It's not just superhero shows and war films that use the phrase "United We Stand, Divided We Fall." This is an excellent example of how ERP integration can be crucial to running a business. Your business can increase its revenue and automate processes by combining multiple " best-of-breed " applications to create or strengthen a nearly custom ERP solution. What is ERP Software, and what does Integration mean? This article will look at these definitions and some of the challenges, benefits, and pitfalls associated with ERP integrations.
What is ERP?
Companies of all sizes use software for enterprise resource planning to automate and streamline business processes. It could be accounting, human resources, or distribution. ERP software has many advantages, including its being a central data hub to facilitate a wide range of workflows. This makes it easy for departments to exchange data. ERP software automates processes that are typically completed manually across different departments. An ERP, for example, could automatically transfer financial information from your accounting software to a sale order.
Market Analysis of ERP
ERP traditional systems are located on company premises and installed on machines locally. Cloud technologies have spread around the world in recent years. ERP has also changed. ERP is now a popular choice for companies to create systems accessible via the Internet. Cloud providers are also used to build their data centers.
Many mid-sized businesses were moved to the cloud in 2019 and 2020. They previously used legacy ERP software and are now shifting their business to the cloud. Cloud ERP systems are less expensive to implement than traditional ones, even though the terms of the different providers can vary. The SaaS model was preferred by 86.3% of the cloud-based ERP systems adopters. SaaS helps reduce IT costs as the provider maintains and upgrades the software. SaaS buyers have limited customization capabilities.
Pandemic Impact on the ERP Market
COVID-19 has been a pandemic that affects most businesses. Travel restrictions and remote work increased demand for IT Services, particularly cloud-based ERP, collaboration, and productivity tools. Pandemics forced companies to adopt remote-working models. ERP systems were crucial in helping to establish business consistency, provide remote access, and manage real-time information.
ERP Use in Different Industries
ERP software was first introduced in manufacturing in the 1990s. Initially, the systems used to manage accounting and HR were first developed. They can now be customized to suit different industries and departments. Here are four examples of ERP systems for various industries.
Manufacturer
A single manufacturing system combines many complex processes. Cloud-based ERP solutions will integrate different departments and help them to work together more effectively.
- Supply Chain Management, Procurement Control
- Delivery of goods to final customers
- Monitor the equipment and operations
Research shows that 48 percent of manufacturers say a software program tailored to their industry helps them increase efficiency.
Healthcare
A HIMSS Analytics report shows that the industry has adopted ERP software at a rate of 38.4%. The US healthcare industry is projected to grow by 5.6% GAGR and reach $ 2.1 billion in 2025. ERP is not only beneficial to businesses but also to patients.
- Simple Medical Record Management
All the data about a patient can be stored in one place, such as vaccinations, travel histories, prior illnesses, etc. Doctors, nurses, and other medical personnel can quickly find all the information they need and get a complete picture of the patient's health.
- Enhance Confidentiality and Security
Medical records contain compassionate data that needs to be safeguarded from unauthorized access, accidental loss, or damage. You can protect documents by using advanced security features in an ERP system.
- Simple Compliance
Healthcare has some of the most stringent regulatory standards. In order to meet these requirements, companies need a way of storing and delivering their documents securely. Adherence to international security standards can lead you into a world of trouble.
Hospitality, Tourism
The ERP system can help tourism companies to manage their internal processes as well as the interaction between the company and the customers:
- Bookings, tickets, and leisure activities: the management of a whole tour
- Visa facilitation, vaccine status.
- Hotel staff management: cleaning schedules and appointment management. Monitoring restaurants, leisure activities, and hotel employees.
Retail
The company can easily sync its sales and marketing teams' work by integrating CRM and ERP systems. Retail enterprise integration can have many benefits.
- Create customized offers with full access to the customer's history
- Quicker order processing, improved customer service
- Predicting customer behavior using accurate analytics
- Discounts tailored to your needs
What is Integration?
Integrating ERP systems with other software allows for sharing of information and automation processes. This is because it can affect the relationship between ERP systems and those of other vendors, allowing businesses to customize their solutions and choose specific tools. This is the most extreme version of it, called postmodern ERP strategies. It is a way to create a customized ERP system that will be unique for your company. This involves combining solutions from different vendors.
Implementing ERP can help streamline processes even if your strategy is more conventional. This is because it improves communication between modules. It is extremely time-consuming, for example, to input data from an ERP into another program. This process can be streamlined and human errors reduced. Human mistakes can be disastrous for your business. In a study, 57% of the prescriptions sampled had typos. A typo may not have a life-or-death impact on your business but can cause inefficiency.
As your company grows and your software becomes more sophisticated, it's more likely that you will encounter inconsistent data or clunky solutions. ERP integration reduces the possibility of inefficient workflows by centralizing information. This leads to improved collaboration and transparency amongst employees.
Integration Benefits
We can now go into greater detail. We'll examine the benefits of ERP integration and see how it could affect your bottom line.
