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Business Intelligence

INFO245: Intro to ERP

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Objectives
Discuss the role of BI in ERP systems
Define Business Intelligence (BI)
Discuss the components of BI:
Data Warehouses and Data Marts
Access tools
Benefits

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The Role of ERP Systems in Business Processes

1. Execute the steps in the process

(includes instance monitoring)

Procurement
Production
Fulfillment

2. Capture the data resulting

3. Monitor / analyze process
from executing the steps

Questions:
1. Why do we monitor/analyze processes?
2. How does an ERP system help monitor processes?

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How do ERP systems help monitor processes?

Generate information in order facilitate decision making or to
assist with other aspects of someones job.
Examples:
Sales month to date vs. budget
Profit margin month to date vs. budget
Product hot seller report
Product non-mover report
Backorder over 30 days report
Customer non-payment over 30 day report.

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ERP Information Output Capabilities

Before
Functionally siloed systems
Data not integrated
Time consuming, manual process
to assemble cross-functional data
> How do you think it was done?
Issues with accuracy and validity
Whos numbers are right?

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ERP Information Output Capabilities

With ERP systems
Integrated data single version
of the truth
One database
Information overload?
How to effectively provide data to
managers that need it

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ERP Information Output Capabilities

Standard reports
Ad hoc query capabilities
Business Intelligence

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What is a report?
Its a program that retrieves data from a database,
formats and presents it to a user
Can allow filtering, sorting, aggregation

The report output

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What is a report?
A report can be:
displayed online
exported to excel or other software
Emailed as an attachment
printed

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ERP Standard Reports

Standard report: prebuilt report supplied with the ERP

software at no additional charge
Systems like SAP (and SYSPRO) provide hundreds of
standard reports
Benefits
Free! They come packaged with the ERP software
Some reports are really good for operational reporting:
> Instance level monitoring
> Routine daily monitoring
> Financial reports (Income statement, balance sheet)
ERP systems like SAP and SYSPRO are implemented in thousands of
companies, so they have a pretty good understanding of what
managers need.. But.

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ERP Standard Reports Issues

ERP standard reports dont always meet the users needs (or
likes) highly ineffective for supporting ad hoc/decision
oriented processes
EVERY organization is different in its decision support needs.
80/20 rule. the 20 in this case is usually critical
Reports are usually written in a programming language (or a
reporting tool) that requires specialized technical skill
Means that when a manager needs a new report, need to go the IT
department. numerous issues

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ERP Standard Reports Issues

Can overload system / impact response time
Reports are generated from the Operational system the same system
being used to execute
Databases are tuned for:
> Execute: lots of transactions, not much data in each transaction (e.g., one
purchase order)
> Monitor process: lower levels of transactions, but lots of data in each
transaction (show me all sales this week by product and location)
When you execute and monitor process on the same database
> Reports take a long time to run
> Execute transactions take longer to run . Why is this an issue?

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Ad hoc queries
ERP systems like SAP and SYSPRO provide tools to build
your own reports
Called ad hoc query tools
Benefits
Permit users to ask any question they like
Issues
Still have the overload issue
ERP databases are incredibly complicated.SAP has 8000 tables
Ability to get the information needed depends on the technical
skills of the Depends on skill level of user
BIG issue user needs to be programmer.

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What is business intelligence?

organized information that helps individuals in an
organization make better, more informed decisions more
quickly.
Business intelligence is generated from a data warehouse,
which collects, stores and presents data.
Business intelligence systems customize information output to
be the most useful for the intended audience.
The overarching goal of business intelligence is:
to provide individuals within the organization with the right
information, in the right format at the right time to facilitate faster,
better decisions.

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How it all works

Business
Intelligence
Data Mart 1
(sales)
Tools
Operational System
(ERP)

Data Warehouse Data Mart 2 Reporting

(marketing) OLAP
Data Mining
Other Operational
System (CRM)
Data Mart 3
(finance)

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Why not just use operational database from ERP?
Operational Systems
Designed to handle thousands of transactions
per days each dealing with a small amount of
data
Data is very detailed and system is concerned
mainly with current data (transactions that are
happening now)
Data is very complex: structured for update
(SAP)
Constantly being updated (as transactions are
recorded)
Used by operational personnel primarily (sales
clerks, accounting staff, warehouse workers)
The bottom line:
Designed to execute a business
process
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Data Warehouses / BI
Designed to handle tens or hundreds of queries
per day each dealing with many thousands (or
millions) of rows of data
Provide tools that make it easy to view/
understand data
Data is historical and some may be summarized
to make analysis easier. Recent data detail;
old data summary
Structured for access (lots of data at the same
time); very simple for understandability
Refreshed periodically
Used by analysts and managers to help with
decision making.
Designed to monitor/analyze a
business process
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Complex vs simple data

dimensions

Customer Time
facts

Sales

Unit price
Products Quality sold Location
Revenue
Cost of Sales

Operational databases are Data mart data is simple

complicated
They look like a spider web
VERY difficult for users to
understand
SAP: 8000 tables
Designed to mirror how
people think and do
analysis

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Case studies
HP
What do you think a metric is? What would metrics be used
for?
RBC
What do you think a 360 degree view of a customer is?
Why would this view be important?
How do you think you get this view?

