ERP integration: When, why, and how
ERP integration is not a new concept, so why has it recently become such a hot topic? It has to do with evolution. Cloud ERPs have evolved past their traditional role of finance and core process management systems. Driven by AI and powerful databases, modern ERP systems are becoming the central hub of all operational processes, across a business. And just as ERPs evolved, so have other business software applications – growing daily in sophistication and numbers. At the same time, employees and team leaders continue to download and use business-specific software applications without telling their IT team. These apps are not integrated with the ERP nor are they properly secured and monitored.
Traditional application integration methods are slow and require the writing of a lot of error-prone custom code. This presents a challenge for modern businesses who want the security and visibility that comes with app and ERP integration, yet don’t want to lose their competitive edge by getting mired down in time-consuming, manual processes. The good news is that the best cloud ERP systems come out of the box with pre-built integrations that ensure a fast and easy connection between some of the most common business applications – and are maintained by the software provider. And as your company’s software and application landscape becomes more complex, integration platform as a service (iPaaS) solutions are ready to go – custom-built to fit with the best cloud ERPs.
What is ERP integration?
ERP integration is the method by which a company connects its ERP software with other, specialised applications and processes – across your entire business.
In a recent Deloitte survey of senior procurement executives, “poor integration across applications” was cited by almost half the respondents as one of the “top three issues” they were facing today. ERP and cloud-based app integration solutions help to tackle this problem with a powerful, unified approach – combining the operational capabilities of a smart ERP with integration software, specifically built to automate, streamline, and scale these essential activities.
Cloud ERP integration and API management
A few years ago, when there were only a handful of essential business apps, it was feasible to manually implement an application programming interface or API – software that allows systems to talk with one another – to connect applications with a legacy ERP system. But as the number of essential apps took off, manual API management methods led to exponentially complicated systems and “code spaghetti” that became difficult to manage and unravel.
In response to the growing need for simplified integration, today’s best ERPs now come equipped with a number of pre-built connectors, APIs, and integration tools. Typically, the prebuilt APIs in a modern cloud ERP are sufficient to manage several applications, but without dedicated integration software, you’re still in a position of relying heavily on IT teams to manage custom APIs, mapping and coding.
Typical priority areas for ERP system integration
As ERPs and SaaS solutions evolve, new opportunities for enterprise integration will emerge. But for most business, the examples below represent some of the commonly integrated operational areas.
CRM is one of the go-to tools for sales and marketing teams because it gives them access to information and history about individual leads. This allows them to personalise their interactions with customers to deliver a better experience and increase the opportunity for conversion. A CRM/ERP integration augments this process by providing real time market intel, demand metrics, and data analysis. With more accurate and relevant information, marketing messaging is more targeted and on point, and sales teams can better nurture leads.
Business intelligence (BI) software is all about understanding data. It starts by curating and collecting it from the best sources. BI tools then use AI-powered technologies to perform specific analyses on that data with the end goal of providing highly actionable insights. Often BI solutions lead to the implementation of new processes or workflows – and sometimes entirely new business opportunities. With cloud BI/ERP integrations, these insights can be centralised and more quickly shared with the people best positioned to act on them.
The complexities of HR and human capital management (HCM) have been compounding at a fast pace. Aside from the almost overnight disruption that the pandemic brought to HR operations, further pressure is on these teams to be data-driven profit centres. With HCM/ERP integrations businesses can continue to benefit from a range of built-for-purpose HR applications and systems and they can augment those systems with the functionality of cloud ERP. From recruitment to retention to retirement, ERP system integration helps to inform and automate activities in this demanding and fast-changing department.
Clichés last because they’re usually true – and none more so than the old saying: “You don’t plan to fail, you fail to plan.” Yet despite planning tools being so important, project management solutions are often one of the most operationally siloed. They can be complex to learn and once they’re embedded, teams are reluctant to give them up. But the good news is that a project management/ERP integration means that the best project management systems can be separately integrated with a centralised ERP. So teams get to carry on with tools they’re familiar with, yet there can still be a unified view of every project and team – including consistent reporting templates and information exchanges within a single database.
E-commerce applications are typically one of the first to be integrated in any company. But today’s e-commerce is about much more than just paying for stuff. Right now, the most competitive opportunities come with the ability to leverage point-of-sale data. Smart shelves and carts can instantly connect with warehouses – and ultimately supply chains – to streamline supply and demand. Marketing and sales teams can also benefit from real-time omnichannel purchasing data and reports. E-commerce/ERP integrations can help plug your e-commerce applications and processes into the greater and more powerful data ecosystem.
Enterprise asset management (EAM)
Businesses that use any kind of machinery, heavy equipment, or fleets in their operations were among the first to realise the full potential of EAM and IoT technologies. But with ERP system integration, IoT data can work even harder. It’s great when your assets can tell you when they need servicing, but what if they could tell you how to build workflows that would help them run cooler and more efficiently? What if your IoT data could help you change your product design so that manufacturing processes were leaner and more ergonomic? What if your delivery fleet could automatically optimise loads and routes to minimise fuel and wear and tear? EAM/ERP integrations help to bring together the smartest supply chain and manufacturing solutions, with the analytical power of cloud ERP.
