ERP System Integration: Types, Benefits & Challenges

What Is an ERP Integration?

ERP integration stands for Enterprise Resource Planning integration which refers to connecting different parts of a company's ERP system together. ERP system Integration helps businesses to manage their operations, improved efficiency and streamlined processes. By Integrating ERP systems with other software businesses can use various modules within the ERP systems. This ERP integration requires the use of different ERP integration tools and platforms such as middleware software, e-commerce platforms, Integration Platform as a Service (iPaaS) and Application Programming Interfaces (APIs).

ERP Integration Meaning

ERP integration full form is Enterprise resource planning (ERP)  integration which is used as the integrated management of main business processes, often in real-time and mediated by software and technology.

There are different types of ERP software integration namely:

• Cloud Integration such as CRM, e-commerce platforms, business intelligence tools, etc.
• On-Premises Integration refers to connecting with other software such as Tally integration or other software solutions.
• Third-Party Application Integration such as HR management, Customer support, etc.
• ERP integration service providers like ERP software vendors, system integrators and consulting firms offer ERP integration services to assist businesses in integrating their ERP systems with other applications or modules.

What Are the Common Methods for ERP System Integration?

There are different methods to integrate an ERP system with other applications or modules. For an e-commerce business, integrating ERP systems is tantamount to automating the order-to-fulfilment process. Here are some standard methods are as follows.

• Customs Integrations – This method is used in building a custom integration between an ERP system and other software or applications like MastersIndia’s OCR Software & APIs or AP Automation Software. The Programmer must match the code of the ERP system with the API code of the software or application they want to integrate.
• Vendor-built/ Native Integrations – Few applications have a pre-built integration feature that allows you to connect directly with the ERP systems. These kinds of integrations don’t need any additional costs of integration.
• Integration Platform as a Service (iPaaS) – It is a cloud-based solution that enables businesses to connect with cloud-based applications without the need for any installation or managing any hardware.

These kinds of integrations can help businesses to fulfil orders faster and improve productivity.

Types of ERP Integration

The type of ERP integration framework a business should choose is dependent on the IT resources of the business and its specific business needs. These types of ERP Integration are as follows.

1. E-commerce Integration – It involves connecting your e-commerce system with a Cloud-based ERP solution. This will allow data to businesses like the number of leads, customers’ orders, shipping times and customer support across all the departments within the organization. There are different ways to connect ERP with the e-commerce platform. One is by using an e-commerce solution's API and another option is by using a third-party solution which may require some additional cost.
2. Customer Relationship Management (CRM) Integration – CRM systems play an important role in managing leads and customers in e-commerce businesses. By using CRM systems businesses can track customer data and purchases which will help in providing valuable insights to the company. Integrating ERP and CRM systems allows a comprehensive view of customers and better interaction with them.
3. Business Intelligence (BI) Software Integration – BI software helps in retrieving, analyzing and reporting the data flows within the organization. Integrating a third-party BI system can help in enabling easy access to insights for authorized personnel.
4. Human Resource (HR) Module Integration – The HR module helps in managing and automating HR processes. Which typically includes payroll, recruitment, pieces of training and performance evaluation of employees. It provides additional features like automated reporting, performance reviews and workplace surveys to enhance HR functions.
5. Project Management Integration – It allows businesses to track updates, process project costs and collaborate with HR and payroll departments. Project Management Integration allows for promoting ownership across the department within an organization which can help in addressing any project issues.

By choosing the right ERP integration, businesses can optimize their operations, improve data management and enhance overall productivity.

How to Integrate an ERP System With Existing Software?

To integrate an ERP System with the existing software or other application, you need to follow the following steps.

1. Configure the API token of your ERP system and the other software you want to integrate.
2. Create flows that define the interactions between the ERP system and your existing software. These flows determine how the data will be transferred and how CRUD (Create, Read, Update, Delete) operations will be performed.
3. Establish a pipe connection between the connected systems to ensure a seamless connection.
4. Customize the integration by mapping data fields between systems and adding modifiers.
5. Set up sync schedule and frequency for data updates to ensure that the ERP system and other applications automatically send fresh data to each other without any delays.

What Are the ERP Integration Examples?

The following are a few examples of various ERP software brands.

• Oracle ERP,
• SAP ERP,
• NetSuite (Oracle),
• Microsoft Dynamics 365,
• Workday,
• Sage Intacct,
• Infor, and
• Kinetic (previously Epicor ERP).

ERP systems are made to accommodate the requirements of a range of businesses, including small, medium-sized, and large enterprises. Because of their scalability, they enable businesses to develop and grow while retaining the same ERP system. ERP software can be set up in a variety of ways, including in the cloud, on-premises (installed on business servers), or as a hybrid of both. Businesses can select the deployment strategy that best fits their needs and infrastructure.

