What is ERP Integration? A Complete Guide for Businesses

Accurate and valuable data is the backbone of efficient business operations and streamlined workflows. With the help of expert custom ERP development, companies can collect and sort all types of data and use it to boost their competitiveness.

Moreover, ERPs serve as a centralized database for a unified view of real-time insights in a single format. Such platforms can’t be isolated from the rest of the business IT infrastructure. Instead, they need to be connected to different data sources. 

Companies must embrace ERP integration to remove data silos and make their operations tick like a clock. How can they do that and benefit from the process? This article covers the essence of ERP systems integration and discloses potential challenges.

What is ERP Integration?

Say a small company has several interconnected business tools in its arsenal. Given well-established processes and well-described procedures, in theory, it is possible to combine several types of software into a single whole. Yes, it will require manual entry and data transfer. But in the end, you can ensure good performance of the entire IT infrastructure.

What is the danger of this approach? The fact is that when working with data manually, the risk of errors and typos is high. But what if the company enters an active growth phase, connects more tools, and adds data of different formats faster than an employee can consolidate everything?

In such a case, efforts to centralize and consolidate data may be in vain and lead to undesirable consequences for the entire company. Inefficient processes, redundant work, and deterioration in team engagement can block the path to further business development.

A real challenge for executives can also be the need for incentives for innovation when choosing a more traditional approach to consolidating data using ERP. However, thanks to ERP system integration, company leaders can reduce the potential of this challenge and remove other roadblocks.

Integration of ERP systems into other business applications, tools, databases, and other data sources is a way of connecting and synchronizing meaningful data that a company leverages to track, manage, and maintain over time and at scale.

Common Enterprise-level apps include CRM, BI systems, Human Resource management tools, and marketing software, alongside other legacy systems and SaaS tools. Each piece of software operates on predefined rules that dictate how a business user should use it.

ERP integration helps unify the data from disparate or conflicting data sources, remove duplicate inputs, and improve efficiency. It instructs on how to transfer particular data types to make an ERP a single source of accurate data.

When and why do you need ERP integration?

As we’ve already found, seamless integration with ERP systems unites each component of the entire infrastructure of business tools in one interconnected ecosystem. Now we can turn to other aspects of ERP integration and discuss in more detail the reasons and conditions for this undertaking.

First, let’s examine why ERP software integration benefits a business.

Create a single source of truth of company-wide data

You ask employees from different departments to manually move the data into ERP. Accounting and revenue teams can have different schedules and due dates to complete the task. Meanwhile, a sales team must act upon real-time supply and demand updates and wait for other departments to update selected records.

Having all the data sync in one place removes friction from the data retrieving and access process. For example, ERP integration with Magento provides a single view of all inventory and transactions for people from all departments. This way, employees can refer to real-time data without distracting other people or waiting for relevant reports or updates.

Eliminate waste of productive time

Manual data input is a labor-intensive task when moving information from multiple data sources is necessary. It becomes mandatory to allocate a burdening portion of time to aggregate the required data and make it available in different formats.

When you opt for integration with ERP systems, the number of activities that require human input starts to reduce. Data integration makes accuracy available in the system automatically. This helps to free your employee equivalent time for more high-level tasks, such as business expansion or finding new relevant markets.

Automate business processes for enhanced efficiency

Traditional data silos can become a significant roadblock to boosting productivity. For example, as a new sales order is processed, employees must initiate communication with the inventory, accounting, and shipping departments. When this happens, collecting the necessary information step-by-step and connecting with each department to complete the task is essential.

An ERP integration solution can automate routine tasks by prompting real-time interactions between data silos and departments. Numerous touchpoints can exchange information without human input, which leads to fewer errors, streamlined communications, valuable time savings, and lower ongoing costs.

Increase workflow transparency

If the data is dispersed across multiple spreadsheets, legacy systems, or business process management tools, it is hard to gain the full picture of the current state of things. Employees need to switch between multiple windows to complete reports and submit information from outside systems. This situation risks important data integrity and eventually convolutes the reporting process.

ERP data integration lets businesses get a unified view of all processes and workflows. With complete visibility and transparency, each participant can see what their colleagues are doing at the moment and assign tasks more efficiently based on current priorities.

What’s included in the ERP integration process?

