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Everything You Need to Know About ERP Integrations

The business world is constantly becoming more dependent on technology. The average corporate tech stack is well over 100 applications, and many companies have several times that number. 

Enterprise Resource Planning (ERP) systems are software solutions that help businesses consolidate, align, manage, and automate many of their core processes. Enterprise Resource Planning (ERP) systems integrate multiple software solutions within an organization, consolidating data into a unified platform. This acts as a central hub, housing a standardized and normalized database for all information. 

A robust and up-to-date ERP system is a powerful tool for business. However, developing and sustaining an efficient ERP poses challenges. This is where ERP integration plays a crucial role.

This resource will delve into the concept of ERP integrations, examining both their advantages and challenges. Additionally, it will discuss important factors, approaches, and optimal methods for implementing ERP integrations within an organization.

What is ERP Integration?

Linking all software solutions within a business, a process known as ERP integration is a crucial and complex aspect of the ERP journey. The complication arises due to the fact that an ERP handles many different kinds of information. It brings together data from different departments of a business, from accounting to sales to HR and more.

Effective ERP integration ensures that various data pools come together seamlessly into a single database that can streamline a company’s activity. At its most basic, ERP integration is the concept of “connecting” all of the business applications to an  ERP system. This takes into account data flow into and out of the ERP system as well as the synchronization and automation of that data across various departments and areas of a business. 

ERP integrations can take many forms. A few of the most common ones are listed below: 

  • CRM integrations: CRM integrations involve merging customer relationship management systems with a business's broader database, ensuring seamless incorporation of valuable customer-related data. Customer relationship management systems hold a wealth of valuable customer-related data. It's imperative to effectively integrate this information into the larger database of a business.
  • HR integrations: HR integrations involve consolidating substantial amounts of employee data managed by HR, encompassing payroll, benefits, taxes, recruitment, training, and performance evaluations. Ensuring this data is accessible within an organization's ERP system is crucial for various employee-related scenarios
  • BI and project management: Business intelligence software serves as a core component for enhancing data visibility within an organization. To fully leverage its data-analyzing capabilities, seamless integration with an ERP system is essential. Moreover, incorporating project management features like ongoing progress monitoring and deadline tracking within the ERP further enhances its utility.
  • ECommerce and online retail: Integrating e-commerce and retail data into the ERP offers a comprehensive overview of sales and customer behavior across all channels to different departments of business like CRM, HR, and Supply chain. It provides real-time insights into inventory levels, order statuses, and customer interactions, facilitating improved strategic planning, precision in decision making, and enhanced customer service.

There are many other potential integration points between business applications and enterprise management systems. The above are a few ERP integration examples that help demonstrate the importance of the connectedness of data for an organization. 

Benefits of ERP Integration

ERP integrations may seem like a routine and obvious aspect of utilizing an ERP system. However, the way each integration is managed matters. It directly impacts the effectiveness, efficiency, and success of the integration process. Here are the key benefits that result from investing in effective enterprise resource planning integrations.

1. Improved Data Accuracy and Consistency

Clean data integration between systems is crucial as it consolidates information typically isolated within different departments operating independently. ERP application integration ensures that the data utilized by each department remains consistent, up-to-date, and synchronized, despite operating separately.

Moreover, employing ERP integrations with end-to-end automation, such as those offered by Calance’s solutions, is essential as automation mitigates the risks associated with manual data input across multiple systems, reducing the likelihood of errors and discrepancies in the company's database.

2. Streamlined Business Processes

The degree of time and energy consumed by corporate technology tools is often underestimated. With only 35% of companies claiming to possess "complete visibility" into their IT assets and their impact on business operations, this lacuna is concerning.  Implementing a well-integrated ERP system can effectively optimize the efficiency of existing tech stack applications.

At Calance, our delivery of SAP integration service and support to numerous clients exemplifies how companies can reap the rewards of streamlining application operations and related business processes. We understand that learning and executing cross-company processes is crucial for successful integration within any ERP system. By prioritizing this aspect, we guarantee not only data synchronization but also seamless and efficient cross-company utilization and communication of that data. 

3. Enhanced Efficiency and Productivity

Building upon the aforementioned example, the integration of SAP solutions into the ERP system is a multifaceted undertaking. It requires expertise in ABAP (Advanced Business Application Programming), module configuration, infrastructure services, and various other components. The initial complexities of this integration, including SAP Cloud Platform Integration, SAP Process Integration, and B2B EDI, can indeed be overwhelming. However, by investing in establishing robust communication and organization within the ERP, businesses inherently enhance the efficiency and accuracy of their entire technological infrastructure. This fosters greater productivity as teams gain confidence in effectively utilizing the system.

4. Better Decision-Making Through Real-Time Insights

Accurate data is essential to effective business activity. We’ve already touched on the fact that ERPs help centralize, organize, and standardize data. It’s also important to realize that this is not a one-time event. It is an ongoing activity.

