What is ERP System Integration? Importance & Benefits

Point-to-point integration is directly connecting two systems together without any interfacing software in between. This method offers two key advantages: security and speed.

By reducing integration points, you're exposing fewer potential attacks. Fewer connections means less opportunity for security breaches. In terms of speed, the fewer systems your data passes through, the faster the information will update and transfer between the original and destination systems.

Your ERP solution often acts as the central intermediary in point-to-point integration, facilitating direct communication between different software platforms.

Enterprise Service Bus (ESB) is software architecture designed to facilitate communication between disparate systems. In a large business with multiple systems, instead of managing multiple direct connections between different software platforms, an ESB sits as a single, centralised system that manages communication.

The ESB knows which other systems need what information and can distribute it accordingly.

iPaaS is a modern approach to connecting software systems. With iPaaS, there are publicly available connection instructions.

iPaaS makes integration cheaper, easier and faster. With iPaaS, you look up how to retrieve or push information between systems. This approach means the integration interface remains consistent, reducing the need for constant updates to integration methods.

This approach allows for more consistent and adaptable system connections, especially in industry sectors where software changes frequently.

Electronic Data Interchange (EDI) is a method for automated data exchange between businesses, particularly with suppliers and customers. Instead of manually raising individual purchase orders with suppliers every day, EDI allows systems to automatically:

• Raise purchase orders
• Receive supplier responses about order availability
• Get delivery dates and times
• Exchange pricing information

In some sectors, EDI is essential to automatically interact, exchange information, and process transactions without requiring manual processes.

CRM (Customer Relationship Management) integration is important for businesses who have a large volume of customers and require specialised CRM systems that have more depth of capability compared to built-in ERP CRM functions.

When integrating CRM with ERP software, the key objectives are to:

• Match customer data across systems
• Ensure data consistency
• Automate processes

When a sales representative creates a quote or takes an order, the data exchange automatically pushes information into the ERP system without manual re-entry. This eliminates the need for manual data entry, which reduces errors and saves time.

E-commerce platforms typically lack comprehensive ERP software functionality. These platforms pull product information directly from the ERP system, including what items can be sold, real-time inventory quantities, and pricing.

For logged-in customers, the e-commerce platform can retrieve customer-specific pricing from the ERP software, ensuring personalised pricing and shipping information. This allows businesses to provide tailored online shopping experiences.

Equally, the e-commerce platform can transfer sales orders to the ERP system. The ERP then takes responsibility for fulfilment, whether that involves manufacturing the product, purchasing from suppliers, or preparing existing inventory for shipment. This automated process eliminates manual order entry, reduces errors, and ensures a smooth transaction from online purchase to final delivery.

HR integration with ERP systems is important for managing employee-related information and compliance as ERP systems typically do not delve deeply into human resources information systems (HRIS).

The key areas of HR integration include:

• Tracking employee pay rates
• Managing leave entitlements
• Monitoring employee breaks
• Documenting awards and legislative changes

HR integration ensures accurate, up-to-date employee information that can be used for payroll, compliance, and workforce management. By integrating with ERP systems, you can more effectively track and manage critical employee data across your entire business.

ERP systems generate vast amounts of data, but turning that information into actionable insights is a challenge. Business Intelligence software extracts these insights from raw data.

Key functions of BI integration include:

• Creating dashboards and reports
• Generating visual representations of complex data
• Alerting businesses to potential issues
• Predicting when actions need to be taken

Now with AI, business intelligence is becoming even more sophisticated. AI can sift through quantities of data to identify insights humans might not have considered, provide proactive alerts and summarise potential business challenges. This helps you make more informed data-driven decisions.

Project management integration is particularly important for enterprise manufacturers that work on large, complex projects that can take months or years to complete so you can track and coordinate multiple project dimensions simultaneously. This includes managing resources, scheduling teams, and ensuring production timelines aligns with customer expectations.

Project changes can often ripple through business functions. The project management tool can communicate these changes back into the ERP system to update forecasted production materials, costs, and resources. This ensures projects remain flexible yet tracked for data accuracy.

Enterprise Asset Management (EAM) allows you to connect your asset management data with your ERP system, driving maintenance planning and scheduling more effectively. 

EAM integration tracks when assets were last inspected, schedules future inspections, predicts maintenance needs and manages maintenance budgets across multiple locations.

This helps you make informed decisions about asset maintenance when planning in your ERP system to avoid risk from delayed operations, unforseeable maintenance or upgrades not allocated in budgets.

ERP integration across multiple software solutions can eliminate the traditional challenges of data fragmentation and inconsistency often seen with legacy systems.

Unified data access breaks down data silos, allowing different platforms to communicate seamlessly and integrate data without manual intervention. This approach means the integration flow of information can be instantly reflected across all connected platforms, reducing errors and improving overall operational efficiency.

This enables you to make more informed decisions by providing a comprehensive, real-time view of your operations. Instead of piecing together information from disparate business units, you can access holistic, real-time data that offers deeper insights into business performance. This integrated approach not only saves time but turns raw data into a powerful tool for growth and innovation.

Workflow automation means that when certain information is entered into a business application, specific actions can happen automatically, without requiring manual intervention.

The key benefits of workflow automation include:

• Reducing manual tasks
• Eliminating manual error in routine processes
• Ensuring consistent and immediate responses when specific conditions are met
• Speeding up business processes

By automatically triggering actions based on specific data inputs, this reduces human resources on repetitive tasks. Your interconnected systems can respond and act without constant human oversight.

By integrating systems like sales and enterprise resource planning, businesses can transform from reactive into proactive.

You can use data to anticipate and resolve customer issues before they become significant problems, ultimately improving the overall customer experience.

An integrated erp application enhances customer experiences by:

• Proactively addressing potential issues before they occur
• Using data from previous service interactions to improve future customer interactions
• Leveraging insights from service technicians to prevent future problems
• Ensuring quick and accurate support by having real time data access to product and warranty information

Better decision-making emerges from the ability to have a single, consistent source of truth across multiple business functions. By integrating different software platforms, you eliminate the risk of conflicting information and create a comprehensive view of business operations.

The key to enhanced decision-making lies in transforming raw data into meaningful insights. Integration provides real-time, accurate and actionable intelligence that can drive business growth, improve operational efficiency, and provide a competitive edge in an increasingly data-driven business landscape.

Data translation issues arise when data in one system doesn't match the data in another system. For example, if two customers are named slightly differently across different systems, it can result in duplicate entries.

When integrating systems, businesses must:

• Clean and standardise business data before integration
• Agree on standard terminologies
• Ensure consistent data formatting
• Test data translation processes

Poor data management can lead to automated errors, making it crucial to have clean, standardised data before implementing system integrations.

Security concerns revolve around the number of integration points between systems. Every integration point is technically a threat risk where a malicious actor could obtain sensitive data that's shared between systems.

Reducing the number of integration points can help minimise security vulnerabilities, such as using point-to-point integration. Be strategic about how you connect systems, always considering the security implications of each integration point.

ERP is a complex system and you need an experienced ERP vendor to help support your integrations.

Inexperienced vendors may not understand the complexity of integrated ERP systems which requires deep technical knowledge and substantial experience. The right expertise helps you reduce potential integration risks.

Choose an integration partner with proven, long-standing experience in managing complex ERP integration strategies.