Getting ERP integration right in 5 steps

Getting ERP integration right in 5 steps

May 4, 2021

Digital Enterprise Researcher

ERPs have long become business staples across the board, sought after for the visibility and transparency they bring into business operations. Opting for industry-specific platforms, widely available today, and relying on ERP consulting, would-be adopters can have ERPs fully aligned with their workflows and needs. But there is one essential but demanding step in ERP implementation without which the solution’s role as a single source of truth would be greatly undermined. This step is ERP integration.

In this article, we will look into the meaning and positive outcomes of ERP integration and provide a step-by-step guide.

What is ERP integration?

Companies adopt ERPs to serve as corporate data hubs. But to fulfill this purpose and become a single source of truth, the platform needs to be brought together with the rest of the business IT infrastructure. 

ERP integration connects the system with relevant business solutions and enables the data they generate to automatically flow to the ERP’s database and get consolidated there. While this step is not mandatory—after all, employees can move the information to the ERP manually—by choosing to forgo integration companies considerably reduce the benefits of their ERPs, creating unnecessary data silos and running the risk of human errors on top of that.

How can ERP software be used to facilitate data integration?

In the modern age of analytics, companies need to have accurate, complete and up-to-date operational and customer data to make effective, informed decisions. Data integration is the process designed to locate, retrieve, and combine information from different sources, delivering the much-needed unified view for decision-makers. Doing it, however, in most cases requires a dedicated application for data consolidation.

In the meantime, an ERP system, tied together with business applications from across departments, can fully take on the task of data integration. ERPs do not only automatically collect real-time insights and consolidate them in a centralized database, but also bring disparate data into a single format and organize it into an accessible, easy-to-comprehend structure. This is one of the many examples of how ERP proves a versatile solution able to substitute for multiple business process management tools.

An ERP integration strategy

#1: Define the ERP integration scope

To prove an efficient data hub, an ERP shouldn't necessarily be connected to every single enterprise system in place. On the contrary, the information from dozens of business applications day after day packing into a single database can complicate analytics and decision-making and make such an ERP expensive and challenging to maintain. This is why adopters should begin with narrowing down the number of applications they want to tie in with their ERPs. 

First and foremost, an ERP is proven to make a difference when integrated with common business software that companies across industries have, such as:

  • The integration of CRM and ERP synchronizes the enterprise’s demand and supply data and helps the sales team to meet customer expectations better. 
  • The connection of human resource management tools with ERP improves visibility into the corporate skillset and enables a more efficient allocation of human resources.
  • The integration of project management systems with ERP helps managers gain better control over project fulfillment and specifics.  
  • Business intelligence systems complement ERP’s analytical capabilities, allowing decision-makers to draw deeper insights from operational data.  

Other than that, the ERP integration scope is mostly determined by the adopting company’s industry and its domain-specific priorities. For instance, a retail brand would integrate their ecommerce ERP with tools for accounting as well as orders, warehouse, and supply chain management. A factory, on the other hand, is likely to tie in shop floor systems, quality control software, and, if implemented, IoT devices with their manufacturing ERP software

#2: Decide on the ERP integration method

There are several distinct ways in which ERP integrations can be carried out nowadays, and opting for the right one will play a great part in the project’s success. 

Dedicated integration tools

Seeing the trend toward ERP integration with enterprise systems gain traction, leading platforms started equipping their products with dedicated tools, while more software vendors venture into building their own ERP connectors. 

There are pre-built ERP integrations that require no coding; they are, however, standardized and selective in scope. In-built or third-party APIs are more common and flexible and can facilitate seamless data synchronization between an ERP and other software just the same, but will require some development work.   

Point-to-point integration

When ready-to-use tools are unavailable, ERP adopters can opt for connecting their platforms with each business app individually. Point-to-point integrations entail establishing multiple custom connections, and new ones have to be developed if either of the integrated systems expands or upgrades. Complicated, high-maintenance and rigid, this ERP integration method should be leveraged selectively and after careful consideration. 

Enterprise service bus

Enterprise service bus (ESB) is the most holistic ERP integration technology at the moment. It involves building a custom communication system over the enterprise IT infrastructure that passes data from business apps to the ERP and back. ESB takes some grunt work to create, but once it’s implemented, connecting new software to it becomes easy. On the flip side, ESB is mostly suitable for on-premises infrastructures and is a poor choice for cloud ERP adopters.   

Custom development

Finally, companies can always rely on custom development for ERP integrations. This method allows designing proprietary connections between the ERP and business apps that will fully meet your requirements—the result that is hard to achieve with pre-built integration solutions.  

Which ERP integration method is right for you?

When proper integration tools are available at your ERP platform out-of-the-box, the case is clear — it’s better to use them. But if there are none or they do not meet your requirements, then you need to consider your options.

Third-party APIs and connectors are easy-to-implement and relatively low-cost, so it’s a great option for companies with a small IT team that will carry out minor maintenance and upgrades but no more. Having sufficient in-house technical resources or an outsourced development team, a company can shift away from the inflexible ready-made tools in favor of tailor-made solutions, ESB, or point-to-point integration—whichever will fit their workflows best now and in the future, as the enterprise grows and expands.

Last but not least, remember you can always take a mixed approach and combine the available integration tools with custom development the way it makes the most sense in your enterprise’s case.  

#3: Make a plan

Once you have determined the integration scope and approach, it’s time to lay out the project’s roadmap, resources, and execution specifics.

