What is ERP integration?
Overview
ERP Integration
What are the fundamentals of ERP integration?
ERP integration connects a core ERP system with other business applications—inside and outside of an organization—including finance, human resources, manufacturing, supply chain, sales, procurement, e-commerce, and more, giving organizations a unified view of operations. This is done to eliminate data silos, automate information flows, and enable real-time information sharing across business functions. Without integration, organizations could face duplicate data entry in multiple systems, inconsistent information sharing, and inefficient manual processes.
Why does ERP integration matter to businesses?
For organizations undertaking digital transformation, ERP integration provides a strong foundation for process automation and data-driven decision-making while making an organization’s IT ecosystem work together cohesively.
Research from International Data Group (IDG) suggests 44 percent of transactional data in ERP systems comes from external sources, which is why it's critical to integrate all data sources and internal systems to ensure consistent data integrity throughout the digital ecosystem.
What are the key benefits of ERP integration?
ERP integration has been undertaken by organizations of all sizes, across all industries. Key benefits include:
- Streamlined operations: Eliminates manual data entry, centralizes data, automates business workflows across systems, reduces time spent on administrative tasks, and enables faster response times.
- Data consistency and accuracy: Establishes a single source of truth for business information, synchronizes data across connected systems and data sources, eliminates data discrepancies, and ensures consistent data.
- Cost savings and enhanced reporting: Reduces operational expenses by eliminating redundant data entry and manual processes and consolidates data from multiple sources into unified dashboards, improving visibility in operations and the reliability of analytics and reporting.
- Scalability and flexibility: Keeps an organization adaptable to changing business needs without major disruptions—for example, when a merger, acquisition, or divestiture occurs or when new technology is implemented.
- Customer satisfaction: Enables responsive, personalized service by connecting customer-facing systems with back-end operations and provides customer-facing teams with immediate access to comprehensive customer information to improve response times and customer service.
- Efficient supply chain management: Enhances supply chain operations by connecting the ERP with supplier portals, transportation systems, and warehouse operations, which provides real-time supply chain network visibility, improved inventory visibility, and optimized procurement.
What are common ERP integration challenges?
There are several challenges to consider when managing any ERP integration:
Technical complexity:
- Enterprise systems process large data volumes, necessitating robust integration infrastructure and domain knowledge.
- Legacy systems likely use outdated technologies that are difficult to connect with modern applications.
- Integration involves connecting systems with different architectures, data models, and communication protocols.
Data mapping and transformation:
- Systems may use inconsistent terminology, field definitions, or data hierarchies, requiring reconciliation during ERP integration.
- Different data sources that maintain unique data structures and formats, such as electronic data interchange (EDI), must be accounted for during ERP integration.
- Data governance practices, including standardized conventions, validation rules, and transformation logic, must be incorporated to ensure successful integration.
Resource constraints:
- Budget limitations, lack of specialized expertise, competing IT priorities, and time constraints require careful prioritization and phased implementation planning to address critical integration needs.
What are some common ERP integration approaches?
Here are some possible approaches to ERP integration:
- Point-to-point integration: Creates direct connections between individual systems using custom code, which is ideal for environments with few applications or data sources to connect.
- Enterprise service bus (ESB): Establishes a central communication infrastructure as an intermediary between integrated systems, connecting each application or data source to the ESB to handle message routing, transformation, and protocol conversion. Can be less ideal for cloud-native applications.
- API-based integration: Leverages standardized interfaces exposed by applications and data sources to support real-time data exchange (e.g. push/pull). Requires development expertise to build and maintain the API connections.
- Integration platform as a service (iPaaS): Provides cloud-based solutions for connecting applications across on-premises and cloud environments, including pre-built connectors for common business applications and visual design interfaces for less technical users.
- Custom integration: Tailored integration solutions may use various programming languages, scripting, and integration tools to meet specific and unique business requirements that off-the-shelf integration solutions may not cover.
What are the best practices for successful ERP integration?
Here are some typical best practices followed during an ERP integration initiative:
- Develop a comprehensive integration strategy: Organizations should create a strategy that identifies systems and data sources requiring integration with a focus on current and future needs, prioritizes connections based on business impact, and establishes governance frameworks.
- Prioritize business process alignment: Integration should enhance business processes, not merely connect systems. Internal stakeholders likely have operational efficiencies they are looking to gain, such as process improvements and workflow automation for their department or business unit, that are tied to strategic initiatives for the entire organization. It’s important to not only look for technology advancements, but to also align integration efforts with stakeholder goals.
- Establish data governance practices: Define which systems serve as authoritative sources for specific data elements and which stakeholders maintain data quality today and going forward. Document and enforce data standards including naming conventions, formatting requirements, and validation rules.
- Implement robust testing procedures: Develop comprehensive test plans covering all integration functionality including data accuracy, process flows, error handling, and performance. Include business users who can validate that integrations support operational needs.
How can I manage ERP integration during system migrations?
A successful ERP integration requires many steps, which is why upfront planning is critical. The following are some important considerations:
Migration planning and risk management:
- Conduct comprehensive assessments of existing integration landscapes, documenting all connected systems, data flows, and dependencies.
