Your enterprise resource planning (ERP) system is the finance hub of your business.
It’s where purchase orders get created, customer records get maintained, product inventory gets updated, and a whole lot more.
The value your ERP system provides, however, is limited when it works in isolation from the rest of your apps.
When operating on its own, employees are forced to manually enter information from other apps. This leads to an aggressive amount of data entry and app hopping, delays in processing data, costly human errors, and a host of other issues that harm employee productivity and the experience of customers.
To avoid these issues and to get the most out of your ERP software, you’ll need to integrate it with the apps your employees in finance, sales, customer success—among other functions—use.
We’ll explain why that is, and we’ll cover everything else you need to know about integrating your ERP system. This includes the benefits that come from integration, specific ways to connect your ERP software with other apps, and the top items to keep in mind when doing so.
But to get us started, let’s align on a few definitions.
An enterprise resource planning system is a type of software that allows organizations to collect, store, manage, and analyze information and documents related to business activities.
These activities can fall under the following:
There’s countless other ways to use an ERP system, but from these use cases alone you can get a sense of how versatile and powerful the software is. Moreover, this versatility explains why a variety of business functions rely on the platform.
Finally, it’s worth mentioning that ERP systems can be accessed in the cloud, on-premises, or through a hybrid deployment. However, given the demand for cloud-based software, ERP vendors are increasingly moving to the cloud—if they aren’t already built on it.
There are a wide variety of ERP systems, many of which are best suited for specific industries, company sizes, and regions. That said, the most common ERP software solutions include NetSuite, Sage Intaact, SAP S/4HANA Cloud, and Microsoft Dynamics 365.
It’s the process of connecting your ERP system with the other on-premise and cloud applications your business uses. This typically involves using their application programming interfaces (APIs).
Once connected, your ERP system and the other apps can stay in sync, and you can implement workflow automations that work across them (we’ll cover examples of this next).
Here are 5 common business processes that can benefit from ERP integration.
Once an order gets added to your customer relationship management (CRM) platform, it’s imperative that it also gets added to your ERP solution as soon as possible. Otherwise, you risk delaying the rest of the early steps in the client engagement—whether that’s delivering your invoice, onboarding the client, etc.
To prevent any delays from occurring, you can integrate an ERP software like NetSuite with a CRM like Salesforce. From there, you can implement a workflow where any time a new client order gets created in the CRM, it creates a duplicate order in the ERP system in real time.
Note: For any of these examples, you can easily replace Oracle NetSuite with other ERP applications, like SAP ERP or Microsoft Dynamics 365.
To help your team access the resources they need, quickly, you’ll need internal approvals for purchase orders to work seamlessly.
To address this business process, you can connect your ERP with your business communications platform (e.g. Slack) and then build a workflow that works as follows: any time a PO gets submitted for review, the appropriate approvers get notified via a channel in the business comms platform, where they’re asked to take a look at the document. Once they have, they can approve (or reject) it with the click of a button inside the business comms platform.
To expedite invoice processing and ensure that no payment is late—or worse, never made—, you can connect your ERP solution with a spend management tool, like Coupa, and implement a workflow where any time an invoice arrives in the spend management tool, a duplicate invoice gets created in the ERP.
Keeping track of all the documents in your ERP and making changes to any over time can be a hassle.
You can find any item more easily by integrating the platform with a storage app you’re comfortable using, like Box. Once integrated, you can instantly share the documents from the ERP with the storage app, as well as allow for changes made in one platform to sync over to the other automatically.
Providing a best-in-class customer experience involves following through on client requests quickly.
Issuing refunds is no exception. To fast-track this process, you can sync your ERP with an ITSM, like ServiceNow, and automatically initiate the process in the former once the customer-facing employee creates the request in the latter.
Here are just a few of the benefits you can expect after implementing the use cases above, among many others.
Data silos—when information only exists in certain apps—can lead to all kinds of adverse outcomes for you and your colleagues.
An integrated ERP system can effectively prevent and break down data silos. Why? Because once you connect the app with others, employees may be able to access the data they need from it within the apps they’re already using. This applies to a wide array of teams, whether it’s marketing, finance, supply chain, human resources, sales, etc.
In many cases, your legacy system is still valuable, it’s just using an outdated UI. You can hold onto the benefits it offers—while avoiding the clunky UI and the significant costs in replacing it—by integrating it with an application that offers a modern UI, such as one built in a tool like OutSystems.
Without integrating your ERP software with the rest of your apps and allowing the data to flow between them seamlessly, your team would be forced to perform extensive app hopping and data entry. These manual tasks leave your team prone to making costly mistakes, such as filling out a PO incorrectly, issuing the wrong client a refund, etc.
Empowering employees to focus less on tedious, manual work and more on thoughtful, business-critical projects instead, is proven to lift employee engagement.
Higher employee engagement, in turn, is likely to drive a host of benefits for your business, whether that’s higher employee productivity or lower turnover.
By removing internal bottlenecks across client-related processes, your team is more likely to deliver first-class client experiences.
In addition, by keeping all the client data across your apps consistent and updated in real-time, your teams can work together more effectively in supporting clients and in troubleshooting any issues as they arise. For example, an employee in customer success might be struggling to collect the first invoice payment from a client. They can notify a colleague in finance, who can easily verify this, and then extend the client’s payment deadline in the ERP system.
