What Is ERP Integration: Understanding the Methods, Benefits & Risks Involved

What Is ERP Integration?

ERP integration is the process of connecting your ERP Software with other third-party systems and external SaaS applications. That includes CRM, HRM, finance, inventory, e-commerce, and business intelligence.

ERP integration is one of the most complex and business-critical parts of ERP adoption. 80% of IT buyers prioritise ERP systems with seamless integration capabilities.

By integrating other apps with your ERP, departments can share accurate, consistent data with real-time data workflow. This creates a single, unified view of business performance and offers clear advantages, like:

• Greater insights into data, and the value of business processes and supply chains
• Identifying and eliminating data silos for improved analysis, centralising data sources
• Automating business processes and delivering faster analytics through live dashboards across the business

For many businesses, ERP integration is essential to modernising legacy systems, improving security, and unlocking the full value of their ERP investment.

How Application Integrations Can Supercharge Your ERP

Integrated ERP applications compile data from all departments to generate business intelligence. Changing the business perspective around ERP delivers a broad view of activity, so managers and leaders can drill down into the details and data.

When successfully integrated across the business, the benefits of the ERP should rapidly become apparent. They include the ability to:

• Save money on multiple applications with redundant features
• Track and improve budgets, workflows, productivity and processes
• Identify delays, manage costs, and find efficiencies to balance budgets
• Understand analytic trends to drive long-term business growth

When integrated, data can be viewed live or displayed in operational or strategic reports across the business, highlighting issues or opportunities for improvement through analytics tools or AI-powered suggestions.

The results for the business are clarity into expenses, visibility into opportunities or potential efficiencies and data to drive business growth.

Beyond immediate operational benefits, ERPs can also integrate with other services, such as AI and automated or low-code tools for analytics and the development of custom features by users, and with social media tools for marketing.

What Are the Most Common ERP Integrations?

A successfully integrated ERP can import data from external applications, managing:

• Accounts and finance
• Supply chain for materials or stock inventory
• Warehouse (WMS) and distribution
• Business intelligence (BI)
• E-commerce sales, orders and returns
• Manufacturing
• Product lifecycle management
• Customer relationship management (CRM) and service
• Data from marketing efforts
• Human resources and people management

3 Primary Methods for ERP Data Integration

There are three main methods of ERP integration:

1. Native

ERP systems offer pre-built connectors or out-of-the-box integration capabilities with business applications. These native connectors are vendor-supported and are updated automatically, making them ideal for common cloud apps. They require minimal configuration and are typically the fastest to deploy.

2. iPaaS

Integration Platform as a Service (iPaaS) solutions provide a scalable, cloud-based way to connect ERP systems with a wide range of tools and services. Also known as middleware, these platforms act as middlemen for connecting hundreds of applications to ERP systems, reducing the need for custom development.

iPaaS platforms also handle API management, data transformation, and error handling. This method is ideal for businesses that need to connect multiple systems efficiently while keeping integration complexity manageable.

3. Point-to-Point (Custom)

For applications without native support or available connectors, custom integrations using APIs, SDKs, or plug-ins are often required. These point-to-point solutions provide maximum control and flexibility but demand more development effort and ongoing maintenance.

Strong API management is crucial here to ensure security, version control, and consistent data flow. In practice, most businesses use a hybrid of these methods, mixing native, iPaaS, and custom API integrations to suit their specific application stack and goals.

How the ERP Integration Process Works

ERP vendors can make data integration sound simple. They may explain it as just two systems with application program interfaces (APIs) simply talking to each other. However, the process can be time-consuming and complex, depending on your business needs and existing applications.

Senior procurement executives cited “poor integration across applications” as one of the top three issues businesses were facing today.

Many businesses focus on a core ERP integration first and then expand to capture additional data over time.

Typically, the integration of applications and ERP systems will look something like this:

1. API tokens for both your ERP system and the intended integrated applications are configured
2. Integration flows are set up to instruct how and what data should be transferred from applications
3. Pipe connections are established through the connector method (native, iPaaS, or Custom)
4. Data mapping and modifiers are put in place to ensure the right data fields are input
5. Regular, real-time data synchronised schedules are set up

Top Challenges Associated With ERP Integration

51% of businesses blame integration problems for not leveraging the right business data. While 31% believe integration testing to be the biggest challenge when testing an ERP system. This highlights a key point: getting your ERP integration right is crucial to the successful use of business data.

However, there are three main challenges that businesses face with ERP integration:

Data Silos and Incompatibility

Data from legacy, bespoke or niche applications can be a challenge to import into the ERP. These typically require extra steps and higher costs to import.

Personnel and Personality Issues

Some departments or team leaders might not appreciate extended visibility into their data or applications. Explaining the broader business benefits and the ability to improve performance can overcome resistance.

Impact on Business Operations

Switching to an ERP requires training and explaining to users the value of the ERP’s functions. Doing this in advance and creating a strategic vision for business data makes the change about business growth and not a focus on IT or systems.

How to Drive the ERP Integration Process

Integrating an ERP successfully into your business requires a clear understanding of your current business applications and identifying the data sources to integrate. As part of the analysis, build and validation process most software adoption follows, integration plays a key part at every stage to ensure a successful deployment.

The need for integration may happen as part of a wider digital business transformation, an ERP integration strategy, or solving pressing issues as companies grow or acquire other firms.

Most vendors provide a series of ERP integration best practices to follow to deliver success, while software integration platforms can support complex efforts.

Acquiring the right ERP also requires some technical knowledge, plus the right training and messaging for users to ensure it delivers maximum value.

Creating a cross-functional team in charge of the ERP integration helps:

• Assign leadership support to key tasks
• Deliver an audit of applications, data sources and existing integrations, silos of data
• Understand who will use the ERP and is responsible for data across departments
• Identify problem applications and data
• Ensure business continuity across and beyond the integration
• Encourage adoption and solve post-ERP implementation issues

The ERP integration may take place in phases to reduce the risk of impacts on the business, or as a single process to move all workers and departments to the new ERP.