Enterprise resource planning (ERP) software, once available only to large enterprises with substantial IT budgets, is now making inroads in smaller companies as well. And it’s not hard to understand why.
With interest in digital transformation growing, more organizations are taking advantage of the many benefits of ERP systems, such as:
- A single “source of truth” for all business processes
- Extensive data collection and presentation capabilities
- Opportunities to automate business processes
In a perfect world, every deployed ERP system would stand on its own, running every aspect of the business in perfect harmony. In real life, however, this almost never happens. ERP systems, by and large, need to be able to work with other business management software, whether in the same business or owned by customers, suppliers, government agencies, or other entities.
We call this ERP system integration, and it’s an important consideration when planning an ERP implementation.
In this article, we discuss the reasons businesses need to integrate their ERP systems, the benefits and potential pitfalls of ERP integration solutions, and how to get help with ERP data integration initiatives.
ERP System Integration: Why Integrate ERP Systems?
If ERP systems are so great, why would anyone need to integrate them with other systems? Why not migrate all business processes and data to the ERP?
Every organization has its own unique reasons for deploying an integrated ERP system, but they tend to fall into a few broad categories:
- Capability vs. Cost: Even the most capable ERP system won’t cover every possible business process. The cost of building a custom solution in the ERP to support a given unique business process might be much larger than the cost of integrating an existing system or application with the ERP.
- Risk vs. Reward: Even if the costs of customization are comparable to those of integration, there are risks involved in building a custom ERP solution that must be considered as well. The risks of customization vs. integration must be weighed carefully.
- Existing Investments: A business that has made a significant investment in (for example) an e-commerce system won’t be interested in throwing it away—in particular, if it’s working well for them.
- External Connections: Some businesses have little choice but to integrate when connections to the customer, vendor or government systems are involved. Electronic data interchange (EDI), for example, is becoming much more common in the business-to-business (B2B) market, where increasing the efficiency of the sales order placement, fulfillment, and billing processes are important.
Another common integrated ERP solution is integration with shipping carriers. Integrating your ERP’s fulfillment module with carriers’ systems, such as those of UPS or FedEx, eliminates manual data entry and increases accuracy.
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Benefits of Integrating ERP Systems
Another alternative to integrated ERP solutions, of course, is not integrating them, but there are important benefits to integration that make it worthwhile:
- Elimination of Duplication: Having separate, independent systems often means that users are forced to enter the same data twice (or more, in extreme cases). The danger of all this manual data entry is that mistakes will happen, and you will end up with systems that don’t agree. Which system is right?
- Reduction of Manual Processes: Even if different systems can be kept in sync, it often means manual copying and pasting, or downloading and uploading, of data from one system to another. This wasteful, error-prone, and mind-numbing activity adds no value to your products or services.
- Consistent Reporting: Proper integration contributes to the “single source of truth” concept, which means that data content and formats are consistent between systems. This consistency makes it much easier to generate meaningful reports and dashboards with real-time data.
Approaches to Integrating ERP Systems
There are many ways to integrate different systems. Some of the most common ERP integration solutions include:
- Drop Files: This old-school method is still in wide use. One system drops a file in a folder that is monitored by another system, which imports the data in the file.
- Middleware: When two systems are not capable of “speaking the same language,” a system called “middleware” translates the data format from one to the other. Although this type of integrated management system can be expensive and tricky to set up and deploy, it has the flexibility to provide two-way connections among multiple systems.
- Enterprise Services Bus (ESB): This advanced type of middleware does more than translate data among systems: It can implement business logic and enforce security, among other functions. ESB integration platforms are becoming more popular in enterprises with diverse systems and complex on-premise and cloud-based integration needs.
- Web Service: When a system is a web application or has a web server component, other systems can exchange information with it using standard web protocols, such as HTTPS and SOAP.
- Application Programming Interface (API): The preferred integration method these days is a direct, two-way connection between systems using programming commands. Many modern system manufacturers publish APIs that enable developers to establish these connections within their applications.
Integration ERP Solution Pitfalls and How To Avoid Them
Integration projects are not without risks. The integration process can be complex, expensive undertakings that can prove fragile and unreliable if not properly implemented. Here are some common problems with system integrations:
- Introduction of Dependencies: Integrating systems means introducing dependencies that must be considered in future upgrading projects. If you need to modify one system, you might end up modifying several to keep everything connected.
- Perpetuation of Obsolete Systems: Integration of ERP software with a legacy system can be tricky on its own, in particular, if the legacy system is a “home-grown” application whose developers have long since moved on. Furthermore, integration means the legacy system still needs to be supported and maintained. As painful as it might be, it’s often better, in the long run, to migrate away from a legacy system rather than integrate it.
Getting Expert Help for Integrating Your ERP Systems
Above all, ERP integrated solutions are not do-it-yourself projects. The considerations and complexities involved can overwhelm all but the most experienced in-house IT teams.
At Corning Data, we have been implementing enterprise resource planning systems integrations for many years. System integration is a core competency and one of our specialties. With over 400 ERP implementations and counting, Corning Data consultants have wide-ranging experience across industries and the integration project management expertise required to analyze your business situation and recommend the best approach.
Whether you are contemplating an ERP implementation and need advice on what systems to integrate and how to integrate them, or you’ve acquired a business and need to integrate its systems with your existing ERP, contact Corning Data today for a free initial consultation.