The big money question is this: If a company opts for getting business intelligence (BI) from its ERP vendor, can...
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it avoid the time-consuming and expensive data prep work of integrating BI with ERP? The notion is, of course, that if you're looking to tap BI with an ERP-based system, shouldn't that data be clean and ready to go?
"You'd like to think that, but this only works in a homogenous environment," said R. "Ray" Wang, a partner in enterprise strategy with Altimeter Group. "Data quality and governance will be minimized, but most [BI] systems will be augmented by many sources of data. In some cases, these will be unstructured as well."
That said, in terms of prepping systems and processes, ERP vendors can often offer a leg-up.
"There is a key advantage, and it's easy to understand: When an ERP provider has done a lot of the work, the customer doesn't have to worry about it if there is prebuilt and predesigned reporting and analytics as part of their ERP applications," said John Hagerty, vice president and research fellow of BI and EPM for AMR Research.
"Years ago, that was something that everyone had to build on their own, and now they don't have to," he explained.
"A secondary benefit is that companies used to implement ERP and then, toward the end of the implementation, realize that they needed reporting, which was a separate cycle. But now that it's embedded, reporting isn't an afterthought," Hagerty added. "They are part and parcel, and you need to implement these together going forward."
This also means that now, for some companies, analytics can be included within some ERP upgrade cycles, which helps spread out the implementation work -- as well as the cost.
However, even companies with a strong ERP presence can run into data issues, according to Boris Evelson, principal analyst of BI for Cambridge, Mass.-based Forrester Research.
ERP-focused companies can sometimes save on data quality efforts, Evelson said, but "this is only if the ERP applications are mostly used as-is, without major customizations -- and that's not typically the case in larger enterprises where they heavily modify their ERP apps. Also, few large enterprises have one ERP solution. Most have several or one off-the-shelf ERP plus many custom-built apps."
In most cases, you can't get away from integration and prep work, Evelson said, even if you're using BI from your ERP vendor.
Preparing data for using BI with ERP
Ideally, an organization will have a master data management (MDM) plan in place or, at the very least, some basic efforts to ensure consistent data definitions and quality. Still, belief in ERP as the be-all and end-all answer to data management persists, making some think they can skip this step if they have ERP in place.
"Transactional master data management -- the ERP vendors went through this phase -- was that the way you solve MDM is just deploying more and more on their technology, and we all know that that's not feasible," said Jeff Woods, managing vice president of ERP and SCM for Gartner. "The ERP vendors are attacking the MDM problem, but more from a transactional point of view."
That, of course, leaves out plenty of data for most organizations, hence the need for a more overarching approach to data quality and to a BI strategy in a greater context than just ERP.
"One of the things we advise is to make sure you have a BI strategy. Just using whatever the ERP provides is not always the best analytics strategy -- you need to make a conscious decision about how you're going to use BI and analytics," Woods said. This should also account for and clear up data quality preparation and potential pitfalls.
AMR's Hagerty agrees that even in ERP-focused organizations, data cleanliness is critical.
"A lot of folks get enamored by the looks of the [BI] solutions for the end user, and they don't pay enough attention to the data," he said. "IT is responsible for the architecture to support BI over time, and data quality is almost always the first area they have to tackle. And business people don't generally recognize how complicated the data really is."
People forget that data is problematic -- even in the best-run companies.
"Even data that's coming out of an ERP system might not be pristine because you might have different codes for the same thing," he said. "For instance, you may have different customer codes, so if you're not aware of that, you can't do enterprise customer data analysis."
That's why more experts are touting the importance of MDM as part of BI initiatives, even in ERP environments.
How does MDM fit into using BI with ERP?
While an ERP-focused organization may not need a full-blown MDM plan in place to squeeze value out of BI, you've got to remember the old phrase GIGO -- garbage in, garbage out.
"The MDM discussion has to begin with a business need to manage data, and where we advise clients to start on how to do this is, first, you have to create the business awareness of it, but then recognize that an MDM solution starts by tracing the sources and uses of data, as well as defining the governance around the data. It doesn't start with the technology solution," Woods said. "You've got to understand where the information is, where it flows, who uses it, before you can solve the MDM problem."
"Lots of people jump to the technology first and say, 'Oh, it's just an integration problem.' No, it's a governance problem, an information mapping problem, first and foremost, and you can't skip that critical step," he added.
Making the ERP vs. pure-play BI choice
These days, it seems as if most BI technology worth the label can connect to multiple, if not most, possible databases. But is the touted ability to connect to any database true -- and what does that really mean to ERP-focused companies?
Hagerty said it is largely true and that while some BI components are going to be more closely linked to certain ERP or application data, BI technology is very versatile now.
"BI is a category where its main value is being able to glom onto most anything -- anything categorized as pure BI can do that, and most can accept data from other places," he said.
To make the choice of ERP vs. pureplay BI technology, experts agree that it's key to look first at the scope and future of BI throughout the organization. Be aware of any tool's true abilities -- and outright limitations. Ironically enough, most limitations these days still come from bad data and poor governance.
"If there's good discipline," Hagerty said, "a lot of problems tend to fall away."