ERP Integration: Challenges and Benefits

By Lexi Wood • Updated on June 1st, 2021
LinkedIn

Enterprise resource planning (ERP) software is an integrated suite of business applications designed to automate the majority of your back-office business processes, such as financials, sales, and operations. Integrated ERP systems, or those which have been combined with pre-existing or legacy business software, provide a unified solution to manage company operations across every department, whether it’s sourcing raw materials for manufacturing or scheduling employee hours for human resources (HR).

Of course, ERP can’t do everything. Fortunately, this is where software integration comes in. Integration establishes how any new software will communicate with an existing solution and vice versa. For instance, if you already have an ERP platform and are adding a specific accounting solution to handle certain finances, you’ll want to know the two are compatible and won’t create more work through accidental data duplication. Or if you currently have a legacy customer relationship management (CRM) software, you’ll want a new ERP capable of drawing upon that existing customer information to address your business needs.

Software integration can bring together two or more unrelated systems, even those made by different developers, into one cohesive solution. Learn more about the specifics of ERP integration now:

Most Common ERP Software Integrations

ERP systems are most frequently integrated with the other types of back-end business software. Some of the most popular include:

  • Accounting: Track financial transactions to record revenue and profit loss
  • Business intelligence (BI) tools: Collect and sort through historical data, analyze the information, then create engaging reports with detailed visuals
  • Customer relationship management (CRM): Manage business-customer relationships to maximize marketing, sales, and customer satisfaction
  • eCommerce: Adapt your current business model to online sales and marketing
  • Supply chain planning: Develop real-time demand forecasts, establish which supplies are needed to fulfill orders, then plan and schedule manufacturing operations

Of course, there are many ways to integrate ERP systems with additional types of industry-specific software. For example, a hotel may want to incorporate an ERP into their existing booking system or a restaurant may have a legacy reservation scheduling software to consider.

Further, there are many ERP systems which are specifically designed to integrate seamlessly with some of the more popular software products and websites out there, such as:

  • Infor
  • Microsoft
  • NetSuite
  • QuickBooks
  • Sage
  • Salesforce
  • SAP

Benefits of ERP Integration

As described above, combining ERP and other software functionality can lead to a lot of useful benefits at your organization. For starters, you can reduce the amount of downtime between performing basic business functions which would have once required alternating between manual and automated labor.

In example, imagine an HR department performing monthly payroll. Before integration, the HR workers had to keep tabs on employees in a spreadsheet, manually marking who was in or out each day. They would then add up total hours to determine payroll, taking a few hours each pay period to do so. An ERP software integrated with their legacy HR system can allow real-time tracking of time and attendance which can then automatically calculate wages, ensuring compensation accurately reflects the hours of each employee.

Next, customization adds another benefit to your business. Combining different software functions can lead to a more precise process for your workforce, cutting down on wasted time between tasks. The integration of ERP software with another system lets you build a custom approach to how your company operates.

Methods of Integration

In order to integrate any software, you must first plan your integration points. What data do you already have? What data do you need? How should one system communicate with another? Your hotel booking application probably doesn’t need to coordinate with your ERP’s budgeting module, so it pays to know what parts of your software can stay separate from each other.

Next, you have to consider how you will actually integrate the software together. There are several different types of software integration you can use with your ERP. The main methods are:

  • Vertical integration: Organizes “silos” based on the functionality of each software subsystem; the fastest integration method though only intended as a short-term solution
  • Horizontal integration: Also known as Enterprise Service Bus (ESB), matches specialized subsystems to reduce the number of total connections
  • Star or spaghetti integration: Interconnects all systems with subsystems based on their functionality, replacing duplication between the different interfaces

In essence, vertical integration focuses on creating one aggregate system out of two or more subsystems while horizontal integration creates a system of communication between two or more systems. Additionally, vertical integration is only intended as a short-term solution until a star/spaghetti or horizontal integration can be achieved.

How Real-Time Integration Works

Regardless of the main method of integration used, the timing is equally important to consider. Larger systems will require significant time in order to fully function after integration. Fortunately, real-time integration is available in several instances. This expedited process lets changes in one system be reflected immediately in the other and is accomplished through the use of a shared database, such as the aforementioned silos. Alternatively, application programming interfaces, better known as APIs, can pre-configure a set of usable instructions that allow for changes in one program’s database to be triggered by actions in another.

In terms of functionality, real-time integration is always best, though may not be technically feasible or cost-justified for your company. Another option is to generate reports and use those to load updated data from one system to the other in batches. While potentially less expensive to set up, this batch integration can create issues where different data sets exist in each separate system until the reconciliation has been triggered. This is supportable in situations where batches are regularly executed, though it’ll be a major limitation in all other circumstances.

ERP Integration Challenges

Integration challenges can get incredibly messy in the best of circumstances, especially if you are dealing with cloud-hosted or mobile migration of a lot of data. Integrating an on-premises solution with an entirely web-based ecommerce solution can lead to problems with accessibility since using an additional software can complicate formerly simple processes by requiring deep communication and coordination between the systems. And customizing the final integration can lead to hiccups in the system as well. And the more software you already have to add, the longer it’ll take to fully integrate.

One of the biggest headaches of an ERP implementation is coordinating integration with additional systems, particularly those which have overlapping functionality. Poor data management during the process can lead to duplication or deletion of important information. You will have to decide if it’s better to have two separate software solutions or one integrated option when adding an ERP to your existing system.

Another difficulty comes from the users themselves. Employees at your company may prefer to use an older, familiar system or have trouble adapting to a new solution. This can lead to additional costs from training and retraining workers in an integrated ERP.

Of course, once systems are fully integrated and users are comfortable using the new system, the ERP software can essentially pay for itself by reducing time spent on typical business processes. A properly integrated ERP can provide access to real-time data, reduce downtime, and overall improve your business performance through streamlined automation.

Looking to integrate ERP software with a legacy system? Get free help finding ERP software from one of our software advisors.

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