Connecting your business and your ERP - A new paradigm in the mid-market

Mid-market businesses have been poorly served by the traditional Business Intelligence industry. The solutions are expensive and complex to implement because they have no embedded understanding of ERP data structures and require considerable consulting support. PrecisionPoint is without parallel in the Business Intelligence space, says Gary Simon, FSN’s managing editor. Its patent-pending integration engine technology and ‘understanding’ of native Microsoft Dynamics installations sweeps away the complexity of ERP data structures at a stroke re-connecting users with their underlying ERP system.

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Contents Page • Introduction Pg 4 • The twin challenges of Business Intelligence in the mid-market Pg 6 • Insufficient skills Pg 8 • Business Intelligence Pg 9 • Why does Business Intelligence fail? Pg 12 • Mid-market considerations Pg 15 • The supreme importance of data quality Pg 16 • How PrecisionPoint meets the need Pg 18 • Reporting Pg 22 • The ‘traditional’ proof of concept is dead Pg 28 • Post implementation support Pg 29 • Summary Pg 31 • Customer Testimonies – FitFlop & Lantmännen Unibake Pg 33 • About FSN Pg 38 • About PrecisionPoint Software Pg 39

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Introduction Today’s economy is volatile and uncertain for most businesses, but mid-market companies often have it tougher than their larger competitors. They do not enjoy the economies of scale that are a feature of multinationals, nor their market clout, deeper pockets and access to a wide choice of funding. As a result, mid-sized organizations thrive by their wits, relying on their business agility and speed to market to out-manoeuvre their larger competitors.

In these complex markets, business decision makers can no longer rely on historic precedents, ‘rule of thumb’, or a gut feeling. The tumultuous changes in global financial markets accompanied by unprecedented government intervention (quantitative easing, exchange rate manipulation, corporate rescues) means that businesses must have their finger on the pulse of commerce - constantly monitoring trading conditions, customer indebtedness, supplier stability and cash positions while continuously re-forecasting business performance.

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But few businesses can claim to have the information they really need at their fingertips; the nineties vision of “Business Intelligence for the masses” has failed to materialise and mid-market ERP systems struggled to keep pace with challenging information needs.

So it is time to call a change in the way that information is delivered. There is a pressing need for a fresh approach. Unsurprisingly, it is a mid-market company, unencumbered by traditional products and thinking, that has come up with a radical approach. “PrecisionPoint” is neither a Business Intelligence company nor a toolset provider. As we shall see in this product review, PrecisionPoint occupies newly defined territory between the business user and the underlying ERP system. By automating the creation and delivery of a business warehouse, it mirrors with “penny-perfect accounting precision” the information and relationships between transactions that reside in the entire underlying ERP system. As such, it represents a paradigm shift for the way that information is delivered in the mid-market, re-connecting business users to the business information they require for accurate decision making.

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The twin challenges of Business Intelligence in the mid-market

Throughout the nineties the ERP (Enterprise Resource Planning) suite was positioned as an all embracing solution that could meet the varied transaction processing and reporting needs of the enterprise. Initially popularized by large multinationals, ‘lighter’ versions of ERP systems made their way into the mid-market. The idea that all of the applications were developed by one supplier, with a shared architecture and a common ‘look and feel’, proved irresistible to a market disillusioned with ‘Best of Breed’ applications bought on a piecemeal basis.

Microsoft’s entry into the ERP market, especially with the acquisition of Navision Software, providing the Dynamics AX and Dynamics NAV ERP platforms, reinforced the notion that these products had become commoditised and easy to use without significant in-house IT resources.

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Indeed, these ERP systems quickly established their usefulness as transaction ‘engines’ overcoming many of the integration issues associated with the best of breed approach, improving processing efficiency and lowering average transaction costs. But ERP did not live up to the promise of providing business information (operational, management and financial reporting). Despite the appearance of an integrated set of applications which could readily provide the foundation for any reporting requirements, in practice the promise of information ‘on tap’ has proved illusory. The reasons are many and varied but boil down to the lack of suitable skills combined with the relative inadequacy of spreadsheet links, report writers and traditional Business Intelligence solutions.