To reap the above benefits, companies need to know how to make an ERP talk to other systems they are using. Besides, figuring out which solutions need to be integrated and which don’t is necessary. When planning an ERP Salesforce integration, for example, it is essential to list all the use cases that may occur and how the data transfer will occur.

To help you navigate the complexity, we’ve collected the main steps to complete the ERP integration process with no waste.

1. Check the scope of integration with other systems and tools.
   The first step is determining the work summary to complete during ERP integration. As businesses operate various business tools and applications, the decision to tie together each one of them can become time-consuming and challenging. Instead, it is worth considering business goals and internal processes to pave the way for each consecutive task.
   As a rule, companies tend to combine the data from the following solutions:
   
   • eCommerce software. To anyone involved with managing and developing an eCommerce business, having quick access to all the data originating in the front-end part of the store is essential. Companies collect different types of information, including leads, inventory, orders, transactions, shipping rates, taxes, etc. To make these insights available across all departments, it is necessary to let the data flow into one place.
     Thanks to eCommerce integration with ERP, this data is automatically packed into a single database and shared across the organization. For example, a retail brand would integrate the data from their Amazon store using one of Amazon ERP integration methods. As a result, it can collect real-time data on inventory levels, confirm out-of-stock status, and track other metrics without manual data transfer to an ERP.
   • Customer relationship management (CRM). A CRM is vital to any business that tracks and manages customer relationships. In other words, it collects all the information related to the front-end processes. Marketing and sales departments deal with standalone CRMs every day to identify leads, connect with new and existing customers, and improve the sales process.
     ERP integration with CRM can streamline the communication between back-office functions and sales strategies. Businesses can increase the potential of each sale and marketing effort by synchronizing the supply and demand data. Thanks to CRM ERP integration, excellent customer service, improved conversions, and streamlined sales processes have become a breeze.
     ERP Salesforce integration is one of the instances when data synchronization helps create a 360-degree view of a large enterprise's customers. Top names like Spotify, Toyota, Amazon Web Services, and many others rely on Salesforce as a go-to CRM to connect with customers personally. Although integration methods vary from company to company, they generally use an interconnected database to improve efficiency.
   • Human resource management(HRM). Employees are the critical assets of any company, large or small. Businesses must rely on efficient workflows and HR processes to manage them and avoid mishandling their sensitive data. After all, the HR department deals with many back-office tasks for every employee.When HR processes become a part of an ERP integration strategy, companies can leverage a single database of basic administrative tasks, including time tracking, attendance, payroll, training, corporate events, etc.
   • Project management software. A unified view of project-related data within an ERP provides decision-makers with ultimate control over the costs, timelines, and updates. When every team member has access to the project status and understands the current workflows, it is possible to adjust priorities and allocate resources more efficiently.
   • Business intelligence (BI) software. A standalone BI solution is a powerful source of data related to the company’s internal processes. It is a starting point for collecting insights and visualizations about critical workflows and operational information. When this data starts to flow into an ERP, stakeholders can act faster and introduce changes to the current operations. Accurate forecasting, navigation to new business frontiers, and all sorts of informed decisions become a natural part of the business development process.
     
2. Choose an ERP integration method.
   Bringing together different parts of the infrastructure of business tools can occur in different ways. Depending on the current composition of the IT infrastructure, available tech expertise, and future needs, companies can choose to use the following integration methods:
   
