ERP plus BI equals more value, says Aberdeen

Combine enterprise resource planning (ERP) with business intelligence (BI) and you have the “perfect storm” for improving performance and visibility in information management strategies, according to a new study from Aberdeen Group Inc.

The Boston-based business research firm gathered data from three surveys, including 520 responses to an ERP survey and 470 responses from two BI surveys, to form the August 2009 report, “ER/BI Connection: Adding Value Through Actionable Intelligence.”

The study includes several findings about the BI-ERP connection and serves as a benchmark for organizations. Aberdeen used five key performance criteria to distinguish the best-in-class category, which includes those that achieved in the top 20 per cent of the performance results.

“BI deployment as an integrated approach with enterprise applications is something that best-in-class companies are most likely to do than all others,” said David Hatch, vice-president and group director of technology research at Aberdeen Group. “In fact, they are almost twice as likely to take that approach than all other respondents.”

Seventy-nine per cent of best-in-class companies assign cross-functional teams for selection and implementation of ERP and extensions such as BI, said Hatch. Best-in-class companies are also more than twice as likely to provide self-service BI capabilities to stakeholders and users within the organization, he said.

“The challenge companies have had is they want to ask questions about the data they haven’t been able to ask before and ERP systems haven’t provided the sophistication they need to do that,” said Hatch. “BI is the other half of the equation.”

According to Aberdeen’s research, through the use of ERP and BI, best-in-class companies experience 17 per cent reduction in operating costs and 18 per cent reduction in administrative costs; have eliminated or redeployed 12 full-time employee positions; are able to close a month in less than four days; and have driven 66 per cent better improvement in internal scheduling.

“If you’re going to make an investment in ERP, our contention is you ought to think about making an additional, much smaller investment – but potentially as powerful – in BI to draw value from the data you are collecting,” he said.

While the vendor-agnostic study found distinct advantages in applying BI to ERP data, a combined ERP-BI solution from a single vendor isn’t necessarily the answer.

“We are not necessarily seeing the distinct advantage in going with the BI solution of the ERP vendor versus an independent vendor, but I’m not saying there is a downside to taking that approach. It’s different for each company,” said Hatch.

Hatch, who has conducted 24 studies over the last two years on BI and the consolidation of the market, still sees both approaches at play. Less than 50 per cent of companies are using a single vendor, he said.

In one survey on deployment strategies, of the 53 respondents using SAP Business Objects, 31 are Oracle shops, Hatch pointed out. Of the 24 SAS customers, which represented 9.5 per cent of the respondents, half are an SAP shop, he said.

Top criteria among organizations using two vendors is understanding whether the data connectors exist, and if there isn’t co-operation between the two vendors, at least development expertise on the side of the BI provider to get access to that data in an automated way so customers don’t have to spend a lot of time and money on a big data integration project, said Hatch.

“If you want to understand your business, BI is the essential capability you’ve got to have, and that is true regardless of whether you have SAP software for ERP or whether it’s someone else’s,” said Franz Aman, vice-president of product marketing for business intelligence at SAP AG.

SAP recognized the trend in applying BI to EPR solutions about two years ago, according to Aman. That’s one of the core reasons the company acquired Business Objects, he said.

“When you look at who came together in the acquisition, it was basically the two leaders in the two spaces – Business Objects being the market leader in BI and SAP being the market leader in enterprise software,” he said.

“We really understand business applications and we really understand BI.

“We have the opportunity to integrate our BI capability really closely and tightly with the SAP applications and we’ve done quite a bit of that already, so for SAP users it’s almost a no-brainer. They can use the same BI tools within their applications and then to look across their enterprise,” he said.

In addition to offering its own ERP and BI solutions, SAP partners with other leading ERP and BI vendors. It’s an interesting scenario, noted Aman. “We are certainly partnering and competing with IBM, Microsoft and Oracle,” he said.

“For non-SAP customers, we can certainly provide the complete view and our technology is highly embeddable, and a lot of vendors today, including Oracle and Microsoft, ship our BI capability within some of their products,” said Aman.

SAS Institute Inc. has noticed a shift in how large organizations are approaching BI, according to Gaurav Verma, technology product marketing manager at SAS headquarters in Cary, N.C.

SAS is seeing a trend toward more integration with the ERP systems and using the information collected from the transaction level to optimize how decisions are being made, how processes are handled, and to perform predictive modeling that allows users to ask questions that are more forward-looking in nature, he said.

“The old business model of being reactive is no longer working,” said Verma. Enterprises are looking to become more proactive and evidence-based rather than just making gut calls based on information or data they get from their ERP systems, he said.

SAS maintains partnerships with SAP and Oracle Corp., even though the companies offer their own BI solutions. “Why the partnerships continue to be very strong and why customers come to us to make sure we are partnered is our ability to provide more than just BI. We call that business analytics,” said Verma.

SAS emphasizes the distinction between BI and business analytics, with the latter providing broader coverage and more specialized reports. “We see BI as it is known in the marketplace, which is query and reporting, as a commoditized product right now,” said Verma.

“[BI] is a requirement, but it’s no longer sufficient given the state of the market and the global economy. We feel that business analytics is where organizations need to be at where they are getting a lot more value for all the information in their data assets,” he said.