Business Intelligence Platforms Boost ERP. (ERP).

The CEO of a business intelligence software provider explores the checkered history of enterprise resource planning applications and concludes that many have failed to deliver on their promises. An integrated business intelligence (BI) platform, he says, offers a solution to a growing ERP implementation issue -- how to easily get critical data into the hands of internal customers.

Enterprise resource planning (ERP) systems brought the vision of a single, integrated processing environment to a diverse mix of business applications. By achieving one information backbone for the organization, the theory went, an ERP system would solve all the organization's information needs.

Encouraged by this vision, many organizations spent millions of dollars on ERP software licenses, consulting services and business process reengineering efforts. Yet ERP systems are far from a magic bullet. These applications are among the most difficult and complex systems to manage, and while they are good at capturing and storing data, their reporting capabilities have often left key users scratching their heads in frustration.

That lack of reporting ease was the crux of a study conducted in 2001 by Hackett Benchmarking & Research, which found that most companies have not truly realized tangible returns on their ERP and decision-support technology investments. Considering the amount of money and time necessary to implement ERP systems, this is not news. What is news is how CFOs and information technology (IT) departments are finding new methods to derive value from ERP installations, quickly and cost-efficiently -- through the application of business intelligence (BI).

Broadly defined as the combination of reporting, data mining and online analytical processing applications, BI brings up-to-the-minute information to centralized repositories (such as ERP data warehouses) to create rich and precisely targeted analytics.

Navigating the complex world of ERP and business intelligence necessitates close watch by the finance department, obviously, since these software investments create challenges in terms of costs, risks and opportunities. Finance executives and their IT counterparts must dodge the obstacles that not only wreak havoc on budgets and reputations, but also erode user confidence. Solutions that ignore user ease and familiarity are doomed, and Band-Aid solutions won't work in the long run.

As with ERP, you can't just bolt on BI applications to existing installations, and there are plenty of hurdles to overcome. Similar to those in any software implementation, these include unrealistic scope, over-reliance on technology, a solution's lack of flexibility, end-user resistance and unexpected maintenance expenses.

BI as a catalyst for improvement

"The bigger the data universe, the greater the opportunity to drive improvement," notes the Aberdeen Group's Dave Sheina. "The ultimate challenge with business intelligence is to separate the wheat from the chaff. It's essential to structure the information so that it is optimized for fast and effective decision-making." Sheina finds two factors crucial to successful BI: the data must be cleansed and formatted to a high level of accuracy, and the IT infrastructure must provide a clear path to BI information.

Yet many would argue that there's one additional, very critical layer essential for success -- that of highly intuitive, user-centric data visualization. What do CFOs and chief information officers want from ERP systems? In the very broadest sense, most would say they want empowered employees who can instantly make the right decisions. This isn't possible if users are encumbered by clunky interfaces that slow down their thought processes and hinder actions.

And that's just looking on the surface. What about programming time and resources? When business analysts are not part of the development process, the final product is often not what they wanted. That's why BI solutions that enable users to easily build report structures -- without over-reliance on programmers -- help validate ERP investments. Organizations that want to truly optimize their ERP spending should consider adding a BI solution that offers:

* Direct access to many types of data sources

* Quick and simple analysis

* Multidimensional presentation of data

* User-focused application creation

Case #1: BI To the Rescue

One of Canada's largest cities embarked on an ERP project in 1996, replacing a legacy mainframe system. The implementation, affecting 24 city departments, addressed accounts payable, purchasing, inventory and financial management. But after spending countless hours and millions of dollars, the city was at an impasse. Basically, the users threw in the towel. And, in what's probably a techie's worst nightmare, employees reverted to the old way of business -- paper.

Many of the 300-plus users found the ERP data too difficult to navigate. There were simply too many alternatives; the wealth and complexity of choices perplexed the users at nearly every turn. The city needed a simpler tool to reach a broader audience.

To further complicate matters, the city had downsized the initial 24 departments to just seven -- so programming staff were stretched to the breaking point.

