ERP Integration: What It Is and How It Works

erpintegration

Enterprise resource planning (ERP) is the secret to the most successful ecommerce brands. 

ERP refers to the software and systems that connect all business processes: finance, manufacturing, supply chain, sales, procurement, and others. At a basic level, ERP integrates these processes into one system. 

An ERP can’t be used right out of the box. It needs to be integrated with a business’s structures and goals. It brings together data, from financial to logistical and human resources, in support of enterprise-level planning and operations. 

Having a centralized ERP is critical for a large-scale ecommerce enterprise, and the integrations you choose reflect your success. In this guide, you’ll get an in-depth look at the basics of ERP integration, as well as how you can start building your ERP system today.

Table of contents:

What is an ERP integration?

ERP integration is the process of connecting an enterprise resource planning system with other software applications, databases, or external systems. It powers seamless data flow, synchronization, and automation across different business functions. This in turn enhances efficiency, visibility, and decision-making capabilities within an organization.

Simply put, it’s a way of automating business processes and improving productivity across the enterprise. 

Some 73% of companies consider breaking data silos and fostering better internal communication and collaboration to be very or extremely important. ERP integration helps create a single source of truth in your business, which means that relevant information can be shared across departments quickly and easily. 

The most common integration methods include: 

  • Custom integrations, which refers to a business building their own core integration. Programmers can match a software’s API code with the ERP system they want to integrate with. They require technical resources and take time. 
  • Vendor-built or native integrations, which refers to out-of-the-box integrations that allow you to connect specific applications. For example, many tools today connect directly with Shopify. They cover popular use cases and typically don’t have additional subscription costs.
  • Integration platform as a service (iPaaS), which is a cloud-based solution that builds and deploys integrations. With iPaaS, organizations can create workflows that connect cloud-based applications and deploy them without installing or managing hardware. 

Ecommerce businesses may use an ERP to automate the order-to-fulfillment process. For example, if you integrate NetSuite with a Shopify store, you could automatically bring orders and customer data from Shopify into NetSuite at checkout. You could also use a connector to push information to a 3PL partner. 

This can help businesses get orders fulfilled faster and increase same-day fulfillment of website orders. Think about the number of labor hours that could save you per month.

Without an ERP integration, the company would have to manually update inventory counts in its ERP system and ecommerce application. As sales volume increases and inventory expands, inefficient and labor-intensive operating processes are hard to scale. 

That’s the beauty of ERP integration. Whether you’re B2B, B2C, or DTC, as your business grows, so does the complexity of your operations. You end up requiring more than disconnected siloed solutions can provide.

Other ecommerce aspects such as stock management, purchasing and supply chain, CRM, fulfillment, and sales and payment information are also integrated into an ERP. If there is a siloed or fragmented approach, there will be inconsistency within the business. 

Benefits of ERP integration

Imagine your business activities like a running car engine. Being able to look under the hood while it’s running can help you decide whether it’s time for maintenance, or if you have another 1,000 miles until your next oil change. 

ERP integrations help give you an overview of your enterprise and all its running applications. They can help track key performance indicators in real-time, ensure data integrity, and much more. 

Let’s look at some top benefits of ERP integration. 

Upgraded legacy systems

In today’s competitive business environment, organizations are discovering they have no choice but to add a modern ERP system. 

Software bought years ago may no longer support the company's business model and can hinder innovation. In fact, 94% of surveyed organizations say timely innovation is important and ERP helps with it.

An enterprise commerce brand may go global or need more internal procedures. These reasons can turn a legacy system ineffective.

If businesses want to gain competitive advantage, they need access to real-time data insights. These insights are important if you want to improve customer experience or optimize your supply chain. 

For example, if you manage inventory through a legacy system, it may not integrate with other systems. This can make it difficult to confirm and schedule orders because there is no way of knowing if there’s enough inventory on hand to order. It can cause supply chain issues since buyers can’t always reorder inventory, and more. 

Modern ERP integrations have advanced capabilities that can provide analytics that help you optimize inventory management and improve customer experience by never running out of stock. Many ERP vendors also make several updates per year, so you’ll consistently upgrade your system and see related business improvements.