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Business Intelligence Tools

Online Analytic Processing (OLAP)
User-Managed Reporting
Data Mining

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OLAP

Revenue: Measure
2,000,000.
Time

OLAP or multidimensional
analysis: Means you can
analyze measures at the
intersection of any combination
of dimensions:
Customer Show me the Revenue we made
from Customer A for Product 1 in
January 2007

Dimension
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OLAP Functions

Drilling.
Change the level of aggregation. For example start with a view of
sales by product, region and quarter.
> Drill down to sales by product, region and month (shorter timeframe)
> Drill up to sales by product, region and year (longer timeframe)
Slicing and Dicing.
Easily dimension to get another view of the data. For example, a
report of Quarterly revenue by Location is easily changed to a
quarterly report of Sales by Product Line.
Different Views.
Numbers are nice, but often charts are better. You can view your
multidimensional reports in the format you need.
Example

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End User Reporting

A type of tool that allows users to:
Run their own queries
Generate their own reports
Generate graphs and charts
Tool designed to be used by non-technical business users:
Isolates users from the complexities of the underlying database and
presents data in business terms they understand
Report building is drag and drop
Access is web based Example
Vendors:
Hyperion
Business Objects (now owned by SAP)
Cognos (now owned by IBM)
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Knowledge Discovery
Data warehouses today can range in size into the
terabytes more than 1,000,000,000,000 bytes of
data.
Within these masses of data lies hidden information of
strategic importance. But when there are so many
trees, how do you draw meaningful conclusions about
the forest?

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Knowledge Discovery
Knowledge Discovery finds patterns and relationships in
data by using sophisticated techniques to build models
abstract representations of reality. A good model is a
useful guide to understanding your business and
making decisions.
There are two main kinds of models in knowledge
discovery: predictive and descriptive.

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Knowledge Discovery
Predictive models future behavior based on historical
behavior.
Propensity to purchase
Attrition
Descriptive models describe patterns in existing data,
and are generally used to create meaningful subgroups
such as demographic clusters.
Customer segments

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Data Mining
Data Mining is a technique used to perform knowledge
discovery.
Data Mining tools provide sophisticated techniques
(including AI) to automate the process of creating
predictive and descriptive model algorithms.
In addition to algorithms, data mining software usually
has features to simplify the graphic representation of
the data (visualization tools) plus interfaces to common
database formats.
To use effectively, users must be highly skilled in
statistical analysis
Vendors: SAS Institute (Enterprise Miner); IBM
(Intelligent Miner), Unica
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BI Benefits

INFO245: Intro to ERP

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Benefits: Data integration

To provide a complete picture, warehouses typically combine data
from multiple sources such as a company's ERP, CRM and SCM
systems. Thus, with a warehouse, it may be possible to track all
interactions a company has with each customer - from that
customer's first inquiry, through the terms of their purchase all the
way through any warranty or service interactions.
This makes it possible for managers to have answers to questions
like, "Is there a correlation between where a customer buys our
product and the amount typically spent in supporting that
customer?"

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Future vision from historical trends

Effective business analysis frequently includes trend
and seasonality analysis. To support this, warehouses
typically contain multiple years of data
Also, warehouses are designed to do time-based
(temporal, longitudinal) analysis

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Tools for looking at data in new ways

Instead of paper reports, warehouses give users tools for
looking at data differently. They also allow those users to
manipulate their data.
There are times when a color coded speedometer speaks
volumes over a simple paper report.
Example

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Freedom from IS department resource limitations

One of the problems with computer systems is that they usually
require computer experts to use them.
When a report is needed, the requesting manager calls the IS
department. IS then assigns a programmer to write a program to
produce the report. The report can be created in a few days or, in
extreme cases, in over a year.
With a warehouse, users create most of their reports themselves.
Thus, if a manager needs a report for a meeting in half an hour,
they, or their assistant, can create that report in a matter of
minutes.
Andview anywhere

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SAP offers its own data warehouse - BW

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