This week’s episode of Conversations with Kip continues the discussion of reference data in our financial system, specifically discussing how a great deal of reference data is embedded in ERP systems, but use of that data in rules and execution of those rules often requires ERP integration.

ERP systems are very effective at managing lists or descriptions of fields which originate within the ERP system, transactions which are captured by the ERP systems.  But the boundary of the ERP system is rarely the boundary of the business.

Data is often brought into the ERP system from systems which perform business functions which are outside of the ERP system remit.  And data is often shipped from the ERP systems to reporting and other analytical applications.

In both of these instances, there often is a need to either use or enhance the ERP reference data with reference data not maintained in the ERP system.

For example, when bringing transactional data into the ERP system, at times accounting rules are applied to the input transactional data prior to storage in the ERP environment. In this case business rules are needed which contain values from the non ERP source system, and resulting reference data values for the ERP system.

Maintenance of these reference data values for off-platform data and integration can be done off system if ERP reference data is extracted in some way.  Alternatively in many ERP systems there are facilities to extend reference data to also maintain these off platform values within the system.

Yet  use  of these values and rules most often is done by some non-ERP system for the simple fact that if the ERP system accommodated the transactions in the first place, they would not be done in other systems.

Understanding of the principles behind this type of integration is important to be able to properly construct business systems which can evaluate the full breadth of data the company has for its important business functions.

This is Episode 176 of Conversations with Kip, the best financial system vlog there is. Literally learn more–about ledgers and financial systems–at LedgerLearning.com.  

Last week ‘sentry: Developing and Testing Business Rules

Next week ‘sentry: Business Rules, Source Data, and Code Synchronization