What could the city do to salvage its investment and also, make people feel good about their jobs? The IT department chose to deploy a business intelligence platform consisting of a development environment and analytic reporting tools. The development environment enabled the in-house team to create the applications using a graphical user interface.

Liberated from writing code, the IT staff was then able to easily respond to user requests. Moreover, the development tool was actually used by the business staff -- in many cases, the users wrote the applications themselves. The end result was a Web-based central repository of more than 70 reports.

What the city benefited from most was the minimal involvement of the programming staff -- a real boon in the downsized environment. After a simple training class, all of the city's employees now access the system every day. Financial results are communicated three days early, enabling department managers to focus quickly on problems as they arise.

According to the city CIO, "Communicating a vision to programmers often takes time and understanding. They might say, 'I think I hear what you're saying,' but what they deliver back is often quite different. It's through no fault of their own -- it's just a different mindset. Giving users the ability to create their own reports goes a long way towards bridging the gap."

Case #2: BI Improves Packaging Reports

Expansion, customization and the complexity of global business processes drove a packaging firm in late 1998 to replace its disparate, home-grown heterogeneous systems with an ERP system. After the initial implementation, senior managers in accounting and finance departments were charged with creating custom management reports on key performance indicators (KPIs) such as sales, inventory, aging and safety.

The process was arduous. Excel spreadsheets for month-end KPIs would take about four to five days to generate and verify. This process involved running various reports from SAP and Hyperion, doing downloads and/or exports. The analyst had to key in information in order to create charts, then go back and verify the information. This was necessary to ensure that nothing was changed in the source systems after creating the extracts, and so that no errors were made in transferring the information to Excel.

Their dissatisfaction with this reporting structure extended beyond the issue of time and resource utilization. Reports were always done at the highest level; so while it was evident that the ERP system was improving their operations in many areas, key users still didn't know the whys and hows. They needed to drill down further to achieve more clarity and depth. While they could identify that "aging had increased," it was difficult to ascertain key factors impacting aging; the analysts needed more on "who, why and how many invoices?"

This company's dilemma wasn't uncommon. There were several shortcomings that prevented these reports from rising to the level of a strong business intelligence system. Many operational databases aren't designed for decision support, so they can't sustain the types of questions asked for decision support. The internal workload can be significant, well beyond the abilities of the average analyst. Writing the queries would be difficult, response time would be hindered and the impact on operational systems performance could be catastrophic. Giving users of a complex ERP system free rein will surely bring the hardware or the network to its knees in seconds, not to mention producing scalability and security issues.

The ERP implementation consultant recommended that the firm deploy a business intelligence platform to gain insight into key areas. Since this new application enables the firm to obtain the information directly from the source application, there is no downloading or keying information to create the reporting, ensuring data integrity. Moreover, the graphical nature of the reports allow users to "see" the numbers.

Report analysts found navigation to be considerably more intuitive to use with the ERP data than the vendor's front-end offering. Oddly enough, responsibilities for report creation have shifted entirely -- to the CIO. While this sounds burdensome, it's actually easier, he claims. In fact, in the time it took one analyst to create a single report in the old reporting system, the CIO can create the query parameters for the entire scope of the company's KPIs.

One key benefit the company has realized from the BI platform is the ability to facilitate decision-making at every hierarchical level, from plant, financial and sales management to the corner office. It's the first thing the CFO and chief operating officer look at in the morning. All it takes is a mouse click to bring up an "executive dashboard," and they can drill down into multiple dimensions, such as business, company, customer or plant.

Insight has improved considerably on a more localized level. The sales force is marketing more strategically and production intelligence has improved, enabling across-the-board analysis of plant efficiency and machine utilization.

In the long run, BI that makes critical knowledge easy and accessible is a smart investment for many organizations implementing ERP. Time can be spent on analysis -- and taking action rather than data retrieval. BI can make an investment in ERP more accessible, more powerful and more valuable - by giving insight back to key business users.

Ronald Hoelscher is CEO of arcplan Inc., a developer of business intelligence and analytical reporting applications, with offices in the U.S. and Germany. He can be reached at [e-mail].