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Insufficient skills The principle methods of reporting from packaged ERP systems are the ubiquitous spreadsheet link or simplified report writers. The spreadsheet link can generally be used to export standard production reports to Excel – which can then be modified – or to generate one-off custom reports. But the latter is hampered by complex ERP database structures (see later), the inability to handle large data volumes and the limited capability of spreadsheets for query and analysis. Furthermore, creating anything more than a simplified two dimensional report is often beyond the capability of ERP value added resellers (VARs) accustomed to setting up ERP transaction systems but very often uncomfortable with the intricacies of relational databases. ‘Simplified’ report writers suffer similar limitations since the generation of anything worthwhile requires a deep understanding of the way that transaction information is held in underlying database structures, i.e. database tables and the relationships between them.

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Business Intelligence In an effort to provide more comprehensive reporting, nearly all ERP vendors partner with providers of Business Intelligence (BI) solutions – in some cases going as far as acquiring BI companies to cement the capability.

It was recognised that most business problems were multidimensional in nature; for example, How many vehicles have I sold in February in the Far East? The answer involves data from multiple dimensions, i.e. how many vehicles (product dimension) have I sold (accounts dimension) in February (time dimension) in the Far East (regions dimension). But finding answers to modestly ambitious questions such as these present significant practical challenges. Despite the appearance of a cohesive structure, most ERP systems are modular in design, effectively mimicking the functional structure of the organizations that they serve. The modular design means that the data supporting these applications is effectively stove-piped into discrete areas with physical gaps between them that hinder transparent reporting across the ERP environment.

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Furthermore, the modular approach, (a concept developed more than four decades ago) which is designed primarily with accounting transactions in mind and does not reflect the way in which business is actually transacted. Business processes do not work within the confines of tightly prescribed application boundaries but flow horizontally across an organization. Take for example the ‘Quote to Cash Cycle’ which in simplified terms commences with the generation of a sales quote, its conversion into a sales order, the dispatch of goods from stock or manufacture, the delivery of an invoice and ultimately the receipt of a customer payment. Even a simplified process such as this spans several functional areas, Sales, Credit Control, Order Processing, Production, Warehouse and Accounts. So a single instance of an invoice created by the ‘Quote to Cash’ cycle should not be regarded as a document in isolation, but more realistically as an intricate maze of inter-related data items. It is the coalescence of these interdependent data items and the dimensions within which they are suspended which forms the basis of a comprehensive multi-dimensional reporting environment.

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Even a simple sales transaction involves a maze of interrelationships and dimensions.

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Why does Business Intelligence fail?

Traditional Business Intelligence seeks to leverage these connected relationships by providing multidimensional analysis cubes on relational database stores, but history is littered with Business Intelligence projects that have failed to meet their objectives. So, why do so many Business Intelligence projects fail? The real difficulty with BI products is that they are supplied as ‘vanilla’ or ‘ERP agnostic’ solutions. Their innate flexibility to work with any ERP system is also their very downfall. With no prior insight or knowledge about a particular ERP package, the implementers of a BI solution have to describe the underlying data structures – which, as mentioned earlier, are distributed across a number of modular applications. In fact, the average ERP system contains hundreds of different relational database tables and thousands of interrelationships between the data. The sheer complexity and scale of this data model, together with a lack of published technical information about data structures from the ERP vendors, means that ambitious projects designed to build an enterprise-wide data warehouse frequently end up with very limited scope.

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In fact, many end up as a series of small functional data warehouses, so called cubes or data marts, which reflect the limited data structures in one particular area of the business. This then creates difficulties when attempting to keep the different cubes in synchronisation with the underlying data and makes it virtually impossible to report across the enterprise without combining different data cubes in a cumbersome and difficult to maintain lattice structure.

Existing ERP systems lock BI users into a stove piped view of applications which prevents them collaborating across a business process and encourages multiple BI cubes

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Crucially, combining cubes (which only tell a part of the story) makes it extremely difficult to prove the integrity (completeness and accuracy) of the information they contain and reconcile it to the underlying ERP system. This undermines confidence in reporting and the data on which it is based. So it is not surprising that Business Intelligence projects frequently end up being very costly to implement and heavily reliant on external consultants and application specialists. Although cultural issues and lack of sponsorship are often cited as problems for the lack of success, fundamental difficulties with sourcing accurate data and describing it to the BI system are usually the root cause.

