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INFORMATION SYSTEMS @ X

Business Intelligence

INFO245: Intro to ERP

INFORMATION SYSTEMS @ X

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

INFO245: Into to ERP

INFORMATION SYSTEMS @ X

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?

INFO245: Into to ERP

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. INFO245: Into to ERP .  Examples:  Sales month to date vs. INFORMATION SYSTEMS @ X How do ERP systems help monitor processes?  Generate information in order facilitate decision making or to assist with other aspects of someone’s job.

manual process to assemble cross-functional data > How do you think it was done?  Issues with accuracy and validity  Who’s numbers are right? INFO245: Into to ERP . INFORMATION SYSTEMS @ X ERP Information Output Capabilities  Before  Functionally siloed systems  Data not integrated  Time consuming.

INFORMATION SYSTEMS @ X 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 INFO245: Into to ERP .

INFORMATION SYSTEMS @ X ERP Information Output Capabilities  Standard reports  Ad hoc query capabilities  Business Intelligence INFO245: Into to ERP .

aggregation The report output INFO245: Into to ERP . formats and presents it to a user  Can allow filtering. INFORMATION SYSTEMS @ X What is a report?  It’s a program that retrieves data from a database. sorting.

INFORMATION SYSTEMS @ X What is a report?  A report can be:  displayed online  exported to excel or other software  Emailed as an attachment  printed INFO245: Into to ERP .

so they have a pretty good understanding of what managers need…. balance sheet)  ERP systems like SAP and SYSPRO are implemented in thousands of companies. INFO245: Into to ERP .. But……. INFORMATION SYSTEMS @ X 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.

 80/20 rule…. INFORMATION SYSTEMS @ X ERP Standard Reports – Issues  ERP standard reports don’t 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. numerous issues INFO245: Into to ERP . 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….

one purchase order) > Monitor process: lower levels of transactions. not much data in each transaction (e. Why is this an issue? INFO245: Into to ERP .. INFORMATION SYSTEMS @ X 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.g. 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 ….

INFORMATION SYSTEMS @ X “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…. INFO245: Into to ERP .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.

which collects. in the right format at the right time to facilitate faster. stores and presents data.  The overarching goal of business intelligence is:  to provide individuals within the organization with the right information. INFORMATION SYSTEMS @ X What is business intelligence?  organized information that helps individuals in an organization make better.  Business intelligence systems customize information output to be the most useful for the intended audience. better decisions. INFO245: Into to ERP . more informed decisions more quickly.  Business intelligence is generated from a data warehouse.

INFORMATION SYSTEMS @ X 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) INFO245: Into to ERP .

accounting staff. Recent data – detail. The bottom line: Designed to execute a business Designed to monitor/analyze a process business process INFO245: Into to ERP . very simple for understandability Constantly being updated (as transactions are Refreshed periodically recorded) Used by operational personnel primarily (sales Used by analysts and managers to help with clerks. warehouse workers) decision making. INFORMATION SYSTEMS @ X Why not just use operational database from ERP? Operational Systems Data Warehouses / BI Designed to handle thousands of transactions Designed to handle tens or hundreds of queries per days – each dealing with a small amount of per day – each dealing with many thousands (or data millions) of „rows‟ of data Provide tools that make it easy to view/ understand data Data is very detailed and system is concerned Data is historical and some may be summarized mainly with current data (transactions that are to make analysis easier. happening now) old data summary Data is very complex: structured for update Structured for access (lots of data at the same (SAP) time).

INFORMATION SYSTEMS @ X 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 Designed to mirror how They look like a ‘spider web’ people think and do VERY difficult for users to analysis understand SAP: 8000 tables INFO245: Into to ERP .

INFORMATION SYSTEMS @ X 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? INFO245: Into to ERP .

INFORMATION SYSTEMS @ X Business Intelligence Tools  Online Analytic Processing (OLAP)  User-Managed Reporting  Data Mining INFO245: Into to ERP .