Centralized Data
All your data being in one place can improve workflows internally. Your accounting team would not have to contact the sales department monthly to get an update on revenue. Data centralized in one place helps streamline business processes. It also reduces time spent by employees waiting for information from other departments.
Automated Processes
Automation is a good thing. ERP integrations streamline workflows and processes in different departments. It reduces manual work and the time required to complete tasks.
Workflow Visualization
Data centralization allows for better visualization of tasks and workflows in your company. Integration with project management software will enable employees to view other colleagues' work. It can also be helpful when asking for feedback or determining the priority of tasks. If you are requesting a reporting standard from your manager, but they're working on an urgent request by the CEO. It would be best if you downgraded the level of severity.
Reduction in Human Error
ERP integration increases automation along the business workflows. This can reduce human errors. Automation can help you avoid mistakes and send emails to the wrong clients, which could negatively affect your business. Human error is a huge problem. A reduction of this rate would give your business a competitive advantage.
Spend More Time on Labor-intensive Tasks
By reducing employees' time on data entry and other tasks, they can devote more time to their core duties. Automation can automate various functions, allowing your staff to focus on more critical work that requires human interaction.
Different Types of Integration
Communication and customer service are two essential elements of any successful business. Customer service that is second to none can help you gain a competitive advantage. This is why CRM and ERP integration can be relatively easy to implement. Integrating your CRM with ERP is essential if you already use one. This is because demand and supply are closely linked. The connection between ERP and CRM is designed to simplify the sales and marketing process.
Business Intelligence
The Business Intelligence software (BI) is a handy tool. BI software collects and analyzes internal data to help companies gain insights into new business ventures. BI data insights are frequently used to launch new software. Integrating your BI solution with your ERP software allows you to make these insights available anytime.
Human Resources
In the HR department, back-office functions are essential. The HR department deals with all employees in your company, regardless of their title and leadership position. Connecting your ERP workflows to your HR vendor allows you to automate and track time-consuming tasks in the back office.
Project Management
Most ERP systems come with a solution for project management. The ERP's project management solution is likely less advanced than your existing third-party software. The project management integration is valuable because it aggregates all your tasks, workflows, and processes in one location. Employees can view which projects have been completed, those still in operation, and who is working on them. They can also see what projects will be coming up. It can save a lot of time. You could see which developer has been assigned to fix a particular bug or which sales representative is following up on a specific lead.
eCommerce
Efficiency is the buzzword that encompasses all benefits of integrating e-commerce. Integration of ecommerce apps can be beneficial to any business that handles orders. This is mainly because the implementation involves data collection. The most important data companies collect are those related to customer information, orders, inventory, and shipping. This data can be used to automate data transfer and eliminate the need for manual entry.
When integrating ERP, these five third-party features are standard and essential. It's crucial to ensure that the integration process is as seamless as possible when you begin. Your ERP provider can tell you which third-party vendors they integrate with. Our Leaderboards can help you select from the many vendors on the market.
Read More: Effective Inventory Management System can Boost Business Productivity
Approaches
The implementation of ERP integration can be done in a variety of ways. Your business's specific needs will determine the best ERP integration solution. This can include factors like your current system, integration budget, and whether or not you have a hybrid cloud/on-premise solution. You may want to consider the following ERP integration options:
Point-to-point
A point-to-point integration connects the ERP to every software and tool separately. This method has the disadvantage that each software or agency must be integrated independently. The process becomes more complex as new devices are introduced. Some companies choose point-to-point communication because of its relatively low entry barrier.
Custom Applications
They may choose to develop their custom applications to connect their business tools. Custom applications may start with only data-transfer capabilities but can grow into more complex workflows and tasks. The maintenance of custom applications can be challenging as companies grow and introduce more software tools.
Enterprise Service Bus
ESBs represent the latest in integration technology. An ESB connects applications by a "communications bus" that acts as a centralized communication tool. This integration method is advantageous because it allows other applications to remain unchanged when introducing a new component. The bus will centralize all communications. Doing this is much easier than using custom applications or point-to-point Integration.
Challenges
ERP integration can be highly advantageous but takes work. Data suggests that 60 percent of ERP implementations are unsuccessful in one way or another. It could be the failure of a system or an inability to achieve a specific goal. ERP systems can fail for many reasons. It's essential to consider these ERP integration issues when choosing and modifying the right solution. Consider these potential roadblocks before you deploy your solution.
IT Integration Requires a Coherent Strategy
Choosing an ERP system can be a strategic decision. It's essential to consider how your business runs and align a possible ERP solution with its goals before deciding which program is most suitable for you. As part of the first step to selecting software, you should define your ERP solution.
Consider, for example, the functionality your company needs to run efficiently. You might need shipping labels that are a specific size. Be sure to communicate this to all software providers you work with. You can ease the workload on your IT team by creating a detailed list of requirements and developing an ERP integration strategy.
Maintaining and Updating ERP Integration
Consider the maintenance of your ERP implementation depending on your chosen method. For example, if you select a point-to-point integration, you must update and modify your system when elements are removed or added. There will likely be a cost associated with updating your software. This should also be considered when choosing an integration method.
