ERP Integration

Enterprise Resource Planning Integration

Enterprise Resource Planning or ERP integration is key to running a successful business. By putting together multiple best in class applications to build a custom ERP solution, your business can automate processes and increase revenue. What exactly is ERP software and what does integration mean in this context? We will go into the basics of an ERP integration along with what to look for as far as benefits, pitfalls and challenges involved in ERP system integrations.

What is ERP?

Enterprise Resource Planning software is a tool that is commonly used by businesses of all sizes to streamline and automate business functions. This could include components such as customer relationship managers, accounting, distribution, procurement, project management, sales order processing, risk management and human resources. One of the main appeals of ERP software is that it operates as a central data hub for numerous workflows, which in turn makes it easier to share data insights across multiple departments. ERP systems also automate processes across departments that typically need to be completed manually. For example, an ERP could take information from a sales order and automatically send its relevant financial data to your company’s accounting program.

What is Integration?

Integration is a way of connecting ERP software to other systems to ensure that information is shared while also automating workflow processes. Integration is useful because it affects the relationships between ERP software and other vendor systems so that businesses can customize and select the specific tools and solutions their business needs. There is the postmodern ERP strategy to consider as well. The postmodern method is a more unique ERP system where a company uses solutions from various vendors to essentially build a completely custom ERP program.

Most use a traditional ERP system where implementation can assist in the streamlining of processes by improving the communication between various modules. For example, it is incredibly time-consuming to take data generated from your ERP and input it into a different program. Integration can streamline this process and reduce the potential for human error.

The bigger your business gets and the more advanced your software solutions become, the more likely it is that inconsistent data and clunky workarounds will become part of your day-to-day business. ERP software integration is critical in reducing the potential for inefficient workflows through its centralization of information. It also often leads to increased collaboration among employees and improved transparency.

Benefits of ERP Integration

ERP Integration is a great way to customize your business solutions to your company’s specific needs. Here are some of the benefits after an ERP integration:

• Centralized Data
• Automated Processes
• Workflow Visualization
• Reduction in Human Error
• More Time For Labor-Intensive Projects
• Centralized Data

Having all of your data in one accessible location can significantly improve internal workflows. For example, your accounting team wouldn’t have to reach out to the sales team every month for an updated record of revenue made. The idea is to have this data automatically populate in the accounting module. Ultimately, having data available in a centralized location helps to facilitate business processes and reduces the amount of time that employees spend waiting on people in different departments to provide them with information necessary to complete important tasks.

Automated Processes

The more automation, the better. ERP integration can help streamline processes across various departments and workflows. This reduces the amount of manual input required and the time that it takes for tasks to be completed. This creates more efficient processes and reduces the change and occurrences of human error.

Workflow Visualization

Visualization of the tasks and workflows of your business goes hand-in-hand with data centralization. Integration with a tool such as project management software can allow employees to see what their peers are working on. This can be beneficial when requesting feedback from a fellow employee or assigning a priority level to tasks. For example, if you need a standard report from a manager, but see that they are working on a direct request from the CEO, you might choose to downgrade the urgency level of your inquiry accordingly.

Reduction in Human Error

ERP system integrations can increase the amount of automation that occurs in business workflows and provides an opportunity to reduce the occurrences of human error. Typos and emails sent to the wrong clients can negatively impact your day to day business, so automation is a huge benefit. Human error occurs every day, so a reduction in this rate could give your company a large competitive edge to avoid costly mistakes.

More Time for Labor-Intensive Projects

When you reduce the amount of time spent on tasks such as data entry, you free up employee time for other more important tasks. Because of the wide range of processes that can be automated, your employees can have more time for essential tasks that require human input and critical thinking therefore improving overall productivity in a workday.

Types of ERP Integrations

There are two essential features of a successful business: proper communication and excellent customer service provided to your customers. Excellent customer service can give you a considerable advantage over the competition, so optimizing your customer communication with a “best in class” customer relationship management tool is critical. For this reason, CRM and ERP integration is very common and can be one of the easiest categories on this list to integrate. If you are already using a CRM program but haven’t integrated it with your ERP yet, it is highly recommended that you do so because of the critical link between demand (CRM) and supply (ERP). This connection between CRM and ERP is used to streamline the marketing and sales process.

Business Intelligence

Business Intelligence (BI) software is one of the most useful tools available on the market right now. By collecting and analyzing internal data, BI software helps companies discover insights that lead to successful new ventures or business practices. The insights generated from BI software data are often the launching points for new software implementations and product offerings. By integrating your BI system with your ERP solution, these valuable insights become easy to access at any time by any authorized employee.

Human Resources

The Human Resources, HR, department has some of the most extensive back-office needs of any department, so providing an efficient workflow is vital. The HR department is the one department that deals with every employee in your business regardless of title or leadership role. Incorporating your HR vendor’s capabilities with your ERP system helps keep track of and automate time consuming back office tasks by connecting them to the workflows of your ERP.