Centralized data

ERP integrations make it possible to centralize enterprise data and improve communication throughout the business. They help create a central hub where all departments can access real-time data and take advantage of flexible, agile solutions in an ever-changing environment.

Without an ERP system, each department has its own records and databases. Teams can upload data and create reports and share them between different groups. But if there is duplicate data, they need to confirm data integrity, which creates more work and headaches for everyone. Legacy systems often use “gatekeepers” to share information, but they can quickly become overwhelmed with requests for information. 

Having a lot of data is one thing. But having accurate data and being able to access, analyze, and act on it is another. ERP integrations help you build ethically responsible and secure frameworks for managing and using data in your business. 

Automated processes

ERP integrations make life easier for organizations moving massive amounts of data each minute. As it stands, 67% of organizations cited ease of use as one of the top things they value in a commerce platform, and ERP can help with that. 

These integrations facilitate automated, bidirectional data exchange between your systems and apps, eliminating costly human errors. Automation can be used across numerous touchpoints to streamline business processes. 

The following activities can all be passed between systems to create an intelligent ERP system:

  • Order information
  • Customer data
  • Shipping details
  • Accounting systems
  • Product and price information
  • Inventory counts
  • Purchase orders

ERP helps bridge business and functional silos, but automation helps scale innovation. When combined with technologies such as AI and cloud, ERP offers nearly limitless possibilities for improving business processes. 

Better customer experiences

Great customer experience with personalization has been front and center for some time now. In 2023, 74% of companies increased customer experience spending overall. 

Yet serving a customer’s unique needs on one channel is not enough to sustain a competitive advantage. Businesses need to understand and create holistic, omnichannel customer experiences. 

ERP integrations can help businesses acquire a deep understanding of customer preferences and interests. Companies with an ecommerce ERP integration, for example, can access all the right tools to get to market faster and improve the customer experience.

Enterprise ecommerce SaaS Platforms: Key features expected by companies

The Role of Enterprise Commerce SaaS Platforms. Shopify

The way enterprises use ERP integrations for customer engagement will determine a brand’s success in years to come. Those who use ERP systems for intelligent customer engagement will succeed. 

Common ERP integration challenges and risks 

To review, what is the purpose of an ERP system? If you said to automate business processes and make the company more efficient, you are correct. 

Twenty-eight percent of surveyed companies have already gained significant benefits and efficiencies through the deep integration of a SaaS commerce platform into their business.

But integrating an ERP with other enterprise systems is not always easy. Here are a few common challenges faced when integrating ERP. 

Over budget

ERP implementations can cost three to four times what was initially budgeted. But don’t sweat it: the benefits outweigh the costs. 

The best ERP partners are key to creating a good ERP system for your organization. They’ll offer a suite of services to cover integrations and implementation, set clear goals, and get the right system in place for your company. 

Unsecured connections

Your ERP system is home to the most critical business information, including sensitive client data and proprietary intelligence. They must be protected at all costs.

Adding more complexity to your system through ERP integration increases the chances of unsecured connections, which puts your organization at a higher threat level when cyberhackers are targeting ERP software

Complexity

Implementations also tend to take longer than anticipated. Failures are often the result of poor communication and planning.

Businesses often have to overcome:

  • Internal resistance to new systems
  • Software integration issues
  • Poor data quality

People need to get trained to use the systems properly. Internal adoption and enablement is key here. Implementations can fall over post-launch if there's no internal champion or proper documentation of workflow. They also need to understand why there is a change in their process to stay motivated to learn the system. 

Businesses that have a clear plan for ERP integration and an understanding of their requirements can avoid becoming ERP failure statistics. 

Types of ERP integrations

The type of ERP integration you choose depends on your IT resources and specific business needs. 

Ecommerce

Ecommerce integration involves connecting your ecommerce system (like Shopify) with a cloud-based ERP solution. Together, they help expand your ecommerce store’s functionality and create better shopping experiences for customers.

Data including leads, customers, orders, shipping times, taxes, and customer support are all tracked through an ecommerce ERP integration. The point of the integration is to make data available to everyone in the organization who manages the ecommerce store. 