Efficient ERP integrations continue to provide current and relevant data. This makes it possible for team members to access real-time insights. Whether it’s a salesperson pulling customer data, or an accountant checking a ledger, real-time insights empower better decision-making.

5. Cost Savings and ROI

According to Gartner, bad data costs businesses approximately $13 million per year on average. Possessing inadequate data systems inevitably results in poor decision-making. It can detrimentally impact revenue streams and result in an unnoticed depletion of resources. It can cause delays in response times from team members and erroneous decisions stemming from outdated or incorrect information. A well-integrated ERP mitigates these issues effectively.

Common ERP Integration Challenges

Successful ERP integrations provide a myriad of benefits for a business, however, there are several challenges to keep in mind when considering the ERP integration process.

1. Data Synchronization Issues

The ultimate objective of integrating an ERP with an external application is to establish seamless and synchronized data flow. Nevertheless, several factors can disrupt this process. Configuration errors, particularly prevalent in custom integrations, pose a significant risk. Additionally, network failures and latency issues are also noteworthy concerns.

2. Compatibility Issues Between Systems

No two applications are alike, and often, they don’t integrate easily. When an application isn’t pre-designed to integrate into an ERP, it can require significant investment and expertise to align the two software systems.

3. Complexity of Integration Projects

ERP integrations are characterized by intricate interactions among diverse software components, including finance, HR, supply chain, and CRM modules. These systems often interface with external platforms, such as legacy systems or cloud services, complicating integration. Challenges include data mapping, maintaining data integrity, and ensuring transactional consistency across systems. Successful integration requires meticulous planning, robust architecture design, and thorough testing to ensure seamless operation and alignment with business goals. 

4. Security Concerns

Any time two applications interact, it adds to the complexity of the organization’s tech stack and opens up the potential for a security breach. An ERP’s consolidation of a business’s information makes it a particularly desirable target for cyber breaches. Cybercriminals have developed more sophisticated attacks specifically in this area in recent years. Businesses can increase cybersecurity and mitigate risks by limiting access to required personnel only and implementing rigorous security training among employees.

5. User Adoption and Training Challenges

Integrating a system can be intimidating. Even if businesses can initially work with a trusted managed ERP integration service like Calance or use pre-built OOB (out-of-box) solutions, they need to maintain those integrations over time. Familiarizing and continually training the in-house teams to utilize ERP integrations is essential not only during the initial implementation phase but also as an ongoing process over time.

Key Considerations for ERP Integrations

With the above considerations in mind, it is important to thoroughly plan out ERP integration initiatives that a business wants to execute. Here are the key points to evaluate early in this critical digital transformation journey.

1. Compatibility Assessment of Systems

The compatibility of an ERP with an organization’s other applications is never guaranteed. There may be occasions when the APIs of both software tools align or have pre-built integrations. However, often this isn’t the case.

When that happens, compatibility becomes a concern. Issues like insufficient system requirements or conflicting data structure can derail an integration. Businesses need to take the time to assess hardware and software requirements, network capabilities, data structure, and format before initiating an integration.

2. Data Mapping and Transformation Requirements

Data must align from an application to an ERP system if it is going to integrate effectively. This starts with mapping out data attributions and linking them to the corresponding fields within an ERP system.

Another crucial consideration for businesses is the process of converting and validating data for accuracy as it transitions from an external software solution into the organization's ERP. These steps are essential to ensure a smooth and efficient integration

3. Security and Compliance Considerations

As previously mentioned, introducing an ERP (or any new element of an internal IT system) creates the potential for a security breach. Cybercriminals are developing increasingly complex techniques of attacks ranging from malware to nuanced phishing schemes. Businesses need to evaluate the potential for a cybersecurity threat before they execute the integration, to ensure that their data remains safe both during and after the process.

Compliance is also a vital concern in this context. ERPs handle extensive volumes of data spanning finance, payroll, supply chain logistics, customer relationships, retail statistics, manufacturing, and warehouse data. Numerous aspects within these domains are subject to regulatory oversight. Identifying the regulatory responsibilities associated with each ERP integration a business intends to implement is essential.

4. Scalability and Futureproofing

A properly established ERP integration platform can not only fulfill existing requirements for ERP integration APIs and software but also lay the groundwork for future scalability and expansion.

With scalability and growth in mind, one must evaluate current ERP integrations to identify factors that can pave the way for future expansion. This involves setting standards to minimize disruptions to the overall ERP data architecture and organization during future integrations.

5. Integration Testing and Validation Processes

Before deploying a new ERP integration tool or program, businesses should consider how they will test the integration post-execution and determine validation processes to indicate success or failure.

Options include conducting end-to-end integration testing to ensure the accuracy of data flow, performing security testing to assess cybersecurity vulnerabilities, and conducting user acceptance testing (UAT) to evaluate the efficiency of system adoption by users. It is essential to have these tests in place before initiating any integration.

