Proceeding. International Seminar on Industrial Engineering and ManagementMenara Peninsula, Jakarta, August 29-30,2007 ISSN: 1978-774X

BUSINESS INTELLIGENCE SOFTWARE AS INSTRUMENT TOINCREASE LEVEL OF ERP SUCCESS

Mohammad Okki Hardian

)Lecturer in Industrial Engineering Department, Gunadarma University, JakartaUniversitas Gunadarma

J/. Margonda Raya 100, DepokEmai/: okki hardian@h?.cos.com

ABSTRACT

Surveys have shown that many companies adopting Enterprise Resource Planning (ERP) resulted in /iulesuccess. In order to raise the level of ERP success, one of the proposed solutions is to adopt BusinessIntelligence Software (BI). In order to achieve more success from ERP system, BI has to be functioned asexecutive information system to assist top-level management in making strategic decision. There is trivialtrouble in integrating BI into ERP system, and having a single integrated database is the key toward thesuccessful adoption of BI.

Keywords: Business Intelligence, ERP

INTRODUCTION

There are six categories of information systemsuccess [1]:

1. System quality2. Information quality3. Use4. User satisfaction

5. Individual impact6. Organizational impact

Arguably there is no information system that ismore widely criticized for its lack of success thanEnterprise Resource Planning (ERP). Thepromise of high benefit had persuaded most ofIndonesia's biggest manufacturing company toimplement ERP. But the size and complexity ofimplementing ERP often becomes obstacle inachieving any kind of success [3].

A survey conducted by Meta Group toward63 companies implementing Enterprise ResourcePlanning (ERP) provides result [5]:

30% (19 companies) do not use the ERPsystem;45% (28 companies) use system usedpartially;25% (16 companies) fully use the ERPsystem.

A separate survey conducted by leading ERPconsultant Dr. Scott Hamilton comes up withapproximate numbers [2]:

Only 10% of companies adopting ERPare formally using the system effectivelyto run the entire company, called Class A

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User.

40% of the companies using ERP systemto run the entire company but onlypartially effective, called Class BUser.40% of the companies using formal ERPsystem in part of the company, calledClass C User.The rest 10% -called Class D User- theformal ERP system is not used at all.

Whilst at recent time no similar study can befound in Indonesia, it is sensible to assume thatthe fact is unaltered than in other countries. It isevident that with the investment ranging fromUS$700,000 to over US$3 million eachimplementation [5], something had to be done inorder to raise the level of ERP success inIndonesia.

One of the proposed solutions to the problemis for the company to adopt another form ofinformation system, Business IntelligenceSoftware (HI). BI independently is a form ofExecutive Decision Making Tool. It is widelypopular in advanced countries, and companies inIndonesia immediate response to the trend. Therecent report could provide some insight.According to Gartner Research, HI market inIndonesia is projected to reach US$I, 7 million,up 60,4% from US$400,000 figure in 2004 [7].

The problem involving the relationshipbetween BI and the level of success of ERPimplementation can be summarizes withquestions such as:

a. What is the logic between implementing

BI and ERP Success LevelHardian

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Proceeding.International Seminar on Industrial Engineering and ManagementMenara Peninsula. Jakarta, August 29-30. 2007

BI and gaining more liS success out ofERP system?

b. What capabilities of BI that can be usedto improveERP system?

c. Is it possible to integrate BI into ERPsystemwithout any trouble?

d. What are the prerequisites of having asuccessful integration of BI into existingliS system?

OBJECTIVES AND METHOD

Thispaperhas the objectives of give explanationabout:

I. The advantages of using BusinessIntelligence Software as ads-on to ERPsystem.

2. Platform architecture of BusinessIntelligence Software, completed with itsintegrationprocess to ERP system.

Themethodin use is empirical study followed bya casestudyas supporting matter.

. ERP applications used as object of studyare SAP R/3 (core modules only) andVISUAL Enterprise

. BI used as object of study is PentahoOpen BI Suite

. While the case study took place in one ofIndonesia retail bank.

3. DISCUSSION

Overall, ERP packages have already installedmostof the features that are included in BusinessIntelligence Software. There are more featuresavailablethat are comparable to Bl's in SAP R/3compare to Visual Enterprise. But the majordifferencesbetween ERP and BI are:

. BI features are easier to access

. BI display and serve the information inan easier form to understand.

The two keywords, access and easy-to-understandmark up for the usability of BI, in theeye of company's decision maker. Decisionmakers don't necessarily want to tangle withoperational and detailed data. They tend to focustheir attention to summary and general data,preferably in tables or charts form.

While ERP still be able to provide a summary, itspower lies in the detailing and sophistication of

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ISSN: /978-774X

operational data, product routing for example.Bringing up summary still requires additionalclicking and typing. This is where BI is mostuseful to the clients.

