What Is ERP Integration and How Does it Work?

In today’s digital world, businesses have many software applications and platforms they can rely on to power their operations. From supply chains to sales, there is a variety of business intelligence software available to cater to each department. However, when you have multiple individual solutions that don’t communicate with one another, they end up functioning as disconnected silos. 

When this happens, it impedes efficiency within your business processes as it clouds visibility and informed decision-making. 

That’s where enterprise resource planning (ERP) systems come into play. ERP systems and ERP integration are pivotal in bridging the gaps within a business’s most critical systems and platforms. They enable a seamless flow of data and processes across ERP software and third-party applications, empowering businesses like yours to unlock new productivity levels, insights, and competitive advantages. 

Below, we’ll talk more about ERP system integration and how it can benefit your business.

What is an enterprise resource planning (ERP) System?

Enterprise resource planning systems (ERP systems) are integrated software suites businesses can use to manage and automate core processes across various departments. An ERP system serves as a centralized database, enabling the different moving parts of an organization to access and share a single source of truth for data across multiple departments and other business processes. 

These moving parts typically include:

• Supply chain management: ERP systems allow you to track the status of your inventory across the entire supply chain, making it easier to coordinate with vendors directly.
• Order and Inventory management: ERP data integration can convert a quick quote or estimate into a sales order. From there, it can be generated into a digital invoice within your ERP system and sent to vendors, suppliers, clients, etc, in seconds, allowing for seamless order and inventory management.
• Procurement: When you have a request for proposal (RFP), your ERP system will enable you to send it to the appropriate suppliers, track their responses, and deliver your purchase orders.
• Analytics: ERP systems also enable you to view various data types on a centralized platform for optimal data accuracy. This ensures you can make more informed decisions like pricing, customer support, inventory management, and more.

The primary benefit of ERP software is that it provides real-time visibility and control over your end-to-end operations. This helps to improve efficiency, decision-making, and reporting compliance and ultimately drives growth.

What is ERP integration?

ERP integration is the process of connecting a business or organization’s ERP platform with other separate databases, e-commerce tools, inventory planning software, customer relationship management (CRM) platforms, and other third-party software and applications. The goal is to unify business processes and enable all systems to work together from a centralized location. 

This means your data capturing, tracking, analysis, and other processes will connect and flow seamlessly as if they were all part of the same system—regardless of the data formats.

The benefits of ERP Integration

ERP integration allows companies to eliminate inefficiencies. Without it, businesses will have to ensure they have the human resources to manually enter data into multiple programs to prevent information silos. This can easily lead to redundancies and errors and waste valuable time. 

Put simply, businesses in today’s digitally driven landscape require their software applications, tools, and other platforms in their tech stack to operate effectively as one rather than isolated entities. This is where ERP integration becomes a game-changer, as it can provide the following benefits:

• Streamlined data flows and processes across the organization, which eliminate data silos
• Real-time visibility into operations, inventory, financials, etc.
• Reduced manual data entry and associated errors and redundancies
• Improved decision-making through accurate, centralized data
• Enhanced collaboration, productivity, and efficiency with real-time data sharing across the organization
• Better collaboration across teams and departments
• Better customer experiences with organized, up-to-date customer data
• Lower operational costs through automation and reduced IT overhead
• Additional opportunities for scalability and growth

With ERP integration, businesses can break down silos, empower employees with the right information and tools, and gain a competitive edge through optimized performance.

Common ERP integration challenges

While incredibly beneficial, ERP integration projects can pose certain risks if not approached and implemented strategically. For example, many businesses face the following challenges when their ERP integration process isn’t properly implemented:

• Complexity in connecting and maintaining integrations across evolving systems
• Upfront costs for tools, implementation, testing, and training
• Potential disruptions during cutovers and deployment
• Data security and governance concerns with increased connectivity
• Over-customization leading to future upgrade challenges
• Lack of adequate planning, resources, or executive buy-in

Businesses should carefully assess their integration needs, understand the risks and costs, and follow best practices regarding ERP integrations.

How Can Businesses Integrate Processes and Workflows with ERP Systems?

There are several approaches businesses can take to integrate other software solutions and workflows with their core ERP system for seamless data flow:

• Customized Integration: Many ERP vendors provide tools, APIs, and documentation to build custom integration solutions tailored to specific business requirements.
• Pre-Built Connectors: ERP providers and third parties often offer pre-built connectors and plugins for popular applications to enable rapid integration with common tools.
• Integration Platforms: Companies can leverage dedicated integration tools and platforms, such as cloud-based ERP solutions, designed to streamline and simplify connecting disparate systems efficiently.