We hear about omnichannel shopping and how today’s consumers expect a seamless experience across whatever online or offline channels they choose to shop or buy. Well, along with that goes an increased expectation for omnichannel service. At the moment, in both the B2C and B2B arenas, customer demands are high, loyalty is fickle, and competition is fierce. AI-powered technologies such as natural language chatbots and recommendation engines are helping businesses to keep a personalised touch in their automated activities. But really outstanding customer service requires the ability for different departments to work together in real time. Whether a service and repairs request, a quality complaint, or a billing question, customer service/ERP integrations can help to unify a variety of applications and centralise a source of customer data across operational areas.
Benefits of seamless cloud ERP integration
The benefits of cloud ERP are already long-established in several business areas – including better productivity, improved visibility, and a centralised source of truth across the organisation. Essentially, ERP integration means that companies can deliver all those benefits across a greater breadth and depth of operations throughout their entire business.
- Real-time data. The ability to capture and manage complex information and Big Data is an essential feature of all modern business systems. But the real value in data can’t be realised unless you can understand and act upon it – quickly. Real-time data analytics and reporting gives businesses a competitive edge with the ability to make confident, informed decisions in the moment.
- Single source of information. Silos are at the heart of some of the worst operational inefficiencies. A single, cloud-accessible source of truth and information not only helps optimise operations, it helps to reduce security risks and human error.
- Regulatory compliance. The past couple of years have seen record-setting legal settlements around HR compliance alone. Integrating the power of cloud ERP into all your regulatory processes helps to ensure business-wide compliance across your operations.
- Agility and faster decision-making. Rapidly changing business and customer demands mean that companies must be able to to pivot quickly and responsively. When people and processes are integrated across your entire organisation – you get the speed and agility you need to make informed decisions and rapid operational optimisations.
- Supply chain optimisation. From raw materials and manufacturing processes to your customers’ front door – every element of supply chain management can be optimised with the greater end-to-end visibility and analytical capability that cloud ERP solutions are built to drive and support.
- Faster return on investment. Understanding ROI, value, and profit margins is very dependent upon capturing and analysing the right data and delivering fast and flexible reports. This goes to the heart of cloud ERP – such that you can even use your cloud ERP’s functionality to assess the ROI of your own ERP system integration initiatives.
- Visual workflows. To optimise and automate workflows, you must first be able to see them and map them from a centralised viewpoint. ERP integration helps to deliver these views quickly, in flexible and actionable ways.
- Mobile access. Since the pandemic, the stats around hybrid and remote work show an unsurprising upward trend. The best cloud ERP systems support mobility with device-agnostic usability that supports workers equally well in the office, at home, or on the move.
ERP integration and 4 methods of managing APIs
The integration landscape is a complicated one. There are over 800 different integration tools and systems out there, ranging from free open-source API management tools to sophisticated iPaaS solutions. The point-to-point (P2P) and enterprise service bus (ESB) models are older methods and while some companies still rely on API integrations, cloud-based, scalable iPaaS integration solutions have become the current gold standard.
Here’s some of the more common methods of ERP integration and their pros and cons.
What is iPaaS – and how does it work?
Integration platform as a service (iPaaS) solutions use pre-built connectors and business rules to define interactions in multi-tenant environments. In other words, they are purpose-built to streamline and speed up the development of integration flows across a disparate range of business operations.
Today, this is especially relevant for businesses whose essential applications live in the cloud. A modern cloud ERP will come with a variety of standard APIs and basic integration functionality. These out-of-the-box API management tools can be sufficient for businesses that only needs a handful of core apps and APIs. However, most modern businesses have a much more complex application landscape and will require the power of an integrated iPaaS platform to help them streamline and smoothly manage their more complex application integration needs. This means that users can specify the types of application they need to use, and a cloud integration solution will manage the underlying API configuration, protocols, and prebuilt code that is needed to rapidly integrate the app with the ERP, and make sure it’s running smoothly and safely.
Your ERP integration journey: A checklist
Your business processes aren’t going to get less complex. Your customers’ expectations aren’t going suddenly stop changing. To get the best value from your enterprise software, choose solutions that are built to grow and scale with your needs. A cloud ERP is at the core of your company’s operations. So when enterprise integration becomes a priority, you’ll want to invest in a cloud-native iPaaS solution that is backed by the support and service you expect, and is specifically built to integrate with your cloud ERP.
Every business has unique goals and challenges but as you start your ERP integration journey, here is a checklist of initial items you’ll want to review with your software vendor.
To start your ERP integration journey, look for solutions that:
- Integrate disparate systems and applications with the latest security protocols, with security patches that can be automatically updated in the cloud
- Streamline critical business processes and cross-business ERP functions
- Connect multiple applications and data silos
- Simplify integration across third-party apps and data sources
- Offer a robust array of prebuilt integrations
- Allow the ability to design, publish, and manage APIs
- Facilitate the development, availability, and lifecycle management of APIs
- Use prebuilt integrations to reduce integration implementation and maintenance effort
- Have an AI-assisted interface and low-code-no-code capabilities, to power API development
- Have AI-enabled cloud and hybrid integration development environment to reduce complexity, get smarter recommendations
- Support multiple business partners and B2B integration with multiple trading partners
Get started with your ERP integration
Explore SAP Integration Suite – an iPaaS that will help you scale integrations.
SAP Insights Newsletter
Gain key insights by subscribing to our newsletter.