Project Management

Many ERP systems include a project management solution. If you are already using a third-party project management software, it’s unlikely that the project management tool included in an ERP is as sophisticated as the standalone tool that you’re already using. What makes project management integration so useful is that all of your business tasks, processes and workflows can be combined in one place. An employee can see which projects are done, which are in progress, who’s working on them and what projects are coming up at any time. This can be a huge time-saver for a project manager as it will provide clarity on projects at a glance to keep progress moving forward. For example, a manager or project manager could look at which developer is working on a bug fix or which sales rep is following up with a potential lead.

eCommerce

The main benefit of ecommerce integration comes down to efficiency. Any business that manages orders can benefit from integrating ecommerce applications largely because of the data collection associated with implementation. Some of the most essential data that companies collect are related to orders, inventories, customer information and shipping. You can reach a higher level of efficiency when this data is available across your other systems, thereby automating the data transfer process and eliminating the need for any manual human input.
Here we break down the five types of third-party software that are essential and have standard features to consider when looking into ERP integration. When you start the process, it’s crucial to make sure that it happens as seamlessly as possible. Ask your ERP vendor about which third-party vendors it can integrate with.

Tips on Approaching an ERP Integration

There are a few different methods of implementing ERP integrations. The best ERP system integration option for you depends on your specific business and can be affected by factors such as the current systems you are using, your integration budget and what kind of software currently in use. Here are some of the ERP integration approaches that you may want to consider:

Point-to-Point

In a point-to-point integration, the ERP software is individually connected to each software or tool. The difficulty with this method is that you have to conduct an integration separately for each system that you wish to use. Additionally, the process can become complicated quickly as more and more tools are added. However, some companies opt to go with point-to-point because it has a reasonably low barrier to entry.

Custom Applications

Some companies might choose to build their own customized applications or adapters to integrate their various business tools. Custom applications often start with data transfer capabilities but may grow to encompass more tasks and workflows. Custom applications have a similar issue as point-to-point integration in that it can be challenging to maintain as a company grows and adds more tools to its software portfolio.

Enterprise Service Bus (ESB)

ESBs are the latest and greatest in the integration sector. In an ESB, applications are connected by a “communication bus.” The bus serves as a centralized tool where the applications communicate. The perk of doing integration this way is that other apps don’t have to be tweaked when another component is added – the bus centralizes all of the communications. This is a more straightforward process than using custom applications or point-to-point integration.

ERP Integration Challenges

ERP system integration is highly beneficial, but it’s not a walk in the park. In fact, the data suggests that 60% of ERP implementations fail in some way. This could be a whole system failure or the inability to reach a targeted goal. There are multiple reasons why ERP systems and integrations fail, and it is essential that you keep these potential ERP integration challenges in mind when selecting and adapting the solution that’s right for you. Here are some of the potential roadblocks to consider before deploying your solution.

IT Integration Needs the Support of a Coherent Strategy

Deciding on an ERP system is an important strategic choice. To determine which program will be most effective for your company, it’s essential to first consider how the business operates while also aligning a potential ERP solution with your organization’s goals. The first step in selecting software should include defining your ERP solution.
For example, you should consider the type of functionality that your business requires to operate effectively. Your company might require shipping labels of a unique size, so be sure to note this and communicate these specific needs to any software vendors that you interact with. By creating a list of needs and developing a specific ERP integration strategy, you can reduce the burden on your IT department and increase your odds of a successful implementation.

Maintenance and Updating of ERP Integration

Depending on the ERP integration method that you use, you may need to consider how upkeep of the implementation will work. For example, if you go for a point-to-point integration, you will likely need to upgrade and change your system as elements are added and removed. This would likely include an associated cost for the updating of your program, which is an important factor to keep in mind when selecting an integration approach.

ERP Integrations Involving Legacy Applications Might Look to Cloud Solutions as a More Cost-Effective Alternative

It can be difficult and costly to integrate legacy applications that were not designed to integrate with other platforms. There are middleware software solutions available that can deal with some of the issues, but they can be costly and require customization and manual processes. Other options, like upgrades to on-premise systems, can also be expensive. Cloud solutions that can integrate with many types of ERP might be a good alternative.

They’re more affordable, more flexible and offer pay-as-you-go pricing that may lower the total cost of ownership. This doesn’t necessarily imply that companies would have to convert to a cloud solution entirely. However, moving some functions to the cloud could prove advantageous to many companies. This option is becoming more feasible as many enterprise ERPs now support cloud applications on their on-premise systems, furthering the ultimate goal of meeting specific business needs.

