As companies grow, it’s inevitable that they’ll add new business applications to help scale operations and make processes more efficient. Implementing new applications, however, presents challenges, especially when systems don’t speak the same language or share common data. For example, requiring employees to manually re-enter the same data in separate applications wastes precious time, and the process can be riddled with potentially costly errors — from inaccurate reporting that hinders decision-making to possible compliance violations.

Enterprise resource planning (ERP) systems have become an important tool to unify business operations, with many solutions integrating core business functions, including finance, human resources (HR) and manufacturing, into a single, comprehensive system. Still, companies often seek to strengthen the capabilities of their ERP systems by integrating them with applications that offer distinct features, such as business intelligence tools and marketing automation platforms. To avoid re-creating data silos, however, it’s important to have a detailed plan so that new ERP application integrations go smoothly. This article outlines the benefits of building a comprehensive ERP integration strategy, presents steps for implementation and explains how to avoid common pitfalls.

What Is ERP Integration?

ERP integration is the process of connecting an ERP system with other core business applications and data sources to create a powerful, unified system to manage essential operations and processes. While many ERP systems feature integrated components for finance, customer relationship management (CRM), supply chain management (SCM), HR and ecommerce, companies may want to consider further ERP integrations. In some cases, companies may prefer the features of separate applications to the native components offered by their ERP provider, yet still want to integrate those applications with the core ERP system. Companies may also want to extend the capabilities of their ERP systems by integrating them with applications that offer distinct capabilities, such as business intelligence or marketing automation. Basically, the more integrated an ERP system is with other organizational systems, the more powerful it becomes as a centralized hub to automate business processes, reduce data inaccuracies, eliminate data silos and drive better decision-making.

What Is an ERP Integration Strategy?

An ERP integration strategy is a comprehensive plan that details how a company will connect its ERP system with other applications and data sources. Developing an ERP integration strategy involves understanding the specific needs and challenges of the business, mapping out the existing technology landscape and identifying the key areas where integration will add the most value. Just as important, an ERP integration strategy outlines the best method of integration for each unique application, which could range from using custom-built application programming interfaces (APIs) to off-the-shelf middleware. The strategy must also consider data governance and security, ensuring that sensitive information remains protected as it flows among applications.

Effective ERP integration strategies aren’t static; they evolve as businesses grow and technology ecosystems evolve. As companies adopt new applications and business processes change, integration strategies should be revisited and revised to make sure that they continue to meet company needs.

Key Takeaways

  • ERP systems unify multiple core business functions, such as finance, HR and manufacturing, but companies often look to integrate them with other applications to bolster capabilities.
  • If applications aren’t integrated smoothly with an ERP, companies risk creating data silos that can increase errors and threaten efficiency and data security.
  • An ERP integration strategy is a detailed road map that outlines how companies can use technologies, including middleware, APIs and integration platform-as-a-service (iPaaS) tools, to connect ERP systems with other critical applications and data sources.
  • The benefits of ERP integration include fewer data errors and inconsistencies, creation of a real-time view of operations and faster return on investment (ROI) for ERP systems.
  • Best practices for an ERP integration strategy include cleansing data, finding compatible integration technologies, implementing in phases, rigorous testing and maintaining data backups.

ERP Integration Strategy Explained

ERP systems often serve as the backbone of a company’s operations, managing critical processes, such as finance, inventory and HR. However, businesses today use a plethora of other specialized tools and systems, from CRM to SCM and more. An ERP integration strategy ensures that a central ERP system effectively communicates and cooperates with other business applications and data systems. This is crucial for maintaining data consistency, improving operational efficiency and making informed decisions. Without a strategy, businesses risk creating isolated data silos, duplicative efforts and inefficiencies that can hinder growth and competitiveness.

Companies often realize they need an ERP integration strategy when they encounter signs of operational inefficiency, such as data discrepancies between departments, manual data entry errors or challenges in obtaining a unified view of business performance. Other indicators include rapid growth, expansion into new markets or the introduction of new technologies, all of which can strain existing systems and processes. An ERP integration strategy can also become necessary after companies merge or acquire new businesses and need to unify disparate systems and maintain business continuity.

How Does ERP Integration Work?

When a company decides to integrate its ERP system with other applications, it typically has several options. One common approach is to use prebuilt connectors, which are like ready-made bridges linking popular applications. Many ERP providers partner with other application providers to build these connectors for their customers.

If a more tailored integration solution is needed, companies can use technologies, such as APIs, middleware and iPaaS. APIs are like sets of instructions that allow different applications to communicate, requesting and sharing data as needed. Middleware is a translator, helping two systems that speak different “languages” understand each other by converting data into a format both can recognize. iPaaS is a cloud-based platform that connects, manages and governs a wide range of APIs and middleware within a unified interface. Companies might also choose a hybrid approach, using a mix of prebuilt and custom solutions to best meet their needs. When custom work is required, companies often use in-house IT teams or hire external specialists with experience in the specific systems involved.