Other note that should be taken toaccount is that several ERP vendors, includingSAP and Oracle, bundle a BI-like module to theirproduct. If company implements SAP R/3comprehensively (not just core modules), theywill receive module called SAP SEM (StrategicEnterprise Management) which function as BI [4].The undermining factor of using SAP SEM isthat implementing an R/3 module cost more thanadopting other BI.

The capabilities of BI vis a vis ERP application isdetailed in section 3.1 below.

Business Intelligence Software Capabilities

In general, BI is a computer application designedto access and analyzes organization data,especially in assistance to decision makingprocess. BI is often used by executives or Boardof Director as a tool in decision making.Therefore, the logic is reasonable as describedbelow:

. By integrating BI with ERP, executivesand Board of Director will be linked toERP system. Consequently a top-downapproach to the information systemenvironment is created.

. If executives can't get the informationrequired out of BI, executives will forceemployees to improve system quality,information quality and the use of ERP.

. More use of ERP means better usersatisfaction. User satisfaction makespossible for individual impact.

. Better information quality leads to betterinformation supplied by BI. Betterinformation leads to better decision byexecutives.

. Better business decision leads to better

organizational impact.

Executives and BOD utilizes BI in many ways.Among BI regular utilizations are to [6]:

. Map customer profile

. Conducting market research

. Performing market segmentation

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Proceeding, International Seminar on Industrial Engineering and ManagementMenara Peninsula, Jakarta, August 29-30, 2007 ISSN: 1978-774X

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. Implementing Activity Based Costingand Management (ABC&M)

. Conducting statistical analysis oncompany performance.

Theoretically, the advantages that BI has -compared to ERP- are:

1. ReportingMainly this is the features in BI that getsregular use. Although every modules andfunctions in ERP provide revisable reportform of some kind, there are certainlimitations.BI offers rich, comprehensive and userfriendly reporting features.

2. Multidimensional AnalysisBeside its ability to perform statisticaldata analysis with various techniques, BIalso equipped with forecasting ability. BIalso is valuable in performing pivotalanalysis, i.e. by product, by marketsegment, by area, etc. Strategic decisioncan be made based on the result of suchanalysis. ERP --especially SAP R/3- alsoequipped with similar capabilities, but BIexcelled in term of easy access.

3. Dashboard

If a particular client has knowledge ofhislher Key Performance Indicator(s)(KPls), then the client can make analysisof KPI using BI. The client would beable to monitor KPI through thecomputer. In performing this feature, BIfunctions like a dashboard in a car. Thefeature can also be treated as a scorecard,if client monitors KPI regularly.SAP R/3 also offers the scoreboard menu,but fall short in performing dashboardfunction.

4. Data MiningAnother big advantage of BI is in datamining. Data mining means to dig moreinformation out of already available data.BI provides features to find cause of aneffect, such as sales decline, related tocertain data or statistic. Once again,although provide similar menu, SAP R/3

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and VISVAL lack in accessibility andpresentation.

5. PersonalizationThe most important factor thatdetermines the advantage in installingBIis its ability to be customized by user.Each user or client may design theirinterface to only contain the infonnationthat he/she wants, therefore theinformation become personalize andmore valuable.

Platform Architecture of BI Software

Business Intelligence (BI) Software hasclient/server configuration. Likewise, ERP alsohas client/server configuration. Typicallyplatform architecture of BI can be describedasfollows:

. As with ERP, BI is using single databasesystem.

. Clients or users interact with interfaceprogram (API or VI), which functionsascommand collector.

. The design of the interface program isadjusted to the requirements of eachparticular user. API (ApplicationProgramming Interface) and VI (UserInterface) can be fully customized so thatthe information displayed on output layeris really corresponding to the needs ofeach user.

. The command collected by interfaceprogram then transferred to the servertobe processed in Application Engine(Solution and/or Runtime).

. To complete a task, Application Enginecalls the data required from the database.Before being processed, the data arepooled in the repository.

. BI also has features to extractinformation from system outside BI orthird party data; hence it is possible tobuild a link or integration with ERPsystem.

The platform architecture of BI can be describedin the form of diagram shown in Figure I below.

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Proceeding,International Seminar on Industrial Engineering and ManagementMenara Peninsula, Jakarta, August 29-30, 2007 ISSN: I978-774X

Figure 1. Platform Architecture of Business Intelligence Software [8J

Uponstudying Figure 1, ERP will take positionas external engine. Logically, the connectionbetweenERP and BI is mutually symbiotic.

. At one end: ERP supplies data for BIincrease the reliability of BI analysis andscalabilities of other features as well.

. At the other end: BI interprets dataproduced by ERP into meaningful andvaluable information in the eye of thedecision maker, therefore increasing theuse of ERP system itself.

