InformationWeek
Defining The Business Value Of Technology
May 3, 1999
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Business-intelligence capabilities seen as next big thing in strategic planning
By Beth Davis
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ow that many companies are wrapping up their initial enterprise resource planning initiatives, they're realizing that those day-to-day operational systems--from general-ledger apps to order-management systems--are churning out a wealth of valuable business information. And they want to make use of it all.In response, the top-tier ERP vendors are crafting major business-intelligence initiatives. In the last two months, PeopleSoft and Oracle began shipping analytical applications that help companies sift through and analyze the data their ERP systems generate; SAP is readying betas of several analytical apps it will ship later this year.
Much of the impetus for these ERP-based business-intelligence applications is user-driven. "Business intelligence is a natural adjunct to what ERP does," says Mike Schiff, an analyst with Current Analysis, a research and analysis firm. "Many companies have the systems they need to run the business; now they need systems to help analyze and plan their business."
Detroit Edison Co. is testing PeopleSoft's new analytical application, called Activity-Based Management. "The tool [lets us] integrate financial and nonfinancial information, then rapidly deploy that information, soon after we close the books, to the desktop for rapid decision-making," says Janet Seefried, director of cost management for the energy company.
Compaq is testing SAP's Business Information Warehouse, the foundation on which SAP's analytical apps will sit, so everyone from sales associates to plant managers can make better, faster decisions. "It will give them more information, and more timely information, in a manageable and secure environment," says Naeem Hashmi, technical director of SAP data warehouse programs for the database and business intelligence group at Compaq.
A data warehouse fed by an ERP system and tightly integrated with analytical apps from that same ERP vendor will prevent what Hashmi calls "data puddles"--collections of data that must be culled from several systems and put into several files to be analyzed and forwarded to another application. "By the time the information gets to senior management, no one knows how that information was derived," he says.
The crux of each ERP vendor's business-intelligence initiative is a data warehouse: Oracle Business Warehouse, PeopleSoft Enterprise Warehouse, and SAP Business Information Warehouse. The warehouses serve as repositories that gather information from a variety of sources so it can be viewed, analyzed, and manipulated. The tools are designed to give managers and executives insight into daily operations, including sales made, products shipped, and orders processed.
For example, Phillips Petroleum Co. is using SAP's Business Information Warehouse to analyze data from its SAP systems at very detailed levels, says Dennis Hodges, Business Information Warehouse project manager at the Bartlesville, Okla., company. Users in Phillips' chemicals and plastics division can better understand rail-car movement of shipments and predict product availability. Within the first two weeks of going live with the application, Phillips was able to catch product shortages and work with customers so they would be less affected."We had a lot of orders that came in at once," says Hodges. "We were able to analyze the data and pass that on to our sales force, who in turn could go to our customers and see exactly what they would need for the next 60 days, until we could deliver more products."
Seeking New Markets
It's no surprise that as the ERP market slows down, vendors are looking for ways to expand their products--and their revenue. Forecasts for the business-intelligence market are healthy: According to Dataquest, it's expected to grow to $6.2 billion in 2002, from $1.2 billion in 1997.
"ERP vendors are looking at analytical applications as the next big revenue push into their customer base," says Joshua Greenbaum, a principal with Enterprise Applications Consulting.
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Photo by Bill Welch
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