How to establish a data strategy around your ERP system in manufacturing
Is an ERP a data tool?
Yes. All software is a data tool on some level. There is always some way in which data is collected: Entered manually by users, grabbed from a server or database somewhere, or an update sent from a machine. Once this data is collected, it is stored in some format, usually in a database. This data is then ready for processing and output.
If you are using your ERP system, and it is a data tool, why do you need a data strategy?
You already have a data strategy, even if you don’t know it. A common strategy is: Trust and rely on the ERP system and if anything isn’t able to be done effectively for us: stitch it together with Excel.
Don’t put a round peg in a square hole.
Vendors of large software companies that create ERPs or CRMs sell the idea that their product is a unified platform for your data across your entire business. It will be the only software you need to run your business, and once it is implemented everything will run a lot smoother.
To their credit, many of these software products are extremely useful and worth the investment. But, they miss a key fact: Your business is different. It isn’t like every other business out there, and it has unique requirements that are constantly changing over time.
These products are customizable, but customizability requires extensive training, consultants, and hiring new people to work with the product itself. This makes these products extremely expensive and frustrating to work with. Add-on modules to the core software product promise to do the thing you are missing, and then they overcharge and underdeliver.
What is the alternative?
Your business should rely on the core software that works for you, using it as a tool along with other software to accomplish your relevant goals.
So what does this mean in the context of data strategy?
Your new data strategy:
Let’s take the data out of your ERP. You aren’t replacing your ERP, you are simply creating a copy of your data outside the ERP system. This will be set up as a cloud-based data lake or a data warehouse. These are simply storage architectures that free your data from an operational state (inside the ERP) and put it in an open format in a second location where it can be effectively cleaned, processed, and analyzed.
This creates an extremely rich environment for analytics. Once this is done, you can start to integrate and combine other data sources outside of your ERP into this data store. Instead of trying to merge everything into your ERP, you are now merging everything in a new environment.
There are many benefits of this approach:
Business Intelligence: You can connect BI tools like Power BI directly to the data lake. While it is possible to connect to the ERP system directly, this approach doesn’t easily allow for frequent data updates. With the new approach, these dashboards can reflect the daily or hourly state of the business.
Break down data silos: With data processed and cleaned in the data lake, anyone has the freedom to access clean, ready to use data to do their jobs easier. They won’t only have access to their department’s data because a unified source of truth will exist.
Creative data source integration: With this setup, you can put anything you’d like in the data lake. Emails, PDFs, audio files, and excel sheets can be dumped, processed, and analyzed according to your needs.
Machine Learning & AI: A cloud-based setup allows you to use machine learning to optimize inventory, predict employee attrition, reduce machine downtime, and more. An AI interface can be created around the data lake, acting as your personal data analyst assistant to answer questions from the data.
Drawbacks to this setup:
There are some potential downsides to implementing this:
Expense: This can feel like you are adding more software, not reducing costs.
Licensing Complexity: For utilizing the cloud and BI software, there is a confusing cost and licensing structure that feels like a big roadblock to getting started.
Technical Complexity: These concepts require some data literacy and expertise to implement and use. There is a risk of developing a setup that only a select few people in your business (or no one besides consultants), understands well.
Morph Data Strategies
Morph Data Strategies makes modern analytics implementation for manufacturers become as easy as possible. We provide cost effective services and become your data partner for the long run to ensure the infrastructure is maintained and technical issues are minimal. We charge a flat monthly rate, managing all of the cloud costs and licensing for you.
Morph Metrics provides subscription fully managed data infrastructure and analytics services built around the Microsoft ecosystem.
To learn more, click here.