Systems That Can Be Integrated With ERP

There are many types of ERP systems that offer combinations of integrated modules for core operational capabilities, such as finance, HR and manufacturing. But some companies choose to connect third-party applications to their ERP system to upgrade the system’s core capabilities. The following are the most common applications companies seek to integrate with ERP systems.

  • Customer relationship management (CRM): Many ERP systems include integrated CRM capabilities to manage and analyze customer interactions and data throughout the customer life cycle, but some companies may prefer to use a separate CRM that has more of the features they desire. An integrated CRM enhances efficiency and insight by aligning customer data with financial and operational data, providing a comprehensive view of business performance and customer needs.

  • Supply chain management (SCM): SCM applications oversee the flow of goods and services, from raw material sourcing to production and delivery. Integrating SCM with an ERP system provides a unified view of operations and financial data, enhancing decision-making, improving efficiency and reducing costs. Some ERP systems have pre-integrated SCM capabilities.

  • Human resources management system (HRMS): HRMS systems, which streamline processes and enhance workforce management by overseeing employee data, payroll, recruitment and performance, are also often core components of ERP systems. Integrating HR applications with ERP systems aligns employee information with financial and operational data to improve strategic planning, resource allocation and overall efficiency.

  • Warehouse management system (WMS): Many ERP systems today offer some warehouse management capabilities, but companies often opt for separate systems with enhanced functionality to oversee and optimize the storage, movement and distribution of goods within their warehouses. Integrating a WMS with an ERP system enhances inventory accuracy, streamlines order fulfillment and provides real-time visibility into supply chain operations.

  • Product lifecycle management (PLM): PLM systems manage the stages of a product’s life, from initial concept and design through retirement, enhancing product development and maintenance. Integrating a PLM application with an ERP system feeds detailed product information into broader business processes to improve coordination, reduce time-to-market and align production with demand.

  • Ecommerce platforms: Ecommerce systems manage online sales, including product listings, order processing and customer interactions. Integrating them with an ERP system streamlines operations by synchronizing purchases with inventory and customer data, thereby enhancing efficiency, accuracy and customer satisfaction.

  • Point of sale (POS) systems: POS systems process sales transactions, track inventory and record customer purchases at retail locations. Integrating a POS system with an ERP system melds real-time sales data with inventory management, ensuring accurate financial reporting and efficient supply chain operations.

  • Business intelligence (BI) tools: BI tools analyze large volumes of data to identify trends and patterns that can yield keen insights to drive better decisions. Connecting BI applications with an ERP system’s deep repository of data allows companies to build rich insights into operations and performance to support strategic planning and performance improvement.

  • Project management tools: Companies use project management tools to plan, execute and monitor projects, ensuring that they’re completed on time and within budget. They’re particularly important in services businesses, like law firms and accounting practices. When integrated with an ERP system, they provide a unified view of project costs, resources and progress, which enhances coordination, efficiency and decision-making.

  • Manufacturing execution systems (MES): These tools manage and monitor work-in-process on a factory floor, ensuring effective execution of manufacturing operations. The integration of an MES with an ERP system connects manufacturing data with business planning, inventory and logistics information to improve production efficiency and quality.

  • Document management systems (DMS): DMS applications organize, store and track electronic documents to streamline document retrieval and control. Examples of popular DMS tools include Microsoft SharePoint and Google Drive. Connecting a DMS with an ERP system ensures consistent, easy access to documents within business processes, refining workflow efficiency and compliance.

  • Finance and accounting software: Financial and accounting systems handle critical operations, such as accounts payable, accounts receivable, general ledger and payroll, and are a core component of all ERP systems. Some companies augment these capabilities with additional tools, such as specialized tax software or advanced analytics and reporting tools. Integrated ERP and financial systems form the backbone of efficient operations, guaranteeing that financial data is consistent and readily available across all business functions.

  • E-procurement systems: E-procurement systems streamline the process of purchasing goods and services by automating the procurement cycle from order to payment. The benefits of combining them with ERP systems include increased procurement efficiency, reduced costs and accurate and consistent financial and inventory data across the business.

  • Transportation management systems (TMS): Manufacturers and retailers use TMS tools to manage the physical movement of goods, both inbound and outbound. A unified TMS and ERP system boosts logistics efficiency by aligning the transportation of goods with production, inventory and customer demand. This allows timely deliveries, reduces shipping costs and improves overall supply chain visibility and control.

  • Enterprise asset management (EAM): Companies use EAM applications to manage physical assets, such as buildings, vehicles and machinery, from acquisition to maintenance and disposal. By integrating this software with ERP systems, companies can get a holistic view of asset performance, maintenance costs and operational efficiency, leading to extended asset life, reduced costs and improved ROI.

