Enterprise Resource Planning systems, or ERP, streamline business processes by integrating the routine management of multiple departments into one software system. Large companies that need to manage their finances, supply chain management, customer service, and human resources often want to do so in a single centralized, integrated solution. Therefore, these companies turn to ERP integration.
ERP systems are in high demand because of their ability to communicate with existing business software. However, such integrations are often complex and costly, no matter if the system is an on-premise solution or a cloud-based ERP. Business owners need to be aware of common pitfalls of ERP integrations while weighing the different options.
Potential Pitfalls of ERP Integration
When evaluating an ERP application for possible integration, consider these factors:
ERP software is often very complicated, requiring specialized knowledge to manage the system. Because of this, some departments may not take to the new software as easily. It’s important to get major stakeholders and decision makers on board before pursuing a new ERP integration. Lay out a timeline and estimates for the integration, so the necessary departments can prepare accordingly.
ERP integrations for large businesses can be very costly upfront. That’s why doing your research and testing your integration before committing to it is so important. Besides the direct costs of software, you need to consider the indirect costs as well. Will you need to pay someone to maintain the system? What if you have technical problems? What if the system malfunctions? Include these indirect costs in your estimate. To make sure you aren’t wasting your money, check out this cheat sheet of features to look for in an ERP integration.
Because of the complexity of the software, teams usually require training on how to use it. This adds more cost in both time and money. If you’re developing custom middleware to connect your CRM and ERP, for example, you’ll need to provide additional training specifically for that.
While many companies originally intend to implement off-the-shelf technologies, project requirements often require customization. ERP implementations in particular usually require a lot of customization. Whether this is a custom interface or middleware to connect the ERP to your existing IT systems, customization is nearly unavoidable these days. And that’s a problem.
According to a report by Panorama Consulting, only 23% of organizations use ERP solutions with little or no customization. On the other end, 34% of organizations say they “heavily” customize their software.
Customizing the system allows your business to meet each of your departments’ specific needs, but also adds a layer of complexity and risk to the product.
ERP Integration Considerations
Many ERP solutions provide a number of modules to interact with their software, but third-party business services require a custom integration. While ERP software is flexible enough to integrate with your existing workflows and systems, that can also be its downfall. According to Toolbox, many companies end up creating complex custom middleware to combine multiple systems (such as connecting a barcode reader or your CRM, for instance). As described in the Customization section above, the flexibility can work against businesses when it makes maintenance and upgrades difficult.
In addition, be prepared to answer questions about data exchange (how will data pass from one system to another, and does it need extra reformatting?). A package for your ERP may exist, but more than likely you’ll have to build an external integration to manipulate the data from one format to another.
You also have to make sure you evaluate the capabilities of the ERP system, as well as determine which services you want to integrate and which you don’t.
Because of these potential pitfalls, it’s important to consider the ease of ERP integration and maintainability when choosing a system.