If you work in the corporate department of a company then you must have heard of these buzzwords. While they are widely used in organisations, not everyone understands the use, benefits, requirements and difference between these complex and expensive systems. I will try to cover these aspects in this post.
Business Intelligence (BI)
Managers are the most important decision-makers in an organization. They have an in-depth knowledge of the entire business operation. Business Intelligence (BI) systems, often called Decision Support Systems (DSS) provide Managers of an organization with a functionality or platform to make, visualize, analyze and improve important business decisions. These complex decisions might be based on various subjects of information (e.g. sales, customer, employee, etc.) collected by different departments of the organization and stored in a common place called a data warehouse.
The BI systems, whenever required, grab the information from this data warehouse, apply a few complex analytical algorithms to it and display it to the Managers in the form of reports containing charts and tables displaying appropriate information effectively and efficiently. These reports help the Managers to make strategic decisions and plan the next move for the organization.
BI systems do not replace the judgment of the manager but support their decision-making process and benefits provided by BI systems are often qualitative rather than quantitative. Business Intelligence provides Managers with the ability to look at more alternatives to a decision, a broader understanding of the business, a better and faster approach to a problem and fine-tune business plans.
Considerable research has shown that increasing the restrictiveness of the system may lead to ineffectiveness in problem-solving situations. However, a recent experimental study has shown evidence that features such as the degree of choice provided to the user, competition among them and familiarizing themselves with the BI system through training, which is generally considered beneficial features for a DSS, can increase risky behaviour of users.
Supply Chain Management (SCM)
This is a complicated system involving an entire chain of activities, starting from acquiring raw materials from various vendors and suppliers to manufacturing the actual product to packaging and distributing it to wholesalers and retailers to supplying it to the final consumer of the product is called a supply chain. A supply chain management (SCM) system consists of integrating and controlling the flow of information between all the departments of the organization (which includes marketing, sales, finance, manufacturing, etc.) and seeing to it that the entire supply chain system is running smoothly.
SCM provides a clear understanding of the entire manufacturing process and also helps in planning and automating certain stages in the supply chain to produce and deliver the products faster and with efficiency to the right consumer. Development and maintenance of SCM involve high complexity and costs. Due to its complex nature, often many crucial functionalities are overlooked and companies face chances of errors in their results.
Enterprise Resource Planning (ERP)
Enterprise Resource Planning (ERP) Systems are used to manage and integrate business processes of an organization which includes sales and marketing, manufacturing, human resources and product planning. It acts as a one-stop application to manage and automate all the resources related to technology, services and human resources of an entire enterprise. ERP system is the source of an enterprise’s information.
Hence, usually, large enterprises are seen using these systems. Small-scale enterprises use a lightweight version of the ERP to come up with business plans and solutions. The risks involved in implementing ERP include cultural issues within the organization, employee usage training costs, choosing the right consultant and top management’s involvement throughout its development process.
Customer Relationship Management (CRM)
Customer Relationship Management (CRM) is a process that enables companies to collect customer data, examine their preferences, perform marketing campaigns, deliver sales and customer service and support strategies to meet their requirements. It helps companies reach the right customers at the right time and analyze the result of following those strategies through overall customer data collected. For the best impact of using a CRM system, the service delivery and response time should go hand-in-hand.
Relationship between the Systems
Since all of the four discussed systems are extremely costly to develop and maintain, there are high risks of companies ending up losing time and money on these projects. A large amount of data is collected, analyzed and used by these complex systems and therefore, a dedicated team of technical and analytical experts is required to customize and handle these systems.
However, all four systems can be used by an organization to generate large profits by improving their work efficiency and effective growth. DSS and supporting tools could identify and assess multiple constructs and criteria that impact the performance of a sustainable SCM. Nowadays, the usage of ERP systems has increased in every industry domain. Almost all large-scale industries use ERP-based solutions provided by leading companies like SAP and Oracle. Most Supply Chain Management Software vendors provide supply chain planning functions that are based on ERP systems to execute the planned tasks. Meanwhile, most of the CRM software is now being implemented using ERP-based solutions.