What is ERP integration?

ERP integration helps synchronize business functions to give stakeholders simplified access to enterprise data. ERP solutions remove data silos that can obscure overall business health and require employees to search for information across various applications, platforms and departments. ERP integration increases visibility into business processes by centralizing data, enabling faster and more informed business decisions.

Enterprise resource planning is a business management software system that organizations use to collect, manage and share data across an enterprise. These systems consist of business applications, also called integrated modules. ERP implementation helps manage core functions of a business—such as finance, supply chain management and procurement, human resources and more—in an integrated platform.

Modern ERP software uses prebuilt connectors and application programming interfaces (APIs)—sets of protocols that enable disparate systems to communicate with each other and facilitate data flow between those systems. ERP integration strategies consider what data enterprises use to make decisions and how to use that data to optimize business functions.

Integrated ERP solutions promote the efficient flow of data between ERP software and other enterprise systems and applications, giving relevant parties easier access to the information they need. Modern enterprises collect large data sets and ERP integration can help teams better view and analyze large volumes of data. This capability enables teams to uncover systemic inefficiencies and security threats, explore opportunities for growth and adapt more quickly to changing business conditions.

ERP vendors provide ERP integration services with both prebuilt and customizable options. Business needs vary depending on factors such as IT resources, the number of software applications an enterprise runs, whether applications are cloud-based or hosted on-premises, scalability needs and projected business growth.

ERP integration methods include point-to-point integration, enterprise service bus and integration platform as a service (iPaaS).

Point-to-point integration enables two systems to link directly. IT teams use custom code to set up direct communication between two systems, offering a high level of control. Point-to-point integration is often a lower-cost option for basic systems with minimal software integrations.

For larger integrations involving many applications, scalability can become difficult for IT departments to maintain in this model. Point-to-point connections require IT departments to build and maintain code, which can be costly and time-consuming.

ESB is a centralized software component that manages the integration of different software systems. It is often used for complex integrations within on-premises architectures.

ESB standardizes information by using connectors that convert information between applications. This middle layer of translation is known as the communication bus. ESB is a strong tool when integrating legacy systems but is not the strongest choice for cloud applications. Like point-to-point, ESB requires technical expertise from an IT department to integrate and maintain.

iPaaS is a suite of self-service, cloud-based tools and solutions that are used to integrate data from multiple applications that are hosted in different IT environments. iPaaS is designed to help manage a growing ecosystem of software as service (SaaS) solutions employed by large organizations.

iPaaS cloud integration services provide a solution to the growing challenge of app, data source and service integration in increasingly complex IT environments (such as hybrid cloud environments). iPaaS addresses enterprise integration and data management challenges by providing tools such as prebuilt connectors, maps and transformations that help enterprises orchestrate integration flows and maximize interoperability between disparate systems.

iPaaS integration presents a solution for many modern businesses because of the scalability that it offers and its suitability with SaaS and cloud-based applications. 

ERP system integration involves various business functions and software based on organizational type and structure, goals and needs. ERP integration use cases include:

• Business intelligence (BI)
• CRM (customer relationship management) 
• Project management
• Supply chain management
• E-commerce platforms
• Human resources

Business intelligence refers to a set of processes designed to generate insights and improved business strategies through the analysis of organizational data. Enterprises deploy tools that collect, manage and organize data across different departments to give stakeholders a detailed picture of business operations.

Business intelligence ERP integrations help organizations deploy AI-powered tools to automate the collection and analysis of data. Automating this process helps provide insights based on real-time data that make it possible to proactively update workflows and business operations.

CRM tools help log and manage data related to customer or potential customer interactions. CRM systems include customer data such as purchase history, contact information and information related to interactions with customer support teams. This data helps sales, marketing and customer service teams increase customer retention, generate new leads and improve customer experience.

ERP integration makes this data visible across various teams, enabling more informed decision-making and optimized sales and marketing initiatives.

Integrating ERP systems with project management tools helps organizational leaders coordinate tasks and meet deadlines across various teams. Project managers use these integrations to make initiatives and product sprints more efficient and improve project planning. Integrating ERP systems with project management software enables project managers to use one unified system to keep team members updated on business-wide initiatives that might impact their workflows and procedures.

ERP integration can play a role in supply chain management by integrating data from sales, shipping, warehouse inventory and manufacturing systems. ERP systems help optimize order management, which includes all steps and personnel responsible for an order from its creation to fulfillment. If an issue happens in the manufacturing phase or if there are shipping delays, an integrated system can automate an alert to inventory management teams, which can update warehouses, customers and business management teams on expected delivery times.

