Most contemporary business applications keep getting better with every byte of data they digest—that’s the good thing.
The bad thing: how much they digest—the “volume” in other words—is only one variable of the equation. The rest are “Velocity,” “Variety,” and “Veracity.”
Together, these variables make up the “four Vs” of big data.
Liken these four Vs to the balanced diet essential to living a happy, healthy life. How much you eat is as important as how often you eat, the quality of your food, and the types of nutrients you get. The difference in the case of software tools is that the more you have of each variable, the better the outcome.
This brings us to ERP software tools, perhaps the most wide-scoped type of software used in business organizations. Whatever function—i.e., accounting, procurement, project management, risk management, or supply chain operations—or department—i.e., finance, HR, or customer service—you can think of, chances are, ERP has a role in it.
The software consolidates various business functions and streamlines processes and information across an organization.
For this business-critical software to be able to produce actionable insights on a regular and incremental basis, it needs to feed on humongous amounts of data. In addition, this data needs to arrive fast, from as many different points of the business as possible, and be as clean and accurate as it can be.
Luckily, the current internet of things (IoT) technology has matured to the point where it can sustain the four Vs to maximize ERP systems.
What is IoT?
IoT is defined as the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.
Too technical? Look at it this way: IoT is a mesh of devices and equipment fitted with technology that allows them to talk to each other, exchange data in other words, over the internet.
In its simplest form, it can be the home burglar alarm that notifies you on your smartphone about any unwanted presence or the lights and thermostats at home you can control from miles away.
How IoT drives the four Vs
We’ll explain how IoT affects ERPs by breaking down each V.
Volume: Frankly, “volume” hasn’t ever been a major problem. Every business generates large amounts of data at different points, from its different processes. With IoT, it’s just that tapping all the data right at the point of generation and then feeding into an ERP is automated.
Velocity: This variable builds on the automation benefit explained above. Since data transmission is automatic and instant, there’s no lag in capturing and feeding data into the ERP. This translates into the availability of most-recent data that then enables (near) real-time visibility into operations.
Variety: Any viable place you can think of fitting some IoT element into will generate a data stream that can be processed. For instance, sensors at premises entry/exit points can help identify attendance trends and sensors in warehouses can help gain visibility into the flow of materials. The wider the variety of data you can feed into your ERP system, the clearer and comprehensive picture you’ll have about your business.
Veracity: IoT elements capture only specific, pre-defined data types. For instance, a sensor programmed to capture/transmit diagnostic information about a server or one designed to identify human presence in a store will do nothing else than what’s intended. This weeds out unstructured data from reaching the ERP system and saves extra effort otherwise required to filter structured data.
Benefits of combining IoT with ERP system
ERP integrates all your major business processes and helps you manage daily business activities such as procurement, project management, accounting, supply chain, compliance, and risk management. Combining IoT with your ERP can enhance the accessibility and precision of information within your organization.
Here are a few key ways this works:
- Improved data accessibility: IoT automates data collation from across different points, processes, and departments, which improves access to business-critical information.
- Enhanced interaction among stakeholders: Unhindered availability of data breaks down silos between users/departments, which helps foster collaboration among stakeholders.
- Better and quicker decision making: High volume and clean data help derive meaningful and actionable insights whereas quick availability of this data helps accelerate the process.
The ERP-IoT opportunity
How and where to implement IoT in the business is limited to your imagination and ingenuity. For many businesses, this implementation doesn’t go much beyond just automating certain processes, such as scanning RFID tags on products or capturing diagnostics data of machinery.
However, combining IoT with ERP can open up avenues that allow for increased efficiency and visibility.
Consider this: If you tie your IoT implementation for automating scanning of RFID tags at your warehouse with an ERP system, in addition to the obvious benefit, you gain real-time visibility into products/materials movement. While this can enable you to make quick, strategic decisions to adjust for process disruptions, past data collated on the system can help you identify seasonal trends to formulate long-term strategies.
Similarly, if you feed machinery diagnostics data into the ERP software, over time the system will have enough information to run analytics and draw equipment performance patterns. This can help you schedule maintenance such that unexpected equipment downtime doesn’t affect regular operations.
IoT has tremendous potential to add value to the already versatile and utilitarian ERP systems. If you want expert help to capitalize on this opportunity by beginning with the implementation of an ERP system to buttress your processes, schedule an appointment with our advisors for a free, no-obligation consultation.