Over the years, I’ve seen companies of all sizes invest considerable amounts of time, effort, energy and human resources into implementing some sort of software to help run their businesses. It could be just a simple accounting software package or a more complex ERP system. Some others have implemented a range of database systems that are integrated together with the hope of achieving the desired results.
In most cases, the investor is of the opinion that the implementation of these software systems will somehow simplify the processes, maintain accuracy, increase productivity, reduce operational costs and thereby increase profitability. But this almost never is the reality. Yes! There is potential, but that’s all it is. “A potential”!
Why is this potential not being harnessed?
There is a lot of truth in the statement that ERP systems, CRM systems and other similar systems do have the potential to simplify processes, maintain accuracy, increase productivity and reduce costs. However, they need to be implemented “intelligently”.
Some ERP systems are rigid with its business process logic and allows very little customization. Such systems force the organization to change its business processes. This can sometimes be a good thing., if it can improve productivity and reduce costs, with minimal compromise on business delivery. However, I’ve also come across instances when this wasn’t probably the best move.
Some other software’s are so flexible that it can adapt to most business processes. This can sometimes be a good thing too. But growth doesn’t come without change. If all business processes remained as is with the exception that now a software system is implemented, then nothing has really changed. There is nothing to measure the success of such an implementation. Again, this is probably not one of the best moves either.
How do you make the right decision?
It is essential to identify the “Business Pains” and call them by “Name” prior to choosing an ERP solution. A lot of thought and analysis needs to go into identifying the pains and the causes and document them. So when you are evaluating an ERP solution, you can analyse the business process logic within the software system and cross check if it’s eliminating your business pains. The system that has crossed out most of your Business Pains without any customisation is probably the best system for you to go with. You can then address the pains that have not been addressed and see if there is a work around for those.
Implementing an ERP in this way, might force some business process changes which will work to your benefit.
However, just choosing the right solution might not be the all in all for company profitability. This doesn’t guarantee in any way a reduction in operational costs and increase in profitability. Every CEO, CFO and anyone else that directly influences business decisions know this. They are actually hoping to retrieve quality information from the system in a timely manner, which will then enable them to make key strategic decisions.
This is where the system usually fails. The processes are in place, the productivity is great, and staff efficiency is fine too. However, retrieving information required by the top management isn’t very timely and isn’t normally in the format expected. This task is usually laborious with manual consolidations of multiple reports and formatting them into a presentable dashboard. The top management then can view the dashboard, hopefully understand it and make key strategic decisions that usually determine the future of the company.
However, the time taken to prepare the dashboard usually makes the information “history”. It is not real time. Secondly, it has taken many man hours to produce the report which has only added to the operation costs. The potential risks, the customer buying trends, the expense trends, predicted cash flow challenges, market changes and many other factors that influence business performance remains unidentified. These factors can potentially be like cancer, not knowing its implications for long before it’s too late. Business appears to be normal with a great ERP system whilst little foxes are eating away at some critical area.
The lacking factor in all of this is Business Intelligence. To successfully accomplish the goals you had prior to investing in an ERP solution, you definitely need a Business Intelligence tool. BI completes your ERP experience.
Any process that currently requires multiple spreadsheets and other data sources to manage or information that is difficult to access and report on is a great candidate for Business Intelligence. Most Business Intelligence tools are packed with features that include Dashboards to display trends and KPIs, Charts, Drill-down, Data-entry, Commentary, Workflow, Alerts and distributed budgeting, forecasting and financial reporting.
All the complex data derived from your ERP system can very easily be presented on your desktop or tablet with simple drag and drop functions, instantly giving you access to real time information. This is much more powerful than think, because just by implementing a BI tool, you have saved many thousands of dollars in operation costs on man hours producing reports. In other words, a good BI tool will pay for itself over a period of time. Secondly, you are now able to predict the future your business is headed to and make key strategic decisions instantly. For eg: change your budget figures for capital expenditure on the fly and see its implications on the cash flow in six months’ time. You are now able to view business performance live on a day to day basis.
In conclusion, “Is business intelligence right for me?” Well, BI completes your ERP solution. An ERP solution without Business Intelligence is incomplete and can struggle to deliver the desired results.
I would advise you to budget a BI tool along with your ERP system prior to making the purchase. It usually doesn’t cost too much in comparison to the ERP system itself. If you are already running on an ERP system without BI, get it real quick. You will be amazed at some of the things you discover about your company. If you are new to Business Intelligence and still can’t comprehend what it actually does, try out a demo. At the least, you will come off better educated.
Santosh Chandran is the Business Development Manager for BOARD Management Intelligence at Olympic Software. He regularly blogs about business intelligence and corporate performance management. You can follow him on Twitter or on LinkedIn. Please contact him directly if you would like to find out how BOARD can improve your business results through better decision making, phone 09 980 3964 or email: firstname.lastname@example.org