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What is an ERP Integration? – Types, Benefits, & Challenges

What you’ll learn


  • Why ERP integration is essential for a business?
  • Benefits of ERP integration
  • What is the future of ERP software?

Enterprise Resource Planning or ERP is a business management software that helps companies integrate all key departments such as finance, operations, and HR with a single data repository and automated workflows. ERP software collects and records information related to accounting, manufacturing, sales, marketing, etc, and helps track business processes across departments.

Some well-known ERP software solutions include NetSuite, Dynamics 365, and Sage Intacct.

What is ERP Integration?

ERP integration connects the ERP software with other applications and systems used at your organization. It creates a centralized data access point. It helps to efficiently manage business processes from a single application. ERP integration also reduces manual data collection efforts with real-time updates across your organization.

Why is ERP integration important and how can it improve your business performance?

There are several benefits of ERP integration when it comes to managing business processes between teams. Here are some reasons why ERP integration is important for your company.

1. Greater efficiency

The different teams within your business use a variety of niche applications to meet their day-to-day operational needs. For example, your marketing team may use Salesforce for customer data management while your finance team may use HighRadius for cash cycle management. An ERP that connects with the various applications used across the organization helps provide a unified and more accurate record of all business transactions and operations.

ERP integration with other systems helps improve the turnaround time of a task by streamlining the business operations. For example, ERP integration with AR software helps your team members to send invoices quickly and collect payments faster. ERP also ensures consistency in workflows, especially for recurring tasks.

2. Improved customer experience

ERP integration allows you to access data collected from multiple locations via a centralized repository. This enables sales and marketing teams to have a unified and up-to-date view of customer data, enabling them to offer tailor-made solutions to customers and resolve disputes faster.

ERP integration with customer-facing tools further helps to enhance customer service and customer experience. For example, a sales portal integrated with the ERP software enables customers to view the pricing and engineering of the product. It will also allow them to enter the sales detail directly into the self-service portal and access past invoices whenever they want. This improves the overall experience for the customer, resulting in higher retention rates and net promoter scores (NPS).

3. Value chain optimization

A company’s value chain comprises the various business activities that enable it to offer products or services to customers. Your company’s value chain can be better streamlined with ERP integration. For example, ERP integrated with CRM can make predicting customer demand in the marketplace a lot easy with integrated customer data. ERP integration with AR software streamlines the O2C process and enables faster cash flow and lower bad debt.

What are the challenges faced without ERP Integration?

Your company might face a number of challenges if it does not have an ERP system integrated. These challenges can be:

Manual processes might slow down the efficiency

There can be a slight delay in information exchange between customers and the company if the data is updated manually. For example, when an order is placed by a customer, primarily it goes into the CRM. If the entire data entry process is done manually, then the workforce required to complete the work must be greater.

Data silos

Data silos is a centralized repository of data that is controlled by one department and is isolated from the rest of the departments in a company. Data silos are silently killing your business by not allowing relevant data to spread across an organization, leading to wasting useful resources. This prevents an organization from getting the most out of its systems and leads to data redundancy and extreme inefficiency.

Lack of real-time data

When data is entered manually each time a customer places an order, the other departments do not get access to the order in real-time. This causes a slight delay in connectivity between the manufacturing sector and the inventory which can cause a lot of confusion. Everything, starting from invoice delivery to accounting gets delayed until the order is received by the customer.

What are the benefits of ERP integration?

Benefit of ERP integration

ERP integration gives you a birds-eye view of organizational information from different sources in real-time. It also opens room for several other benefits:

1. Automated processing

ERP integration helps eliminate manual data entry and increases the productivity and efficiency of the entire team. It also allows you to complete activities involving cross-team workflows such as re-purchasing supplies or gathering customer details much easily.

2. Centralized data repository

ERP integration allows you to centralize all the information in one place. This helps access real-time data when required and eliminates the chance of redundant or missing information.

3. Optimized supply chain

ERP integration makes all business data readily available, allowing you to create accurate customer demand forecasts, streamline supply chain operations, and optimize working capital. It also enables manufacturers to reduce distribution costs and overhead operational expenses. Integrating your ERP with other systems helps unlock the full potential of your business’s supply chain, finance, and operational activities.

