March 12, 2024

ERP Integration Methods, Benefits, and Challenges Overview [2024]

Elena Pashkovskaya

Technical copywriter

Technology

ERP System Integration: Best Strategies and Methodology
March 12, 2024

ERP Integration Methods, Benefits, and Challenges Overview [2024]

Elena Pashkovskaya

Technical copywriter

Technology

ERP System Integration: Best Strategies and Methodology

Any activity is meant to be chaotic in a world of disparate data volumes spread across different sources. Do not worry — there is a silver lining called Enterprise Resource Planning (ERP) that can streamline information, documentation, and workflow in the company. See how enterprise resource planning systems integration benefits your business and what to expect from this process. Let's go!

What is ERP integration?

ERP software helps to gather, store, manage, and analyze business-related data. It acts as a central hub, uniting the data scattered in departments, and represents a single source of information available in real-time. ERP software market, valued at a staggering $54.76 billion in 2022, empowers businesses to streamline their operations by effortlessly connecting data and applications across finance, accounting, customer relationship management, and human resources. Driven by rising demand for efficient business management, the global ERP software market is on track to reach $101 billion by 2026, meaning that more and more businesses rely on this solution.

US ERP software market growing trend from 2020 to 2024 and predictions for constant growth for 2025-2030
ERP Software Market in the United States. Source

Moving forward, we'll learn more about ERP integration types, benefits, and best practices to better understand the global demand for this software solution.

ERP integration benefits

Enterprise resource planning systems integration is suitable for businesses of any scale and IT infrastructure level — there is a solution for everyone. It is a great way to connect the data from siloed sources from different departments and gain a complete business picture. For example, in e-commerce, ERP integration helps to automate order-to-fulfillment processes by unifying stock management, CRM, sales and payment info, purchasing, and supply chain data. What are other advantages the ERP integration solution can bring to the table?

Unified data source

ERP integration gives departments and teams access to centralized quality data, thus promoting business process transparency and effectiveness.

As global data volume grows yearly, so does the information volume in every single company. The research shows we expect to see 61% growth globally by 2025. As we cannot expect data to become easier to manage, it is the right time to refine and unify it in a single source.

Graph showing rapid growth of data created, captured and consumed worldwide from 2010 to 2025 (forecasted).
Data Volume Worldwide. Source

Elimination of data silos

Data unification leaves no data locked in particular departments, so employees can access common core data from apps they already use. Why is it essential? The survey discovered that knowledge workers spend on average 11.6 hours per week searching for data they need for work, making them feel disengaged. Luckily, the organizations understand the importance of connectivity across data and teams and take firm steps for its improvement.

Legacy systems upgrade

For some legacy systems, UI upgrades may be complicated and tedious. ERP integration solutions allow the application of modern UI to such systems through integration with the app with modern UI, making it more convenient to use.

Legacy systems modernization itself is a challenging yet rewarding task. Security and efficiency are why companies modernized legacy applications and data in 2023, with nearly half seeking cost reduction, integration, and agility. While regulatory compliance was less common, it still motivated 20% of companies. Clearly, legacy system improvement remains in demand and brings a wide range of benefits for any business.

Faster order fulfillment, update, and inventory maintenance

Consolidated data and real-time updates make e-commerce processes swifter and more efficient. ERP empowers data-driven supply chain optimization, allowing access to real-time insights into inventory, order processing, and production planning. ERP integration fosters collaborative decision-making, enables flexible adaptation to market shifts, and expedites delivery timelines.

Improved payments system

ERP payment systems connect directly with credit card gateways, allowing instant payments and automatic invoice tracking. It saves time and eliminates manual errors, while tokenization technology ensures secure transactions. Linking global payments with the surrounding operations reduces error risks and facilitates the collection of proper payables information.

Processes automation

Well-tuned data workflows remove the need for manual data entry, reducing the possibility of human errors and enhancing employee experience by redirecting their effort to more considerable projects. From customer interactions to sales processes, automation is rapidly transforming the face of the business. Nevertheless, there are some roadblocks on the way towards process automation: 55% of organizations cite data integration woes as the top hurdle to ERP automation, the survey indicates.

Top 5 reasons to modernize legacy systems: increased security, efficiency, cost reduction, better integration with other modern technologies, and increased agility/flexibility.
Reasons to Modernize Legacy Applications. Source

Workflow visualization

ERP systems integration enables the presentation of data in charts, maps, and graphs, which helps to understand complex datasets better and identify patterns and trends. It presents higher transparency for teams, management, and stakeholders, enhances collaboration, and helps to define the priorities better.