ERP e-commerce integration centralizes inventory management, product data, purchase order history and customer data. Centralizing this data enables organizations to automate many functions on their e-commerce sites, such as making sure that website listings are up to date with current inventory.

E-commerce integration enables automation and efficient information sharing across organizations. For example, this integration can help simplify order fulfillment by automating the flow of shipping information to fulfillment warehouses. Marketing and sales teams can use e-commerce information to note high-demand products and sales patterns and adjust strategies accordingly. E-commerce data can help business teams decide when products need to be phased out or when to adjust pricing models.

Human resources (HR) departments often handle many organizational tasks—such as hiring and firing, managing benefits, performance reviews and payroll tracking—and large volumes of employee data and documents. ERP integration helps consolidate this data through the creation and management of profiles on individual employees that are easier to access and securely stored.

Integration with HR systems helps keep HR teams informed of broader business needs—information that can be valuable when hiring new employees and creating job listings. ERP integrations also help teams automate many manual HR tasks—such as onboarding or paid time off (PTO) approvals—enabling HR teams to focus on more strategic work.

ERP integration provides numerous benefits, including helping organizations:

• Unify real-time data
• Create a single source of truth
• Automate workflows
• Improve observability

The collection, synthesis and analysis of real-time data helps teams establish organizational knowledge and better understanding business functions. Data that is siloed or not accessible across various departments can prevent organizations from attaining a holistic understanding of their resources and business needs. This siloed data can create workflow redundancies and other inefficiencies or issues.

ERP integration unifies previously disparate data, enabling teams to derive greater value from their data and discover insights that help improve organizational processes.

Integrating ERP applications with other enterprise applications and databases enables the centralization of data and helps improve internal communication between departments. It also prevents employees from having to waste time searching for data. 

Centralized data repositories enable easier distribution of real-time data reporting and analysis, and create a single source of truth that all business units can rely on (and know they are acting on the same information as their counterparts.) Many ERP systems can automatically create charts and dashboards that provide clear visualizations of collected data.

Centralized data stores have many practical applications. For example, if sales, marketing and e-commerce teams share an understanding of supply chain timelines and production flows, teams can improve their forecasting and align to make sure that sales and marketing efforts are efficiently adjusted in the case of supply distruptions or when items are out of stock.

Data entry is tedious and prone to human error. ERP solutions help automate data entry processes and drive data accuracy. ERP systems can also help automate invoice generation, invoice approval, inventory updates and other industry-specific processes.

In short, ERP integration helps provide organizations with a more accurate picture of their entire business. This enhanced observability drives real-time data analysis, provides leaders with the comprehensive view that is needed to make confident decisions and helps teams proactively avoid future issues.

Broad observability and integrated systems also help enterprises enforce companywide rules, regulations and compliance standards.

ERP integration offers enterprise-wide benefits, but there are challenges IT teams might face during the initial integration process and throughout the integration lifecycle. The hurdles of ERP integration vary depending on enterprise scope and scale and the chosen integration method. Challenges include:

ERP systems collect and manage data from different teams and departments, meaning that data might be formatted differently across applications. Point-to-point and ESB integration solutions in particular require in-house technical expertise and IT professionals to help manage data translation. These integration methods also require technical staff to scale and maintain environments as they grow more complex.

iPaaS solutions include prebuilt connectors that help integrate applications and alleviate the data translation workload. While iPaaS solutions offer more standard integration tools and capabilities than some other methods (and can be easier to scale), they can also require technical staff to customize and monitor data flows, particularly during set-up and with more complex or unique integrations.

Complex integrations often require extra IT resources and staffing. IT teams make sure that applications are updated and that these updates do not cause a disruption in data flows.

iPaaS integrations and cloud-based applications typically support automated updates, integration and testing, but still require periodic oversight. Monitoring the initial data migration when implementing ERP solutions helps organizations make sure that integrated data is complete and avoid business disruptions.

ERP integration solutions sometimes include data migration monitoring tools or can be coupled with other monitoring software.

Integrating data from various sources can expose sensitive data or leave gaps in security. For example, data stored by the HR department might have different security requirements than customer sales data, even though data integration processes united the data in the same centralized system.

Whether integration solutions are built in-house or purchased through a third-party vendor, organizations should be sure that these solutions include data monitoring, regulation and compliance capabilities.