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Enterprise Business Intelligence for ERP Systems1© 2006 IdealCMS All Rights Reserved
Enterprise Business Intelligence from ERP Systems
Dave Guevara
www.idealcms.com
Enterprise Business Intelligence for ERP Systems2© 2006 IdealCMS All Rights Reserved
You Will Learn Objectives
• Pragmatic design and analysis techniques that expose enterprise information from ERP systems
• Straightforward metrics alignment process
• Examples of what to do when the ERP system is only partially deployed or modules aren’t integrated
• Trade-offs between when to use a EDW, data marts, data federation, ODS or reporting mart
Enterprise Business Intelligence for ERP Systems3© 2006 IdealCMS All Rights Reserved
Agenda
• Challenges: enterprise info people want to use.
• Biz value driven design of enterprise info.
• Metrics, strategic & business alignment
• CDI enables EBI with ERP & non-ERP sources
• “Side view” data for EA, SOX and SLA.
• Wrap-up discussion, Q&A
Enterprise Business Intelligence for ERP Systems4© 2006 IdealCMS All Rights Reserved
Challenges in Providing Enterprise Information that People want to
Use
Lot’s of busy reports and “so what” data
No clear visibility of cause & effect
Where is the business value?
Need it sooner than later
Transactions data from ERP isn’t enough
Enterprise Business Intelligence for ERP Systems5© 2006 IdealCMS All Rights Reserved
Business Impact
• 52% never realized strategic value.
• 89% are flying blind!
• 57% cannot deliver market driven demands & capabilities.
• 50% say they could have realized value at 50% of cost.
“IT Portfolio Management”, Bryan Maizilish, Robert Handler © 2005
Business Impact
Enterprise Business Intelligence for ERP Systems6© 2006 IdealCMS All Rights Reserved
The “What” and “How” Dilemma
Delivering Maximum Value
Technical Requirements
Decomposition
Delivery
ProjectDevelopment
Test&
Validation
TestRequirements Development
Iteration
How Should You Do It?
Cost Justification
Resource Planning
Project Objectives
Ideas Prioritization Prioritization
Competitive Strength / Market attractiveness
Business Objectives
What Should We Do?
Business Value
Roadmap
Business Milestone Roadmap
Cost Justification
Resource Planning
PrioritizationBusiness Milestone Roadmap
Project Objectives
Ideas Prioritization
Project A
Business Milestone Roadmap
Cost Justification
Resource Planning
PrioritizationBusiness Milestone Roadmap
Project Objectives
Ideas Prioritization
Project B
Business Milestone Roadmap
Cost Justification
Resource Planning
PrioritizationBusiness
Value Roadmap
Project Objectives
Ideas Prioritization
Project C
Bridge the “What” to the “How” with Business Value Alignment
Enterprise Business Intelligence for ERP Systems7© 2006 IdealCMS All Rights Reserved
Business Value Milestones Connect Your Value to Project Milestones
Resource & Asset Allocation
Budgets (Opexp, Capex) & Cash Flow
Scope, Change, and Cost Control
Opportunity Management
Time Sequencing
Capability Development
Resource Planning
Risk Assessment & Management
Business Impact & Performance Goals
Functions & FeaturesBusiness
Value Milestone
Enterprise Business Intelligence for ERP Systems8© 2006 IdealCMS All Rights Reserved
Example of Actionable Metrics
Enterprise Business Intelligence for ERP Systems9© 2006 IdealCMS All Rights Reserved
MDM: Master Data Management
• Operational– Integrates operational applications for ERP, CRM,
financials, etc.
• Analytic– Prominent in data warehousing since it balances between
tracking data lineage and repurposing data to create new structures (e.g. aggregates and time series)
• Enterprise– Broader in scope than operational and analytic MDM and
may encompass both
Enterprise Business Intelligence for ERP Systems10© 2006 IdealCMS All Rights Reserved
1st Step in Designing Software Solutionfor MDM
• Decide data model of business entities– Hierarchical, multidimensional, object-oriented, relational
or flat
• “Move past reacting (like out-of-sync systems) to proactively searching for opportunities for improvement (like more systems in the MDM grid).”