Potential Pitfalls of ERP Integration

Enterprise resource planning systems streamline business processes by integrating the management of multiple departments into one software system. Large companies that need to manage their finances, supply chain management, customer service, and human resources often want to do so in a single centralized, integrated solution. Therefore, these companies turn to ERP software integration.

ERP systems are in high demand because of their ability to communicate with existing business software. However, such integrations are often complex and costly, no matter if the system is an on-premise solution or cloud based ERP. Business owners need to be aware of common pitfalls of ERP system integrations when weighing the different options.

When evaluating an ERP application for possible integration, consider these factors:

Complexity

ERP software is often very complicated and may require specialized knowledge to manage the system. Because of this, some departments may not take to the new software as easily. It’s important to get major stakeholders and decision-makers on board before pursuing a new ERP system integration. Lay out a timeline and estimates for the integration so the necessary departments can prepare accordingly.

Cost

ERP integrations for large businesses can be costly up front. That’s why doing your research and testing your integration before committing to it is so important. Besides the direct costs of software, you need to consider the indirect costs as well. Will you need to pay someone to maintain the system? What if you have technical problems? What if the system malfunctions? Include these indirect costs in your estimate.

Training

Because of the complexity of the software, teams usually require training on how to use it. This adds an additional cost in both time and money. If you’re developing custom middleware to connect your CRM and ERP, for example, you’ll need to provide additional training specifically for that to your employees.

Customization

While many companies originally intend to implement off-the-shelf technologies, project requirements often require customization. ERP implementations in particular usually require a lot of customization. Whether this is a custom interface or middleware to connect the ERP to your existing IT systems, customization is common and widespread.

According to a study, only 25% of organizations use ERP solutions with little or no customization. On the other hand, 75% of organizations use solutions that have at least 11% of the solution code modified to create a unique solution. Customizing the system allows your business to meet each of your departments’ specific needs, but also adds a layer of complexity and risk to the product.

Questions to Ask Before You Integrate

It’s no secret that ERP integration is a timely process. However, there are many benefits to integrating your ERP system such as reduced human error, increased revenue and the ability to increase overall productivity. When you’re deciding which vendors to choose from and whether ERP system integration is the right choice for your company, here are a few questions that you should ask yourself to ensure that you’re making the right selection for your needs.

Will operations be standardized on one platform without sacrificing functionality and productivity?

Will any operations remain independently operated?
When speaking with vendors, it is important to verify that your selected software solutions can be integrated. If not, consider how certain features could work as a standalone software outside of the integrated ERP. You may also need to consider other software options.

How will the vendors undertake data migration with the least disruption to my business and the greatest overall efficiency?

You should consider how the migration from your current software system to an integrated ERP model will disrupt your business. Will there be downtime between the implementation of the new system and the uploading of historical data from your business? If so, how long? You should also make sure that there is an efficient way for historical data to be added to the new system so that you can retain your existing insights.

Do the vendors have experience with my industry?

This question is generally important for any software purchase that you make. In this scenario, you should ask each vendor if they have experience both in your industry and with ERP integration. The experience level of a vendor can inform how difficult an implementation will be.

How much do the standalone solutions cost? How much do the integration and ongoing maintenance cost?

There is a wide range of direct and indirect costs to consider when going with ERP system integration. You should discover how much each software system costs, along with the anticipated cost of integration and maintenance. If there is an ongoing maintenance fee, does this fit with your business needs and plans.

How is software training conducted? Is it done directly by the vendor, or will I need to hire a third party?

Training is an additional cost that should be factored into your software budget. You may also need to hire a consultant to help you with integration depending on the level of support that your selected vendors provide.

Do I need the functionality associated with integration, or could I go with an out-of-the-box ERP solution?

Some companies can operate with an out-of-the-box ERP program. This means that there is no need for customization or configuration. If your business needs are fairly standard and you don’t have any special requirements, a basic ERP solution might be best and most cost efficient option for your business.

The Future of ERP Integration

As technology needs shift and change, so does ERP system integration. This includes the tools that are available for integration with ERP along with the actual implementation approaches.

Currently, ERP integration is ramping up due to postmodern ERP strategy. These types of completely personalized solution or standalone software systems that they want to integrate create a whole new unique solution.

There are a few approaches available for ERP integration, but ESBs seem to be leading the way as technology continues to evolve and shift. This is because it allows new integrations to occur without the risk of ruining the way that other tools communicate. With other approaches such as point-to-point integration, connectivity between other software can be affected by a new integration because of how integrations are woven together.

Enterprise resource planning solutions are incredibly beneficial to the productivity and bottom line of companies of various sizes. Like most businesses that operate in the technology sector, ERP software is constantly changing and adapting to business needs. That is why ERP integration is so prominent in companies today. The customization opportunities are attractive and often successful. Before you select an ERP system integration strategy or an ERP vendor, you should consider the types of tools that you wish to include in your solution along with the kind of integration that would work best for your company.
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