Terence Bennett - June 28, 2023
ERP Integration is the method by which a business connects its ERP (Enterprise Resource Planning) software with other applications. The objective is to share data across systems to improve productivity and insights and create a single source of truth. There are several conventional approaches to achieving this, including point-to-point, ESB (Enterprise Service Bus), and iPaaS (Integration Platform as a Service).
Here are the key things you need to know about ERP Integration:
- ERP integration connects ERP systems with other software applications, databases, or external systems for seamless data exchange and synchronization.
- Integration involves mapping data fields, ensuring compatibility and consistency between systems.
- ERP integration improves data accuracy, streamlines processes, enhances visibility, and enables scalability and flexibility.
- Integration methods include point-to-point, Enterprise Service Bus (ESB), and Integration Platform as a Service (iPaaS).
- Best practices for ERP integration include data cleanup, careful analysis of integration requirements, and prioritizing secur
Table of Contents
What is ERP Integration?
ERP integration refers to the process of connecting an ERP system with other software applications, databases, or external systems to facilitate the exchange of data and ensure synchronization across various business functions. It enables seamless communication and data flow between different software solutions, creating a unified ecosystem where information can be shared in real-time.
In simpler terms, ERP integration acts as a bridge between the ERP system and other software tools, enabling them to work together harmoniously. It allows businesses to extend the capabilities of their ERP system and leverage data from disparate sources, leading to enhanced visibility, efficiency, and informed decision-making.
How Does ERP Integration Work?
ERP integration operates on the principle of establishing communication channels and data exchange mechanisms between the ERP system and other software applications or systems. The process involves connecting the ERP system’s application programming interfaces (APIs) with the APIs of the external systems to enable seamless data flow.
At a technical level, ERP integration often relies on middleware or integration platforms that serve as intermediaries between the ERP system and other applications. These middleware solutions facilitate the translation and transformation of data formats, ensuring compatibility and consistency between systems.
The integration process typically involves mapping data fields between the ERP system and the integrated application, ensuring that data is correctly aligned and synchronized. This step is crucial to enable accurate and seamless data exchange, as well as to avoid data duplication or misinterpretation.
Once the integration is established, data can flow bi-directionally between systems, allowing real-time updates and information sharing. This enables various business functions, such as finance, sales, inventory management, and human resources, to access and utilize accurate and up-to-date data from multiple sources.
Why is ERP Integration Important?
The aim of an ERP system is to create a single source of truth for an organization. The benefits of achieving this are huge, including real-time reporting, increased productivity, reduced operational costs, and improved business insights. However, an ERP system cannot do this effectively without data – and integrations are how that data gets into the system.
When implemented effectively, ERP integration offers many benefits:
- Breath New Life into Legacy Systems – By connecting a legacy system to a CRM, it can continue to be useful. This means that if an old system works well, a business can continue to use it. Otherwise, the business may need to make an unnecessary upgrade; By instead integrating the legacy system, the business saves the cost of the license and training for the new system and prevents disruptive changes to its established processes.
- Improved Mobility – A fully-integrated ERP enables employees access to data on-the-move that would otherwise be stuck in a siloed legacy system.
- Easy to Add New Integrations – With the right integration system, businesses can move beyond the most commonly used products and connect anything to their CRM. This enables them to exercise greater flexibility when choosing the right tools for their business.
- Improved Decision-Making – ERP integration allows businesses to access real-time data from across their systems in one central location. Better integration means more data and better decision-making.
- Ditch Manual Entry – Manual data entry is not only a huge drain on resources but also a source of many errors. Instead, businesses use ERP integration to move data around automatically and efficiently. This enables them to use their time and resources to use that data effectively, rather than just managing it.
- Reduced Employee Training – Most employees will only need to access data through the ERP system. This significantly reduces the number of software that the average employee needs to be trained on.
Without ERP integrations, businesses have two choices. They can either leave data sitting in silos, with all the problems that entails (no visibility, poor productivity, no single source of truth), or they can rely on moving data manually. Manual entry leads to errors, reduced collaboration, and the inability to access real-time data.
ERP Integration Methods
Most ERPs come with pre-built integrations, but these are limited in number and scope. Unless a business sources their entire software stack from one vendor, or only uses the most popular products on the market, it is unlikely a single ERP will come pre-built with every integration a business needs.
