The importance of enterprise resource planning (ERP) systems to today’s business leaders is hard to overstate. Not only do ERP applications automate and streamline core business processes – from manufacturing and logistics to HR and finance – they are also the fountainhead for corporate understanding of operational performance.
Ensuring that ERP systems can act as a source of intelligence for decision-making has not always been easy to achieve. For one, business intelligence (BI) tools are rarely applied to the ‘live’ data being generated by ERP systems. Much more commonly, BI analysis and reporting is generated by using a snapshot of extracted information that can be anything from several hours to several days old.
That does not undermine the value of traditional BI. In fact, a recent poll of 1,400 CIOs conducted by IT industry watcher Gartner, showed BI as their top technology priority for 2006.
But, the nature of BI requirements is changing. Whereas traditionally tools have been the preserve of power users, increasingly, analytical tools are being used throughout the business. This extended army of users can have vastly different requirements – some merely need canned reports, while others might need a much more current or even real-time view of the state of the business.
At the same time, there is pressure to derive greater value from ERP systems – even as users reel from the massive consolidation in the ERP market.
The Shaw Group, the Baton Rouge-based construction giant, experienced first hand the turbulence of seeing its ERP supplier JD Edwards (JDE) being acquired – twice in the period of a few years – first by PeopleSoft and then by Oracle. But it remained committed to the JDE platform and sought ways to drive greater value from its investment.
As Patrick Thompson, CIO and vice president of administration at The Shaw Group explains, success in the construction industry stems from the skilful management of projects – of which it has hundreds running at any one time – with budgets constantly reviewed and kept on a tight leash.
In 2003, the company began consolidating seven information systems, supporting 288 business units across the globe, onto a single JD Edwards platform. This took out significant operating costs and reduced IT overheads by about 50%, while “improving transactional systems”, says Thompson.
But while that standardisation project helped streamline operations, many employees were still faced with significant difficulties in trying to get to information they needed from the consolidated system. “There are challenges with getting the information into a data warehouse and keeping it refreshed,” explains Thompson. For its project managers, for example, who oversee large construction programmes, there was intense frustration as they waited to see end-of-month reports to be built by IT and loaded into the data warehouse.
Reacting to that, Thompson sought out a more direct route to those reports. By deploying end-user enquiry tools from BI software specialist The GL Company, that draw data directly from the ERP databases, project managers can now get an accurate view of a project’s status in real time – including actual costs.
As Thompson emphasises, time is really critical here: “We needed literally real-time information, and that wasn’t possible with some of the other tools we looked at.”
The attraction of analysing operational data by bypassing the data warehouse has not been lost on executives at major ERP vendors.
In August 2006, Oracle acquired the assets of Sigma Dynamics, a maker of real-time predictive analytics software for customer relationship management systems, in a move to strengthen its ability to provide reporting and analysis directly from the application databases. That leads Alys Woodward, an analyst at market watcher Ovum, to conclude that “Oracle is approaching business intelligence and analytics from the perspective of its applications.”
Its chief rival, SAP, has also started to add legitimacy to the real-time BI approach. Having recognised that customers are looking to reduce the time lag between activity in operational systems and the availability of that information in an analytical environment, the company is using its NetWeaver platform to allow direct analytical access to operational data.
SAP also has its xApp Analytics portfolio of BI applications built directly into the mySAP modules. This, too, allows direct access to SAP and non-SAP application workflows and data to enhance the decision-making process for users.
No more warehouse?
It may be tempting to believe that the drive towards operational BI, where companies use various methods to analyse live data, reduces the need for the data warehouse entirely. But that would be foolhardy.
For while it may be possible to access and analyse operational data directly, there are still plenty of reasons for building, populating and maintaining a data warehouse. For one thing, no-one is going to allow the running of major queries against the operational database. However, in many instances – accountants consolidating last-minute bookings at the end of a quarter, inventory managers keen to pre-empt a stock-out, or a chief executive who wants to deliver a truly accurate trading update – access to a real-time picture is the vital.