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ERP integration strategy: 3 common approaches
Integrating ERP with other business systems is critical to ensuring organizations are able to access data and streamline processes. Here are three approaches that can help ensure success.
The right ERP integration strategy is critical to creating efficient operations and ensuring back-end systems talk to each other. But integration can be difficult and taking the right approach is critical.
Benefits of ERP integration
There are a number of benefits to integrating ERP systems with other business systems.
Integrating an ERP system with other systems, such as CRM, HR and e-commerce systems, ensures that data from these applications remains updated in the ERP system. The ERP functions as a single source of truth for a variety of workflows, making it easier to share data and insights across business units. ERP integration also helps companies automate their business processes, enabling them to operate more efficiently by helping to eliminate human error.
What makes ERP integration difficult
Despite the benefits, choosing the right ERP integration strategy is not as straightforward as it seems. For one thing, ERP integration can be difficult and expensive to integrate on-premises ERP systems with other platforms. Not only do enterprises have to integrate their ERPs with their internal systems in their data centers, they also must figure out how to successfully integrate data across a variety of mobile platforms and cloud-based applications.
Even if the data is in a compatible format, it's still difficult to get products from different vendors to effectively talk to each other. Also, integrating ERP with other applications may require a specific set of skills, as well as an understanding of the integration process. An organization's internal staff may not possess these skills or knowledge.
3 approaches to an ERP integration strategy
Although there are a number of ways a CIO and the IT department can choose to execute an ERP integration, three common ways stand out.
- Application program interfaces
Many organizations look to application program interfaces (APIs) as a top ERP integration strategy in their effort to connect ERP and other business systems.
Most ERP systems come with a library of APIs, said Geoff McPherson, project manager at Panorama Consulting, an ERP consultancy in Denver.
APIs define the way the ERP and the other external systems interact and work together. The APIs set out the rules for communication with the system. Each API provides code that allows data to be passed between software programs.
Programmers can then match the API from the ERP system with the APIs from the other systems they want to integrate with the ERP, McPherson said.
Enterprises can use the APIs offered by their ERP vendors, create their own APIs or buy APIs from third-party vendors. This is all done to ensure that their ERP applications work well with their other programs. An API acts as the middleman between a company's ERP system and its external applications.
"So, a common one would be to use an API to do an interface with sales tax, which is Avalara or Vertex or to do an interface with FedEx," McPherson said.
- Vendor integration tooling
Most ERP vendors -- including Infor -- offer their own tools to help integrate their ERP systems and third-party enterprise systems. For example, Infor Intelligent Open Network, Infor's middleware cloud platform, enables companies to integrate their third-party enterprise systems. This allows the third-party systems to work with the company's Infor ERP systems, providing access to data in real time.
In 2015, the Elsinore Valley Municipal Water District in Lake Elsinore, Calif., moved from its legacy, on-premises Lawson ERP system to Infor's CloudSuite ERP, the next generation of the Lawson platform.
The company used Infor's Process Automation integration tool to connect its ERP system to its third-party systems, said Jim Ollerton, director of IT at the Elsinore Valley Municipal Water District. The company tried to come up with the best way to securely integrate their external processes -- such as utility billing and its customer information system -- with its ERP.
"So, we leveraged the integration tooling that Infor provides their customers, and the Elsinore staff rearchitected these interfaces," Ollerton said. "And we made changes from the previous [Lawson] interfaces; we streamlined them and made them more efficient using Infor's tooling product."
The Elsinore Valley Municipal Water District also uses RESTful APIs to connect its ERP and third-party applications, Ollerton said.
"REST API leverages JavaScript Object Notation, which is a protocol for interfacing as well," Ollerton said. "We use that for data extraction for populating our data warehouse on prem, so we really have adopted the modern way of talking to other systems."
- Third-party integration software
Third-party vendors also offer integration platforms, so organizations don't have to construct their own integrations between their ERP systems and external applications.
Billy Footwear, a Seattle-based company that creates shoes with zippers, uses Alluvia to enable the flow of data between its OptiProERP cloud-based system for manufacturing and distribution, which sits on the SAP Business One platform, and its external systems, all without the need to write code, co-founder Billy Price said.
Alluvia's user interface is built on back-end e-commerce and ERP integration architecture that enables Billy Footwear to connect immediately to its digital commerce systems and automate its two-way data exchange. With Alluvia, Billy Footwear is able to connect its e-commerce system, Business One to Shopify, and its shipping system, ShipStation.
"OptiPro has been the engine for Business One and Alluvia has been the connector to ... tie in all these other systems, including our e-commerce system and shipping software, that we were already using, to be able to get the information into Business One and then also be able to get this information out of Business One," Price said.
The integration team
An ERP integration team is unique to the organization it serves.
Who makes the decisions around ERP integration and who exactly is on the integration team depends on the company, said Andrew MacMillen, an analyst at Nucleus Research, a Boston-based provider of IT research and advisory services.
"I've even seen some instances where it's the CFO who's in charge of everything technology-related, because he or she is [in charge of] making sure that the company is profitable," MacMillen said. On the technology side, the CIO and IT administrator would be part of the CFO's team.
"The IT department would be responsible for ensuring that everything is harmonized with the operations of the rest of the company," MacMillen said. "When the scope or complexity of the ERP integration project is such that it requires more expertise, you could hire a specialist to become a full-time employee of the company or you can call in a systems integrator or IT consultant."
The CFO was the executive sponsor for the ERP integration project at the Elsinore Valley Municipal Water District. The integration team also consisted of the director of IT, who served as the project manager; the organization's accounting supervisor, accounting manager, director of HR and purchasing manager, as well as the subject matter experts in accounts payable, accounts receivable, contract management and supply chain.
"I also had a senior tech lead who was a core part of the project from the technical standpoint, from building automations to reporting to getting people what they needed out of the system in the most efficient way," Ollerton said.
The Elsinore Valley Municipal Water District also employed consultants from Infor services, the consulting arm of Infor, its ERP provider.
"Some worked on-site, but many, many worked remotely," Ollerton said. "We had folks working from all over the country, in the Philippines and other parts supporting us throughout the project."
