ERP and Business Intelligence: Why Your Organisation Needs Both

Enterprise resource planning (ERP) is an increasingly popular technology in charities and other organisations that want to gather, analyze and share insights across the organisation. With cloud software, ERP is now within the reach of small organisations right through to global organisations.

Consider the example of a small 15 employee charity that delivers dreams for children with life-impacting illnesses. The organisation would be greatly assisted by a real-time view of grants and the spends of those grants on individual children. This visibility would make it easier to raise more money, to make more dreams come true. 

While ERP systems are great at connecting the dots between business processes to find efficiencies, there is a call these days for even more: Real-time data analysis and insights that help organizations make smarter decisions. In the above example, a real time view of individual dreams, with both income and spends would be really useful.

Enter business intelligence technology, or BI. Combined, ERP and BI increase an organisation’s agility, help leaders with oversight and pave the way for the organisation to achieve more.

What Is ERP?

Organisations use ERP software to automate business processes and gain a central hub for insights and controls. A modern ERP System for a charity draws on a central database that collects inputs from departments including finance, operations, workforce planning and meeting the requirements of grant making bodies. Thanks to that central database, stakeholders gain cross-departmental insights that they can use to analyze various scenarios, perform financial planning and analysis (FP&A) and teasing out process improvements that can translate to major efficiency gains, cost savings and better productivity as people spend less time searching for needed data.

That sums up an ERP systems’ key value: the ability to optimize and automate essential operational processes, such as financial and workforce planning, freeing up time and resources for strategic endeavors.

What Is Business Intelligence (BI)?

Like ERP systems, business intelligence (BI) software provides organisations with a comprehensive view of their operations, enabling leaders to base business decisions on data. BI also plays a central role in both high-level strategy and tactical responses to market demands, helping charities operate more efficiently, focus on their mission and ultimately increase impact.

In practice, BI helps generate dashboards, reports, customer-facing IT systems and external sources to deliver a detailed, transparent view of the organisation’s current standing by pulling data from a centralized repository. It produces comprehensive, detailed analyses that help users improve operations in both their front and back offices. For instance, if a charity is looking to increase its grants and carrying out more projects to help its beneficiaries, analysis from BI can pinpoint operational bottlenecks and devise a plan that shows grant making bodies clearly and simply the benefit that is being delivered.

What Are the Key Differences Between ERP and BI?

ERP and BI overlap in many ways, but they have different strengths. An ERP system primarily serves as a process management software that manages and integrates important business processes like procure to pay, grant management, supplier management, actual to budget performance, financials etc. As a unified process system, centralized data breaks down silos and promotes greater efficiency across the organization. BI takes this data further, enabling businesses to organize, analyze and contextualize information from around the company to generate actionable insights.

The creation of dashboards and other visualizations to make complex data easier to understand.

ERP and BI also support different levels of decision-making. ERP systems add most value at the operational level, giving charities a precise view of how each of their functions is performing at the moment. BI analyzes that and other data, helping charities dive deeper into their performance metrics and uncover trends that, in turn, can be used to fine-tune their strategies at a high level, a granular level — or both.

Whether for analyzing the ROI of a new digital marketing strategy or calculating the cost savings delivered by a more real-time approach to delivering projects, BI systems drive performance improvements while containing costs, including saving time and resources.

OLTP + OLAP: Better Together

An online transaction processing (OLTP) system is a data processing system used by enterprises to record transactions. ERP is an example of an OLTP system. Business intelligence, on the other hand, is built on an online analytical process (OLAP) system, which offers multidimensional analytical capabilities.

OLTP

OLAP

Constantly updated

Less frequent updates

Operational data sources

Consolidated data sets

Relatively standardized queries

Complex, freeform queries

Returns responses quickly

May take some time to process queries

Original data source of record

Captures and maintains transaction data in a database,
such as purchase transaction or vendor payment

Draws data from multiple sources, including ERP

Evolution of ERP and BI

ERP has its roots in the material requirements planning systems used by manufacturers in the 1960s. In the 1980s, these systems evolved to manufacturing resource planning systems, helping to improve production planning. The unified business management platform debuted the following decade, paving the way for on-premises, then hosted, then cloud-based to consolidate business-wide processes onto one central database and make insights available anytime, anywhere.

BI had a similar trajectory, with roots in the decision-support systems introduced in the 1960s and further developed through the 1980s. BI started to take off as an on-premises solution in the late 1990s; only in the past few years have vendors started to offer BI solutions in the cloud.

Nowadays, ERP systems are typically integrated with BI in the cloud. Not only does this remove the burden of hosting, maintaining and paying for on-premises infrastructure, it allows for real-time integration of data between systems and, as a result, smarter decision-making.

Integration of Business Intelligence and ERP

Data and analysis have always been at the core of sound business decision-making. But these days the vast amounts of data, structured and unstructured, that companies collect mean they require a way to organize, store and analyze this information at scale. The integration of ERP and BI brings everything together, helping users consolidate millions of data points into clear, actionable insights.

Forward-looking charities want to shift from historical reporting to predictive modeling, that has also driven the rising popularity of ERP-BI integration. The ability to spot trends and patterns, anticipate shifts in the market and proactively adjust plans are all ‘must haves’ not nice to haves in today’s digital world.

Why Business Intelligence in ERP?

BI and ERP software are not only complementary, they enhance each other’s performance.

ERP systems are integral to data analysis, breaking down silos between essential functions like finance, increasing income and spending. BI turns all of these information sources into more than the sum of their parts, drawing on operational data from the ERP system and advancing it into actionable insights that directly serve the organisation’s strategic ambitions.

Consider the example of a charity that delivers dreams for children with life-impacting illnesses. With a real-time view of grants and donations, in a single database along with spends on individual children and some ‘lite’ project management of the dreams delivery, the charity can strike the right balance between the various stakeholders to achieve more impact.

Today, BI cannot exist without ERP. BI software mines ERP databases and, via dashboards and other visualizations, makes it easier for stakeholders across the charity to consume insights. Meanwhile, ERP systems play a bigger role in strategic decision-making when elevated by BI capabilities.

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