What’s the difference between ERP software and BI software? These are two pieces of software that are often confused, muddled up and each perceived to be something they are not. What they are however are two very distinct pieces of software that do very different things.
Enterprise Resource Planning (or ERP) software doesn’t really live up to its name. In fact, does it at all? Planning, it doesn’t do much of that. And resource? Wasn’t that just another buzzword from yesteryear? What matters most here is the term enterprise, so bear that in mind. I’m all for renaming it. Answers and ideas on a postcard!
What is ERP software?
So what really is this ERP software? With roots in the inventory control systems of the 1960s, ERP software systems really came to the fore in the late 1980s.
They are pretty much a way of integrating departments and functions across a company into one single computer system. Every department manages information and data differently. What ERP software aims to do is integrate all of this into one single computer system that will serve everyone’s needs.
When used properly, ERP software can transform any business and generate a huge return, both financially and operationally.
Let me give you an example. You take a customer order. Typically that order is jotted down on an order sheet by your sales rep, before being keyed into their sales report and passed to the next department to process. That one order then begins a long paper-based journey through every arm of the business before reaching its end point. What is worrying however is that no one really knows the status of the order until the customer calls in to grumble that it hasn’t arrived.
ERP software vanquishes the archaic systems being used in HR, finance, manufacturing and warehouses, replacing them with a single software solution. This means that from the moment the order is taken to the time it lands with your customer; the entire business knows where it is and what is happening with it.
What is BI software?
BI software draws heavily upon the information stored in your ERP system, yet has the primary objective of analyzing this information. With a history dating back to the 1860s, the very idea of BI software has been thrown around for over 150 years. While not the impressive bits of kit we know today, BI has its roots firmly set in understanding how being the first to hear news of impending battles impacted a banker named Sir Henry Furnese. You can read more about the history of BI software in another of my posts here.
Feeding on the information stored in your ERP software system, a BI solution will take this data, analyze it and present it back to you in an actionable and easy to interpret format. Dashboards, reports and key sales information are fed back to the business in a manner that can actually be used, rather than being locked away within the ERP software, never to see the light of day.
The difference between ERP and BI software
Businesses today are incredibly data rich but most never really know how to action this data and make it useful. This is precisely where BI software can step in and take a weight off when it comes to the analysis of data stashed in your ERP system.
While ERP software is traditionally a tool used to process orders, generate invoices and store all your transactional data, it really wasn’t made for analysis unless you have the patience of a Saint. While of course doable, trying to analyze the information stored in your ERP software will lead to more Excel spreadsheets, pivot tables and macros than you can shake a stick at. And if you’re anything like me, opening a hefty Excel document is like staring into the pits of hell.
And this is where ERP and BI software really differ. BI software is your number cruncher. Churning out trends, any movements in a customer’s buying patterns and even your best (and worst!) performing line items, BI does all the legwork for you so you can put ‘Excel for Dummies’ down.
We speak to so many people that think there’s no real difference between ERP and BI and that their ERP software can do just what BI software can, but in short, it can’t. They are two very different things, with different objectives and end games for your business. An ERP will keep you organized and everyone reading off the same page, where BI software will make you proactive in your selling and forward thinking in the way you approach your customers.
ERP and BI are BFFs
Moving on, ERP software is BI’s best bud. A true match made in Cloud heaven, the pairing of these software solutions will bring all of the information you care about and present it to you in one intuitive platform to make faster and better-informed business decisions.
In comparison, Business Intelligence is not quite as archaic as some ERP software systems, but is something relatively new to the tech arena, relying wholly on ERP and back office data to work. You don’t need top spec ERP software with all the bells and whistles, but you do need one, of sorts.
As you can see, the difference between BI and ERP systems is really rather large, so I hope this has cleared up a few things.
We would love to hear what you think too. Have you considered BI software? What are your thoughts on ERP software? Did you assume ERP and BI software were the same? Share your thoughts in the comments section below.