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Mid-market considerations The difficulty of implementing business intelligence solutions is magnified in mid-market companies. Mid-market ERP shares all of the complexity of larger scale ERP solutions except that smaller organisations have more limited resources. In most instances mid-market ERP, for example the Microsoft Dynamics range, is implemented through Microsoft’s partner network, who help to install and configure the applications and processes. However, few of these partners have deep expertise in sophisticated BI tools or a detailed knowledge of the data structures within the ERP system. As a result, most implementations are limited to standard spreadsheet based reports and perhaps a limited number of operational reports generated using a report writer. Neither do mid-sized organisations usually have sufficient IT specialists in-house to configure a BI solution. While a very small number of ERP software authors have developed proprietary Business Intelligence solutions configured to work ‘out of the box’, the reality for most medium sized organisations is that Business Intelligence is beyond their grasp.

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The supreme importance of data quality

So the sticking point for most organisations is the knowledge, skills and tools necessary to access the ERP data. The challenge is comprised of the following elements: •Capturing a complete understanding of the data held in the underlying ERP systems, i.e. the dimensions (mentioned earlier), transaction data and business rules that govern the interrelationships between the data elements and the relational database tables in which they are held. •Interpreting the data so that it is served up to business users using terminology (business language) that they understand rather than IT ‘shorthand’ which is natively how information is held. •Generating a data warehouse that is fully amenable to query, analysis and reporting. •Establishing controls to prove beyond doubt that the multidimensional data warehouse is a faithful reproduction of the underlying ERP environment, i.e. is complete, accurate and fully reconciled in accounting terms. •Providing a mechanism to ensure that the data warehouse is refreshed regularly and frequently with the latest available information in the ERP system.

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So, if traditional ‘ERP agnostic’ Business Intelligence tools and report writers have failed to meet the need, is there a better way? The problem that has been described is not that existing BI tools are not fit for purpose but rather that they are impotent in the face of complex data structures. In effect, it is knowledge about the underlying ERP system that is the limiting factor. But how would the position change if it were feasible to describe the entire ERP system to a Business Intelligence (or other reporting) tool so that the two tools worked seamlessly together ‘out of the box’? In other words, to buy a pre-configured solution rather than build it from scratch.

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How PrecisionPoint meets the need

The struggle to establish a comprehensive and reliable mid-market BI solution is a familiar problem to PrecisionPoint Software, a company established with the sole mission of liberating thousands of Microsoft Dynamics users from the confines of existing reporting solutions. Recognising the skills limitations in the mid-market, PrecisionPoint elected to develop a purpose built solution for Microsoft Dynamics NAV and Microsoft Dynamics AX. In the “Build” versus “Buy” debate PrecisionPoint provides a solution which users can buy without the expense and onerous implementations that have beset the traditional BI approach. So how does PrecisionPoint achieve its mission to deliver a Business Intelligence solution out of the box?

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The answer lies in clever proprietary and patent-pending integration technology which allows their solution to interrogate the underling Dynamics ERP environment and automatically build a complete unified data warehouse. The PrecisionPoint software ‘understands’ fully the Dynamics Data Model, that is: •physically and logically how the data is held in hundreds of tables across all application areas •the relationships and business rules that govern the interrelationships between the different data elements •the transaction types (documents), together the attributes and analysis codes that accompany them Using this information PrecisionPoint can generate a complete replica of the entire ERP environment and re-purpose it in a form that is optimized for multidimensional analysis and reporting. Depending on the size of the ERP environment the automatic generation of the database should take just a few hours to finish. Most importantly, it is possible to reconcile the complete database to the underlying ERP system to prove the accounting integrity of the contents.