000. INFORMATION SYSTEMS @ X OLAP Revenue: Measure 2. 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 INFO245: Into to ERP .000.

region and year (longer timeframe)  Slicing and Dicing. region and month (shorter timeframe) > Drill up to sales by product.  Change the level of aggregation. region and quarter. For example start with a view of sales by product. INFORMATION SYSTEMS @ X OLAP Functions  Drilling.  Numbers are nice.  Easily dimension to get another view of the data. You can view your multidimensional reports in the format you need.  Different Views.  Example 21 INFO245: Into to ERP . but often charts are better. For example. > Drill down to sales by product. a report of Quarterly revenue by Location is easily changed to a quarterly report of Sales by Product Line.

INFORMATION SYSTEMS @ X 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) 22 INFO245: Into to ERP .

But when there are so many trees. how do you draw meaningful conclusions about the forest? 23 INFO245: Into to ERP .000. INFORMATION SYSTEMS @ X Knowledge Discovery  Data warehouses today can range in size into the terabytes — more than 1.000.000.  Within these masses of data lies hidden information of strategic importance.000 bytes of data.

 There are two main kinds of models in knowledge discovery: predictive and descriptive. A good model is a useful guide to understanding your business and making decisions. INFORMATION SYSTEMS @ X Knowledge Discovery  Knowledge Discovery finds patterns and relationships in data by using sophisticated techniques to build models — abstract representations of reality. 24 INFO245: Into to ERP .

 Propensity to purchase  Attrition  Descriptive models describe patterns in existing data.  Customer segments 25 INFO245: Into to ERP . and are generally used to create meaningful subgroups such as demographic clusters. INFORMATION SYSTEMS @ X Knowledge Discovery  Predictive models – future behavior based on historical behavior.

data mining software usually has features to simplify the graphic representation of the data (visualization tools) plus interfaces to common database formats. users must be highly skilled in statistical analysis Vendors: SAS Institute (Enterprise Miner). INFORMATION SYSTEMS @ X 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. IBM (Intelligent Miner).  In addition to algorithms.  To use effectively. Unica 26 INFO245: Into to ERP .

INFORMATION SYSTEMS @ X BI Benefits INFO245: Intro to ERP .

"Is there a correlation between where a customer buys our product and the amount typically spent in supporting that customer?" INFO245: Into to ERP .  This makes it possible for managers to have answers to questions like. warehouses typically combine data from multiple sources such as a company's ERP. CRM and SCM systems. INFORMATION SYSTEMS @ X Benefits: Data integration  To provide a complete picture. Thus.from that customer's first inquiry. through the terms of their purchase all the way through any warranty or service interactions. it may be possible to track all interactions a company has with each customer . with a warehouse.

warehouses typically contain multiple years of data  Also. warehouses are designed to do time-based (temporal. INFORMATION SYSTEMS @ X Future vision from historical trends  Effective business analysis frequently includes trend and seasonality analysis. longitudinal) analysis INFO245: Into to ERP . To support this.

They also allow those users to manipulate their data. INFORMATION SYSTEMS @ X Tools for looking at data in new ways  Instead of paper reports. warehouses give users tools for looking at data differently.  There are times when a color coded ‘speedometer’ speaks volumes over a simple paper report.  Example INFO245: Into to ERP .

can create that report in a matter of minutes.  With a warehouse. IS then assigns a programmer to write a program to produce the report.  And…view anywhere INFO245: Into to ERP . if a manager needs a report for a meeting in half an hour. the requesting manager calls the IS department. The report can be created in a few days or. in over a year. in extreme cases. they. INFORMATION SYSTEMS @ X Freedom from IS department resource limitations  One of the problems with computer systems is that they usually require computer experts to use them. Thus.  When a report is needed. or their assistant. users create most of their reports themselves.

INFORMATION SYSTEMS @ X SAP offers its own data warehouse .BW INFO245: Into to ERP .