In most cases, a business will use a mix of legacy systems and modern SAAS. This mix of systems is a result of different departments managing their own data and software needs, signing up for different applications as and when they need to to achieve their objectives. This enables fast growth but becomes a problem once the business grows to a size where it wants to integrate with an ERP.
Swapping all these systems for ones that work with a specific ERP out of the box may not be practical, affordable, or desirable. Instead, businesses need to choose a method that enables them to create and manage the integrations they need themselves.
Businesses typically use one of several different ERP integration methods:
Point-to-Point Integrations
Point-to-point integrations connect one specific piece of software with another. This can be quick and effective when there are only two pieces of software to connect, but that is rarely true for modern organizations.
Because each piece of software requires a connection to every other piece using its data, the number of connections needed scales exponentially as the volume of software increases. Many enterprises use hundreds of different software solutions across the organization; creating and maintaining point-to-point integrations for even a fraction of these becomes a huge burden on the IT department.
Enterprise Service Bus (ESB)
Another solution is the Enterprise Service Bus or ESB. This is an on-premises software architecture that enables different applications to communicate with each other and share data. Data comes onto the bus in a specific format, often XML, and there are adapters that sit between the bus and the other software (such as the ERP) that translates their data to/from XML (or another language) and the format they require.
ESBs, while ideal for on-premises integrations (vertical scaling), do not scale well horizontally. This makes them a poor choice for businesses that need to integrate with SaaS solutions and third parties. ESBs also add an additional layer of complexity, which is not ideal for a solution that aims to simplify the way a business uses its data.
Integration Platform as a Service (iPaaS)
iPaaS platforms offer a cloud-based approach to integration, enabling businesses to sync apps faster and easier than using an ESB. iPaaS platforms have many benefits: they typically require no coding, are designed to connect ERP systems to SaaS products, and are flexible and inexpensive. With no on-premises hardware requires, these are ideal for many modern businesses.
Of course, iPaaS platforms like DreamFactory have many more use cases beyond ERP integration. Click here to check out our article “iPaaS Use Cases: How Enterprises Are Using Integration Platform as a Service Technology.”
Common ERP Integration Challenges
Integrating different pieces of software with an ERP is complicated because each piece of software has its own clearly defined set of rules about how it wants to manage and use data. The job of the ERP integrations is to sync this data in the correct format while ensuring it remains accurate and useful. Doing this at scale requires a system that is organized and logical and that your team can maintain over time.
For example, a business might need to integrate its ERP with its (Client Relationship Management) system. This connection would enable it to track critical client data in their ERP and share data contained within their ERP with their CRM. Financial data, for example, might be synced into their CRM to help teams better manage their client relationships.
Another use case might involve supporting a quote-to-order system. This requires the organization to sync product data across the CRM and ERP.
Is your business looking for an ERP integration tool? DreamFactory enables companies to instantly generate secure REST APIs without a single line of code. Click here to start your free 14-day hosted DreamFactory trial today.
Which Integration Method Is Right For Your Business?
When considering which method (and specific vendor) to use, businesses should consider the following:
- Technical Resources – An ESB solution will require significantly more in-house resources than iPaaS. What technical resources do you have on your team? How will you maintain your integration strategy over the long-term? Remember, data points and tools can change; no integration method is a one-and-done solution.
- Budget – ESB solutions will require higher upfront costs than iPaaS, which is more likely to be paid for in a subscription model. Don’t forget to budget for the employee time maintaining your solution will require.
- Integrations Needed (Present & Future) – How many custom integrations do you need? How is this number likely to grow over time? Do you need to scale vertically or horizontally?
- Training – What are the training requirements for your chosen solution?
- Security – How will the chosen integration method keep your (and your customer’s) data safe?
Typically, most non-Enterprise businesses launching an ERP implementation project for the first time will want to choose an iPaaS solution.
DreamFactory has enabled thousands of businesses to benefit from ERP integrations without the hassle of manually creating the APIs they need themselves. Would you like to know more? Schedule a call with the DreamFactory team today.