  • Customer support and ticketing systems: Customer support and ticketing systems manage and track customer inquiries, issues and interactions to improve customer service responsiveness. Connecting them with an ERP system provides a unified view of customer information, purchase history and interaction logs, enabling more personalized and efficient customer service. For example, when a customer contacts support about a defective product, the support representative can immediately view the customer’s purchase history and warranty information from the ERP system within the ticketing interface.

  • Marketing automation platforms: Marketing automation platforms streamline and automate marketing tasks and workflows to increase efficiency and improve the effectiveness of marketing campaigns and strategies. Unified marketing automation and ERP systems align marketing efforts with overall business operations for more targeted, data-driven campaigns and improved ROI.

  • Collaboration and communication tools: Collaboration and communication tools, such as Slack for instant messaging and Zoom for videoconferencing, facilitate real-time interactions and information sharing among team members, regardless of their physical location. Companies integrate these tools with ERP systems to improve workflow and data consistency by providing direct access to relevant data and documents within the communication platform.

  • Internet of Things (IoT) platforms: IoT platforms collect and analyze data from connected devices to deliver insights and remote control over various physical assets and processes. Integrating them with ERP systems enhances real-time data visibility and operational control. For example, sensors in a manufacturing plant can detect a machine performance issue and automatically relay the information to an ERP system, which can then schedule maintenance and adjust production schedules accordingly.

  • Mobile applications: Integrating mobile applications with ERP systems allows for real-time access and updates to business data and processes from anywhere, anytime. For example, a salesperson using a mobile CRM app integrated with an ERP system can instantly access the most up-to-date inventory levels and customer histories during a client visit, enabling them to make accurate commitments and update the sales pipeline on the spot.

Benefits of an ERP Integration Strategy

ERP integration isn’t just about collecting data from separate applications; it can also dramatically improve efficiency and productivity, while increasing data consistency and accuracy. An integrated system also provides greater scalability and spurs growth by delivering keener insights and speeding time to ROI. Successful ERP integrations can provide the following benefits.

infographic erp integration strategy
ERP integrations can dramatically improve efficiency and productivity, while also increasing data consistency and accuracy.
  • Reduction in Manual Data Entry

    When systems operate in isolation, employees often find themselves entering the same data into multiple applications. Not only does this waste valuable time, but it also increases the risk of errors that can ripple through an organization, affecting everything from inventory counts to financial reports. ERP integration mitigates this risk by allowing different systems to communicate directly with each other. For example, when a sale is made, the information from a POS system can automatically update inventory levels in an ERP system, while also adjusting financial records, all without a single keystroke from an employee.

    A reduction in manual data entry also boosts data accuracy and reliability for sharper decision-making. Fewer errors mean fewer costly corrections and less time spent identifying and reconciling discrepancies. It also frees up employees from tedious, repetitive tasks, allowing them to focus on more strategic, value-added activities. As a result, ERP integration doesn’t just streamline processes; it empowers a more strategic, agile workforce that can move quickly and confidently, backed by reliable data.

  • Real-Time Data Sharing

    One of the most important advantages of seamlessly integrated ERP systems is that they create a single, unified database of rich, real-time information to drive insights and decision-making. The ability to share data in real time can have a transformational effect on how companies operate, making every piece of crucial information instantly available across all departments in a consistent way. For example, when a customer places an order, the sales team immediately sees the effect on inventory levels, finance quickly processes the invoice and the warehouse simultaneously prepares the item for shipment.

    Sharing real-time data ensures that every decision, from the front line to the executive suite, is based on the most current and accurate information. It enables rapid response to market changes, customer needs and supply chain disruptions, keeping a company agile and proactive. Data sharing also fosters a more collaborative environment in which teams can coordinate effectively and understand the immediate impact of their actions on other parts of the business. The result is a more connected, aware and responsive business that leverages data to drive efficiency, improve customer service and support strategic decision-making.

  • Fewer Data Redundancies

    ERP integrations excel in streamlining information flow, significantly reducing redundancies. When systems communicate effectively, the same piece of data doesn’t need to be stored in multiple places. For example, customer details entered in a CRM system are instantly accessible within the ERP system for billing or customer service purposes, eliminating the need for multiple entries and the discrepancies they often cause.

    Reducing data redundancies also improves the reliability of the data companies use to make critical decisions. By reducing data redundancies, ERP integrations save time and improve the integrity and responsiveness of a business’s entire information ecosystem. Fewer redundancies also mean less time spent verifying and reconciling information, leading to faster decision-making and a more agile response to market opportunities and challenges.