   • Integration PaaS (platform-as-a-service). This method fosters API-led connectivity between different applications and ERP and consolidates real-time data for a unified view. It relies on web-based APIs such as JSON or REST. Once set up, an iPaaS solution can serve the needs of multiple business units, be these departments or even subsidiaries.
     Companies can opt for iPaas platforms for integrating data from multiple sources, including cloud services and local applications. iPaaS is also ideal for B2B eCommerce ERP integration, as it scales dynamically and automatically depending on the required computational resources.
   • Enterprise service bus (ESB). By contrast, ESB technology solves application integration needs for local or legacy systems. Its typical application area connects sensitive data that should reside on-premises instead of moving to the cloud. As a result, the data will move from business applications to the ERP and return it inside an on-premises IT infrastructure. This method of ERP integration is resource-intensive, given the time it consumes to fine-tune the operational processes. However, moving the data to and from ERP becomes easy to manage and control when everything works as intended.
   • Point-to-point (P2P) integration. Point-to-point integration uses custom code to synchronize the data between an ERP and another business application. It facilitates data transformation and includes the mechanics of its transportation to each destination. 
     To become an efficient way to connect multiple business systems, point-to-point integration needs to be implemented by specialists familiar with their inner workings. Besides, a combination of technologies is used to create the code, which means your team needs a couple of expert developers proficient in selected tools.
     What if the company adopts a new business tool or expands the functionality of an ERP? The issue with this integration method is that it leaves little room for uncertainty. Point-to-point integration with ERPs isn’t designed to adjust to ongoing changes, as it requires developers to work out new solutions to enable the necessary connectivity.
   • Custom applications. A company willing to enable business integration in ERP can opt for bespoke development of special connectors or adapters. This method can address specific requirements that are difficult to meet using generic solutions or pre-built iPaaS functionality. While the added value of custom integrations is enormous, companies need to factor in the time and expenses associated with the effort.
     Having your systems integrated with this method is complicated for operational teams. As with point-to-point integration, custom adapters are challenging to maintain and supervise. When an IT infrastructure adds new elements, new integration must be implemented.
3. Planning.
   As with any type of data integration, it is a time-consuming process that requires preparation and careful planning. To keep it straightforward, here are the three main points you need to consider when planning ERP integration:
   • Set a timeline. Stakeholders and other interested parties that initiated the integration process need to communicate with engineering teams to set a realistic deadline for consecutive implementation. It is worth assessing resource constraints, technical issues, and potential data inconsistencies to set a reasonable timeline.
   • Decide on the team structure. The ERP project team typically includes an executive sponsor, a project manager, and representatives from the departments that will use the system. Involving senior management is critical to ensure the project gets the resources it needs to implement change across the organization.
     The team also may hire an external consultant or ERP implementation partner to provide expertise in designing and configuring the system. It should also include any internal specialists involved in implementing the system, such as a representative from IT and a report writer who will develop customized reports for users across the organization.
   • Budget. Based on the above considerations related to integration methods, how you implement the connection between the ERP and other software will affect the calculations. Besides, it is necessary to factor in the costs associated with data storage and transfer, testing, and software upgrades and configurations.
4. Start the integration process.
   Reaping the benefits of a well-thought planning phase and considering the goals set by the project team, you can get started with the integration process. Whether you build custom connections, integrate systems using ready-made solutions, or choose a mixed approach, leave room for prospective customizations for particular methods.
   Guided by the specific business needs, adjust the integration process and communicate with the engineering team as they roll out each integration. It is necessary to conduct each change consequently and connect one integration after another in the form of a queue. This way, you can consolidate the integrated ERP without disrupting business processes in an emergency.
5. Testing that everything works as intended.
   ERP integration touches upon nearly every aspect of operations, including human resources, finance, and eCommerce, payroll. Besides, it affects numerous industry requirements, stakeholders, and business users. An ERP system must assimilate into the company’s processes to deliver the expected results and drive value. Assessing business scenarios, checking real-life user activities, and ensuring that multiple systems communicate without roadblocks is necessary.
   The testing process requires the work of QA specialists and business users who will deal with the newly integrated ERP daily. However, test execution can become overwhelming when opting for large-scale activities. Instead, try running test activities for different integrations or sections. This will help remove workload from the QA team, let them detect bugs, and report the current status within a single group of business and functional requirements. After that, the QA team can pass new system capabilities to release gradually. Moreover, it is necessary to test the entire ecosystem of business tools as a cohesive whole to ensure all the changes and updates work correctly and contribute to the efficiency of the Enterprise.

Having discussed the above integration methods, we can summarize the peculiarities of each one of them.

Consider the availability of technical resources, the type of business apps to be connected with an ERP, and the requirements of your particular case. Eventually, you can use a combination of integration methods to meet the changing needs of your Enterprise.

ERP integration challenges and risks

Before you step into the ERP integration game, it is worth assessing the opportunities and their effects on your business. As one of the most popular solutions for consolidating a dozen users, departments, and processes, an ERP becomes a centralized hub for managing routine and critical tasks.