Benefits of ERP Integration

ERP integration not only automates business processes and reduces the manual workload of data entry but also minimizes the occurrence of human errors.
By now, you should have a comprehensive understanding of ERP Integration benefits and drawbacks, its significance, and the various types that can benefit your business.

• Streamlined Business Processes

Achieving this seamless integration requires connecting your ERP with other business applications. Otherwise, you would have to waste valuable time manually entering the data into the ERP system. By integrating your ERP system, you can streamline business processes and workflows across different departments within your organization.

• Centralized and Accurate Data

Integrating ERP systems with existing software ensures that data from various sources, such as e-commerce and CRM remains consistently updated within the ERP software. This integration allows employees from all departments to access their business data. The accounts team no longer needs to rely on the marketing and sales departments for revenue details.

• Improved Operational Accuracy

With teams working with accurate data, the overall accuracy of the information within the ERP software significantly improves. Without ERP integration, the operations team would be responsible for manually entering customer orders from the e-commerce platform, which increases the risk of errors. Such errors could lead to incorrect product deliveries or sales personnel approaching leads with inaccurate requirements.

• Enhanced Time Efficiency

By eliminating the laborious task of manual data entry into the ERP system, you can free up valuable time that can be dedicated to other essential business operations. This time can be invested in other important activities like implementing new features, expanding your business, optimizing processes, and more.

• Streamlined Workflows

Integrating your ERP system with business tools like project management software allows for the centralization of work-related data. This means that everyone in the company can easily see what others are working on and you can prioritize employee tasks and schedule processes accordingly.

• Accelerated Sales Conversions

ERP integration leads to accelerated sales conversions, meaning more website visitors are successfully converted into leads, and more leads are converted into customers within shorter time frames compared to before integrating your ERP application. This streamlined process allows for the effective processing of leads in less time, providing the dual advantage of increased customer satisfaction and business revenue.

Common Challenges and Risks in ERP Integration

Integrating an enterprise resource planning (ERP) system with other business systems can be a complex task. Understanding and addressing the challenges of ERP integration is crucial for businesses aiming to maximize the benefits of an ERP implementation.

1. Over Budgeting the Cost Factor - One of the primary challenges encountered during ERP integration is budget overruns. Many ERP implementations end up costing three to four times the initial estimates. To ensure a successful integration, it is essential to collaborate with reputable ERP partners like MastersIndia who can provide comprehensive services for integration and implementation.
2. Safeguarding Critical Information against Unsecured Connections - The integration of ERP with other systems introduces additional complexity, which can increase the likelihood of unsecured connections. This heightened risk becomes particularly significant when cyber hackers target ERP software. Therefore, businesses must adopt stringent security measures to safeguard their ERP system and associated data from potential breaches.
3. Complexity in Overcoming Implementation Hurdles - Implementing an ERP system is a complex undertaking that requires careful planning and execution. Common hurdles faced during ERP integration include the following.
   • Internal Resistance to New Systems - When introducing a new ERP system, businesses may encounter resistance from employees who are reluctant to embrace change. It is crucial to address this resistance through effective communication and change management strategies.
   • Software Integration Issues - Integrating the ERP system with existing software can present technical difficulties. These challenges can be mitigated by partnering with experienced ERP providers who specialize in seamless integrations.
   • Poor Data Quality - ERP systems will rely on the accuracy of data and reliable data for their optimal function. Inadequate data quality can hinder the effectiveness of the system. It is essential to ensure data cleanliness and integrity before the integration process.
   • Training and Adoption - Successful ERP integration requires proper training and enablement of employees. Businesses should have internal champions who promote the adoption of the new system and provide comprehensive documentation of workflows.

ERP Integration Strategies for Successful ERP Integration

Integrating an ERP system into the existing infrastructure of a business can be a complex task. However, with a well-defined ERP integration strategy, the process can be streamlined and result in a successful implementation. By the following five essential steps of ERP integration strategies, businesses can ensure a smooth and efficient integration process.

• Step 1 - Assessment

The first step in the ERP integration strategy is to conduct a comprehensive assessment of the organization's current system. This involves understanding the existing software and processes while identifying any gaps or potential roadblocks to integration.

• Step 2 – Planning

Once the assessment is complete, the next step is to create a detailed plan that outlines the integration process. This plan should include a timeline, a list of required resources, and a thorough description of each step involved.

• Step 3 – Implementation

The third step of the ERP integration strategy is the implementation phase. This is where the actual integration work takes place, including programming and deployment. This includes configuring the ERP system to seamlessly integrate with other systems and ensuring that data flows as intended.

• Step 4 – Testing

Thorough testing is a critical step in the ERP integration strategy. This phase involves testing the integrated ERP system to ensure that it functions as planned and is free of any bugs or errors. During the testing phase, IT teams should focus on developing a comprehensive testing plan and test scripts, conduct tests in various scenarios and document any issues that arise to resolve them effectively.