Improved communication

Shared information and resources fuel staff ownership, enabling effortless communication of successes and opportunities. ERP acts as a communication hub, eliminating endless emails and calls. It empowers everyone with real-time insights, from ongoing projects to up-to-date sales data and precise inventory levels.

Regulatory compliance

Business visibility and transparency are the main components of regulatory compliance. ERP software integration increases data visibility, traceability, and security, helping meet regulatory requirements.

Benefits of regulatory compliance: enhanced customer trust, improved operational efficiency, competitive advantage, reduced risk of legal penalties.

Faster decision-making

Constantly staying informed about ongoing changes allows you to make better decisions quickly and improve resource allocation for your projects. The single source with information from various departments updated in real-time helps you stay informed about company processes and make the right decisions that will benefit your business.

Improved customer experience

It can provide practical customer support by unifying data and removing bottlenecks in client-related processes. Quality client data helps resolve any emerging issues up to point and without delay.

Enhanced data analysis

Enterprise resource planning integration systems offer analytics tools, allowing the creation of diverse customized reports and dashboards and facilitating data-driven decision-making. ERP analytics offers improved demand management, a better understanding of consumer preferences, up-to-date insights, and amplified growth. Those benefits are reached by data mining, data preparation, statistical and descriptive analysis, reporting, and performance metrics.

As you can see, ERP application integration offers an abundant array of advantages that can improve business processes and increase team communication and customer experience, leading to more coherent and comprehensive management decisions and fruitful results.

There are a lot of benefits of ERP integration, and they can vary from industry to industry. But the core remains untouched: using ERP as a single source of truth for your business.

ERP integrations with other systems

To better understand ERP system integration, let's look closely at the types of applications that can be integrated into a single information system.

ERP system integrates with financial management systems, CRMs, HR systems, manufacturing resource planning software, and supply chain management systems.

E-commerce platform

Connecting e-commerce platforms with ERP solutions makes data available to everyone in the organization who manages the web store. The integration is done through APIs, third-party products, or custom ERP solutions. The advantages of such processes include accurate real-time data accessibility, up-to-date inventory tracking, dynamic pricing, automated financial audits, and shipping.

With ERP integration, you can create a demand-supply link to streamline marketing and sales processes, deliver a better customer experience, and increase the opportunity for conversion.

Business communication platform

ERP integration may speed up the workflow by connecting with communication platforms through instant notifications, which makes the review and approval process smooth and well-timed. By leveraging the powerful potential of this integration, you can empower your teams, streamline communication, and unlock new levels of business efficiency.

Business intelligence

Business intelligence software obtains, analyzes, and reports internal data. ERP system integration with BI applications is essential for companies with ongoing digital transformation, as it helps to discover insights and create new ventures or apply new business practices, transforming raw data into actionable insights and empowering data-driven decision-making. ERP systems can use AI-powered technologies, allowing accurate forecasting and reducing manual data analysis.

HR

ERP system integration for the HR department helps structure and automate payroll, recruitment, job offers, benefits administration, retirement, and offboarding. The HR module also helps to manage these processes, improve the department's efficiency, and gain valuable insights into your workforce by combining HR data with other business data in your ERP.

The additional benefits of ERP and HR systems integration include:

  • Secure data storage and management;
  • Improved time and attendance management;
  • Better employee training and development;
  •  Improved employee satisfaction levels;
  • Simplified payroll and compensation management;
  • Automated reporting.

Including HR applications in ERP systems provides back-office task automation and ensures compliance with labor laws and regulations by streamlining reporting and tracking relevant HR data within the integrated system.

Benefits of HR data integration: improved productivity and efficiency, identification of bad data, finding out trends and causes, forward-looking analysis and planning, and improved candidate and employee experiences.

Project management

ERP integration solutions for project management applications give several benefits: they help determine project costs better, track project progress, trace updates, evaluate project methodology productivity, and collaborate with HR and finance departments. The integration makes the project management process time-saving and efficient, significantly enhancing your organization's ability to plan, execute, and monitor projects.

Customer service

How ERP system integration can improve customer service? Combining customer data from several sources into a unified profile enables personalized service and faster resolution of issues. ERP integration allows you to provide customer service representatives with real-time information on order status, inventory levels, and shipping details, allowing them to set accurate expectations and resolve issues promptly. 

