the doctor was recently asked by a senior consultant if a CFO was right when he said why should I use Spend Analysis if my ERP has BI functionality that allows me to do ‘any’ analytics and generate reports … and I only have one ERP instance as the company was relatively small (< 100M).
How is the CFO wrong? Can we even count the ways? First of all, let’s go back ten (long years) to when SI published this great post from the spend master himself, Eric Strovink on screwing up the screw-ups in BI where he noted that Baseline, in their efforts to defend AI, were simply pointing out more holes in the process. In this post, the spend master noted:
1. A central database won’t solve the analysis problem, and at the end of the day you’ll have just as many spreadsheets as before … which, as every CFO and CIO knows, is way too many.
2. Business analysts should be able to construct BI datasets on their own, as needed, from whatever data sources are useful/appropriate, and it shouldn’t be difficult for them to do so … but most BI tools only make it easy to construct datasets and reports on data in the ERP. And you NEVER, EVER, EVER have all the data you need in the ERP. Some is in the AP. Some is in the sourcing and procurement systems. Some is in the WIMS. And then there are market data feeds that can provide insight, not in the ERP.
3. While BI is said to be the cornerstone of a governance program, a governance and stewardship program doesn’t actually put any meat on the table … whereas modern spend analysis systems do.
4. While BI can support data integrity, it typically isn’t cleansing that’s the problem, it’s (1) the fixed organization of the data, which is guaranteed to be inappropriate for any analysis that hasn’t been anticipated a priori, (2) the ad hoc reporting on it, which has to be easy to accomplish, as opposed to requiring IT resources (see below), and (3) the fact that cleansing can’t be accomplished on-the-fly (as it should be) by the business analysts themselves.
5. BI systems are difficult to use and set up, it is difficult to create ad hoc reports, and it is impossible to change the dataset organization … especially compared to spend analysis.
And this doesn’t even begin to address the facts that
6. BI reports are pretty generic, and not fine tuned to Sourcing, Procurement, or Finance. Modern SA systems, built by Sourcing, Procurement, and Finance professionals, have out of the box reporting fine-tuned to the needs of sourcing, procurement, and finance professionals that report on spend by category, supplier and metrics by category and supplier with easy drill down and segmentation by department, category, etc.
7. BI engines work on one schema — the ERP schema. And this is not always appropriate for Sourcing and Procurement who need to manage by category. and then do what if analysis against different re-categorizations to try and find the best way to source and procure for the organization. Modern SA tools allow for the creation of different schemas, different cubes on those schemas, and different views on those cubs. Power not in the BI.
8. BI engines expect the data in the ERP. SA systems don’t. They can import data from multiple systems, flat files, market feeds, etc. — put it in private, or public workspaces, reclassify and modify and augment the data as needed, and create true intelligence on a category or a supplier — not just a summary of last year’s spend by product or supplier.
9. The ability of first (and even second generation) BI engines to create arbitrary reports is considerably overstated. Most of them limit the facts and dimensions that can be used in reports to those in defined tables, and limit the self-service reporting to modification of pre-defined templates. Not the freeform capability of a modern Tableau or Qlik solution, and definitely not the freeform capability in a best in class Spend Analysis solution that can allow any dimensions or facts to be used and reports and dashboards to be created using any defined report components in an easy drag and drop manner.
And so on. Hopefully by now you get the point — especially when there are SA solutions out there that start at only a few thousand a month and provide at least 10 times the value of that outdated BI solution the ERP company should be paying you to use. (The technical debt they owe you on this is huge!)