The fascination with data continues to proliferate, just like data itself. “Big data” used to be considered a collection of data sets so large and complex that it was difficult to process using on-hand database management tools or traditional data processing . Now it is seen less as something to grapple with and more as a source of tremendous power that can maximize value, identify new revenue streams, and ensure advantages in an increasingly competitive global marketplace. While this may be true, and the growing concern with big data understandable, there’s a more manageable and often underutilized source right in the heart of most enterprises: ERP data.
According to Aberdeen, Enterprise Resource Planning (ERP) solutions are an integrated suite of modules that form the operational and transactional system of record upon which any business is based. “As such, ERP systems contain large amounts of data that can be used to gain visibility into business operations and underpin informed management decisions,” says the introduction to a recent study by the analyst. “Often there is difficulty in finding the data needed and analyzing it to gain insight. Data may be siloed or inaccessible to business users, preventing these organizations from gaining the full return on investment (ROI) from their ERP implementations.”1
One of the major reasons many ERP implementations have not lived up to expectations is that they were employed as a software project per se, rather than as a business improvement tool.2 Failure to fully understand the value of ERP data may be a part of this misapplication. “Information is the lifeblood of the organization, and the primary goal of ERP is to provide decision makers with the information that they need in order to make properly informed decisions; to provide a solid foundation of truth,” notes Sean Culey, a member of the Supply Chain Council’s European Leadership Team. “Accurate and timely data can enable rapid, incisive decision making, whilst poor and inaccurate data slows down everything, [creating] excess management, duplication, and indecision. Many businesses use tools like ERP as transactional recording devices to capture what they have done, rather than pour their intelligence into the system so it can plan what they should do.”3 As a result, many users say that ERP presents information they disagree with, constraining the flexibility of their supply chains.
In contrast, those who are leveraging their ERP data, integrating it with other enterprise systems, and delivering it in a timely and understandable manner to decision makers are seeing significant benefits in operations. “It comes down to getting the data stream right, and that data stream comes from our ERP, CRM, and other enterprise systems,” says Doug Sheffield, vice president of information technology for Dallas, Texas-based Heritage Bag Company, the largest manufacturer of industrial trash bags in the United States. “We’re able to take that data stream, whether it’s customer, sales, production or manufacturing data, and make it available throughout our organization. By consolidating the data, we get a holistic view of where we are as a company; then we can see the different areas in which we can work, improve, and become more efficient.”
According to Sheffield, ERP provides a single trustworthy data source. Without that, companies struggle to:
- Close out the month properly.
- Meet compliance requirements.
- Plan production accurately and effectively.
- Understand what has shipped versus what has been billed.
- Communicate across multiple facilities, be they plants or corporate offices.
Establish communications for visibility into all areas of the business from all areas of the business.
Make well-informed decisions.
To facilitate these essential activities, ERP solutions have evolved different ways of delivering data. Analysts note ERP’s expanding footprint, indicating its value will grow as long it continues to evolve to meet customer needs, and that those customers realize the value of this data. These goals can get lost when these users become fixated on what they run day-to-day.4
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- “ERP Plus BI: Maximizing the Return on Your ERP Investment,” Aberdeen, 2012.
- Cutley, Sean, “Ensuring the ROI from ERP Has a Bigger ‘R’ than ‘I,’”The European Business Review, October 2012.
- Goulart, Karen, “Other IT Systems May Get the Buzz, But the Value of ERP Remains,” TechTarget.com, February 29, 2012.