If you were to spend a chunk of time researching the technology tools and processes that can best take your business to new heights, it wouldn’t be long before you came across the term Business Intelligence (BI). This term crops up frequently when discussing Enterprise Resource Planning (ERP) technology because the two are somewhat related. Related, yes, but also rather distinct.
ERP systems are designed to integrate all the disparate functions of an organisation within the one centralised software platform. It solves the serious problems that arise when a business stores its data across disparate systems that do not allow for the easy sharing of that data between different business units. ERP gathers, stores and manages all a business’s data from the one place. This enables improved efficiencies, higher productivity and substantial cost-savings, amongst other benefits.
The amount of data that a business typically has stored in its ERP system is vast. Your business’s ERP system may for example hold data relating to accounts, warehousing, inventory, marketing, sales, job scheduling, shipping, delivery … the list goes on. And while it’s great to have all that data, it’s of limited practical value if it can’t be used to make better business decisions. This is where Business Intelligence steps in.
So what exactly is Business Intelligence?
BI is essentially all about turning data into information and information into meaningful, actionable insights. ERP collects data, BI analyses that data and presents it so it can be easily understood and practically applied. Or, put another way, BI makes sense of the data that you already have stored in your ERP.
The ‘easy to understand’ aspect of Business Intelligence is important because it means that BI can be applied by those with a non-technical background. Previously it was largely the responsibility of IT professionals and specialist business analysts to make use of at‑times complicated data. These days that is no longer the case. With a little instruction, managers at all levels will be able to grasp the fundamentals of Business Intelligence and use it to their business’s advantage.
Effective BI is no longer only accessible to large enterprises with big budgets and complex requirements. Just as the application of ERP technology has become widespread amongst SMEs, so has BI. It’s not just for the big boys anymore.
Businesses use BI in a wide variety of ways, from improving day‑to‑day operations through to long‑term strategic planning. Business analytics, dashboards and the smart use of reporting are some of the primary means through which BI achieves its objectives. Using these methodologies, managers can interrogate their business data and identify relationships between different data sets. They can then use their accumulated knowledge to detect trends, identify inefficiencies and reach conclusions that can lead to better informed decisions.
Now if all that sounds a little abstract, let’s get more specific. How can you apply BI in your business to make it more successful?
Previously, people had to wait hours or even days to receive data relating to occurrences within your business. In today’s environment that’s no longer acceptable – customers, suppliers and other stakeholders (both internally and externally) expect fast action. For example, a product gets shipped to the wrong address, or a customer receives something they didn’t even order, or a product is defective. What went wrong? When’s the time to fix it? Well, now of course!
Business Intelligence enables real‑time reporting so that you can drill down into the causes and ramifications of events as they occur and make the necessary adjustments quickly.
But it’s not just when things go wrong that real-time reporting comes into play. Using BI, you can generate real‑time reports on virtually any aspect of your business. This allows you to spot emerging growth opportunities, shifts in customer demand and other trends that may impact your future business operations.
Business Intelligence leads to improved Inventory Management
By setting metrics to track in your ERP system and analysing the data, you can gain a complete view of your inventory. Using BI you will be able to easily identify which inventory items are selling well and which aren’t. You can also see which products are the most and least profitable, which types of customers are purchasing which products, and when. Stock levels are also presented in real time. Meaning you can identify and respond to instances of over‑stocked and under‑stocked inventory without delay.
Additionally, BI can provide insights into warehouse operations. You can compare the performance of your warehouses with each other. This way you know where resources should best be allocated.
ERP provides a single, unified version of reality. Rather than individual business units making managerial decisions based solely on the data that pertains to their functional area only, ERP combines data from all business functions to provide a company‑wide overview of business operations. Put simply, collaboration and knowledge‑sharing amongst business units becomes easier, more efficient and more inclusive. As a silo-busting tool BI does a superb job. Those who use it to plan for the future gain a full understanding of how a shift in one area will impact other business functions.
Improved Cost Management
Are the costs associated with running certain aspects of your business getting out of control? Have budget blowouts become a troublesome issue? BI offers you complete visibility of your operational costs and expenses, allowing you to pinpoint areas where costs can be reduced. Starting with a budget analysis, you can identify which business activities are generating the required return on investment and which are not.
You may, for example, discover that some of your marketing activities really are a waste of time and money. While other marketing initiatives are being under‑exploited as customer acquisition strategies. You may also discover inefficiencies within your procurement, warehousing and distribution process that are contributing to unnecessary cost over‑runs. The list is endless.
What BI essentially does is bring cost‑cutting opportunities to the surface in the form of cold, hard data. It’s the top‑down perspective that converts the imperceptible into the obvious. Once armed with the information you need, you can take a hammer blow to excess spending. You can be confident in the knowledge that your cost‑cutting tactics are backed up by solid, reliable and up‑to‑date information.
Business Intelligence is the ideal tool for unlocking the data in your ERP system and putting it to valuable use. The best business decisions are, after all, those that are based on reliable, comprehensive and up‑to‑date information. This is what BI provides. When it comes to pointing you in the right direction, BI is in a class of its own.
And the more you get into BI, the more dependant you will be on it as a process for continuous business improvement. After a while, you’ll probably wonder how you ever got by without it. If you would like to find out more about leveraging Business Intelligence, read here.