3 ERP Integration Best Practices
Best Practice #1: Clean Up Data Before Integration
The quality of your data will define how much of a benefit your ERP system is to your business. Before integration begins, you have a one-time opportunity to clean up your data, check for mistakes, and remove duplicates. Doing this requires significant resources, but is worth it to ensure that the data on which you will be basing your future strategic decisions is accurate.
Best Practice #2: Analyze Integration Requirements Carefully
Make an inventory of your systems and how you need them to integrate and use this map to help you decide on the correct way of integrating them. Once you have chosen a solution, prioritize the integrations that will deliver the biggest benefit to your business first. Once your initial integrations are complete, your business should continue to consider integration when evaluating future software solutions.
Best Practice #3: Security First
The security of your data is vital to the long-term health and reputation of your business, and your ERP integration must reflect that. Prioritize security and ensure that all your endpoints and integrations are protected. This is where an iPaaS solution has an advantage, since the provider of the software will manage the updating and security of that software.
Integrating Your ERP System Using DreamFactory
Creating ERP integrations does not need to be hard. The DreamFactory platform enables employees to create enterprise-grade APIs and enable superior connectivity with just a few clicks and without writing a single line of code.
DreamFactory is:
- Fast – Create a fully-documented REST API in a few minutes. – that same solution would take a backend engineer weeks to build.
- Scalable – DreamFactory grows with you. Manage as many REST APIs as you need through a single, easy-to-use portal.
- Secure – Protect your data with Role-Based Access Controls, CORS, SSO Authentication OAuth, and JWT.
Ready to connect your ERP system? Contact the DreamFactory team to find out how we can help you today.
Frequently Asked Questions: ERP Integration
What is ERP Integration?
ERP integration refers to the process of connecting an ERP system with other software applications, databases, or external systems to facilitate data exchange and synchronization across various business functions. It enables seamless communication and data flow between different software solutions, creating a unified ecosystem for real-time information sharing.
How Does ERP Integration Work?
ERP integration works by establishing communication channels and data exchange mechanisms between the ERP system and other software applications or systems. This is often achieved through the use of middleware or integration platforms that act as intermediaries, translating and transforming data formats to ensure compatibility and consistency. Data mapping is performed to align and synchronize data fields between systems, allowing for accurate and seamless data exchange.
Why is ERP Integration Important?
ERP integration is important because it extends the capabilities of an ERP system by connecting it with other applications and systems. It enables businesses to leverage data from disparate sources, enhancing visibility, efficiency, and informed decision-making. Integration streamlines business processes, ensures data consistency, and provides comprehensive insights across different functions. It also allows for scalability and flexibility, enabling organizations to adapt to changing technological needs and maintain a competitive edge.
Which Integration Method Is Right For Your Business?
The choice of integration method depends on various factors such as technical resources, budget, integrations needed, training requirements, and security considerations. Point-to-point integrations are suitable for connecting two specific software applications, but they can become complex and burdensome as the number of integrations increases. ESB solutions are ideal for on-premises integrations but may not scale well for cloud-based and SaaS integrations. Integration Platform as a Service (iPaaS) platforms offer a flexible and cost-effective cloud-based approach, requiring no coding and supporting ERP integration with various applications. Assess your specific requirements and consult with experts to determine the most suitable integration method for your business.
What are the benefits of ERP integration?
ERP integration offers numerous benefits, including improved data consistency and accuracy, streamlined business processes, enhanced visibility and reporting, scalability and flexibility for future growth, elimination of manual data entry, reduced employee training requirements, and improved decision-making through access to real-time data across systems. It empowers organizations to optimize their ERP systems and leverage data from multiple sources for efficient operations and informed decision-making.
What are the common challenges in ERP integration?
Common challenges in ERP integration include managing different data formats and ensuring compatibility, maintaining integration over time as systems and requirements change, considering the availability of technical resources and expertise, budgeting for integration implementation and maintenance, evaluating future integration needs as the business grows, addressing security concerns to protect sensitive data during integration, and ensuring compliance with relevant regulations and industry standards. Effective planning, choosing the right integration method, and partnering with experienced integration providers can help overcome these challenges.
Terence Bennett, CEO of DreamFactory, has a wealth of experience in government IT systems and Google Cloud. His impressive background includes being a former U.S. Navy Intelligence Officer and a former member of Google’s Red Team. Prior to becoming CEO, he served as COO at DreamFactory Software.