Data and Application Integration

Basically, there are three ways to integrate BIwith ERP system or other form of legacyinformationsystem. They are:

1. Extract Transfer Loading (ETL)Several BI vendors provide ETL facilityto extract data from third partyapplications. ETL than standardized thedata format and sequence according to BIrequirement. The weakness of thismethod is the data have to be historical,not real time.

2. Executive Information Integration (Ell)Several BI also equipped with built-inEll. In case built-in Ell is absent,company can also create an APIconnector in the form of separate

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software to bridge and link BIcomponent to ERP module or function.

3. Common MetadataWidely popular recently, integrating BIand ERP can be done by takingadvantage of same data format andsequence for many interests. The data isdesigned and configured in such a way tocreate a condition where the data isreadable by all application in the system.The method is also called Service-Oriented Architecture (SOA).

The data and application integration process ofBI to ERP or other information system isdescribed in Figure 2 below.

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The difficulty in integrating BI and ERP ispractically minimal. The advancement ofintegrationtools, especially the inception of SOA,provides much help in dealing with the problem.

Case Study: ABC Bank

ABC Bank is one of Indonesia fastest growingretail bank in the past five years. One of the keyfactors in contributing to ABC Bank recentsuccess is the acquisition of majority of share toSingapore leading bank, in early 2006. ABC BankHead Office moved from Bandung to Jakarta inorder to achieve target to become a national bankby 2010.

In November 2006, ABC Bank successfullylaunched their new information system, MisysOpics Plus and Misys Trade Innovation. Theapplication vendor is Misys Banking System, aspecialist in banking industry application.The capabilities of the new information systemare to execute:

. Transaction management from front toback office

. Asset and treasury management

. Workflow management

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. Business planning

. International banking activityMisys system is integrated with ABC Bank corebanking system, ensuring real-time and integratedoperational data throughout branches.

After about six months of going live with Misyssystem, in April 2007 ABC Bank decided tolaunch another liS project. They decided toacquire Business Intelligence Software from SAS,called Business Intelligence/EnterpriseIntelligence Platform (EIP). System from SASwill be integrated in the same platform withMisys and core banking system. These multipleintegration will result in multidimensionaldatabase, but still preserving real-time andintegrated operational data throughout branches.

The multidimensional database can be shown by astar schema, as depicted in Figure 3 below.

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Figure 3. Star Schema - ABC Bank InformationSystem Database

The desired improvement from implementingSASEIP is in providing ABC Bank with:

. Risk Management System

. Enterprise Financial Management

. Customer intelligence

. Forecasting analysis and businesssimulation

All functions are useful as a tool in strategicdecisionmaking process.

The users or clients of SAS EIP will be ABCBankexecutives and top-level management, so inrealitySAP EIP will act as Enterprise ExecutiveInformationSystem.The reasons behind the selection of SAS EIPaccordingto one of ABC Bank executive are [8]:

. Brand image of SAS as one of BI leadingvendor

. Scalability

. Comprehensiveness

. Reasonable price

The adoption of SAS EIP also offer evidence thatexisting information system in ABC Bank isinsufficient in providing information needed fortop-level management in strategic decisionmakingprocess.

CONCLUSSIONS

The conclusions that can be underline from thisdiscussionare:

a. There are a lot of companiesimplementing ERP that have not enjoyedsuccess. Action need to be taken to

improve the situation and save bulkBI and ERP Success LevelHardian

ISSN: 1978-774X

investment installed.

b. BI best act as executive informationsystem to create a top down approach toERP system environment. Top-downapproach means executives can forceERP clients to make better use of theformal system.

c. Better use of ERP formal system willresulting in better information qualitysupplied by BI to assist executives inmaking strategic decision.

d. The main capabilities of BI that can beutilizes as an advantage to ERP are itsaccessibility and user-friendlypresentation.

e. There is trivial trouble in integrating BIinto ERP system, especially with theprogress of Service-Oriented Architecture(SOA) recently.

f. Having a consistent direction towardsingle integrated database is the keytoward the successful adoption of BI intoERP system.

g. Further study should be conducted tosupport companies in order to get optimalreturn out of ERP investment. Otherwisethere is an immense risk of having ERPas nothing more than data system, ratherthan information system.

REFERENCES

DeLone, William H. and McLean, Ephraim R."Information System Success: The Quest

for the Dependent Variable". InformationSystem Research Journal. 2001.

Hamilton, Scott. "Classifications of ERPSuccess ". APICS Journal. 2005.

O'Leary, Daniel E. "Enterprise ResourcePlanning Systems". CambridgeUniversity Press. Cambridge. 2000.

SAP AG. "SAP R/3 version 4.6C".

help.sap.com.

Van Oyen, Mark P. "ERP (EnterpriseResources Planning) ". IPOMSKnowledge Resources. www.ipoms.or.id.2001.

www.cognos.com.www.ebizzasia.com.

www.pentaho.com.

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