By this time, you might have guessed that the companies that take the road to ERP integration must prepare for a bumpy ride. It is necessary to consider potential risks and challenges that can drive timeline and budget overruns and the overall success of ERP integration.

Here’s what you need to pay attention to before initiating the ERP integration process:

• Identify and address security risks.
  The phrase "Together we stand, divided we fall" works well in the example of an ERP. Yes, a united and interconnected system is a powerful consolidating mechanism that helps reap the benefits of ERP integration. It allows you to combine the most beneficial business applications into a single organism, automate processes and increase the company's profitability.
  But it is worth looking at this situation from the other side. Integrating systems with ERP means expanding access to essential data for many users. The amount of data in different formats and passing through various processing stages also increases.
  The stakes for integrated system protection are higher when multiple business layers form a colossal attack surface. As a result, numerous threat actors can exploit vulnerabilities and increase the chances of critical data breaches or losses. These risks can be detrimental to a company, so it is necessary to take a proactive approach to ERP integration practices. Additional security measures must be a part of the integration to ensure the best-of-breed protection. Some of them include:
  • having a quality control system in place;
  • developing a role-based access control system;
  • implementing a robust threat modeling system;
  • fostering a workplace culture of integrity, which can minimize insider threats;
  • applying reliable vulnerability scanners.

• Conduct regular system audits.
  Because of the complexity of the software, going live with your first or maybe tenth ERP integration requires constant oversight. Business owners or other stakeholders can change sources of data flows, add new databases, or refine the IT infrastructure’s inner kitchen. Or suppose an employee makes a mistake while working with the integrated software. This tiny factor may result in overall business disruption. For example, failure to comply with customer service standards can put off potential customers.
  The ERP integration meaning is in blending the data from multiple systems. When they receive updates or modifications, it is necessary to take time to engrave each change in the integration itself. Otherwise, data transfer might be difficult or obstructive, resulting in consecutive integration failure.
• Organize user training.
  As we previously mentioned, ERP integration allows for replacing manual work with different software systems or tools. This implies less effort in employee training to work with separate tools. Take a designer who works with Solidworks and has to move important information to an ERP. Thanks to seamless Solidworks ERP integration, many routine tasks can be put on automation.
  But another side of the coin is the sophisticated nature of integrated software. Depending on the chosen integration method, there will be different training requirements for ERP adopters. For instance, data handling and storage guidelines can become daunting for non-tech-savvy users or those who haven’t been acquainted with the way an ERP works.
  As a rule, employees do require training on how to use the software, which can add unforeseen expenses. However, it is a necessary investment for business owners, as it can educate specialists about new technical requirements on how to deal with the system.

• Choose the right integration strategy.
  Just like you create a shopping list before driving to Walmart, organizing a list of requirements and developing a tailor-made ERP integration strategy is a must. First, create a map of all business processes a company is using and is planning to integrate. Next, you can identify the correct way of synchronizing them with an ERP.
  How to choose the right solution to facilitate the integration process? For example, when you need to integrate the back end of your eCommerce business with an ERP, try opting for vendors specializing in this sphere. Another idea is to consider your business's size and its operations' specificity. Small businesses can rely on ready-made iPaaS solutions instead of choosing complex and resource-intensive custom development.
  Once you have chosen the integration method, prioritize the integrations that will drive the most value in the first place. Once the initial integrations are ready, your business can continue to add new functionality to the integrated ERP.
• Clean the data before integration.
  Duplicate and error-prone data can burden the complex process of ERP integration. It is worth ensuring that the data on which you plan to establish potential strategic decisions is accurate and complete. Besides, it is crucial to validate that the APIs of the ERP and other software can reposition the data back and forth.

In conclusion

If you wondered what ERP integration is and had a lot of questions dedicated to this type of project before reading this article, we hope that now you have the complete picture of its essence, benefits, and process steps. By now, you understand your challenges and know how to overcome them and mitigate potential risks.

ERP integration requires a lot of work, but it will be well worth it when you are done. With a trusted ERP development partner like Geomotiv, you can enable exceptional connectivity of different types of business software and leverage a unified view of all critical parts that constitute your business.

The benefits of implementing ERP software can transform your business — propelling you to the next level of success. The best way to capture these benefits and ensure a smooth ERP implementation process is to choose an experienced vendor with deep expertise in your industry.