TDWI Study “Master Data Management: Consensus-Driven Data Definitions for Cross-Application Consistency” by Philip Russom Oct 2006
Enterprise Business Intelligence for ERP Systems11© 2006 IdealCMS All Rights Reserved
Business Value Driven Design of Enterprise Information
Only 5 ways to impact business value
Use market or service driven (not vendor) approach
4 levels of data abstraction
Business context comes from metadata
Enterprise Business Intelligence for ERP Systems12© 2006 IdealCMS All Rights Reserved
Ways to Impact Business Value
• Increase Revenue
• Reduce Costs
• Improve Process Efficiencies
• Risk Mitigation or Improve Governance
• Enhance or Preserve Capabilities
Enterprise Business Intelligence for ERP Systems13© 2006 IdealCMS All Rights Reserved
The Investors’ View
River of Cash™ Flowing through Your Business
Financing (FCF)
Investors & Debtors
Investment
Loan
s & L
easing
Returns to
Investors
Return
s to
Debto
rs
Investing (ICF)IT Systems & Projects
Fixed Assets &
Investments
Operating
Expenses PaidColle
cted S
ales
Operating (OCF)Revenue & Costs
Processes & People
River of Cash™ is a trademark of IdealCMS
Project Pipeline
Cash Flow: Financial Context for Decisions
Increase Business Value from IT is from:
1) Increase Sales,2) Reduce Costs,3) Improve Process Efficiency
4) Mitigate Risks, Improve Governance5) Capabilities: Enhance/Preserve
Research & Development
IT & Product
Enterprise Business Intelligence for ERP Systems14© 2006 IdealCMS All Rights Reserved
Your Company’s River of Cash™
Your Company
Collections[direct, channels…]
(OCF in)
Labor OperatingExpenses (OpExp) Paid
Non-Labor OperatingExpenses Paid
Dra
ws
from
LOC
(FCF
in)
Deb
t Rep
aym
ent
(FCF
out
)
Bank
Fixed Assets, PP&E(ICF out)
Direct Cost ofGoods/Sales Paid
Shareholders
Unusual & Spec ProjectExpenses Paid
Dividends
(FCF out)
Paid In Capital
(FCF in)
Enterprise Business Intelligence for ERP Systems15© 2006 IdealCMS All Rights Reserved
Align Sales to Customers’ Pain
MARKETS
CUSTOMERS
YourCompany
CollectedSales
“Must Have”Service &/or Products
“Pain” BasedValue Proposition
VA
LID
ATE,
VA
LID
ATE,
VA
LID
ATE
Consistent sales growth requires:• Consistent sales activity• Clear “Pain” based value
proposition• Perceived “Must Have”
Services/Products
Constantly VALIDATE your customer’s Pain (it changes), THEIR
understanding of your Value Proposition, and THEIR decision if you
are “Must Have”.
Enterprise Business Intelligence for ERP Systems16© 2006 IdealCMS All Rights Reserved
4 Levels of Data to Information Abstraction
Decision Level
Strategic
Management
Task, EventProblem Solving
Task
Data Abstraction
KPI, Goals, Goodness
Actionable Metrics
Business Context &Sequence of Transactions
Transaction
Type of Information
Performance, Financial, Economic
Economic, Financial, Operational
Operational, Financial
Operational, Financial
Enterprise Business Intelligence for ERP Systems17© 2006 IdealCMS All Rights Reserved
Customer Order Example in Context of MDM
• Data design at transaction level and of metadata must be able to support Analytic & Enterprise analysis, and visualization at each decision level.
An
alyt
icE
nte
rpri
seO
per
atio
nal
Customer Places Order with 3 Line
Items
Order ID links SKU, Customer ID, Discounts,
Order Date, Order Method
Cust ID is associated with a
demographic profile
SKU is associated with product taxonomy,
vendor, vendor SKU taxonomy, fulfillment
centers, warranty
Orders by time period are categorized by income category, product taxonomy, COGS, GM, promotions, seasonal
events, advertising spends
Order Line Item is associated with product taxonomy, pick list, pricing, COGS, fulfillment center, service center, shipping method, must
ship date, vendor sales, item level promos, order level promos, item status, order status, returns
Order ID is associated with pick queue, marketing campaign, time period, order placement method, payment method,
payment processing, order status
Sales, sales velocity, profitability and inventory on-hand goals are
updated quarterly
Customer service events & correspondence is associated
with order, order item, disposition
Customer touch points are associated with life cycle value, history & sequence
of events, demographic changes, mindshare responses, buying patterns
Side View tracking includes time to complete each
status, audit data, processing center
Enterprise Business Intelligence for ERP Systems18© 2006 IdealCMS All Rights Reserved
Business Value Exercise
• Enough talking!
• Let’s get into small groups
• Objective:– Determine how to translate an
earnings growth goal into the key performance indicators that your BI solution will report from the ERP financials.
Enterprise Business Intelligence for ERP Systems19© 2006 IdealCMS All Rights Reserved
Lessons Learned on DesigningBusiness Value Driven BI
• Determine early the level(s) of decision making & decision making stakeholders.• Actionable metrics show what needs attention, what to do and who to call• Actionable information is defined from decisions being made, cause & effect
analysis, and the actions taken• Define the full vision, but implement in small steps• Work side-by-side with your key constituents for a few days or a week• Identify exceptions to the rule, or decisions that are made “outside the system”• Identify HOW your “customer” determines cause & effect.• Verify level of data abstraction and the relationships of these data to decision
making criteria• Design your reporting data architecture then evaluate the appropriate data access• Map the high-level actionable or scoreboard metrics down to the transactional
source data prior to deciding the preferred architecture
Enterprise Business Intelligence for ERP Systems20© 2006 IdealCMS All Rights Reserved
Metrics, Strategic & Business Alignment
Start with the end-in-mind
IT Portfolio Management provides guidance
Focus on metrics not reports
Lead the alignment discussion, don’t wait
Enterprise Business Intelligence for ERP Systems21© 2006 IdealCMS All Rights Reserved
Business Alignment of Enterprise Info
“IT Portfolio Management”, Bryan Maizilish, Robert Handler © 2005
IT Portfolio Management
Enterprise Strategic Intent
Enterprise Business Objectives
Business Unit Objectives/Requirements
IT Plan(IT Policies, Principles, Road Map, etc.)
What are the Key Performance Indicators?
What belongs in the Performance Scorecard?
What are the Critical Success Factors?
Customer Requirements
Enterprise Architecture
Business Intelligence
Competitive Intelligence
What selection criteria will be used to filter the Portfolio?
Enterprise Business Intelligence for ERP Systems22© 2006 IdealCMS All Rights Reserved
Portfolio Management Processes Simplify Business Alignment Into
Data Architecture
Strategies
Risk Management
Methodologies (eg SOA, MDM, CDI)
Design Processes
Enterprise
Architecture
Business Value Governance
Initiatives
Portfolio
Management
Technologies
Visibility
Projects Architectures
RoadmapsArchitecture BlueprintsInvestments
Budgets
Best Practices
Enterprise Business Intelligence for ERP Systems23© 2006 IdealCMS All Rights Reserved
Line-of-Sight AcrossLevels of Decision Making
Decisions
Need
s
Reve
nu
e &
Pro
fit
Resu
lts
Desi
red
Ou
tcom
es
Investors
Board of Directors
Executive Team
Management Teams & Key Employees
Work Groups & Customers
Vendors & Subcontractors
Supply Chains
Distribution Channels
Goals
StakeholdersLine of Sight
Enterprise Business Intelligence for ERP Systems24© 2006 IdealCMS All Rights Reserved
Organization Structure
Alignment For Actionable Metrics
ActionableMetrics
Operations Model Economic Model
Operations Metrics Financial Metrics
Enterprise Business Intelligence for ERP Systems25© 2006 IdealCMS All Rights Reserved
Metric Alignment Exercise
• Get back into small groups
• Objective:– Using the KPI from the first
exercise to define the Actionable Metrics for the COO who is driving down COGS.
Enterprise Business Intelligence for ERP Systems26© 2006 IdealCMS All Rights Reserved
Lessons Learned on Alignment
• The business and strategic alignment process for any enterprise program (EDW, BI, EA) is the same as that used in IT Portfolio Management. So don’t reinvent the wheel, use the pieces that help you.
• Often the business or executive teams will not provide the strategies or initiatives with enough clarity that they are actionable at a design level. Plan on doing your own alignment analysis and to facilitate this process with your business, process and finance SME’s.
• The metrics alignment process runs in parallel to the business/strategic alignment process, however the outcomes are Actionable Metrics, Back-of-the Envelop metrics, Key Performance Indicators (KPI) and Enterprise metrics (side view).
Enterprise Business Intelligence for ERP Systems27© 2006 IdealCMS All Rights Reserved
Using CDI EnablesEnterprise Business Intelligence from ERP and Non-ERP Sources
Timeliness and time frames
Cross-correlation of data into decisioning context
Business context to provide meaning
Goals to provide measures of goodness
Enterprise Business Intelligence for ERP Systems28© 2006 IdealCMS All Rights Reserved
Timeliness of Visibility in BI
• Timeframes:– Real Time: O&G trading, customer service, telecomm– Near Real-Time: Online retailer, Webcasting, Walmart– Periodic (day, week, month, quarter): Scoreboards– On-demand: Use determines refresh rate– Scheduled: EFT batch submit– Event Driven: Notification reports (SLA, major customer sale)
• Cross-relating data sources requires that both sources refresh on like timeframes– Find slowest common denominator.– Note data refresh and report refresh in report, scoreboard...
Enterprise Business Intelligence for ERP Systems29© 2006 IdealCMS All Rights Reserved
Overstock.com EDW/BI Architecture
• Overstock architecture diagram is not available electronically per conditions applied by Overstock.com in how their system is briefed.
• The system is described in the Speakers notes.
Enterprise Business Intelligence for ERP Systems30© 2006 IdealCMS All Rights Reserved
TDWI MDM Study Mid-2006 ofMDM Business Entities
• Customer 74%
• Products 54%
• Financials 56%
• Biz Partners 49%
• Employees 45%
• Locations 41%
• Sales Contracts 25%
• Physical Assets 21%
% of 741 respondents that identified Business Entity as important in MDM.
TDWI Study “Master Data Management: Consensus-Driven Data Definitions for Cross-Application Consistency” by Philip Russom Oct 2006
Enterprise Business Intelligence for ERP Systems31© 2006 IdealCMS All Rights Reserved
Relating Financial Data to Operational Data
Debit CreditAccount Type
ARAPInv
AssetsLiab
Equity
Account
1100120020002500
…Report Metric
Sales by DivisionDepreciation
Account Inversion
+1-1
Chart of Accounts
1100120020002500
…
Credit Inversion
+1+1
FilterAttributes
xxx yyy zzzxxx yyy zzz
Enterprise Business Intelligence for ERP Systems32© 2006 IdealCMS All Rights Reserved
SOA Exampleof Data SourcingIssues for EBI
• Develop data governance standards sooner than later.
• Use new initiatives (like SOA) as way to introduce data standards & rework old structures.
• SOA adds transaction data that is outside the ERP & non-ERP systems, so design in how you will get visibility.
Services that Support the Sales Business Functionsfrom Lead to Order to Fulfillment Operations
Deal Management Order Management Operations
Use
r In
tera
ctio
n
P roduct
SVC
Bu
sin
ess
Pol
icie
s L2O: Lead to Order
CS: Customer Support
QTC: Quote to Cash
Tra
nsa
ctio
n
Pro
cess
ing
Dat
a
Mg
mt
Lead Management
Integration
Product Sale Leads
Services Sale Leads
Product Deal Management
Services Deal Management
Product Order Management
Service Order Management
ProductFulfillmentOperations
ServicesFulfillmentOperations
Lead & Territory
Management
Scheduling, Configuration,
Pricing, Quoting, Validation
Transaction Engines
Deal Management Business Process
Transactions
Sales Contact Processing, Opportunity
& Service Contact Management
L2OLead to Order
QTCQuote to Cash
Claiming, Credit, Tax and Account
Transaction Engines
CSCustomer Support
Business Services
Business Services
Pre-Sales Identify Qualify Post-SalesSolve Present Close
Common Integration Layer
Business Intelligence
Dashboards
Order Processing Transaction Engines
Order Management Manufacturing &
Services CRM
Enterprise Business Intelligence for ERP Systems33© 2006 IdealCMS All Rights Reserved
Lessons Learned on CDI enabling EBI
• Get in front of the problem where ever you can!
• Identify early on where you will need trend or historical reporting capabilities.
• When relating financial data to operational, sales or service data design:– COA mapping tables– Sign inversion tables– User interface for finance or accounting to manage these mappings
• Define and document the different definitions for the core data entities (customer, products, partners, etc.), then determine what is the master source of record and the defining business context.
• Whenever possible establish data structure standards for any new software development and application enhancements. Same goes for new design approaches like SOA.
• Determine where to incorporate data transformation mapping tables based on development standards, data accessibility and system architecture.
• Develop a roadmap and a data architecture blueprint for your data migration plans to your preferred future data structure.
• Develop an approach (even if sub-optimal) to work with what you have as data sources.
• When all else fails, and depending on your BI, ETL and database technologies, pull the data into a BI mart.
