What is ERP? A Comprehensive Guide

9 minute read | 11 Apr 2023

By Boomi

Every moment spent searching for a piece of information is a moment not spent acting on that information. Enterprise resource planning (ERP) systems collect vast amounts of information from every business function and store it in a central location for easier discovery. That way, you can make the best, data-driven decisions for your business.

But how information flows in and out of an ERP is often time-consuming and cumbersome. When that happens, vital business information can remain tucked away in other specialized systems, hidden from all but those who deal with that system every day. This is what we mean when discussing “data silos” and how they can hinder business productivity.

It doesn’t have to be that way, though. ERP integration removes the barrier of manual data transfer across all business applications. This guide will explain what ERP integration is, why you might use it, and how you can integrate your ERP with other critical business applications.

What Is Enterprise Resource Planning (ERP)?

ERP systems are platforms businesses use to collect, store, track, and analyze large amounts of data and business activities. ERP systems act as a central repository for information from across the organization and are generally considered a single source of truth for the business.

An ERP system will often touch many aspects of an organization, including finance, human resources planning (HRP), business intelligence (BI), customer relationship management (CRM), supply chain management (SCM), and materials requirements planning (MRP). Given the broad reach of the ERP system for internal functions and external audiences like customers and partners, ERP data must always be as accurate and complete as possible. That explains the importance of continuous, real-time connectivity between the ERP system and other business applications.

What Is ERP Integration?

ERP integration is the process of creating connections between a company’s suite of business applications and its ERP system. When these applications are integrated with the ERP, all relevant business data is automatically brought into the ERP system, and ERP data is shared back to the other applications. This broadens the available information sources, creating a richer and more comprehensive view of the organization’s financial and operational situation.

5 Benefits of Enterprise Data Integration

When business data is stored in a specialized system, information is siloed. That presents many risks, including duplicated efforts, decisions made on incomplete or inaccurate information, and lost opportunities for collaboration.

When your ERP is integrated with your other business applications, the data is accessible to every person in your organization — and every other application. The benefits of ERP integration are numerous and far-reaching. Here are three examples:

1. Real-time data

With ERP integration, data entered into one system is updated automatically, in real time, across every other system connected to the ERP. This dramatically reduces the need for manual data entry and the possibility of inaccurate information caused by human error. When the data is synced across the entire suite of applications in addition to the ERP, there will be greater trust in the accuracy. This enables faster, more trustworthy data analysis, which leads to sound business decisions.

2. Workflow automation

ERP integration does more than make data available. It also makes data actionable without the need for human intervention. Many processes, such as help desk ticketing and contract lifecycle management, can have events set to trigger automatically when a record is updated. This offloads the responsibility of advancing a workflow from a person — allowing them to focus on higher-value tasks.

3. 360-degree customer profiles

Integrated customer experiences require integrated business systems. ERP integration keeps every customer detail attached to their profile, no matter where in the sales process they are. This allows sales reps, product developers, and even marketing automation platforms to have a complete understanding of individual customers as well as deep insights into broader market trends that would otherwise be unavailable.

4. Cost Savings

While implementing an ERP system and integrating it with existing software may involve initial investments, the long-term cost savings can be significant. By automating repetitive tasks, reducing manual errors, and optimizing resource allocation, ERP integration helps lower operational costs.

5. Scalability

ERP integration offers scalability by providing a modular structure that allows organizations to add or customize features according to their needs. Whether expanding into new markets, adding product lines, or accommodating organizational changes, ERP systems can flexibly accommodate these transition and allow for true scalability.

What are the core ERP modules?

ERP systems typically consist of several core modules that address various functional areas within an organization. While the specific modules may vary depending on the ERP software provider and the needs of the business, some common core modules include:

Finance and Accounting: This module manages financial transactions, including general ledger, accounts payable, accounts receivable, fixed assets, budgeting, and financial reporting.

Human Resources (HR): The HR module encompasses functions related to employee management, such as payroll processing, benefits administration, time and attendance tracking, recruitment, performance management, and training.

Supply Chain Management (SCM): The SCM module focuses on optimizing the flow of goods and services from suppliers to customers. It includes modules for inventory management, procurement, order management, demand forecasting, supplier relationship management, and logistics.

Manufacturing: The manufacturing module helps organizations plan, schedule, and control their production processes. It includes features for production planning, shop floor control, work order management, bill of materials (BOM), routing, quality management, and product lifecycle management (PLM).

Sales and Customer Relationship Management (CRM): This module focuses on managing customer interactions, sales activities, and marketing campaigns. It includes functionalities for lead management, opportunity tracking, sales forecasting, customer profiling, order management, and customer service.

Inventory Management: The inventory management module helps organizations track and manage their inventory levels across multiple locations. It includes features for inventory tracking, stock replenishment, warehouse management, barcode scanning, and inventory valuation.

Project Management: The project management module helps organizations plan, execute, and monitor projects effectively. It includes features for project planning, resource allocation, task management, time tracking, budgeting, and project collaboration.

Integrated ERP Use Cases

ERP integration can improve processes across many functions within your organization. Here are a few practical use cases demonstrating how fully integrating your ERP system into the business can provide immediate practical benefits.

ERP integration with ecommerce platforms

eCommerce platforms generate large amounts of customer data, such as time to purchase, the most popular products, and average cart value. All of this data is useful beyond quarterly forecasting. Integrating a company’s ecommerce platform with the ERP system can streamline the order fulfillment process through automation, update inventory software, and make customer analytics data available across the organization without needing to grant organization-wide access to the ecommerce platform.

ERP integration with project management tools

Most ERP systems will have a native project management tool. However, because ERP systems are not built specifically for project management, the functionality may be limited compared to other purpose-built tools. Integration between your project management tool and your ERP system allows you to take advantage of the functionality your team needs without sacrificing data portability.

ERP integration with BI tools

Business intelligence (BI) tools contain a wealth of information about the inner workings of your company. That information has traditionally been siloed, which prevents companies from getting real-time perspectives on internal processes and trends. When that data is accessible across the organization, unique insights can emerge to any number of business challenges.

ERP Integration Use Cases

ERP integration does not look the same in every organization. How you implement ERP integration will depend on business needs, regulatory requirements, staff capabilities, and more.

There are three main approaches to ERP integration:

Point-to-point integration

ERP integration with one other application can be relatively straightforward. This is especially true if the application has a pre-built integration module. However, this type of integration becomes labor-intensive when the number of integrations required increases as a business scales.

Enterprise service bus (ESB)

Enterprise service bus (ESB) integration creates connections between multiple programs within an organization by standardizing how the data is processed and shared. This integration method is developed internally, so it’s customizable to any given organization’s needs. The flip side, however, is that these connections also need to be maintained and updated in-house, and new connections can potentially interfere with or even break old connections.

Integration platform as a service (iPaaS)

Using an iPaaS for ERP integration is a fast and flexible solution. An iPaaS will have pre-built connectors for nearly every application your organization uses so that the ERP integration process will have the simplicity of a point-to-point integration with the multi-application connections of an ESB system. What’s more, because this is an “as-a-service” solution, it does not require in-house maintenance and will continue to develop new connectors for emerging applications.

ERP Integration With Boomi

Boomi is the iPaaS market category pioneer and continues to lead in its development. Our mission is to enable businesses to achieve their best outcomes through intelligent integration and automation. That connectivity begins with ensuring ERPs are integrated with the entire business.

Learn more about modernizing ERP to drive more value from your data with our eBook, “Modern ERPs Allow Organizations to Integrate and Accelerate.”