Sanjeev Aggarwal's Blog

January 28, 2010

Mid-Market companies benefit from the significantly better ROI offered by the synergistic relationship between ERP and BI

Strong value in considering/purchasing ERP plus BI simultaneously/at the beginning of the implementation cycle

ERP solutions come with a reporting toolset consisting of a predefined set of reports and with general purpose query tools to generate reports from data within ERP database. Most often, these tools are difficult and confusing to use and rely on an IT team to deliver the requested report, which can take time. ERP systems provide acceptable reports on day-to-day operations but if business requirements change, these static ERP reports need to be customized. Business users need on-demand reports, which are cumbersome and expensive to deliver in a timely manner. By using BI reporting solutions, these systems empower the business user to define and generate the needed reports, freeing valuable IT (or consultant) resources in the process, such that data and time can be better exploited to make meaningful business decisions.

I have been talking to several mid-market companies that have implemented ERP solutions followed by a business intelligence solution (initially deployed for reporting from the data in the ERP solution). Their recommendation, based on their experience of deploying both solutions, is that mid-market enterprises should consider utilizing ERP and BI together (possibly through a planned phased implementation approach), a strategy that would realize significantly higher ROI versus the alternative of considering each independently of the other.

The crux of this recommendation comes from closely looking at the customizations required to make the ERP solution useful for these companies. A significant number of customizations needed in ERP systems are related to generating reports to provide detailed information (in part, similar to that previously obtained through their formerly implemented legacy systems) for decision-making and presenting it in a useful and easy-to-understand manner—a daunting and expensive proposition. Complementing a BI solution with an ERP solution makes the generation of reports required by corporate management and various lines-of-business very easy and eliminates the need for any extensive customizations (as was required to generate these in an exclusively ERP system). The right business intelligence solutions can help extract significant value from the extensive data repositories in an ERP solution. The combination of ERP and BI should also bode well for mid-market companies in the current difficult economic environment, as companies strive for maximum efficiency by looking to cut costs and realize projects that provide them with short-term returns. The companies that have already implemented ERP could benefit by focusing on BI solutions for reporting, corporate performance management and consolidation (CPM) and strategy planning.

Mid-market customers using SAP Business-All-in-One as their key ERP solution have said that the extra time, effort, and money spent to customize their initial ERP could have gone towards paying for a BI solution (in several of the cases they were using SAP BusinessObjects Edge BI). Additionally, the reports they now get from their SAP BusinessObjects solutions (after integration) are more detailed and accurate than before. Other added benefits of this integrated solution—including savings on maintenance, IT administration time, integration and consulting support for upgrades, etc—largely result from the fact that SAP has already spent the time and effort to tightly integrate these two solutions providing better workflow and departmental self-service capabilities to develop and customize reports for their needs. With this solution, individual users can also more easily drill down from these reports to get deeper context to explain the factors influencing what is shown in reports beyond the visually attractive graphs and tables.

As a result, this combined SAP Business-All-in-One and SAP BusinessObjects Edge BI solution could provide significantly better Return on Investment (ROI) than each solution considered independently, and if the SAP BusinessObjects Edge BI can be paid for by reducing the customizations required in SAP Business-All-in-One, the combined solution also has a much lower total cost of ownership (TCO). With the mid-market focused Business All-in-One fast-start program from SAP coupled with the SAP best practices for the SAP BusinessObjects Edge BI for reporting and CPM solution, mid-market enterprises will be able to benefit from fast deployment, more productive and streamlined solution.

November 8, 2009

Increasing interest for Corporate Performance Management (CPM) in Mid-Market Enterprises

In today’s world overloaded with buzzwords, terms such as “Business Intelligence (BI)”, “predictive analytics” and “Corporate Performance Management (CPM)” are confusing to mid-market enterprises.

BI technologies provide historical views of a company’s business operation. Some of the enterprise –class BI solutions now include predictive analytical capabilities also. BI is a term used to describe the technology used to access, analyze and report on data relevant to an enterprise. It includes ad-hoc query, reporting, on-line analytical processing (OLAP), dashboards, scorecards, search, visualization, etc. Initially, most BI vendors lacked the ability to build models that can project in the future. However, in the past 3-4 years, the enterprise-class BI vendors have added some of these capabilities to replicate functionality offered by CPM vendors. BI and CPM are complementary solutions, and the BI platform provides a natural-basis to build a CPM solution. BI solutions are usually very complex and expensive for most mid-market companies. However, some of the more focused and template/wizards driven “Express” or “Fast-start” solutions, which are more affordable (especially if they are available in a online or appliance) and can be implemented in a reasonable amount of time – are becoming interesting for the mid-market if the vendors can show measurable benefits and short-term ROI.

In the CPM world, “predictive analytics” is generally used to refer to software solutions that automate and manage process related to corporate performance – financial forecasts, budgets, financial strategies, financial consolidation, scorecarding, and reporting. Another term used to identify CMP is BPM (Business Performance Management but this is sometimes confused with Business Process Management – two very different areas). Some CPM solutions regularly monitor some key performance indicators (KPI) in terms of actual vs. budget and, whenever a significant discrepancy is identified, help perform root causes to identify sources that could be causing this.

The BI and CPM solutions do not need to come from the same solution provider, as the two technologies are complementary and could co-exist. However, there may be economies and synergies related to getting them from the same vendor (if offered). In some instances, mid-market ERP solution vendors are now developing deeper integration to some CPM solutions (like NetSuite with Adaptive Planning).

In the current tough economic conditions, this segment is under tremendous pressures to improve financial processes, measurements and management of the mid-market enterprises. To adress the above, mid-market businesses are increasingly deploying CPM solutions to improve planning (forecasts and budgets), manage costs/optimize profits and more importantly risk and compliance.

The following companies provide enterprise and mid-market CPM solutions:

Increasing interest and deployment of these solutions by mid-market enterprises is demonstrated by the double-digit growth rates most of these mid-market solution companies are experiencing. The CPM applications are targeted at the mid-market company CFOs, C-level executives, finance team and corporate strategy teams.

How were majority of these mid-market companies addressing the financial planning issues until now? Majority of these companies are using Excel spreadsheets. Using Excel, has significant accuracy limitations and  the amount of time spend on the planning process. It also denies the organization a collaborative, connected and productive planning process. Mid-market organizations need to take a more objective view to replace Excel based planning and replace them with CMP solutions. Some basic analysis on time (and accuracy achieved) spent on Excel planning and the results achieved will quickly show the benefits and ROI that can be achieved by CPM solutions – these can be split into the “hard” benefits quantifiable by replacing Excel and the many potential “soft” benefits derived from using a CPM solution.

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