In addition to these ERP integration approaches, there are three primary methods businesses use to integrate ERP systems:

1. Point-to-Point Integrations

This traditional approach to ERP integration involves building direct, customized connections between two systems or applications using APIs, Web Services, file transfers, etc. Point-to-point integrations are best when straightforward integration requirements are needed for data exchange between a limited number of systems. 

However, as an organization’s needs grow, these one-off integrations can become complex and difficult to manage. This is because point-to-point integration relies heavily upon human intervention for coding, implementation, and future growth.

2. Enterprise Service Bus (ESB)

An ESB acts as a centralized integration backbone or management software, enabling reliable data routing and transformation between multiple applications and systems. It provides a single integration platform with a unified set of capabilities across cloud, on-premises, and hybrid environments.

ESBs can simplify complex integrations but require significant upfront costs and IT resources, as well as considerable human resources, to function properly. ESBs also do not support certain forms of automation, meaning this ERP integration may require manual configuration for each unique event.

3. Integration Platform as a Service (iPaaS)

iPaaS solutions provide cloud-based integration platforms that connect applications, data sources, APIs, and IoT devices across cloud and on-premises systems. iPaaS offers pre-built connectors, mapping tools, and centralized management, which enable businesses to rapidly build, deploy, and manage integrations without extensive coding or infrastructure setup. 

The scalable and low-code nature of iPaaS can accelerate integration initiatives. This makes iPaaS a “future-proof” solution in terms of ERP integration. 

Which Integration Method Is Right For Your Business?

The ideal ERP integration approach depends on an organization’s specific requirements, existing technology landscape, in-house skills, and budget:

• Point-to-Point: Best suited for basic integrations with a limited number of systems and straightforward data flows.
• ESB: Best for complex, high-volume enterprise integrations that require robust security, transformation capabilities, and centralized management for all business operations.
• iPaaS: Offers a cost-effective, scalable solution for rapidly building and managing integrations across cloud and on-premises environments with low-code tools, making it best for hybrid data systems.

Many businesses also utilize a hybrid approach, leveraging multiple integration methodologies based on their ever-evolving needs. To navigate the options effectively, it is recommended that an integration assessment and strategy planning be conducted to determine which method is right for your business needs and project management goals.

Sync your data seamlessly with Inventory Planner

ERP system integration doesn’t have to be complicated or take up all your time. When you want to reap the benefits of plug-and-play integration for seamless data tracking, capturing, and analyzing across all your apps and tools at all stages of growth, Inventory Planner is what you need.

• Accurate demand forecasting: Inventory Planner’s integrations are designed to accurately predict future demand for all your inventory based on historical sales data, market trends, seasonality, and numerous other metrics that will allow you to automate your purchase decisions.
• Inventory optimization: By capturing, tracking, and analyzing data across your third-party systems, Inventory Planner can review your current inventory levels in all locations to recommend the appropriate order reorder quantities you need at any given time. 
• Vendor management: Track lead times, minimum order quantities, payment terms and conditions, and performance metrics across all vendors and suppliers for a healthier supply chain — regardless of the number of tools and apps used to connect with each party involved. 
• Purchase order creation: Automatically create purchase orders and review buying recommendations from multiple sources in one centralized location. Inventory Planner will bring all of your data sources together to optimize your POs and recommendations based on our accurate demand forecasting and metrics in just a few clicks.
• Order tracking: Monitor the status of pending purchase orders and make any necessary revisions without running multiple software applications simultaneously. Inventory Planner ensures you can handle everything from tracking receipts to making quick changes for order fulfillment from one platform—minus the potential for errors and redundancies.
• Speedy reporting and analytics: Inventory Planner provides a user-friendly dashboard with high-level visibility into every last metric. This includes PO history, vendor performance, demand forecasting updates, and everything else you could possibly need to perfect your procurement and purchasing process.

When you have the right ERP integration solutions tailored to your business operations, you can unlock endless connectivity, enhanced productivity, greater insights, and a competitive edge in today’s fast-paced digital landscape. This is precisely what Inventory Planner can do for you!

Learn more about how to combine Inventory Planner with your ERP system for next-level demand forecasting, reliable buying recommendations, and plenty of other business functions today.