  • Scalability

    As businesses expand, their operations invariably become more complex. With an integrated ERP system, companies can add new modules or functionalities as they grow, enabling the system to evolve in lockstep with the business. For example, a small retailer initially using an ERP system for inventory and sales might integrate ecommerce or customer support modules as it expands its online presence, ensuring seamless operations across all new channels.

    The ability to scale using ERP integrations helps maintain efficiency and control as business complexity increases. As more employees, departments and locations come into play, a unified ERP system lets everyone use the same real-time data, maintaining consistency and coordination across the expanding enterprise. An integrated ERP system also streamlines the onboarding of new staff by providing a centralized platform for training and access to information, allowing new employees to quickly understand and engage with the company’s operations and policies. Additionally, as a company grows and introduces new processes or product lines, an ERP system can easily incorporate these changes so that all departments and functions are aligned and updated.

  • Holistic View of Customers

    By integrating various systems, such as CRM, sales and customer support, with an ERP system, companies can build a complete view of each customer. For instance, a sales team can see a customer’s purchase history, payment records and interaction history, all within the same system.

    Integrated systems allow companies to understand customer behaviors, preferences and needs more deeply, which, in turn, enables personalized marketing, more targeted sales approaches and more effective customer service. If a customer frequently purchases a particular product, for example, a company can proactively offer them a related accessory or a loyalty discount, strengthening the customer relationship and potentially increasing sales. A holistic view fosters customer loyalty and satisfaction through interactions that are informed and relevant. It also helps identify opportunities for up-selling and cross-selling, and enables quicker, more effective responses to customer inquiries or issues.

  • Data Consistency

    When systems like CRM, SCM and finance all feed into and draw from a central ERP data repository, they share a unified set of clean, normalized data. For instance, when a sales order is processed, that information isn’t just confined to the sales department. The integrated ERP system updates inventory levels, financial records and customer details across all related modules simultaneously, allowing every department to work with the same up-to-date information.

    This consistency is vital for eliminating discrepancies that can lead to errors, misunderstandings and misinformed decisions. For example, finance teams can trust the accuracy of the sales figures they’re using for reporting and forecasting because they know the data is synchronized across all departments. An ERP integration strategy leads to decisions that are made based on a true and complete picture of business operations, generating more effective collaboration, better customer service and a stronger competitive position in the market.

  • Vulnerability Management

    ERP integrations play a crucial role in addressing various vulnerabilities within a company, ranging from operational inefficiencies to security risks. By creating a unified system where data flows seamlessly among applications, ERP integrations eliminate the gaps and overlaps that often become the breeding ground for errors and miscommunications. For example, when financial data from sales is automatically synchronized with an inventory management system, it reduces the risk of overselling or stock shortages that can significantly dampen customer satisfaction and decrease revenue.

    A well-integrated ERP system also improves data security. With a single, cohesive system, companies can uniformly apply security protocols and control and monitor system access. This is especially important when dealing with sensitive financial and personal customer data. For example, if a security threat is detected in one part of the system, the integrated nature of an ERP system allows for a quick and coordinated response, minimizing potential damage.

  • Predictable Outcomes

    A sound ERP integration strategy ensures that different business systems operate in unison, creating a smooth and standardized flow of information that’s crucial for producing predictable results. When a manufacturing firm integrates its production planning with real-time inventory data, for instance, it can accurately schedule production runs, identify potential shortages and adjust operations accordingly. This predictable approach reduces the risk of unexpected production halts or delays, resulting in a steady supply that meets customer demand.

    Producing predictable outcomes also impacts credibility and the bottom line. Consistency in product delivery, service quality and customer interaction builds brand trust and reliability, encouraging customer loyalty and repeat business. Predictability also allows for better strategic planning and resource allocation. When outcomes are consistent, companies can plan for growth and investment with greater confidence, knowing their integrated systems provide a stable foundation for their operations.

  • Faster ROI

    ERP integrations eliminate inefficiencies, reduce manual efforts and enhance decision-making, all of which contribute to a faster realization of benefits and cost savings. A company that integrates its ecommerce platform with its ERP system, for example, can automate order processing, inventory updates and financial entries, significantly reducing the time and labor involved in managing online sales. This not only cuts costs but also improves customer satisfaction, leading to more sales and quicker growth.

    A faster path to ROI also frees up capital sooner for reinvestment, accelerates growth and provides tangible evidence of the value of investments, which is crucial for stakeholder confidence. The ability to achieve and demonstrate quick wins is also vital for maintaining competitive edge and adaptability.

Risks of Not Having a Clear ERP Integration Strategy

As companies grow and add more applications to their technology stacks, the risk of having those apps speak completely different languages becomes clear: an ever-increasing maze of data silos that increase errors and threaten efficiency and security. Without a clear ERP integration strategy, companies can expect to experience the following issues.