- Identify integration-related risks such as synchronization failures or interface incompatibilities.
- Develop contingency plans for critical integrations.
Testing and validation approaches:
- Implement multi-phase testing that progressively validates integration components, from basic connectivity to complex business scenarios.
- Test with actual business transaction data representing normal operations and exception conditions.
Cutover strategies and business continuity:
- Develop carefully orchestrated cutover strategies maintaining business operations throughout the transition.
- Evaluate different approaches including big-bang implementations versus phased migration.
- Implement synchronization mechanisms during transition periods when both systems operate concurrently.
What is the role of B2B integration in ERP environments?
Organizations are moving toward cloud-based applications while keeping up with ERP product evolutions to optimize technology investments and minimize business disruptions linked to end-of-support of legacy ERP systems. With so much data flowing into an organization from external sources, it’s essential to ensure B2B integrations coordinate with any ERP migrations. Here are some important considerations:
External data exchange requirements:
- External data sources, including EDI transactions, present unique requirements, including diverse communication protocols based on trading partner capabilities.
- Data mapping becomes complex as partners use different formats for similar business documents.
- Security requirements for external exchanges typically exceed internal integration needs.
Supply chain integration challenges:
- Supply chain integration requires synchronizing master data across organizational boundaries including product information, pricing, and location details.
- Integration approaches must accommodate sophisticated EDI implementations for major partners while supporting simpler methods for smaller suppliers.
How can OpenText help with ERP integration?
It’s time to stop struggling with ERP integration. With OpenText, you can leverage the right mix of B2B expertise, modern technology, and best practices to speed up integration initiatives and reduce business continuity risk.
Maximize the value of ERP applications: Businesses risk operational delays and bottlenecks if integration is not prioritized during ERP integrations. Optimize ERP systems like SAP S/4HANA, Microsoft Dynamics 365, Oracle NetSuite, and Oracle Fusion by reassessing the B2B infrastructure for optimum data workflow.
Speed up ERP implementation planning: Businesses need mapping support for easier and faster ERP integration while they manage varying B2B/EDI standards and hidden data quality issues. Accelerate ERP project planning with consolidated insights on existing integration.
Avoid business disruption: Ensuring business continuity is key with ERP integration. Assess and address all connections within the overall integration architecture as a buffer against the risk of delays, cost increases, and missed opportunities.
Extend your IT resources: Companies require expertise to execute ERP integration and other complex modernization initiatives without diverting tight budgets and resources away from business activities. Leverage a trusted partner to alleviate resourcing challenges.
How can OpenText B2B integration solutions help with ERP integration?
B2B integration helps you automate processes, seamlessly exchange any type of business documents, and easily collaborate with partners, suppliers, and customers around the world. Operating the world’s largest business network, OpenText offers B2B integration solutions ranging from basic EDI connectivity to complex, ecosystem-wide integrations. Accelerate ROI and build efficient, resilient supply chains with a B2B integration solution tailored to your specific needs.
OpenText™ B2B Integration Enterprise:
This fully-managed B2B integration service shields businesses from integration complexity while allowing them to focus on core activities. OpenText's enterprise-level integration platform empowers some of the largest global supply chain leaders to seamlessly connect with a vast network of trading partners, facilitating the processing of billions of transactions annually—a capability built upon decades of OpenText experience.
OpenText™ B2B Integration Foundation:
This unified EDI integration environment helps companies integrate with trading partners through self-service tools with expert assistance available when needed. Pre-built ERP adapters integrate with popular systems like Oracle NetSuite, Microsoft Dynamics 365, and SAP S/4HANA, establishing a digital backbone while minimizing operational costs.
OpenText™ B2B Integration Essentials:
This affordable solution provides EDI connectivity specifically for small and medium-sized businesses. It simplifies connections to major retailers with easy setup. The solution offers transaction visibility, workflow automation, and advanced supply chain capabilities including cross-docking and drop shipping.
OpenText™ Data Integrator:
This on-premises B2B gateway includes a managed file transfer (MFT) solution for full control of B2B integration, data translation, and managed file transfer through a single platform. It supports virtually all document types, communication protocols, and industry standards for rapid trading partner connections.
What is the future of ERP integration?
Organizations that strategically invest in comprehensive integration and modern technologies will maintain operational efficiency, adapt to changing requirements, and fully leverage their ERP investments. Artificial intelligence (AI) and other emerging technologies are becoming critical to the future of ERP, enabling advancements such as AI and machine learning for advanced data mapping that automatically identifies field relationships across systems. Predictive analytics can anticipate integration failures by identifying patterns preceding typical issues. AI-powered tools automatically detect and correct inconsistencies during synchronization.
Integration with emerging technologies, such as internet of things (IoT), supports real-time data collection from sensors, digital product password scans for traceability, and blockchain for secure transaction records.
OpenText B2B integration solutions are designed to address complex ERP integration challenges while creating a foundation for sustainable business growth, positioning you to seamlessly incorporate AI and other emerging technologies as your business evolves.