Benefits include:

  • Accurate, relevant front-end data available across all departments
  • Real-time inventory counts in front end and back end
  • Dynamic, customer-specific pricing options
  • Automated financial audits 

There are a few ways to integrate an ERP with your ecommerce platform:

  • Use the ecommerce solutions API on your own and customize the system. But you are fully responsible for managing it.
  • Use a third-party, out-of-the-box solution. If you need any customization, you’ll need to pay for it and rely on another team to get it done. 
  • Use an ERP system within a native integration to your ecommerce platform. An ERP with native integrations, such as Shopify-NetSuite, is the most flexible option. The ERP company creates a native integration into the ecommerce system. It’s agile enough to meet an organization’s needs and can adapt to market demands. 

Ecommerce brands can also integrate with different platforms to improve efficiency and cost saving, including:

Customer relationship management (CRM)

Every ecommerce company needs a standardized way to manage leads and customers. CRM systems manage customer data like purchases and contact information, which can be used by sales and marketing teams. Businesses use this data to gain better insights into customers and make informed decisions when it comes to interacting with them. 

For example, Salesforce and NetSuite by Oracle, an ERP and CRM integration, pass data between each other, which gives companies a 360-degree customer view. Whether it’s sales, support, marketing, or shopper data, your company will have everything you need in one place. The data can easily be used to create experiences that improve your relationships with customers. 

Business intelligence (BI)

Business intelligence software is designed to retrieve, analyze, and report data. BI software is important for companies undergoing a digital transformation because it provides visibility into a company’s data. It easily compiles and visualizes data so stakeholders can discover new insights and act on them to enhance their bottom line. 

In some cases, a BI function may be built into your ERP system. But often the functionality is not powerful enough for organizations that receive vast amounts of data daily. 

When a company connects a third-party BI system with an integrated ERP, these insights become easily accessible by any authorized employee. They also get access to advanced reporting that helps a business make the most of every piece of data it receives.

Human resources

No other department has more back-end tasks than human resources. Between payroll, recruitment, evaluations, and job offers, managing HR data can become overwhelming fast. Mishandling sensitive HR data is both costly and poses a security threat for any business. 

An HR module in your ERP helps manage, digitize, and automate HR department processes. Some benefits include:

  • Secure storage and management of basic employee databases 
  • Simplified payroll and compensation management 
  • Improved time and attendance management 
  • Better employee training and development 

Businesses can also get creative with their ERP HR module. They can send workplace surveys to gauge employee satisfaction levels, configure automated reporting, and easily implement and understand performance reviews across the organization. 

Project management

Like BI software, some ERP systems may include project management solutions. Yet many companies that begin building their ERP systems already use more complex project management software. Seeing the status of projects in your ERP is useful for a few reasons:

  • You can determine project costs.
  • You can see project updates and processes. 
  • You can figure out if project methodologies are working or not.
  • You can collaborate with HR and payroll departments.

When you create a project management module in your ERP, anyone can see who’s working on what and when it’ll be delivered. Understanding these workflows encourages ownership across departments and can help companies solve small project issues before they become big problems.

How to integrate an ERP with your existing software operations

The term integration has a lot of meanings in ecommerce. Any two systems with solid application program interfaces (API) should be able to talk to each other or be integrated. Often when someone refers to integration, they are referring to a prebuilt connector. These connections have different names depending on the host software—for example, Shopify calls them apps. 

An increasingly popular integration strategy is referred to as integration platform as a service (iPaaS). This is a cloud-based approach to integration that enables apps to sync faster and easier. It requires no coding and can connect ERP systems to SaaS products.

Many of these apps, or prebuilt connectors, exist on an iPaaS platform. Out of the box they are designed to start an integration with between 50% and 90% of the work done. They often require some tweaking by a developer or integration partner to complete the integration. 

To integrate an ERP with a system using an iPaaS integrator, you’ll need to: 

  • Configure the API token for your ERP and other systems you plan to integrate. 
  • Create flows that define interactions between your ERP and other applications. This will cover how the integration will transfer data and how CRUD operations will perform.
  • Configure pipe connections in the connected systems. 
  • Set up mapping and modifiers. For example, you can add a New Customer to specific contacts in your CRM. Then sync the label to your email marketing software to kick off a welcome campaign. 
  • Set up your sync schedule and frequency. If you want real-time synchronization, you’ll need to ensure the ERP system and other applications are automatically sending fresh data between each other. 