  • Data Silos

    In the absence of a clear ERP integration strategy, companies risk trapping data within certain departments or systems, making that data inaccessible to other parts of the business that might need it. Imagine a scenario where the sales team uses one system to track customer interactions and sales, while the finance department uses another to manage invoices and payments. Without integration, the finance team might not have real-time access to sales data, resulting in delayed invoicing and potential cash flow issues.

    Data silos also breed inefficiencies because employees waste time manually transferring data among systems, a process prone to errors and delays. Silos also obstruct a unified view of company operations, hindering informed decision-making and strategic planning. Furthermore, data silos can result in a lack of accountability and transparency because it’s difficult to track the source and accuracy of information. In regulated industries, this can lead to compliance issues, with serious legal and financial repercussions.

  • Increased Errors

    When systems operate in isolation, data is often transferred manually from one system to another. Each manual entry is an opportunity for a mistake — a mistyped number, a duplicated entry or an outdated piece of information that slips through, leading to incorrect invoices, inventory discrepancies and misinformed decisions. Financial inaccuracies can cause budget overruns, and incorrect product orders can result in excess or insufficient inventory. Customer service can also suffer if employees are working with incorrect information. And in industries where compliance and reporting are crucial, errors due to a lack of integration can prompt regulatory penalties that can damage a company’s reputation.

    In addition, any time spent identifying and correcting mistakes is time not spent on strategic activities that could drive the business forward. In a competitive market, this inefficiency is a significant risk, potentially ballooning into lost opportunities and diminished customer trust.

  • Operational Inefficiencies

    A lack of ERP integration creates significant bottlenecks that stymie the pursuit of streamlined and effective operations. Imagine a warehouse where stock levels aren’t automatically updated in the ERP system after every sale or receipt of goods. Employees must count inventory manually and update records, a time-consuming process prone to errors. This not only slows down the operation, but it also causes delays in order fulfillment, inaccuracies in stock levels and, potentially, lost sales if customers can’t get what they need, when they need it.

    These operational inefficiencies can also create missed opportunities if employees get too caught up in manual tasks to respond to market changes quickly or capitalize on new trends. This can result in higher operational costs, because more resources are required to manage and rectify inefficiencies. And, in a landscape where customers demand speed and superior service, delays and errors can damage a company’s reputation and cause customers to take their business elsewhere.

  • Security Vulnerabilities

    In an environment where data breaches can be both costly and reputationally damaging, a lack of ERP integration can significantly heighten security vulnerabilities. Disparate systems operate with their own security protocols, which can produce inconsistencies and gaps that cyberattackers can exploit. This situation increases the exposure of data to potential breaches and makes it more challenging to monitor and respond to threats across multiple platforms.

    In addition, when systems are isolated, companies may not be able to uniformly implement updates and patches to fix security vulnerabilities, leaving certain areas exposed. The lack of a unified view of an attack surface also means that detecting suspicious activities becomes more difficult because anomalies might not be apparent when data is scattered across different systems. The risks associated with these security vulnerabilities are profound, including data loss, financial theft, legal consequences and a tarnished reputation that can significantly damage customer trust and deter business prospects.

  • Reduced Competitiveness

    Disconnected systems restrict the flow of information across an organization, leading to slower response times and reduced agility. For example, if a customer service platform isn’t integrated with an inventory system, representatives might not have real-time access to stock levels, resulting in delayed or inaccurate responses to customer inquiries. This can contribute to missed sales opportunities and a tarnished reputation, as customers turn to competitors that can provide quicker and more accurate customer service.

    Isolated systems also make it difficult to harness the full power of data for strategic decision-making. Insights that could inform on market trends, customer preferences and operational improvements remain locked away in separate systems, preventing a business from anticipating and adapting to changes in the market.

  • System Incompatibilities

    When different systems can’t communicate effectively, the outcome is costly data mismatches and process discrepancies. For instance, a sales team might close deals and update the CRM system, but if data doesn’t sync with the inventory system, it could result in selling products that aren’t in stock, leading to customer dissatisfaction and operational chaos.

    System incompatibilities can also prompt significant operational disruptions because employees must manually reconcile data among systems, a time-consuming and error-prone process. This slows down operations and increases the likelihood of mistakes, which can have financial and reputational repercussions. In addition, incompatibilities can hinder a company’s ability to scale and adapt to new technologies or market changes, because adding or upgrading systems becomes a complex and risky endeavor, with the potential for causing further integration issues and downtime.

  • Poor User Adoption

    When disjointed systems don’t communicate seamlessly, users are often forced to navigate multiple interfaces, re-enter data and manually bridge the gaps among systems. For example, an employee might need to extract data from an inventory system and have to manually enter it into a sales system to process an order, a tedious and error-prone task that diminishes the user experience and the employee’s trust in the system’s efficiency.

