ERP: Data Quality and the Data-Driven Enterprise
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Enterprise resource planning, or ERP for short, integrates the functions of an organization around a common database and applications suite. A brainchild of the late 20th century – the term was coined by the Gartner Group in the 1990s – the concept of ERP has grown to become ubiquitous for organizations of all sizes, in what has now become over a US $25 billion dollar industry annually.
ERP systems often encompass areas such as human resources, manufacturing, finance, supply chain management, marketing and customer relationships. Their integration not only automates many of the operations of these functions, but provides a new level of strategic visibility about your business. In the ERP era, we can now explore questions like:
- Where your most productive facilities are
- How much it costs to manufacture a part
- How best to optimize your delivery routes
- The costs of your back office operations
- And many more
Its functions often interface with customer relationship management or CRM (discussed in a previous blog post), which provides visibility on post-sale customer interactions. CRM is often integrated within ERP product suites, adding market intelligence to the business intelligence of ERP.
ERP data generally falls into one of three categories:
Organizational data, which describes the infrastructure of the organization, such as its divisions and facilities. For most firms, this data changes very slowly over time.
Master data, which encompasses entities associated with the organization such as customers, employees and suppliers. This data changes periodically with the normal flow of business.
Transactional data, based on sales and customer interactions. This data, which is the lifeblood of your revenue pipeline, is constantly changing.
Note that two out of three of these key areas involve contact information, which in turn can come in to the system from a variety of sources – each of which is a potential source or error. Causes of these errors can range from incorrect data entry to intentional fraud, not to mention the natural process of changing addresses, phone numbers and email addresses. And this bad data can propagate throughout the system, causing consequences that can include wasted manpower, incorrect shipments, missed sales and marketing opportunities, and more.
According to one research paper, data quality issues are often a key driver for moving to ERP, and yet remain a concern following ERP implementation as well. This leads to a key concept for making ERP work for you: automated systems require automated solutions for data quality. Solutions such as Service Objects’ data verification tools ensure that good data comes into the system in the first place, leveraging constantly updated databases from sources such as the USPS and others. The end result is contact data quality that doesn’t depend on human efforts, in a chain that has many human touch points.
ERP is part of a much larger trend in business computing, towards centralized databases that streamline information flow, automate critical operations, and more importantly have strategic value for business intelligence. With the advent of inexpensive, cloud-based software, the use of these systems are spreading rapidly to businesses of all sizes. The result is a world that depends more than ever on good data quality – and the need to use tools that ensure this quality automatically.