Shopify’s integration partners are referred to as “iPaaS partners.” The reason is that many of the prebuilt connectors are hosted on the partners’ services or cloud of choice. Most iPaaS offers include maps and transformations to speed up the development of integration flows and business rules for defining interactions.

Shopify integrates with top ERP software, including:

  • NetSuite
  • Acumatic
  • Brightpearl
  • Microsoft

For example, a Shopify store can install the NetSuite ERP Shopify App and transfer data to NetSuite. Then a NetSuite implementation team or NetSuite certified partner can add customization to the NetSuite implementation. 

ERP system integration best practices

Whether it’s your 1st ERP integration or your 15th, keep the following best practices in mind.

Have an integration plan in place

Before you look at integrating an ERP, create a plan with your team. Have one person who understands your business goals and internal processes head the project. Work with stakeholders to plan for any obstacles that may come about. 

When creating your plan, think about:

  • Why you want to integrate your store with your ERP system
  • What information you want to send from store to ERP
  • What information you want to send from ERP to store
  • Where the gaps in your inventory data are
  • What other systems like warehouse management or 3PL need to be integrated, and how the integration will work. 

Planning will help implement a smooth integration and reduce the chances of becoming a failure statistic.

Inform employees, partners, and vendors about change

Businesses using older, legacy systems will likely encounter some change and resistance when integrating an ERP. Business processes, roles, and other things central to how a company functions could be affected, so expect some pushback or roadblocks that may come with any organizational change.

Even those organizations using newer, cloud-based ERP systems (e.g., Netsuite) will likely experience some change to their processes and routines. They may discover that processes currently in place need to be adapted to an ecommerce integration and specific workflows. Communication throughout the integration project is key. 

Poorly informing warehousing and logistics staff could lead to confusion when orders start coming into an ERP system from an ecommerce platform if this team was not included in discussions around integration and fulfillment. Customer service could suffer as expectations and new processes (after the integration) are not aligned throughout the entire organization.

Practice good data management

Sound data management is the backbone of ERP integration. Having clean, reliable data that gives strong insight into your business processes and will impact your bottom line. You’ll want to regularly:

  • Cleanse data and normalize formats
  • Validate data to ensure accuracy
  • Review who has access to data and why
  • Eliminate bad or duplicate data

Good data management will reduce delays during the integration process and make the transition smoother. 

How Shopify can help with ERP integration

It’s clear ERP integration is the foundation of a successful ecommerce business. That's why 72% of companies already have a fully integrated SaaS commerce platform within their business operations. 

With Shopify's Global ERP Program, you can connect your ERP to your store with an enterprise resource planning partner through the Shopify App Store. 

What’s more, Shopify partnered with Microsoft Dynamics 365 Business Central, Oracle NetSuite, Infor, Acumatica, and Brightpearl to make ERP integration simple.

Screenshot of Shopify App Store’s ERP apps

Once your store and ERP are connecting, you can:

  • Access accurate inventory, product, order, and customer data in real time.
  • Implement automation to make operations more efficient. 
  • Avoid time-consuming and expensive customized implementations.
  • Have peace of mind that your data seamlessly and securely flows between your Shopify admin and your ERP.

ERP integration

What is ERP and how does it work?

Enterprise resource planning (ERP) is a software system that connects all business processes: finance, manufacturing, supply chain, sales, procurement, and others. At a basic level, ERP integrates these processes into one system. 

What is meant by ERP integration?

An ERP integration involves connecting an Enterprise Resource Planning (ERP) system with other software tools and applications inside a company. ERP integration aims to make information and processes flow seamlessly across various functions of the company, like finance, human resources, supply chain, inventory, sales, and marketing.

What are three ERP integration methods?

  • Custom integrations
  • Native integrations
  • Point-to-point integrations

What is the role of ERP in business integration?

The role of ERP is to streamline and integrate processes, operations, and information flows in an enterprise. ERP systems integrate data from across an organization, from labor to materials to money to online stores, and bring it into one unified system. 

About the author

Michael Keenan

Michael is a SaaS Marketer and SEO and founder of Peak Freelance. He’s inspired by learning people’s stories, climbing mountains, and traveling with his partner and two Xoloitzcuintles.