You can also use personalized chats and AI-based natural language chatbots to communicate with customers. From quality complaints and repair requests to billing questions — be sure that your customer service can handle any issue with the help of enterprise resource planning systems integration.

A 2023 survey painted a telling picture: 70% of e-commerce executives yearn to revamp their customer experience entirely, but limitations in budget, time, and expertise hold them back, showing a significant gap between aspirations and reality in online shopping.

EDI ERP integration

EDI-ERP integration connects Electronic Data Interchange (EDI) software with an ERP system. This connection allows for the automated data exchange between trading partners and your internal business processes, streamlining the supply chain and improving efficiency. EDI-ERP integration can streamline business processes and improve overall efficiency.

EAM ERP integration

EAM and ERP integration, similar to EDI and ERP integration, refers to connecting Enterprise Asset Management (EAM) systems with ERP systems. Combining data from both systems improves asset utilization, reduces downtime, and optimizes maintenance schedules. EAM-ERP integration ensures accurate and timely costing of asset-related activities, improving financial visibility and control. It facilitates better budgeting, forecasting, and financial reporting.

This is a partial list of available integrations. You can integrate document storage apps, purchasing software, and other systems. You can also consult professionals to find possible solutions for your business.

ERP integration challenges

Amidst plentiful benefits and opportunities, let's not forget that ERP integration comes with challenges and downfalls. You should get a clear picture of what to expect so as not to be caught by surprise and react accordingly. Forewarned is forearmed!

ERP integration challenges: implementation failure, lengthy implementation process, risk of going over budget, potential disruptions during data migration, risk of internal resistance, legacy system integration complexity.

Cost evaluation

The first and foremost thing that comes to mind when considering ERP integration solutions is the final cost. And that is where things can turn out to be unpredictable. Considering the use of ERP integration services, working with the risks of running over budget is essential. The cost can be evaluated by a professional ERP integration team based on the project's complexity, number of integrations needed, types of integrations, etc., but is subject to changes. Nevertheless, the benefits outweigh the costs. To prevent the unwelcome outcomes, establish honest communication with ERP integration services deliverer about your current IT architecture, expectations and business goals. Choose an experienced and trustworthy vendor and consultant, who will inform you in advance about project scope and costs.

Staff training

While implementing an ERP system unlocks many benefits, navigating its complexities can be daunting. This is where training comes in, equipping your team with the experience and skills to use the system effectively. However, the cost of training, both in terms of time and money, can quickly add up.

Staff training benefits: increased employee productivity, enhanced cost-efficiency, growing time-effectiveness, error risk reduction, improved employee retention.

System customization

The promise of ready-to-use ERP systems is enticing, offering quick deployment and standardized functionalities. However, the allure often fades when real-world project requirements come into play. ERP implementations, in particular, often find themselves entangled in the customization puzzle. It includes unique business processes, integration, and compliance hurdles, making ERP integration more time-consuming yet tailored to the particular business.

Tuning your ERP system to meet your business needs may be easier with the help of seasoned software development specialists. Consider hiring professionals if you are dealing with complex integration that requires expertise.

Security

ERP integration creates a single data hub for all company information, including critical information, so it must be appropriately protected. The more complex your ERP system is, the more it is susceptible to unsecured connections, which may lead to sensitive client and financial data leaks.

Shift towards external solutions

The public cloud ERP market is rising, reaching $73 billion by 2026, a staggering 15% annual growth from $36 billion in 2021. This surge represents a significant opportunity for businesses seeking to modernize their enterprise resource planning systems, shifting from on-premises towards cloud solutions.

ERP integration solutions: on-premise, cloud, hybrid.

Modern integrations imply connecting internal and external systems, such as cloud-based solutions and mobile platforms, with new and constantly updating protocols. As the technologies keep evolving, ensure implementation of up-to-date protocols to be future-oriented. Also ensure your ERP system has proper maintenance and support after its implementation to keep up with time.

Performance issues

Performance issues in ERP software integration can quickly turn their potential into frustration, impacting operational efficiency and user experience. Complex integration architectures involving multiple hops, middleware, or custom code can introduce latency and increase processing overhead, impacting performance. Limited server capacity, network bandwidth, or database resources can struggle to handle data exchange demands, resulting in slow response times and system sluggishness.

Maintenance, update, and support

While selecting the suitable ERP integration method is a critical first step, it's crucial to remember that the journey doesn't end there. Like any infrastructure, your implemented integrations require continued maintenance to keep running smoothly and adapt to changes. Weighing the complexity of your current and future requirements against the development costs, vendor support fees, and potential rework needs for different methods will help you make an informed decision.

