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The Challenges of ERP-Integration

An ERP system does not only map out the core business processes, but it is also the system-of-record for some of the most critical data in an organization. Any modern manufacturing organization has several systems, ranging from ten and upward for small companies, to hundreds of systems for larger enterprises (see here). Many of these systems need access to the data that resides in the ERP systems to work efficiently and vice versa. Without an integration between the systems where data can flow freely, the systems will either lack data or need to be kept coordinated through manual effort. 

Variety of Data Sources and Implementations

According to a survey conducted by IDG in 2021, respondents reported the following top three sources of data for their ERP systems: 

  • 68% CRM systems
  • 66% HR systems
  • 66% partner’s applications

The respondents of the survey also indicated that almost half of the transactional data (44%) in their ERP systems comes from systems outside their own organization. As if the complexity were not high enough already, many organizations have multiple ERP deployments; on-premises (53%), in the public cloud (45%) and in the private cloud (55%). The number of systems that need to be integrated and the diversity of their integration mechanisms and deployment models is clearly a challenge on its own. However, nearly half of the organizations cite lack of expertise around modern integration technologies and competing priorities as the largest obstacles to achieving an integrated ERP landscape. 

Loss of Connectivity as a Result

The effects of these issues can be felt in a very tangible way in an organization. Most respondents to the above-mentioned survey (63%) experienced loss of connectivity over the last year. Notably, that number rose to more than three quarters (78%) for organizations that are not using a centralized integration platform. Connectivity-loss in the short term may lead to increased manual effort and effort spent to rectify the problem. Even worse, it may also lead to inconsistencies in data across systems, which is time-consuming and expensive to correct. In the worst-case scenario, extended loss of connectivity may cause production to come to a halt. 

Integration Platform as a Solution

There is obviously no shortage of challenges when it comes to ERP integration, but some are more easily overcome than others. As indicated in the survey by IDG, companies that use integration platforms to conquer their integration projects fare better than the ones who do not. However, it is important to note that this applies only to the companies that use the same platform for most of their ERP integrations. Using a different platform for each new integration effectively eliminates the benefits of a platform approach compared to developing bespoke integrations. Another, too often overlooked prerequisite to be successful with a platform approach, is choosing systems with standardized, scalable, and open integration mechanisms such as RESTful APIs whenever possible. The latter significantly reduces the integration effort and the need for hard-to-find niche competencies in the challenging situation of skill-shortage and lack of development capacity that most organizations face today. A case which cannot be made for legacy integration platforms based on such as Electronic Data Interchange (EDI) solutions. 

Managed Services by Third-Party Integration Partners

Third-party integration partners can be an effective way to relieve overburdened in-house IT teams and fill skill-gaps in the short term, but it is important to remember that integrations require maintenance and updates as systems and data requirements change, making costs harder to defend in the long term. A more viable alternative may be to use managed services, where one only pays for the actual work being carried out and where one buys expertise-as-a-service rather than managing the risk of hiring specific resources oneself. 

Top three tips for avoiding ERP integration headaches: 

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