An indicator for measuring the impact of the investment in an integrated ERP system is the ROI (Return of Investment). This indicator is represented by the immediate and collateral benefits of an ERP implementation and managers, in order to justify the resources, are trying to identify them since the first months of using the system.
The direct benefits that a company can get in a relatively short period of time from the completion of the implementation refer in most cases to reducing the operating time, standardization and reorganization of certain workflows or increasing employee productivity. But, in addition, the implementation of an ERP system also brings a number of indirect benefits, less visible, but which in turn have a positive impact on the company. They are represented by the in order stored and managed by the ERP and the additional value they can bring, if properly used and interpreted.
Firstly, it is important to know that any activity conducted in the ERP generates two types of data: those related to the task itself and those related to the action. For example, for a customer order, the ERP system will store its details such as products, prices, discounts, payment term, delivery and billing dates and so on and on the other hand the data about who and when took the order, if it was modified, who approved it, who sent it to the warehouse or who has generated further documents (invoices, notices etc.). All this information is useful because it provides a complete and precise picture of the business, facilitate the decision-making process.
A Business Intelligence solution extracts information from other systems (e.g. ERP) and provides it to the decision-makers in an intuitive and easy to handle form. In this way, the indirect benefits of an ERP become more easily visible thanks to the BI system.
Implementing a solution integrated with the ERP helps companies to observe faster the results of the investment, but also provides another reimbursement that beforehand would not have thought of. Some of these are:
The transition to integrated ERP software will result primarily in the existence of a common database, which will contain all information, regardless of the department/employee that has entered it or the location from which they were recorded. This data is available as soon as it is introduced into the system by employees since our ERP system is designed for online operation, thus facilitating the decision-making process
But for quick and correct data interpretation, of major importance is also the way in which they are displayed, because the employee needs vary depending on their role in the company and their specialization. Thus, while for an accountant it is probably easier to make decisions based on the data presented in a tabular form, for a sales manager, a graph, presented in an interactive visual form, would be much more useful.
Here comes one of the main advantages offered by the Business Intelligence system: it allows you to create any type of report and analysis exactly in the desired shape, starting from the data from the ERP system. Thus, any manager can see the information they need in an easy to interpret form and can take the right decisions faster.
The analysis and processing of a large volume of information, data interpretation and comparison, whether it is related to the financial, sales, etc. department, are essential in making the correct decisions for the company’s activity. The Business Intelligence system will allow us to streamline the decision-making process and track all indicators that influence costs and sales.
When the analysis and reporting needs of the company exceed what the ERP system offers, managers are forced to turn to the professionals from the IT field. If there’s no IT department within the company, outsourcing this task can be quite costly. On the other hand, the length of time in which programmers can deliver required reports varies depending on the complexity of the task, and there are cases in which, until the completion of the report, the task is out of date.
Implementation of a Business Intelligence system eliminates this problem from the start. Due to its high intuitively, it can be successfully used both by employees with training in the IT field, as well as those with negligible technical knowledge, which will result in significant savings of time and money.
ERP systems include a number of reports for specific indicators, related to accounting, sales, and acquisitions and so on, but they can’t always respond to all of the managers’ questions or concerns, especially if it is necessary to correlate different indicators into a single dashboard.
The Business Intelligence system provides firstly a wide range of graphs and reports. An example would be the geographical charts that can display the status of each location on an interactive map, where different parameters are highlighted through different colors and shapes. Secondly, all these graphs created according to the needs of each department can be grouped into one dashboard, so that to be possible the parallel tracking of multiple indicators.
Thus, every decision-maker from the company can figure out what are the weaknesses and strengths of the business and due to the increased interactivity of the Business Intelligence system, they can be highlighted with just a few clicks.
The analysis of the historical data from the ERP system allows formulation of conclusions on the past evolution of the main business indicators, but for more accurate forecasts is important to keep in mind factors such as seasonality, an impact of certain products’ price increase or decline and so on.
With the help of the BI system and its forecasting and analysis functions, managers can more easily figure out how certain aspects of the business might evolve in the future.
First of all, from all the data recorded up to that time in ERP, the Business Intelligence system can provide the estimated values of the indicators for the next period. For example, you can display the estimated volume of sales for next year, analyzing the trend recorded by them in previous years. Of course, you can keep in mind the seasonality or other external factors that may influence the sale, as well as increasing fuel prices and the impact of this increase on the cost of transport of goods and further on the final price of the products.
Subsequently, using the “What-if” analyses, the manager can learn for example how the future sales volume could be influenced if he chooses to modify certain parameters such as costs or the prices for certain products.
A BI system can be the most important tool in the hands of a company’s managers. It gives you actual, real, and necessary information to analyze the company’s situation, the obtained results, in order to identify the factors that have led to positive results, to identify the sources of the problems in your company, to predict what will happen and to take the necessary decisions at the appropriate time.