4. Increased ROI

After your ERP software is installed and integrated, there won’t be a need to add any custom integration for years to come. It will allow your business to achieve a high ROI and make better business decisions.

5. Enables visual workflow

The ERP software allows leaders and stakeholders from different departments to see which project people are working on, allowing them to plan and forecast strategies accordingly. It makes resource planning and forecasting more accurate and data-driven.

What are the types of ERP Integration?

There are six types of software solutions with which ERP tools need to integrate to ensure smooth business operations. These are:

1. Customer relationship management

Customer relationship management, or CRM, is a tool that enhances customer service by storing all customer interactions and details at one location. This software provides detailed customer insights, enabling analysts to predict and build strategies based on holistic customer data, thus, giving the business a  competitive edge.

2. Human resource management

Human resource is one of the most critical departments of a business that requires an optimized workflow. With ERP integration, HRM systems can effectively manage employees and easily handle onboarding, resource planning, employee records management, training, and offboarding. 

3. Project management

Modern ERP integration software solutions help businesses to create custom integrations that can fetch data from different systems. This allows managers to monitor their teams efficiently and improve project management KPIs. The ERP system ensures that the team meets its deadlines and saves time and effort.

4. Business intelligence

Business intelligence, or BI software, collects and analyzes data so that the management team can create an action plan for business development. Once you integrate BI with an ERP system, the managers and senior executives can instantly get insights into the different business processes. 

5. eCommerce

The ERP system integrates with a business’s eCommerce website and tracks all the incoming orders. It then directly connects with the inventory management system to monitor the available stocks and ensure that all the orders are fulfilled on time. Another advantage of integrating an ERP system with an eCommerce store is that it reduces inefficient inventory usage and loss of sales.

6. Accounts Receivable

Integrating ERP software with accounts receivable solutions help improve cash management and collections. It also helps generate a number of reports that help assess your working capital and cash flow metrics.

ERP integrated with AR software can streamline the cash applications process as well as give you visibility into the credit history and balance of your customers, thus lowering credit risks.

What is the future of ERP integration?

Projection of the global ERP software market

ERP integration software has evolved to help connect different business functions such as HR, manufacturing, and CRM with a single system. Companies depend on ERP software to streamline their business processes, reduce expenses, and automate manual tasks.

Let’s take a look at some of the expected ERP trends that we can see in the future:

  • Cloud ERP market is growing due to ease-of-use and affordability

    Cloud ERP software assists businesses in simplifying project management without any added paperwork. It is more flexible and scalable than a traditional ERP system. It also comes at lower initial costs and can be accessed from anywhere, any time.

  • Syncing IoT with ERP

    Internet of Things (IoT) is the technology that involves sending and receiving data from one device to another over a network. Combining IoT with ERP systems will allow the connected devices to transfer data within the cloud-based apps. The advantage of syncing IoT with ERP is that it allows users to track their performance, location, and other information when needed. 

  • Built-in AI-based chatbots make modern ERPs easy to use

    The earlier ERP systems were difficult to use since they were based on complicated languages. However, modern ERP systems are user-friendly and have simple user setups. Modern ERPs also offer built-in chatbots that can be controlled via voice commands or texts, making it easier for the customer to resolve the queries.

Conclusion

ERP solutions are extremely beneficial to any organization. In the modern age, businesses must integrate ERP software with other systems to automate and streamline different business workflows. With modern technologies coming into play, the ERP integration process is changing rapidly.

ERP integration should be a key goal if you want to transform your business operations by centralizing data from multiple systems to generate accurate insights.

FAQs

Question: What is ERP and how does it work?

Answer: ERP or enterprise resource planning is the process of organizing and assembling business data via an integrated software suite. ERP software helps manage business functions like accounting, sales quoting, production, etc. 

Question: Why is ERP important to a company?

Answer: ERP is essential and useful to a company because it allows them to leverage a suite of integrated applications and streamline business operations. ERP integration also brings transparency to the business by increasing collaboration between teams. 

Question: How does ERP integrate with an organization?

Answer: ERP integration allows your ERP software to sync with data sources that come from different departments across your organization. It allows you to share work processes between both systems efficiently.

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