    If employees are reluctant or slow to use an ERP system due to its complexity and inefficiency, a company fails to realize the full potential of its investment. Productivity can plummet as employees spend more time wrestling with the system than performing their core duties. In addition, unwillingness to engage with an ERP system can lead to underreporting, data inaccuracies and a general lack of insight into business operations, any of which can severely detract from decision-making and strategic planning.

  • Loss of Data Integrity

    Data integrity is about maintaining the trust and reliability of the entire information system upon which a company operates. A lack of ERP integration undermines this trust, turning data into a liability rather than an asset. When systems operate independently without a streamlined flow of information, discrepancies can easily arise. Consider a situation where sales data is recorded in a CRM system but doesn’t automatically update in an ERP system. Over time, the sales team and the finance team might have vastly different figures that end up producing incorrect financial reporting, misguided decision-making and potential conflicts within the organization.

    Inaccurate data can also lead to poor strategic decisions, operational mistakes and financial errors, which can have serious consequences for a company’s performance and reputation. In addition, in industries where regulatory compliance is critical, data discrepancies can result in legal issues, fines and a loss of trust among customers and partners.

6 Steps in Crafting an ERP Integration Strategy

Connecting critical business systems is a delicate process that has the potential to create significant disruptions if not carefully planned and executed. The following six steps can guide companies through a successful ERP integration journey.

  1. Assessment and Planning

    The initial step in crafting an ERP integration strategy is meticulous assessment and planning. Businesses must first identify what they hope to achieve with ERP integration, whether it’s to streamline operations, improve data accuracy or enhance customer satisfaction. Understanding these goals enables the integration to deliver tangible value that is aligned with a company’s strategic direction.

    Next, a thorough examination of the existing IT infrastructure is vital and should include cataloging current applications, databases and systems in use and understanding how they interact — or fail to. It’s important to determine whether these systems are ready for integration or if upgrades or replacements are necessary. A gap analysis can then pinpoint discrepancies between the current state of operations and the desired future state post-integration. This analysis includes identifying manual processes that can be automated, data that should be synchronized and workflows that can be optimized.

  2. Choosing the Right Integration Method

    Choosing the right integration method is a pivotal step in crafting an ERP integration strategy because it aligns specific needs with the most effective technology. Selecting the right method depends on several factors, including the existing IT infrastructure, the complexity of the integration needed, scalability and a company’s long-term technology road map.

    Companies have several options, depending on their individual technology resources. Middleware allows for robust communication and data exchange without altering the systems themselves. API-based integrations, on the other hand, use well-defined protocols to allow different software components to interact with the ERP, providing a more streamlined and often faster way to synchronize data. iPaaS allows companies to connect applications deployed in various environments, including on premises and in the cloud. Enterprise service bus (ESB) is another approach that can orchestrate complex interactions and processes among connected applications, allowing data to be transformed and routed correctly. Finally, point-to-point integration is often viewed as the simplest method, since it creates direct links between systems, but as the number of integrations grow, it can become unwieldy and difficult to maintain.

  3. Design and Development

    In the design and development phase, ERP integration strategy begins to take shape with actionable solutions. It’s about crafting a strategy that not only fits within the technical landscape of the organization, but also aligns with its strategic vision and operational rhythm. Data mapping and transformation are crucial in this phase, as they outline how data from different sources will be translated and structured to fit the standardized format of the ERP system. This allows information from a CRM or an ecommerce platform, for example, to be accurately reflected in the ERP system, thus maintaining the integrity and usability of the data.

    In parallel, companies should address workflow and business process alignment, tailoring the ERP system’s functionality to the company’s specific operational processes. Each business process must be reflected in the ERP system in a way that enhances efficiency and maintains or improves workflow continuity.

  4. Testing and Validation

    The testing and validation phase of ERP integration verifies that every element of the system works as intended, both individually and as part of the whole. Unit tests are conducted first, with each component or module examined in isolation to confirm it functions correctly. After unit tests are completed, integration tests evaluate how well the different applications and systems work together. This process can reveal data flow issues between systems that unit tests may not detect. Finally, user acceptance testing (UAT) is performed. This involves real users testing the system in a controlled environment to validate the integration from the user’s perspective. UAT is crucial for identifying any discrepancies between user expectations and system performance.

    Each testing phase is instrumental in identifying issues that, if left unresolved, could lead to failures in the live environment. The risks of skipping these steps are significant; they can result in business disruptions, data inaccuracies and lost revenue.

  5. Implementation

    During implementation, companies often choose between a phased or a big bang approach. The phased approach is like carefully turning on the lights room by room, making sure that each integration works as expected before moving to the next. On the other hand, the big bang approach is like switching on the power for the entire building all at once, which can be efficient but carries significant risk if something goes wrong.