Budget

As it was mentioned before, ERP integration methods vary significantly in cost, so at large the budget will be determined by how you balance out ready-made and custom solutions. Regardless of your choice, you will need to include the expenses on data migration and storage, integration testing, ERP and business apps configuration, and potential IT infrastructure hardware and software upgrades into your budget calculations.

Companies also need to provide for hidden costs arising from unplanned but necessary changes, tech professionals’ possible overtime, ERP consulting fees, and so on. 

Team

Next, decide on who is going to integrate the ERP. IT specialists are naturally the central element of the project, so if you are uncertain that your in-house team can carry out all the integration, configuration and data migration tasks adequately, it’s better to bring in more experienced ERP consultants and developers from outside.

Other than that, make sure to invite business users from the related departments. They can serve as conduits for business-end concerns and bring viable suggestions about the integrated system’s operation to the table. 

Furthermore, an ERP integration project needs an executive sponsor. Apart from signifying leadership’s buy-in, they can also take responsibility for the project’s budget allocation, bringing in more specialists, and formulating global integration objectives.     

Timeline

To set a realistic timeline, project owners need to cooperate with the integration team. The scope and substance of integrations are major factors in time estimates, so only IT specialists, aware of the technicalities and potential setbacks, can accurately predict the amount of time they will spend on carrying out each integration and bringing it live. To be on the safe side, allocate some extra time for possible contingencies.

It is also important to properly schedule launch dates for each integration, ideally when both ERP and the connected app are least utilized, and map out a roll-back plan in case the integration doesn’t operate as expected. 

Beyond that, companies should take into account subtler factors that lengthen the ERP integration. For instance, if bringing an ERP together with the IT infrastructure involves organization-level changes in data workflows and governance policies, then timeline overruns are likely. Data issues, like inconsistencies, duplicates, and missing chunks, can also slow down the integration progress.

Reasons for ERP timeline overruns

#4: Connect ERP with business applications

Armed with the project plan, timeline, and requirements, the team can phase into ERP integration. This involves building custom solutions to connect a business application and the ERP or bringing them together via an API and then configuring both solutions to support the redesigned processes. In the case of homegrown legacy solutions, additional customizations may be required to get them to work with the ERP.

We highly recommend companies to opt for a phased approach, where integrations are carried out one by one or in sections, not in one go. This way, the integrations can be rolled out, tested, and rolled back if necessary without jeopardizing business process continuity.     

#5: Conduct ERP integration testing

Before putting the integrated ERP into operation, the company needs to make sure the newly consolidated system operates as intended. Integration testing involves simulating real-life scenarios and replicating users' activities to detect potential errors and bottlenecks in communication between the ERP and other modules as well as vulnerabilities arising from the changes.

Because ERP integrations usually span multiple business applications, the best course of action would be running separate test activities for each integration instead of carrying out large-scale testing after all the work is done. Having a moderate volume of work on their hands, QA specialists can accurately spot all the faults within a single ERP integration before moving to another, with different requirements and specifics. 

Moreover, as the detected bugs are fixed, you can release ERP integrations one by one, providing employees with a gradual access to new capabilities of the system. After all ERP integrations are verified, the company will still need to test how the new infrastructure works as a whole, but it will be an easier task.

ERP integration dos and don’ts

To make ERP integration less challenging and minimize the risk of failure, consider following these best practices.

Don’t make unnecessary customizations

As systems are most effective when tailored to enterprise workflows, ERPs are traditionally subject to numerous customizations, large and small, standardized or tailor-made, and integration is the right time to tinker with the system some more. However, make sure you follow the initial requirements and refrain from unwarranted or on-the-fly customizations. 

More customization doesn’t necessarily mean good customizations, which might undermine the integrity of the ERP and the connected software, slow down the project’s progress, and cause ERP budget overruns. 

Reasons for ERP budget overruns

Do double down on security

Integrations expand the ERP’s attack surface and make it accessible to a wider range of users, thus weakening its protection mechanisms. This is why companies should accompany ERP-business app integrations with additional security measures. At large, their scope and substance depend on the ERP’s hosting model and the existing security infrastructure, but introducing more granular, role-based access controls and more advanced ERP vulnerability scanners won’t go amiss.     

Don’t skip user training

You may have good arguments for skipping this step: training is time-consuming and expensive, a typical ERP is an intuitive software, and if the system had been in operation at your company before integration, then employees are already more or less acquainted with it. 

However, user training is essential for exploring all the valuable, at times hidden capabilities of the connected ERP, and the cost of missed opportunities can prove higher than that of a training program down the line. Moreover, the integration may introduce some new requirements to data handling and storage, so educating employees on how to meet those when working with the ERP will help prevent potential security incidents.  

Do perform regular integration audits

Your work on the integrated ERP does not end with the system successfully going live. Many factors can undermine the connected system’s performance, from misconfigurations and employees’ mistakes to new integrations and IT infrastructure expansion. This is why ERP adopters are advised to conduct regular ad-hoc audits to ensure the software operates as intended and remains secure, while the data flows seamlessly and unobstructed.

Make ERP your corporate data hub

ERP was designed to serve as a single source of truth, but to realize its full potential, it needs to be connected with other business apps. ERP integration is a much more complex and demanding transformation than it seems, but if relying on this integration guide and supported by an experienced IT team, your company can carry it out successfully, cost-efficiently, and without major setbacks.