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Once established the database is automatically refreshed overnight with the latest data in the ERP system. Where meta data has changed in the ERP system, for example a new cost center is added, the addition is detected and the required changes are made in the multidimensional database. Unlike traditional BI projects which use ETL (extract, transform and load) programs to select segments of an ERP system to load into a multidimensional cube, PrecisionPoint captures the entire database in its original form. By leveraging the ERP database in this way (i.e. as though the BI layer is an extension of the accounting system), the data benefits from the tight validation routines that the ERP system imposes on data entry and data quality can be assured. In fact, so rigorous is this process that the generation of the multidimensional database frequently highlights data anomalies in the ERP system. For example, identifying data that has been ‘fixed’ by tampering directly with database tables rather than going through strict ERP validation routines.

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PrecisionPoint ‘understands’ the complex interrelationships in the ERP system and can support multi-dimensional reporting across the enterprise

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Reporting First insights into the data can be gained by the use of a standard pivot tables in Microsoft Excel. This unveils the multidimensional structures within the PrecisionPoint database and allows users to drill down into the database and roam across dimensions as desired. It is at this stage that the benefits of PrecisionPoint over the traditional BI solution become most evident.

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The full PrecisionPoint data warehouse is exposed in an Excel Pivot Table, allowing the user to ‘roam’ through reporting dimensions as desired

First, the completeness of the data warehouse allows users to reach across functional boundaries to prepare reports. For example, a sales manager can look at sales by product, but can combine information from the inventory system and purchase order system to view potential stock-outs and expected replenishment timescales. This compares very favourably with traditional BI cubes which would confine the user to a “Sales Cube” which may not contain order information at all. In this way, PrecisionPoint supports the modern trend for roles based reporting that follows business processes rather than traditional functional reporting. Secondly, the availability of the entire transaction system within the multidimensional PrecisionPoint environment means that it is feasible to pursue reporting inquires to the lowest level of granularity possible. For example, Sales can be traced through product group, by region, by salesman, to individual invoices, to invoice lines and ultimately to gross profit by line item.

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Clearly, drilling down through multidimensional hierarchies is not necessarily the most efficient method of reporting in all circumstances. For formatted management reports PrecisionPoint provides an Excel add-in/report writer to rapidly generate multidimensional views and reports. For operational reporting and transaction analysis PrecisionPoint provides access to the raw data warehouse through any SQL reporting tool as well as supporting controllable views for Microsoft PowerPivot tool which can then be viewed through Excel2010 and SharePoint2010 (see the following screen shot).

PrecisionPoint also solves another thorny problem, which is where to store budgets. Historically, the difficulty of reporting from ERP systems often dissuades users from maintaining budgets within the ERP system, even though the functionality is perfectly adequate. In many cases budgets are held in Excel spreadsheets which are periodically and inefficiently updated for the monthly actual. The ease with which PrecisionPoint generates its database, together with the simplicity of reporting, means that it is generally more efficient to create budgets within the ERP system – which is what it was designed to do.

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For operational reporting and transaction analysis Microsoft Excel2010 PowerPivot generates views of transactions.

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For self-service management reporting PrecisionPoint provides an Excel add-in/report writer - XLPublisher.

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At a glance comparison of traditional ERP, Business Intelligence and PrecisionPoint reporting

Issue Traditional ERP Reporting Business Intelligence Tools

Management reporting and decision making

Confines user to inefficient modular applications that bear no relationship to the underlying process or the way that people actually work. Reporting is largely confined to Excel links, pre-canned operational reports and the limited use of report writers.

ERP vendors have established relationships with any number of ‘vanilla’ BI vendors but none of these have any pre-built or assumed knowledge of Microsoft Dynamics NAV and Microsoft Dynamics AX . The modular design of the underlying ERP systems results in multiple disconnected BI cubes - usually one for each functional area, Finance, Sales, etc.

Accounting integrity Multiple spreadsheets written and sourced by individuals means that accounting integrity (dependable accuracy) is virtually impossible to achieve.

Multiple BI cubes makes it difficult to achieve data consistency and hence consistency of management information between BI models.

Completeness of reporting

Severely constrained by the limited capabilities of spreadsheets and very limited access to ERP data.

Separate BI cubes cannot support complex multidimensional reporting that runs across business processes.