Legacy apps integration

Integrating legacy applications into your modern ERP ecosystem can be exhausting. Often designed in isolation, these systems can notoriously resist connecting with other platforms. While middleware solutions exist to bridge the gap, they often come with hefty price tags, customization needs, and manual processes. Upgrading on-premise systems might seem like a solution, but it can also be costly and disruptive. Cloud-based systems may come as a solution.

Data standardization

Each application's diverse data types and formats can create a significant roadblock in integrating ERP systems. Migrating and standardizing this data can be time-consuming, expensive, and disruptive to daily operations. Still, it is essential for successful ERP integration.

Multiple ERPs

Organizations often begin their ERP journey with modules from a single vendor, seeking a streamlined implementation. However, as their needs evolve, they might be drawn to best-of-breed solutions from various vendors. This multi-vendor ERP approach, while promising broader functionality, introduces integration complexities.

Approaches to ERP integration

What are the integration techniques of ERP? Here, we have collected all ERP integration best practices and approaches for data unification. Choose the one that is most appropriate for your company.

ERP integration types: point-to-point integration, iPaaS, enterprise service bus, API integration.

Point-to-point integration

Point-to-point integration is the most straightforward approach, where two systems are directly connected with custom code or pre-built connectors. The strengths of this approach include complete integration control with no third-party software included, increased data accuracy and integrity, concise integration needs addressed, and low-barrier entry. Point-to-point integration is easy to set up and manage initially; its cost is low for simple integrations. 

Negative effects are the lengthy integration process, the amount of manual support needed, no centralized place to monitor integrations, and each integration being conducted separately for each system. Additionally, the approach is not scalable, challenging to maintain as the number of integrations grows. It can become complex and prone to errors.

Point-to-point integration is best suited for businesses with simple IT infrastructure.

API integration

What is API ERP integration? API management leverages open APIs the ERP system provides and other applications to establish connections. You, or a third-party tool, manage the data exchange and transformations. The advantages of such an approach include subscription plans, simple and standardized API management, and plenty of teams ready to provide high-quality support. 

The drawbacks include the following: apps do not offer all necessary integrations, are not preconfigured for event-based architecture, integrations may not fulfill business requirements, and have no end-to-end automation.

The solution best serves companies with no advanced IT infrastructure beginning their digital transformation.

Enterprise service bus (ESB) integration

Enterprise service bus integration is a specific approach to integrating systems, particularly ERPs, that uses a central hub to facilitate communication and data exchange, i.e., apps communicate with one another via a middleware layer. In this enterprise resource planning systems integration, communication between apps goes through connectors and adaptors.

The strengths of such an approach include less dependency on specific apps, high scalability, centralization for managing integrations, and good connecting legacy and on-premises systems. The weaknesses include ill-adaptation for cloud apps, not supporting intelligent automation, having to be manually configured, and requiring technical proficiency/complex maintenance.

This ERP software integration approach suits companies with large and mixed (on-premises and cloud) IT environments.

Integration platform as a service (iPaaS)

Integration platform as a service represents a cloud-based platform that provides tools and services for building, deploying, and managing integrations between applications. It offers pre-built connectors for various applications, including ERPs, databases, and SaaS platforms.

The other iPaaS features include visual drag-and-drop interfaces, data transformation capabilities, and workflow automation features. The pros of such an integration approach include: it gives a centralized view of all integrations, as a rule, complies with data protection requirements, accelerates the workflow, has automated updates, is a scalable, future-proof solution, supports hybrid data models, and allows easy cost forecast because of subscription-based pricing.

The cons include that the solution requires technical knowledge, may be time-consuming and costly, takes longer to achieve ROI, and has limitations for complex data flow.

Overall, this approach fits best for businesses with a cloud-based IT environment.

How to Integrate ERP

So, you've decided that enterprise resource planning integration will significantly improve your company’s efficiency. What is next?

ERP integration steps: preparation, planning, implementation, testing, and maintenance.

Step 1: preparation

ERP integration often clashes with the complexities of actually implementing it. While the promise of streamlining processes and gaining valuable insights is tempting, choosing of the right ERP integration strategy may be daunting. Do not worry: the next steps will clarify the issue.

Before implementing ERP software integration, you should thoroughly evaluate the available resources, systems, and data. Define the solution environment and technical resources you need, and do rough budget calculations.

