ERP integration is the method of connecting a business's best Enterprise Resource Planning software with its other applications to streamline data sharing across systems and create a single source of truth. Companies can achieve improved internal communications, team collaboration, enhanced data insights, and overall productivity through all the steps of ERP implementation and integration.
However, organizations need various ERP cloud vs ERP integration challenges to timely to identify and successfully overcome them before these benefits can be obtained. In this article, we will discuss how ERP works, the different types and approaches of ERP integration, and its benefits and challenges.
What is ERP and How Does it Work?
ERP works for process improvements and automations to manages the core processes for organizations to optimize their business performance. ERP integration provides a single source of truth as it systemizes data flow between the various business processes and streamlines enterprise-wide operations.
Through proper phases of ERP implementation and integration, multiple functions and domains of the said organization can be linked on a single platform. ERP software can be purchased via a licensing model for on-premise ERP or a cloud subscription.
Organizations experience significant ERP benefits and limitations as data is centralized and redundant tasks are removed, boosting operational visibility and business profitability. Depending on the flexibility of the ERP software, and the nature of the requirements of the business, clients can select and add the features they need to prioritize. ERP systems support industry-specific requirements too. This is done either as a part of their core functionality or via ERP integration with various application extensions.
While ERP integration offers some attractive benefits, organizations cannot ignore its daunting challenges. Therefore, to efficiently meet organizational goals, it is essential to be forewarned about these ERP integration challenges. ERP provides business management with a consolidated view of workflows and enables decisions derived from updated and accurate data.
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What are the Types of ERP Integration?
ERP integration connects the various pre-established ERP projects and services with other management systems, marketing, sales applications, etc. Correct ERP integration enables a centralized database so employees of all departments can seamlessly communicate and access information regarding various business processes. This results in significant improvement in company-wide harmonization of workflows. Some essential types of ERP integration are as follows.
CRM systems record and manage the customers’ contact information. CRM tools use this information to optimize customer interactions and enhance customer service. Organizations gain a competitive edge using this information to obtain valuable insights regarding customers and prospects but should be aware of the important differences between ERP and CRM to make the best decision. However, a CRM-ERP integration is necessary for order management, order fulfillment, shipping, and connecting demand with supply.
eCommerce platforms provide a contactless shopping experience to customers. Customers can browse and purchase from the comfort of their homes. This saves time and money spent on commuting. Using E-commerce platforms, customers can browse online stores, place orders, and make payments. However, without an ERP integration, order fulfillment isn’t possible. An small business ERP integration links the E-commerce site with in-store systems, tracks all incoming orders, monitors stock levels via a further integration with an IMS, and prevents stockouts and backorders.
The Human Resource (HR) department requires a smooth workflow to streamline operations. An HR-ERP integration enables HR systems to handle employee management effectively. Since an ERP can efficiently store and share information, it makes the process of onboarding, training, and documentation seamless.
Project Management-ERP Integration
A project management (PM) system contains data relevant to the core business processes of an enterprise. Businesses can collaborate data from different systems for specific projects through a PM-ERP integration. This helps in saving time, effort, and capital while handling enterprise projects.
What are the 3 Approaches to ERP Integration?
There are three fundamental approaches to ERP integration.
The Big Bang Approach
ERP software is simultaneously deployed for the entire organization. Therefore, the go-live date is the same across all departments, including ERP manufacturing, sales, operations, finance, etc.
This approach requires much planning, as any error can affect all business functions. The upside to it is the overall lower cost and deployment time. However, the deployment risk is high, and changes are irreversible.
The Phased Approach
ERP implementation is planned sequentially for one or more business processes in each phase. This approach takes more time to implement but provides a higher degree of safety and less stress to the implementation team. In the Phased Approach, errors take less time to fix; however, implementation and integration take long.
The Parallel Approach
The Parallel Approach implements a new ERP system while the legacy systems run in parallel. This approach lowers the risks, as the organization can shift to legacy systems in case of critical errors.
What are the Best ERP Integration Benefits?
The daunting ERP integration challenges should not stop you from going ahead and benefiting from its numerous offerings, such as outstanding customer experiences. Some key benefits of ERP integration are:
Easy Data Access
Since ERP integration involves connecting multiple information systems, it facilitates employees accessing real-time data and making better, data-driven decisions.
It connects the organization’s various departments and reduces the need for manual data transmission by creating a centralized data platform.
Maintaining multiple data sources requires huge investments by businesses. As ERP integration combines multiple systems and facilitates a single data source, it is much more cost-effective.
What are the Most Common ERP Integration Challenges?
Specifically, organizations face challenges while integrating various functional ERP modules with other E-business software applications or legacy systems. The most common ERP integration challenges are:
A Shift in Integration
With the introduction of SaaS and mobile applications, businesses need to integrate their ERPs into internal systems and external systems, including cloud-based applications and mobile platforms.
Besides inbound integrations, there is a need to provide outbound data. In some cases, even real-time information is required.
Supporting Multiple ERPs
Scaling businesses need to support data transformation across the growing number of formats, which can be costly.