    Change management is also an essential facet of the implementation process. It involves helping employees transition to the new system, ensuring that they’re trained and ready to handle new workflows and processes. Companies should also have backup systems in place to secure critical business data before the switch. In addition, it’s wise to schedule the implementation during off-peak hours to mitigate the impact on operations. Stakeholders should be informed and temporary workarounds prepared to support business continuity. Finally, it’s important to develop a contingency plan that outlines steps that address possible failures or bugs during the transition, to minimize any disruption to business processes.

  6. Maintenance and Support

    The final stage in the integration process is checking that the ERP system continues to function smoothly after implementation and adapts to changing business needs. In this stage, regular updates are made to the ERP system, including new features, enhancements and security patches. Continuous monitoring is necessary to quickly identify and address performance issues, bugs or inefficiencies, minimizing downtime and disruption.

    A robust support structure is essential for resolving issues as they arise. This includes having a dedicated team ready to tackle integration challenges and provide assistance so that employees can use the ERP system to its full potential. These support mechanisms are crucial because they not only solve immediate problems, but also collect feedback that can inform future improvements to the system.

8 ERP Integration Best Practices

Even with best-laid plans for ERP integration, unexpected surprises during the process often emerge. The following eight best practices can minimize the chances of unforeseen issues arising.

  1. Cleanse data before integration to ensure accuracy.

    It’s pivotal before an ERP integration to ensure that data is accurate, complete and formatted consistently. Dirty data can lead to flawed decision-making, inefficiencies and limited user adoption. If employees don’t trust the data, they’ll be less likely to rely on the ERP system, undermining its value.

    Cleansing data begins with identifying and correcting errors, such as duplicates, inconsistencies and outdated information, across all datasets that will be integrated with the ERP system. The process also includes standardizing data formats to align with the system’s requirements, as well as validating the accuracy of the data to be sure it truly reflects the business’s operations.

  2. Consider a phased rollout.

    A phased rollout breaks down the integration implementation into manageable stages, which allows for careful assessment and adjustment at each phase to mitigate risk. A phased rollout differs from a big bang approach, where all integrated components are launched simultaneously. The big bang approach can be faster, but it’s also prone to significant disruptions if challenges arise.

    A phased rollout often begins with prioritizing business functions that will rely most heavily on the ERP system, such as finance or inventory management. Additional integrated modules can be introduced carefully to establish stability before progressing. This step also allows for focused training and support to help staff adapt to new processes without the pressure of a complete system overhaul. It also provides an opportunity to gather feedback and refine the system so it aligns well with user needs and business objectives.

  3. Conduct comprehensive testing.

    Comprehensive testing before ERP integration ensures that the system functions correctly, meets user needs and supports business processes effectively. It uncovers potential issues that can disrupt operations, affect data integrity and lead to costly downtime.

    Comprehensive testing requires detailed test plans that cover all aspects of the ERP system’s functionality and outline what will be tested and how. The first step in the process is often unit testing, where individual components of the ERP system are tested in isolation to see whether they perform correctly. Next, integration testing checks that different applications and systems work together seamlessly to share data and processes without error. Finally, the users get involved; UAT involves end users testing the system in a controlled environment to validate the integration from the user’s perspective and confirm that it meets their needs and expectations. Companies should prepare test data that reflects real-world use and involves users who understand business processes and can provide insightful feedback.

  4. Ensure security protocols are in place to protect sensitive data.

    With vast amounts of critical and confidential data flowing through an ERP system, any security breach can lead to financial losses, legal ramifications and irreparable damage to a company’s reputation. To avoid those outcomes, companies should conduct a thorough risk assessment to identify potential vulnerabilities within their systems and data management processes. This involves understanding where sensitive data resides, how it’s used and who has access to it. Based on this assessment, companies can implement appropriate security measures, such as encryption, access controls and intrusion detection systems, to protect against unauthorized access and data breaches.

    Regular security audits and updates are also important if security measures are to remain effective against evolving threats. In addition, companies should provide training to employees about data security best practices and the importance of maintaining these standards.

  5. Provide adequate training to end users.

    No matter how sophisticated or well-integrated an ERP system is, its success depends on how effectively employees use it, making training critical in any ERP integration. Building an end-user training program starts with assessing the specific needs and roles of different user groups in order to address each unit’s specific needs. For example, sales staff might need to use different features than those preferred by the inventory management team.

    Companies should also use a variety of training methods to cater to different learning styles, from hands-on workshops and live demonstrations to instructional manuals and online tutorials. Ongoing support and refresher training can address any subsequent questions or updates to the system. Success relies on developing a culture of continuous learning and improvement, where users feel supported and empowered to master the ERP system.

  6. Invest in compatible middleware or integration platforms.

    The compatibility of integration technology is essential in an ERP integration strategy because it allows data to flow freely and accurately between the ERP system and other business applications. To find compatible middleware or integration platforms, companies should thoroughly assess their current and future IT infrastructure needs. This includes understanding the specific requirements of their ERP system and how it needs to interact with other software applications.

    Next, companies should research and evaluate different integration technology options, considering factors like functionality, scalability, vendor support and, importantly, compatibility with existing systems. It’s also wise to seek out demonstrations and trials to see firsthand how well the middleware and integration platforms connect with systems.

  7. Ensure regular data backups.

    In the event of system failures, data corruption or other unforeseen issues during ERP integration, having a recent backup of data means businesses can restore operations quickly, minimizing downtime and preventing loss of critical information.

    Companies should establish a backup schedule that reflects the frequency and volume of data changes. This might mean daily backups for high-transaction areas and less frequent backups for more stable datasets. In addition, companies should choose a reliable backup solution that suits the size and complexity of the business. This could be cloud-based services offering scalability and accessibility, or on-premises solutions for greater control. It’s also essential to regularly test the recovery process from these backups to make sure that they’re functioning correctly and that data can be restored effectively. Finally, companies should have clear documentation and protocols that outline the backup and recovery processes to ensure that employees understand their roles and responsibilities in maintaining and protecting data integrity.

  8. Maintain a central repository for documentation, tools and scripts.

    A central repository for documentation, tools and scripts acts as the single source of truth for the entire integration project, giving all stakeholders access to the latest resources needed for a successful integration. This reduces the risk of miscommunication and errors that can arise from using outdated or incorrect documents. It also means that everyone will be using the same versions and standards, which is crucial for maintaining the integrity and reliability of the integration process.

    It’s important to select a platform for the repository that’s accessible, secure and capable of handling specific needs, whether it’s a cloud-based system, an intranet or a specialized documentation tool. Companies should also establish clear guidelines for how documents are created, stored and updated to ensure consistency and ease of use. Regular reviews and updates will keep the repository current and relevant. Access control is also crucial to make sure that sensitive information is protected and only available to authorized personnel.

Connect All Your Business Systems With NetSuite

NetSuite offers a comprehensive solution for companies looking to streamline ERP integration. As a cloud-based platform, NetSuite provides a flexible, scalable and unified system that seamlessly adapts with growing businesses.

NetSuite ERP is a robust system that includes seamlessly integrated modules for all core operations, from financials and CRM to supply chain and inventory management. For companies looking to integrate NetSuite products with third-party applications, NetSuite’s SuiteCloud platform simplifies customizations and integrations, so businesses can tailor their ERP systems to their specific needs without the heavy lifting typically associated with on-premises systems. NetSuite SuiteTalk provides web services that enable seamless integration, allowing companies to maintain their preferred tools while leveraging NetSuite’s capabilities. Customers can also leverage NetSuite’s SuiteApp ecosystem of more than 600 prebuilt integrations with third-party software providers.

If each application a company uses is like a person speaking a different language, then ERP integration is the interpreter that helps everyone understand each other. It ensures that every part of the organization is communicating effectively and working toward a common goal. Ultimately, successful ERP integration isn’t just about connecting systems; it’s about fostering a more collaborative, informed and agile business environment.

ERP Integration FAQs

What is the ERP integration approach? Enterprise resource planning (ERP) integration involves connecting an ERP system with other business applications and data sources to create a unified, efficient and comprehensive system. It aims to streamline business processes, improve data accuracy and enhance decision-making across various functions, including finance, supply chain management, customer relationship management and more. It typically involves using middleware, APIs or custom-built connectors to ensure seamless communication among systems.

What is an example of ERP integration?

An example of enterprise resource planning (ERP) integration is connecting an ERP system with a customer relationship management (CRM) system. As a result, when a sales team updates customer engagement data in the CRM system, it automatically gets reflected in the ERP system, updating sales orders, inventory levels and financial records. This allows all departments to have consistent, real-time information, which boosts efficiency, enhances customer service and provides accurate financial reporting. It also eliminates manual data entry and reduces errors.

How do you integrate two ERP systems?

To integrate two enterprise resource planning (ERP) systems, start by defining the data and processes that need to be shared or synchronized between them. Middleware, application programming interfaces (APIs) or an integration platform as a service (iPaaS) can be used to establish a secure and reliable connection for real-time or scheduled data exchange. Use thorough testing to ensure data accuracy and seamless functionality. In addition, continuously monitor and support the systems to adapt to any system updates or changing business requirements.

What are the levels of ERP integration?

There are typically four levels of enterprise resource planning (ERP) integration:

  1. Data integration shares data among systems.

  2. Application integration involves linking software applications to operate cohesively.

  3. Process integration synchronizes business processes across different systems and departments.

  4. Enterprise integration creates a fully connected environment across an organization’s entire IT landscape, including ERP, customer relationship management, supply chain management and other systems, to streamline operations and strategy.