What is ERP?
When searching for ERP on Google, you might get shocked of seeing nearly 176 million results. If you have never heard about ERP, you might feel discouraged to get information from these results. Here’s the brief definition of ERP:
“Enterprise resource planning (ERP) is business process management software that uses master data and, often, real-time data”.
There are 3 concepts that should be noted in the definition:
1. Business Process
The operation of a business includes a lot of departments, such as Purchasing, Warehouse Management, Sales, Administration, Human Resources or Financial Accounting. In order to complete the task of each department, BUSINESS PROCESS has to be performed. In other words, the business process is the first formation for the departments to coordinate with each other and perform their duties.
2. Master Data
Generally, businesses have two types of categories: Category of products/services and Category of partners (customers or suppliers). Master Data is simply a code with a unifying name that shared among departments in a company.
3. Real-time data
Real-time data means that when a user updates the system, others will see the change of data immediately. However, in the definition of ERP, the word “OFTEN” was added before the real-time data, because not ERP are the same, for example, Oracle only pushes data when you lock subsystem. There are many vendors of ERP, namely SAP, ORACLE, MICROSOFT, etc.
What is BI?
BI stands for Business Intelligence which is an application used in data analysis. It is said that BI is a type of software for Report and Dashboard. From my point of view, it’s not the full meaning of BI. Unlike Report and Dashboard that are just the ways to convey information to decision makers, BI Tools can do more than that.
BI is a type of software. Each BI tool has its own functions, but for data analysis, a BI product needs to have at least 3 components for 3 stages in data analysis:
- Connect, clean and enrich the data.
- Analyze, predict and graph.
- Share, assign security role and refresh data.
The core of BI is in the SEFT – SERVICE feature, meaning that when doing report analysis, users can get information by using BI tool, without contacting to IT department or the third unit. For that, it requires 3 factors:
- Technology base: If a company has not digitalize data and formed as an organization, it is clear that it doesn’t need to apply BI. BI is data analysis, so first you have to have data.
- Human: BI is just a tool. Therefore, when using BI for analysis, users need to have critical thinking.
- Tools: what you need is a good BI tools.
Some famous BI tool are Tableau, SAP Business Object, Oracle BI, Power BI, Qlik Sence, etc.
Why ERP and BI?
Why should businesses deploy ERP and BI? The benefits of ERP deployment is to standardize business process, master data and real-time data, while BI assists in data mining and analysis. In other words, while ERP can collect and standardize data, BI can allow you to extract data.
The combination of ERP and BI is similar to the construction of a house. ERP is like building the frame of the house and BI is like decorating the house with furniture, landscape and ornaments.
ERP and BI are like two sides of the Information System in businesses. While ERP will help businesses standardize process and data, BI will help businesses exploit that data from different aspects and experience.
Does ERP have to include BI?
Does ERP always include BI in businesses? In my opinion, the asnwer is NO. Technically, ERP and BI have different purposes, so I recommend to add BI to ERP to achieve the EFFICIENCY, and it’s optional. Depending on specific conditions, businesses can deploy appropriate tools.
Is there any overlap when using of ERP and BI? In essence, it is not, but when deploying the systems, ERP and BI can have duplicate data. Every ERP has its own reporting system, so will these reports be duplicated with the mining reports of BI? To answer this question, let’s look at an example. In ERP, there is a Module on managing sales activities, so there will certainly be at least one report on REVENUE after inputting data. In BI, the business analysis also has at least one Dashboard on REVENUE. So are these two reports overlap each other? It is not if the users understand the features of each report.
- If it is a daily, weekly or monthly STATISTIC report on sales: Put this report into Daily Task reports on ERP.
- If it is the ANALYSIS report on sales comparing in many dimensions (time, customers, items, etc.) by months or years: Put this report into the BI reporting system.
It’s not compulsory to deploy both ERP and BI, but adding BI to ERP system will be much better for your business. During the deployment process, it is necessary to distinguish the administrative needs to arrange suitable locations, avoiding duplication and waste of resources.
Tran Thai Giang – FPT ISRelated posts: