Difference between BI and ERP reports

Yesterday I had a meeting with a potential client in Abu Dhabi and a question popped up. What is the difference between reports/information obtained from an ERP and that of a BI solution?

I have seen this question on numerous discussion boards, forums and blogs and I felt that there are certain buzz words which are been repeatedly being told to audience without realizing that audience understand it or not. Some common phrases like

• “ERP is for data input and BI is for data retrieval”.
• “ERP is an OLTP system and BI is an OLAP System”
• “You can do more analytical reporting in BI”.
• “BI provides single version of truth”
• “ERP reports are for day to day needs only” etc

These phrases still do not clear the concept in the mind of a non-IT business user that "why they need a BI solution when their existing ERP solution is already generating reports for them".

I will try to explain the difference for a non-IT business user giving some examples. Two phrases which I mentioned earlier were:
“ERP is for data input and BI is for data retrieval”…
“ERP is an OLTP system and BI is an OLAP System”…
That’s right. ERP software being an Online Transaction Processing (OLTP) system is used to record/edit transactions as and when these happen. The data architecture is designed in such a way that it provides maximum speed in recording a transaction keeping disk space utilization at a minimum. For those of you know who know about IT, this is the application of normalization in a database environment. BI on the other hand being an Online Analytical Processing (OLAP) system provides you robust access to different reports, dashboards and balanced scorecards. Now lets see how ERP reporting is different from BI reporting using a very simple case scenario.
Alpha Company, Inc is in the business of Food & Beverages. Mike is company’s Sales Director and wants to see the sales report for January 2009. A typical ERP system will generate a report like this:












Now what if Mike wants to analyze the report based on geographic region and compare it with last month’s sales. He doesn’t want to see the products appearing row wise. Instead he requires products to appear column wise and show the sales amount of respective geographic region in rows. Developer Buddies!! Remember cross tab / pivot table reports ??? But don’t think Mike’s expectations are going to end here. He also wants to compare these figures with previous months figures in the same report. Wait here. Still don’t think its end of the demands. Mike also wants to show the dropped sales figure in different color. So it needs to be like this


A typical ERP system doesn’t have enough capability to support this. Although there are cross tab / pivot table reports available in latest tools like ORACLE and Microsoft SQL Server 2005 (and above) but they are:

1. Very Complicated,
   
2. Very Slow
   
3. Put a lot of burden on processor

So Mike might have to wait 10 minutes or more for the report shown in figure 2 using an OLTP system. But using an OLAP system, it will only take a few seconds. I have explained three concepts in the figure 2 that a BI system is capable of and those are:

• Time series comparisons (between Jan 09 & Dec 08)
• Drill Down (e.g. on regions)
• Ability of OLAP to do cross tab/pivot table format
  

I will need at least 2 to 3 more posts to further explain/cover rest of the powers of BI solution like slice & Dice concepts, Dashboard Gauges and Scorecards, etc. Also I will explain about the single version of truth phenomenon. But developers!! please don't assume that you can accomplish the required results putting all data (including precalculated data) in one single table. This is a big misconception among developers and you will know it when i will explain the concept of dimensional data modeling in my next blogs i.e.what is the difference between a normalized relational database model (used in ERP) and a dimensional data model (or the data warehouse used for BI). That would be of much interest for those who are already in the field of ERP and want to know more about BI.

Watch out for my next post on this blog. Your comments/thoughts are always welcome.