How ERP Software Enables Data-driven Decision-making

In a number of ways, data is the life’s blood of the digital economy. There’s the information thrown up by experience and research, which provides the basis for product innovation and development. The account archives and transaction histories that lead to quicker and more satisfying responses to customer queries, order processing, and technical support. And the hard numbers documenting the success or failure of sales drives, marketing campaigns, and enterprise accounting.

One of the most critical uses of information in the life of an enterprise lies in its capacity to provide the in-depth knowledge or insight necessary for making decisions – be they in response to changing market conditions, concerning matters of a strategic or operational nature, or looking outward and to the future, in planning the growth of a business.

The modern commercial environment is such that many of today’s critical business decisions have to be made in real time – or as close to it as possible. This requires businesses to have instantaneous access to all the data relevant to effective decision-making, and to the tools and technologies needed for translating those decisions into action. And it’s because of this that Enterprise Resource Planning (ERP) software has the power to facilitate the making and enforcement of data-driven decisions.

In fact, there’s a science to it. Data-driven decision management or DDDM is defined as, „an approach to business governance that values decisions that can be backed up with verifiable data.“ The quality of that data and the effectiveness with which it’s analysed and interpreted are factors governing the success of this approach.

Accumulating that data and making it readily accessible are other factors. Historically, this has been a huge problem as many enterprises consign business-critical information to departmental „silos“ – with each division (Sales, Marketing, Finance, R & D, etc.) jealously guarding the data needed to run its own operations, using its own software and methodologies to work with that data, and (critically) reluctant to share that information with others in the organisation who might have use for it.

Enterprise Resource Planning software solutions have centralisation of data at the heart of their operation – literally. Systems are based on a central repository of information populated with data from all streams and branches of an enterprise. All database entries are in a common format, so there’s no need for Accounting or Marketing professionals to become data scientists in order to gain access to it.

And having access to a common pool of data covering all aspects of an enterprise empowers business users to gain a number of perspectives (from finely detailed views to „the big picture“) on what’s actually going on – and the potential to make logical connections that lead to valuable insights.

Without some guiding discipline, having access to a ton of information from a multitude of different sources can be as confusing and counter-productive as having no information at all. That’s why it’s crucial for access privileges and mechanisms to be put in place, clearly defining the conditions under which users from various departments will be granted access to the data most needed for doing their jobs.

This approach requires a comprehensive policy governing enterprise data, and the provision of the tools necessary for workers to extract that data whenever they need it. A well-crafted ERP solution will allow management and administrators to set security levels and job-specific access, while the system itself permits authorised users to gain access to critical information without having to waste time and energy seeking approvals from IT.

The data-driven decision-making process relies on interpretation and insight – and these are made possible through fast and effective data analysis. Data analytics has evolved into a complex science, but today’s ERP software incorporates powerful tools for analysing Business Intelligence (BI) and transactional data without blowing the minds of the people who have to use them.

Customisable and user-friendly dashboards greatly simplify the process of data analytics for business users. And these tools are readily available to all departments of an enterprise, presenting a common software platform.

Comparing data sets and making logical connections or inferences between facts must then translate into choices or decisions based on these connections, which in turn will dictate whatever actions need to be taken, as a result.

Most managers and enterprise decision-makers aren’t data analysts, so the results of information analysis need to be communicated to them in a form that they’ll understand. Typically, this means text-based documents, graphs, charts, and infographics – and an effective ERP solution will contain the reporting tools necessary to produce such output, as part of its analytics modules.

In an optimised environment where data-driven decision-making is the rule, acting on the results of transactional data and Business Intelligence analysis cannot be restricted to high-profile executives. Workers „in the trenches“ must be empowered to act on incoming data and changing conditions on an ad hoc and real-time basis – and their initiative and right to do so needs to be written into their conditions of service.

Again, ERP software gives enterprises the ability to do this, by setting rule and role-based policies for workers in each section of the business.

Even the best informed decisions can sometimes be wrong, or lead to unforeseen circumstances. But mistakes and past experiences are opportunities to learn – and adaptive Business Intelligence systems such as those incorporated into the best ERP software can use their accumulated archives of knowledge and past results to craft improved responses and better insights for future situations.

Research conducted by the MIT (Massachusetts Institute of Technology) Centre for Digital Business suggests that organisations using data-driven decision-making methodologies enjoy 6% higher profits and 4% higher productivity rates than businesses that don’t. The data-driven approach is clearly a healthy one – and Enterprise Resource Planning software is very much at the heart of it.