Your ERP tool, in and of itself, offers limited analytics functionality.
To fully understand the information it collects, your team needs to analyze its data alongside the data from other apps in more sophisticated BI and analytics tools.
More specifically, you can follow a data integration approach: your data warehouse adds the data from your ERP, allowing your business analysts to pull data from the former (along with the other data that exists there) and use it in their analytics/BI tools to unearth more nuanced insights.
As online retailers use an ecommerce platform—whether it’s Magento, Shopify, Amazon, etc.—to sell their products, they’ll need their ERP system to work in lockstep with it.
For example, they need the ERP system to update the inventory count of a product every time it’s sold. That way, the count is kept accurate and any products that sell out are displayed as such on the site.
Integrating your ERP system with your ecommerce platform neatly solves this, as once connected, you can instantly update inventory counts across your products whenever sales take place.
Bought into integrating your ERP system with other apps? Now you’ll need to think through how these integrations should work.
Here are some best practices that can guide you:
This involves identifying the apps that should collect and store data from your ERP as well as those that should deliver data to your ERP (there’s often overlap).
Each potential integration can offer up a different answer. When integrating your ERP with your CRM, you likely want many of the data flows to operate in real-time (e.g. creating a sales order in the ERP once it’s created in the CRM). Conversely, other integrations can use data flows that get executed in batches (e.g. creating new rows in Google Sheets for clients that get added to your ERP system)
Many data flows should be flexible, where the actions that get taken depend on different circumstances.
For instance, when a client’s account gets updated in your CRM, you should add logic that updates the customer’s account in your ERP if their profile already exists in the latter; however, if the client’s profile doesn’t already exist in your ERP for whatever reason, you would create the customer in the app before updating their profile.
No integration is immune to issues. You have API outages to contend with, system outages to consider, data that can go missing, and the list goes on.
To effectively manage each of these potential issues, you’ll need to ideate error-handling processes, which can then be applied to the various integrations and data flows you set up.
Finally, once you know how you want your ERP system to interact with other apps, you’re ready to explore your integration options and find the one that can do the best job of carrying out your vision.
To that end, here are some approaches to consider:
1. Point to point integration: the use of custom code to connect two applications
Pros:
Cons:
2. Native integration: when the applications themselves can connect with one another via their APIs
Pros:
Cons:
3. Enterprise service bus (ESB) software: A software that allows you to use an ESB architecture—where apps can communicate and share data with one another via a middle layer (known as the communication bus).
Pros:
Cons:
4. Integration platform as a service (iPaaS): a 3rd-party, cloud-based platform that provides a centralized means of integrating your apps and on-premise systems
Pros:
Cons:
This leads us to a 4th option: an enterprise automation platform.
Using this type of platform, you can address the unique integration challenges of each option above as well as their their common issue of being unable to implement end-to-end automations that work across your apps, data, and teams.
Here’s more on how this type of platform can work:
In case you have more questions on ERP integration, we’ve addressed several below:
The answer largely depends on how you’re implementing the integrations.
If you’re building them in-house, the cost can come in the form of the hourly salaries of developers who build and maintain the integrations multiplied by the number of hours they spend on this effort. And given how in-demand this skillset is and how burdensome the work can become, this approach is likely to cost your organization hundreds of thousands of dollars a year—if not millions of dollars.
If, on the other hand, you’re using a 3rd-party software to build and maintain your ERP integrations, the cost comes down to the software and the time your employees spend on the integrations (via the software) multiplied by their hourly salaries.
Assuming the platform you use offers a low-code/no-code UX, you can dedicate less technically-savvy personnel to your integrations and have them spend fewer hours on building and maintaining them—both of which translates to lower costs for your organization.
Organizations often connect their ERP system with their CRM, ITSM tool, document storage solution, business communications platform, purchasing software, and e-commerce platform.
Common challenges include resource contraints, as only select engineers can build and maintain the integrations; scalability, as there are likely countless integration use cases that can’t be implemented quickly or maintained effectively; and performance issues, as many integration methods, such as exporting and importing files, prevent data from being synced between systems in near real-time.
You can develop a powerful strategy over time by working through the following questions in sequential order (and on a recurring cadence, such as every 6 months):
What are the business goals of the ERP integration?
If it’s, say, to make existing processes more efficient, you might be able to rely on your in-house integration team to implement and maintain the solution. On the other hand, if it’s to innovate a finance or sales-related process, you should probably look to involve the business team (as they likely understand the process and the associated applications the best).
What are your ERP integration use cases?
Answering this question can help you pinpoint the applications you need to connect your ERP system with and the teams that need to get involved.
What are the nonfunctional requirements for your ERP integrations?
In other words, you’ll need to define how you want your ERP integrations to perform when it comes to availability, security, scalability, among other performance measures.
What type of platform should you adopt?
Based on your business goals and your nonfunctional requirements, you’ll likely be able to pinpoint the integration solutions that do the best job of addressing your needs. For example, if security and scalability are key nonfunctional requirements and you’re looking to fundamentally transform a process that involves your ERP system, you should adopt an enterprise automation platform.