Implementation effort Unconnected spreadsheets are time consuming to develop and maintain.

Requires consultants and lengthy implementation timescales merely to define a sub-set of the ERP environment to the BI suite.

Costs Maintaining a spreadsheet environment is very costly.

The inability to implement without consultants or high levels of in-house expertise is extremely costly.

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The ‘traditional’ Proof of Concept is dead

Prototyping is a form of Rapid Application Development (RAD) designed to accelerate the development of a new applications by avoiding traditional paper based specifications. But prototyping a “Proof of Concept” can also be used to quickly evaluate whether a new application is suitable, i.e. whether it can meet the users’ needs before committing to a contract. It is a method widely used by the BI industry, although the effort required on the part of potential customer and supplier can be considerable, stretching to days or even weeks. However, PrecisionPoint virtually eliminates the need for a Proof of Concept because it generates a complete working system based on a customer’s entire Dynamics database within a few hours – something that traditional BI prototypes simply cannot begin to match.

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Post implementation support In an age where Cloud Computing is gaining in popularity, PrecisionPoint strikes a happy medium by taking much of the strain of maintenance and systems management off-premises. Its “Guardian” service provides remote support of customer databases making sure that networks, upgrades and overnight refreshes of the PrecisionPoint data warehouse work as planned, even taking corrective action where appropriate. It means that customers can concentrate on the business rather than the IT infrastructure.

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Dashboards can be provided with Microsoft PerformancePoint Services, part of SharePoint2010. PrecisionPoint’s integrated data model provides executives with powerful interactive analysis including drill-through to transaction detail.

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Summary Mid-market businesses have been poorly served by the traditional Business Intelligence industry. The solutions are expensive and complex to implement because they have no embedded understanding of ERP data structures and require considerable consulting support. PrecisionPoint is without parallel in the Business Intelligence space. Its patent-pending integration engine technology and ‘understanding’ of native Dynamics installations sweeps away the complexity of ERP data structures at a stroke, eliminating the need for time consuming prototyping leaving consultants free to concentrate on adding value through best practice information delivery. Furthermore, PrecisionPoint’s ability to replicate the exact ERP database allows it to preserve data quality while exposing the data to complex multidimensional (roles-based) reporting using readily accessible tools of the users’ choice, such as Excel, PowerPivot and SharePoint.

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The ability to hold all transactions at the lowest level of granularity allows penny-perfect reconciliation of the PrecisionPoint data to the underlying ERP and, unlike traditionally fragmented Business Intelligence solutions, builds complete confidence in the integrity of the reporting system. PrecisionPoint is unique. It is neither a Business Intelligence product nor an ETL software tool. In fact it is in a class of its own, connecting business users to their business systems – something that countless BI tools have failed to do. User references independently confirm that PrecisionPoint is quick to set up, provides complete accounting integrity and can be used by non-specialists to meet management reporting as well as production reporting needs. Although the only ‘Business Intelligence’ tool certified by Microsoft for use with Dynamics NAV and Dynamics AX, PrecisionPoint’s success in the mid-market is likely to pave the way forward for connection to other ERP systems in the future.

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PrecisionPoint provides dependable reporting for global brand-management company

FitFlop is a rapidly growing footwear organisation whose products are promoted worldwide. The company has been using Microsoft Dynamics NAV since early 2008 but Simon O’Sullivan, the group’s IT director quickly noticed that native NAV provided very little in the way of usable management reporting out of the box. But O’Sullivan did not want to pursue the traditional Business Intelligence (BI) route, with all of the consultancy costs and lengthy timescales that this implied. O’Sullivan says, “We were looking for reporting out of the box. That is something that would be very quick and easy to implement, with no huge internal effort or onerous long term maintenance.” He was not disappointed. “We saw the product demonstrated one week and we were up and running with our own solution the very next week,” he added.

