duplicate data housed in the enterprise independent data marts across. ERPBI also saves time for both data suppliers and users because of more efficient data delivery.

The integration of ERP and BI can help to enhance and improve the ability of company's decision-making by leveraging the ability to manage data from the ERP system and the analytical capabilities of the BI system. This integration leads to the optimal use of both ERP and BI systems. This integration has the following benefits-
- Control the recognition of corporate cash flow in real time
- Facilitating a company to implement cooperation between different departments
- Reducing time required to generate regular reports
- Improving profitability by transaction data analysis and forecasting of business trends
- Enabling finance personnel to create financial revenue reports quickly
- Improving accounts payable and vendor relationship management
- Enable management of the sales force
- Providing online access to the data, which saves access time.

- Improving relations with customers through in-depth data mining of sales.

- Sharing information with the sales department which allows to make better decisions based on a macro view of the business