Enterprise Business Intelligence for ERP Systems34© 2006 IdealCMS All Rights Reserved
“Side View” Data forEA, SOX and SLA
Side View data is about the systems, processes and performance
SOX compliance data may provide visibility onto candidates for process improvement
Correlating system/app monitoring data with transaction loads may highlight cause & effect
Enterprise Business Intelligence for ERP Systems35© 2006 IdealCMS All Rights Reserved
“Side View” into Enterprise Data Sources
• Capturing a little extra data provides tremendous “Side View” visibility
Tra
ns
acti
on
Per
form
ance
Co
mp
lian
ce
Customer Places Order with 3 Line
Items
Order ID links SKU, Customer ID, Discounts,
Order Date, Order Method
Order and Item status changes are
timestamped for FCC compliance
Payment processing & collection (i.e. cash event) is timestamped, cash reconciliation timestamp, disposition & accountant are
recorded for SOX compliance
Performance goals are updated quarterly
COGS data is refreshed weekly or monthly and is forecasted by Finance
Order status is associated with business processes and the respective steps/tasks.
Customer correspondence regarding the order & subsequent service issues are securely archived for discovery up to 7
years for product liability assurance
Enterprise Business Intelligence for ERP Systems36© 2006 IdealCMS All Rights Reserved
Relating SOX Audit Structure toFinancial & Operational Data
Revenue/AR
SOX Compliance Cash Cycles
Procurement/AP
Inventory/ Goods
Fixed Assets/ PP&E
Treasury/
Financing
Operating Cash Flow & Earnings
Financing Cash Flow
Investing Cash Flow
Enterprise Business Intelligence for ERP Systems37© 2006 IdealCMS All Rights Reserved
CORE ACTIVITIES ARE:• A group of tasks that produce output• Specific enough to be actionable
CORE ACTIVITIES ARE NOT:• Customer orders• Process descriptions
Control
Input
Consumables
Output
Uncontrollables & Environment
•Work products•Measures of Quality•Timeliness•Reporting
•Resource Time•IT Resources & Capacity
•Sales Orders•Work Orders
•CRM•Executive Oversight•Order processing System
Work Function View can IdentifyHigh Value Data for Side View
Time through work function
Enterprise Business Intelligence for ERP Systems38© 2006 IdealCMS All Rights Reserved
Lessons Learned on Side View Data
• When designing your primary EDW/BI or enterprise information systems remember to look at how you will see your system, processes and events from a side view.
– Side views may be for compliance (SOX), enterprise architecture (EA), service level performance (SLA), disaster recovery (DRM)
• Relating system monitoring data to transactional data may provide unique visibility into cause & effect.
• SOX compliance is based on the five cash cycles.
• Since logging functions can produce huge files that just burn storage and provide little value, evaluate where to insert event data writes.
• Interrogating transaction rates and latency from the transactional records can provide insights into data loading issues, timing problems, demand surges, performance hits due to external data feeds, and possibly SLA conditions at end-user experience level.
Enterprise Business Intelligence for ERP Systems39© 2006 IdealCMS All Rights Reserved
Lessons Learned on Buy-in
• KNOW your “customers’” view of “What’s in for me?”
• Start with the end-in-mind.
• Use a roadmap to set expectations and update
• Frequent communications and reviews are critical
• Use mockups to visualize the “customer” requirements.
• Actionable metrics require knowing:– What Needs Attention, – What to Do– Who to Call
• Set up Change Management at the beginning of the project
• Respect your business SME’s, Humility is good
Enterprise Business Intelligence for ERP Systems40© 2006 IdealCMS All Rights Reserved
Wrap-up Session Q&A
General Lessons Learned
• Be prepared to do your own business/strategic alignment analysis
• Focus on metrics alignment as 1st step in requirements.
• Get your requirements into software requirements & framework
• Be specific and offer solutions to the software developers
• Do the performance trade-off analysis
• Verify how you correlate processes, tasks, transactions and data entities into the business context of your decisioning requirements.
• Get a handle early on about data inconsistencies
• Constantly revisit timing performance and load management
• Be prepared to design around sub-optimal implementations
• Be able to capture metadata and reference data not otherwise available
• Use query time optimization techniques to assure timeliness while not interfering with transactional throughput.
Enterprise Business Intelligence for ERP Systems41© 2006 IdealCMS All Rights Reserved
References & Information
Articles on BI and EDW topics are available at www.idealcms.com
• Guest authors who would like to contribute an article or white paper on these topics are invited to submit ideas to www.idealcms.com .
• “IT Portfolio Management, Step-by-Step, Unlocking the Business Value of Technology”, Bryan Maizlish & Robert Handler, Wiley © 2005.
• “Managing by the Numbers, A Commonsense Guide to Understanding and Using Your Company’s Financials”, Chuck Kremer and Ron Rizzuto with John Case, Inc. © 2000
Contact Information for Questions
Dave Guevara, IdealCMS
(303) 694-9394, [email protected], www.idealcms.com