ERP Integration Strategies

Given its role as a central hub of information, executing ERP integrations with precision is crucial. Here are four integration strategies that organizations can employ to ensure seamless execution

  1. API-Based Integrations

In some cases, one can simply utilize existing APIs to connect and integrate ERPs with applications. In most cases, these are pre-built solutions that are quick and easy to set up.

An API streamlines an ERP integration with minimal hassle. However, in many cases, pre-existing API-based integration solutions don’t exist, which requires IT teams to seek other integration strategies.

2. Middleware Solutions for Integration

Middleware is a third-party solution that can help bridge the gap between ERPs and the applications they are trying to integrate with. Middleware solutions translate data between different formats and protocols, helping to move it between systems.

This is an excellent way to streamline complex ERP integration scenarios with disparate or unsynchronized data. It allows businesses to operate with preferred external applications without sacrificing ERP efficiency and operability in the process.

3. Custom Development vs. Pre-Built Integration Solutions

There is a certain degree of flexibility between pre-set integration options and customized solutions. These include:

  • OOB solutions: Out-of-box (OOB) integrations are pre-built solutions designed to connect specific applications to ERPs. This is a faster and easier option but offers limited flexibility. 
  • iPaaS solutions: Integration platform as a service (iPaaS) solutions are cloud-based tools that help to create and deploy ERP integrations. iPaas providers remove the need for user coding and on-site hardware to connect applications.
  • Custom integrations: Custom integrations refer to matching API code with ERP systems on a case-by-case basis. This is an infinitely flexible option, but it does require greater knowledge, experience, and resources to set up.

Customized IT solutions and services support unique goals, while pre-built integrations are fast and cost-effective. Each ERP integration method has its place, and it’s important to consider which one is ideal for a business’s scenario.

4. Hybrid Integration Approaches

ERP integration tools can be both on-site and cloud-based. A hybrid utilizes the best of both options to maximize accuracy, flexibility, and agility.

While on-premise ERP systems help handle sensitive information, cloud-based options are easier to access and scale. Hybrid solutions manage the exchange of data between both on-site and cloud-based APIs.

By carefully considering these strategies, organizations can determine the most suitable approach for their ERP integration needs.

Best Practices for ERP Integrations

As with all IT activity, there are certain best practices that businesses can follow while performing ERP integrations. Here are a few :

  • Thorough planning and requirement gathering: It is imperative to invest time in planning out integrations well in advance. Addressing key questions such as the data to be transmitted, formatting and mapping requirements, security concerns, post-deployment training, and any other requirements is essential.
  • Collaboration between IT teams, vendors, and stakeholders: Determining who needs to be involved, identifying necessary team members, informing relevant vendors, and potentially engaging an IT service provider for a smooth transition are essential considerations.
  • Documentation and communication throughout the integration process: Establishing and adhering to standards, creating comprehensive written documentation to elucidate the integration process, and ensuring regular communication with the team are vital aspects of effective integration.
  • Continuous monitoring and optimization post-implementation: Successful integration is step one. Beyond achieving successful integration, it is essential to remain vigilant for any shortcomings or unforeseen issues that may arise as the newly integrated system is put into operation. These best practices can create a seamless and streamlined integration process.

Future Trends in ERP Integrations

ERP systems have been a central aspect of business for decades, and they aren’t going anywhere any time soon. However, they are live systems that are always evolving. Here are a few ERP integration trends to keep an eye on:

  • Integration with emerging technologies: Technology is in a constant state of evolution. ERP systems are positioned at the forefront as SaaS providers, third-party support and IT teams actively seek ways to integrate the latest advancements ranging from Artificial Intelligence (AI) to the Internet of Things (IoT).
  • Cloud-based ERP integration trends: In the past, many ERP systems have been in-house on-site systems. That is changing now as a growing number of ERP solutions move to the cloud. This has the potential to simplify on-site setup. It also makes it easier to integrate with remote and hybrid workspaces; and improves disaster preparedness.
  • Focus on user experience and usability: ERP systems prove beneficial only when they effectively assist their users. There is an increased focus on developing systems that provide positive experiences for those who interact with them.
  • Predictive analytics and machine learning-driven integrations: As artificial intelligence continues to grow, generative AI will begin to use the vast database of ERPs to create powerful, accessible predictions to help with business forecasting.

The ERP landscape is constantly evolving, with ongoing trends expected to shape its trajectory for the next several years.

Optimizing Your ERP Integrations

ERP integrations are critical to maximizing a business’s ERP system. They ensure that the team has accurate, consistent data to make robust decisions that reduce waste, enhance productivity, and ultimately improve ROI.

While ERPs prove effective, they also present challenges that must be considered, including planning, security, and testing considerations. Adhering to best practices ensures maximum benefit from each integration. If assistance is required, seeking professional help is advisable.

Are you ready to optimize your organization’s digital transformation journey through tailored ERP integrations? Contact our team at Calance today to ensure successful integrations that align with your objectives.