How Integrating ERP and BI Transforms Business Decision-Making

Last Updated: November 7th, 2023
Researched and Written by: Lexi Wood

Enterprise resource planning software streamlines a lot of back-office tasks from accounting to human resources. Yet an ERP isn’t always the best at collecting and organizing real-time data. It’s business intelligence or BI tools which expertly gather and analyze key data to find actionable insights. Working together, the powerhouse ERP and specialized BI can help decision-makers get the real-time information they need to improve business performance. Learn more about the importance of BI tools in ERP systems.

What is ERP?

An ERP is an integrated suite of business applications which covers workplace functions like financials, sales, and other back-office operations. The variety of features connect different areas of your business together so you can do all your work from one central platform.

By combining a variety of modules into one platform, ERP software helps businesses in a lot of ways. To start, it acts as a central hub of real-time visibility into operations, facilitating continuous improvement and holistic process optimization. When paired with a BI’s ability to gather data, ERP’s reporting capabilities enhance decision-making by allowing data analysis from various angles. Moreover, it simplifies data security management and promotes collaboration by consolidating different forms of data and communication.

Some top ERP systems which utilize BI tools include:

What is BI?

Business Intelligence or BI refers to tools which gather and analyze data to give businesses more informed decision-making abilities. They help managers to make data-informed decisions when trying to improve business strategies. Other main features are focused on data: discovery, mining, integration, visualization, and analysis. All are designed to help improve decision making at the highest level.

There are five key steps to follow with BI:

5 Step Business Intelligence Process

The most crucial elements of BI tools are Online Analytical Processing (OLAP) and Big Data. OLAP is a way to analyze different types of business data from a variety of critical viewpoints. Big Data refers to an increased volume of complex data sets from a multitude of sources. Together, these features store large quantities of business data and then perform multidimensional analysis on it. Ideally, the data is pulled from the central hub created by an ERP system, which includes data from departments like accounting, human resources, and CRM.

Role of BI Tools in ERP

When paired with an ERP, BI tools provide real-time data gathering and sharing. This allows for more actionable insights based directly on which KPIs are performing well or are failing. A report by Fortune Business Insights found the Business Intelligence Market Size is projected to reach $54.27 Billion by 2030. There are standalone BI tools, but as we’ve seen, they work best when paired with ERP software.

Benefits of Integrating ERP and BI Software

Using BI tools within an ERP system can provide businesses with a lot of extra benefits. They enhance one another by providing a complete overview of a company’s performance in real-time. The ERP acts as a central hub so different departments can all share and see how other areas are performing. In turn, the BI tools then analyze all the data collectively to determine areas of improvement.

Another benefit of integrating an ERP with BI tools is the increased speed for decision making. According to a survey by Aberdeen Group, 69% of data analysts noted decision-making windows were shrinking. As such, they needed faster BI tools to keep up with increasing time-crunches. With businesses relying more than ever on real-time, strategic decision-making, it’s critical to integrate BI tools with an ERP to provide more complex data for analysis.

Key Differences between ERP and BI

The main difference between an ERP and a BI tool is the scope. A full ERP includes functionality for a whole range of business processes. A BI is focused solely on collecting and analyzing data. Without an ERP to act as a framework, the ability of the BI to gather data from various business departments is limited.

Functionality Supports core business processes, such as order management, inventory management, accounting, payroll, and HR Supports data analysis, visualization, and reporting
Data Sources Primarily relies on internal data generated by an organization's operational processes. Connect to multiple data repositories, including ERP systems, databases, spreadsheets, and external data sources
Users Used by various departments across an organization, including finance teams, procurement, manufacturing, and HR Typically used by analysts, data scientists, and decision-makers
Purpose Designed to manage and optimize operational processes and data within an organization. Designed for data analysis and reporting

However, there are still times when standalone solutions are more appropriate. It will depend on the business scope and the total budget. Getting both an ERP and a BI can increase overall software costs, so it may be better to start with one or the other.

Three of the top trends in ERP with BI are:

  • Artificial Intelligence (AI) and Machine Learning Integration: ERP systems are increasingly incorporating AI and machine learning to provide predictive analytics, automated insights, and smarter decision support.
  • Cloud-Based ERP BI Solutions: The shift towards cloud-based ERP BI solutions continues to grow, offering scalability, flexibility, and cost-efficiency for businesses.
  • User-Friendly Dashboards: ERP BI tools are focusing on improving data visualization techniques and creating user-friendly dashboards to make data insights more accessible and actionable for non-technical users.
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