• Step 5 – Maintenance

The last and final step in the ERP integration strategy is maintenance. This phase involves ongoing monitoring, updates, and support to ensure the ERP system remains current and meets the business’s needs. During the maintenance phase, IT administrators should focus on monitoring the system for any issues that may arise and perform regular updates to maintain the system.

Best Practices for ERP System Integration

1. To ensure a successful ERP integration, it is important to follow best practices that address key areas such as data management, integration requirements analysis, and security. By implementing these ERP integration best practices, businesses can optimize the integration process and maximize the benefits of their ERP system.
2. Clean Up Data Before Integration - The quality of your data directly impacts the effectiveness of your ERP system. Before initiating the integration process, it is crucial to invest resources in cleaning up and enhancing your data.
3. Analyze Integration Requirements Carefully - Before integrating your ERP system with other applications and systems, it is essential to analyze your integration requirements. This involves creating a comprehensive inventory, mapping integration scenarios based on the inventory and prioritizing integration efforts to ensure that the integration solution you choose can accommodate future software additions and expansions.
4. Prioritize Security - Maintaining the security of your data is paramount throughout the ERP integration process. Follow these security best practices.
   • Ensure that all endpoints, including systems and applications involved in the integration, are adequately protected.
   • Keep all systems and software up to date with the latest security patches and updates.
   • Regularly review and address any vulnerabilities that may arise during the integration process.
   • Regularly review and address any vulnerabilities that may arise during the integration process. iPaaS providers can handle software updates and security measures which helps in reducing the burden on your business.

Common Business Processes that Can Benefit from ERP Integration

Enterprise Resource Planning (ERP) integration can greatly enhance various business processes, improving efficiency and overall operations. Here are several common business processes that can benefit from ERP integration:

1. Supply Chain Management: ERP systems enable real-time tracking of inventory levels, orders, and shipments, optimizing supply chain processes, reducing lead times, and preventing stockouts.
2. Financial Management: Integrating ERP with finance allows for streamlined accounting, financial reporting, and budgeting, enhancing accuracy and transparency in financial operations.
3. Human Resources: ERP integration helps manage employee information, payroll, benefits, and performance evaluations, fostering efficient HR processes and ensuring compliance.
4. Customer Relationship Management (CRM): Integrating ERP with CRM systems enhances customer interactions by providing a unified view of customer data, leading to improved customer service and targeted marketing
5. Manufacturing and Production: ERP integration optimizes production planning, resource allocation, and order tracking, resulting in better production schedules, reduced waste, and enhanced quality control.
6. Inventory Management: ERP systems allow for real-time tracking of inventory levels, minimizing overstocking and understocking issues, while also aiding in demand forecasting.
7. Project Management: ERP integration enhances project planning, resource allocation, and progress tracking, leading to better project outcomes and timely completion.
8. Procurement and Vendor Management: ERP integration streamlines procurement processes, automating purchase orders, supplier selection, and invoice management, leading to cost savings and improved vendor relationships.
9. Quality Control: ERP systems assist in quality assurance by tracking product and process data, identifying trends, and enabling swift corrective actions to maintain product standards.
10. Analytics and Reporting: Integrating ERP with analytics tools enables data-driven decision-making through insightful reporting and visualization, aiding in strategic planning.

Incorporating ERP integration across these processes can lead to increased operational efficiency, reduced manual errors, better resource utilization, and improved collaboration among departments, ultimately enhancing an organization's overall competitiveness and growth.

How MastersIndia Can Help With ERP Integration?

Masters India is a leading provider of ERP integration solutions that can greatly assist businesses in streamlining their integration processes. With their expertise and innovative tools, MastersIndia offers Invoice OCR (Optical Character Recognition) software and API that can automate the extraction of data from unstructured invoices.

By leveraging AI and ML technologies, this tool significantly reduces the need for manual data entry, saving time and effort. The Invoice OCR software intelligently captures relevant data from invoices, such as invoice numbers, dates, line items, and vendor details. This automation eliminates errors and ensures accurate data integration into the ERP system.

MastersIndia offers cutting-edge solutions for ERP integration, particularly in data extraction from invoices. By leveraging their Invoice OCR software and API, businesses can automate the data capture process, streamline invoice processing, and achieve greater accuracy and efficiency in their ERP integration efforts.

How Does AP Automation Software Improve ERP Integration?

AP automation software such as the one provided by Masters India can significantly improve ERP integration by automating and streamlining the accounts payable process. By leveraging AP automation, businesses can seamlessly integrate their procurement processes, including purchase-to-pay (P2P), with their ERP system. This automation eliminates manual tasks, reduces errors, and ensures the timely processing of invoices, purchase orders, and payments. With improved efficiency and accuracy in the accounts payable process, ERP integration becomes more efficient, allowing businesses to optimize their financial operations and gain real-time insights for better decision-making.