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From an IT Director’s point of view the product does “Exactly what it says on the tin. The system has a very ‘light touch’, it is very fast and flexible and most importantly very much a user tool.” In fact PrecisionPoint has become pivotal to the group’s management reporting and decision making. “We couldn’t live without it,” says O’Sullivan. “Our sales reporting globally is published to our intranet so that our sales people can easily pick up their reports. Since we acquired a subsidiary in the United States, we use the system to produce consolidated results as well as the figures for the individual brands.” “PrecisonPoint sets the standard and I have grave concerns about reports produced any other way. Everyone trusts the information in PrecisionPoint. We know it works and that it is completely reconciled and aggregated which cannot be said for spreadsheets generated through the Excel linked to Dynamics NAV,” adds O’Sullivan.

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Lantmannen Unibake has complete confidence in its reporting

Stan Wyngowski, Director of Finance at the US subsidiary of Lantmännen Unibake, the global provider of popular bread and baked goods, quickly hit the limits of what his Microsoft Dynamics AX system could provide in the way of management information. “We spent a lot of time with consultants trying to configure reports but it didn’t provide the answers we wanted or the reports we needed to run the business. We had little confidence in what native AX could provide,” he said. Stan Wyngowski stumbled across PrecisionPoint at an exhibition held by the AX User Group, AXUG, and a quick demonstration of the system was sufficient to highlight its potential. “We decided to take a closer look and gave PrecisionPoint a few days to prepare a prototype based on our own database. We also gave the same opportunity to another well known Business Intelligence vendor.”

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What happened next “wowed” the management team. “PrecisionPoint came back with a fully working system including some dashboards and sales reporting in which we could see our own live data. The competitor couldn’t show anything like it – certainly nothing that I could place before the president of the company.” The prototype confirmed for Lantmännen that the system could be installed, configured and deployed very rapidly. Stan was not disappointed. “We attended training and on the first day had built all of the management reports we needed. Sales performance reporting came ‘right out of the box’ and the sales director could see his KPIs and top performers in an instant. More importantly the accuracy of the system and the ability to drill down right on the spot allowed us to quickly identify anomalies in the data and transactions needing further investigation.” “At last we had complete confidence in the data and, for example, the sales guys were quoting the same numbers as the finance department. There is no discrepancy in the figures or discord about the numbers in different areas – something we simply couldn’t achieve using Dynamics AX on its own.”

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The Director of Finance is effusive about the performance of the system. “The PrecisionPoint system is updated overnight and report s are generated almost at the ‘speed of thought’ – we couldn’t be happier,” he adds. With rapid deployment, absolute confidence in the integrity of the reporting and rapid production of reports Stan Wyngowski is now just waiting to see if PrecisionPoint catches on with other Lantmännen subsidiaries around the world.

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About FSN FSN Publishing Limited is an independent research, news and publishing organisation catering for the needs of the finance function. The report is written by Gary Simon, Group Publisher of FSN and Managing Editor of FSN Newswire. He is a graduate of London University, a Chartered Accountant and a Fellow of the British Computer Society with more than 23 years experience of implementing management and financial reporting systems. Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information management assignments for global enterprises in the private and public sector. His bestselling book, “Fast Close to the MAX” was published in 2008. www.fsn.co.uk Gary.simon@fsn.co.uk Whilst every attempt has been made to ensure that the information in this document is accurate and complete some typographical errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of circumstances. FSN Publishing Limited and the author do not accept responsibility for any kind of loss resulting from the use of information contained in this document.

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About PrecisionPoint Software

PrecisionPoint simplifies access to sophisticated decision critical Business Intelligence (BI) and is available for both Microsoft Dynamics NAV and AX. Available as an online managed service, customers benefit from rapid speed of deployment and are able to produce meaningful cross-functional reports and analysis across the entire organization in a matter of days. With dual bases in the UK and the US, PrecisionPoint is used by hundreds of successful companies worldwide including Americana International, Royal Horticultural Society, Broadsoft, Fitflop, Koppers, NTT Europe, AB Agri and Carter Jonas. To find out more go to http://www.precision-point.com

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UK Office Abbey House Grenville Place Bracknell Berkshire RG12 1BP +44 8451 306 278 info@precision-point.com

US Office 1 International Boulevard Suite 400 Mahwah New Jersey NJ 07495-0400 +1 866 455 2414 info@precision-point.com

Contact PrecisionPoint