Step 2: planning

At this step, you should define integration goals, choose what systems/applications must be integrated, and create a plan for exceptions (systems/apps that cannot be integrated for some reason). Determine if the process is time-sensitive, prepare use cases, and inform employees and stakeholders about implementing the ERP integration solution. Finally, choose an experienced ERP integration service provider if you prefer custom ERP integration or a reliable software vendor if you are looking for out-of-box solutions.

Remember non-functional system requirements: define security, scalability, and availability needs.

Some additional words must be said about data preparation: before ERP integration implementation, you should cleanse data, normalize formats, validate data, review access, and eliminate duplicates to integrate information without any flaws.

Step 3: implementation

The actual integration takes place at this step, encompassing coding and deployment. It also involves data migration, business logic incorporation, system credentials API token creation, flow configuration of integration pipes, mapping and modifiers, etc. Further actions entail ERP system configuration and data flow checks.

Step 4: testing

Test the solution to make sure everything works as intended, performing flawlessly. Develop a testing plan, check several system configurations, resolve any issues, and gather approval from relevant stakeholders.

Remember that extensive system testing by the IT team verifies seamless ERP integration and launch readiness.

Step 5: maintenance

You must implement a comprehensive maintenance and update strategy to ensure the ERP system remains current, meets organizational needs, and operates stably, efficiently, and securely. It involves the following actions:

  • Identify and address potential issues through continuous monitoring;
  • Implement regular updates and patches to improve functionality and security;
  • Equip users with the knowledge they need through targeted training;
  • Offer dedicated support to resolve user challenges and optimize workflows;
  • Guarantee a stable, secure, and efficient system for optimal performance.

Stay ahead of potential problems and maximize the value and performance of the ERP system. Suppose you are still concerned about ERP system integration and hesitate to face ERP integration challenges. In that case, you can always use IT consulting services to get the complete picture.

Examples of ERP integration

How exactly can an ERP integration solution be implemented in reality? Take a look at some ERP integration practical applications here.

  • Orders synchronization: the connection between CRM and ERP allows to quickly manage further order processing steps and client engagement, including client onboarding or invoice delivery without a delay.
  • Notifications of decision-makers: if there is the need for quick action, such as purchase order approval, ERP integration with a business communication platform allows the delivery of crucial information directly to the relevant approvers within their familiar communication channels.
  • Refunds simplification: by syncing your ERP and IT Service Management (ITSM) tool, customer requests automatically trigger relevant actions in the background, eliminating manual steps and accelerating processes like refunds or order fulfillment.
  • Seamless editing & sharing of ERP docs without switching apps: you can integrate your ERP with your favorite storage app for instant access and seamless sharing.
  • Invoice processing facilitation and elimination of missed payments: ERP integration with spend management tools creates a seamless workflow where invoices automatically flow from your spend management system to your ERP upon arrival.

As you can see, ERP software integration is helpful in any domain of your business, being especially handy in e-commerce, streamlining order management, and making the workflow smooth and efficient.

NEKLO ERP integration expertise

The NEKLO team is excited to share our experience working with enterprise resource planning integration in the e-commerce domain. Follow your reading and find some inspiring examples of ERP integration services and their outcomes.

Jamiak

For this client, the NEKLO team worked with an e-commerce website. The store ran on Shopify, while the Odoo ERP solution handled inventory, shipping, order tracking, and customer service through its HelpDesk. 

We upgraded Odoo 11 to Odoo 14 and integrated and tuned a newly created set of funnels following the landing-details-checkout structure. For example, a separate funnel was created for each Facebook advertising campaign to evaluate its effectiveness and track profits. 

The integration also enabled order status tracking and sending notifications to the customers. Moreover, NEKLO experts provided seamless ERP integration with payment gateways, including PayPal and Stripe, increasing the store's functionality.

My1stYears

Our productive work with ERP integrations continued with the Magento-based store, which used Odoo as an ERP system. The NEKLO team provided flawless integrations with third-party services and platforms. We also expanded the possibilities of working with the stock, introducing product status and quantity management through Odoo ERP. We also did all the tuning and bug fixing for better integration and advanced performance. 

Conclusion

Enterprise resource planning systems integration offers robust advantages for businesses of any scale and industry while simultaneously being a complex and all-around process. The choice of the right ERP solution depends on your business goals and needs.

If you need help with enterprise resource planning integration, NEKLO can help you evaluate the work volume and resources and find custom-tailored solutions for your business. Our enterprise software development experts are ready to support your integration plans of any scope.