Cloud Solutions Are a More Cost-effective Alternative for Erp Integrations That Involve Legacy Applications
Integration of legacy applications, which were not built to be compatible with new platforms, can be costly and complicated. Middleware software can help with these issues but can be expensive and involve manual work and customization. Upgrades to existing on-premises systems can be costly. Alternatives include cloud solutions that integrate well with various ERP systems.
Pay-as-you-go pricing may reduce the overall cost of ownership. It doesn't mean that all ERPs will be cloud-based. Many companies could benefit from moving certain functions to the cloud. As many ERPs support cloud-based applications, this option becomes more viable.
Potential Pitfalls
The Integration of routine management across multiple departments in one software program streamlines business processes. Many large companies want to integrate their finance, customer service, and supply chain management into a centralized solution. These companies then turn to ERP integration.
ERP systems are highly demanded due to their ability to communicate with other business software. Such integrations can be complex and expensive, regardless of whether the ERP system is cloud-based or on-premise. Business owners should consider the standard ERP integration pitfalls when weighing different options.
Complexity
ERP software can be very complex and require special knowledge in order to operate. Some departments might need more time to adapt. Before integrating a new ERP, it's crucial to have the significant decision-makers and stakeholders onboard. Set a timetable and estimate for the implementation so that departments are prepared.
The Cost of the Product
ERP integrations can be expensive for large companies. It's essential to do your research, test your Integration and ensure you are comfortable with it before committing. It would help if you also considered indirect costs. You will need to hire someone to keep the system up to date. If you encounter technical difficulties, what should you do? What happens if your system fails? Incorporate these indirect costs into your estimation.
Train Yourself
Teams usually need training to learn how to use complex software. It is a time-consuming and expensive process. You'll have to offer additional training if you are developing middleware that connects your Customer Relationship Management with ERP.
Customization
While most companies initially intend to use off-the-shelf technologies, the project often needs customization. ERP implementations, in particular, require extensive customization. Customization is standard, whether it is a customized interface or middleware used to integrate the ERP with your current IT systems.
A Consulting report shows that only 25 percent of companies use ERP systems with minimal or no customization. The report also found that 75% of companies use a solution with at least 11% code modifications to make it unique. Customizing the system will allow your company to cater to each department's specific needs. However, it also increases the complexity of the product and the risk.
Questions to Ask Before You Integrate
ERP integration takes time. Integrating an ERP system has numerous benefits, including reduced errors, higher revenue, and increased productivity. There are some questions you can ask to help you decide which ERP vendors you want to work with and whether ERP integration is proper for you.
Can Operations Be Standardized on a Single Platform Without Losing Functionality or Productivity? Are Any of the Operations Still Independently Run?
You need to confirm that the selected software can be seamlessly integrated when speaking with your vendors. Consider how some features might work outside the integrated ERP. It may be necessary to also consider "best-of-breed" software.
What Will Be the Vendor's Plan to Ensure That My Data is Migrated With Minimal Disruption and Maximum Efficiency?
Consider how an ERP system will affect your business. There may be a period of downtime between the installation of the new ERP system and the uploading of historical data. It is important to ensure that recorded data can be uploaded to the system in a timely manner so you retain valuable insights.
Does the Vendor Have Any Experience in My Field?
It is essential to ask this question for every software you purchase. In this case, ask the vendors if they are familiar with your industry and ERP integration. Vendor experience can indicate the difficulty of implementation.
What is the Cost of Standalone Solutions? What is the Cost of Integration and Maintenance?
When integrating ERP systems, there are a variety of costs that need to be considered. It is essential to know the cost of each design and what Integration and maintenance will be.
What is the Process of Software Training? Does the Software Vendor Provide Training, or Do You Have to Engage a Third-party?
You should factor in the cost of training into your budget for software. Depending on how much support your vendors offer, you may need to hire an integration consultant.
Can You Get by With a Standard Erp System?
ERP programs are available in a variety of formats. There is no customization required. A basic ERP system is best suited for businesses with standard business requirements and no customization.
The Future
ERP integration changes with technology. The tools were available to integrate with ERP, and the implementation methods were included. Postmodern ERP is driving the current ERP integration boom. This strategy has been discussed in the article. However, to refresh your memory, postmodern SAP is a customized solution that allows companies to select modules and standalone software to be integrated to form a unique, custom solution.
ESBs are leading in the Integration of ERPs as technologies change. It allows for new integrations without affecting the communication between other tools. In other methods, such as the point-to-point approach, a new software integration can affect connectivity because of how closely it is woven into other devices.
Last Thoughts
Enterprise Resource Planning solutions can benefit companies of all sizes in terms of productivity and profitability. Like most technology-based businesses, ERP software constantly changes to meet business demands. ERP integration has become so popular in industries today. The customization options are appealing and successful. It would be best to consider the tools you want to integrate into your ERP solution and the integration type that will work best for you before you choose an ERP integration strategy. In today's technological industry, you have many options. ERP integration is a crucial factor in automating fundamental business tasks. Automation can improve employee productivity and performance without adding to operational costs.
