What is Cloud ERP Integration?

The need for seamless integration between cloud-based Enterprise Resource Planning (ERP) systems and other business applications is no longer a premium differentiator—it’s becoming table stakes for enterprises of all sizes. Such an integration allows real-time data sharing, improved decision-making and enhanced collaboration across departments. Businesses can create a unified ecosystem that delivers a holistic view of their operations by connecting various software solutions. The sum of it?  Cloud ERP integration breaks down silos and enables a more agile organisation. 

In This Article:

• What is a Cloud ERP System?
• What are Cloud ERP Integrations?
• Types of Cloud ERP Integrations
• Benefits of Cloud ERP Integrations
• Challenges of Cloud ERP Integrations
• How to Move ERP to the Cloud
• Cloud ERP Integration Costs
• What are Types of Cloud ERP Integration Tools?

Cloud ERP is a powerful software solution that enables companies to manage their core business processes, data and applications via the internet. It’s hosted on a cloud platform by a third-party provider, eliminating the need for companies to maintain their own servers.

Businesses are increasingly favouring cloud ERP over on-premises solutions. A 2023 survey revealed that 64.5% of companies opted for cloud ERP software to run their operations.

As the technological foundation of an organisation, cloud ERP software embeds advanced functionality into a firm’s daily workflows. It serves as the central nervous system, integrating various departments and functions into a cohesive system.

Cloud ERP is typically delivered "as a service," with customers leasing the software on a subscription basis rather than owning it outright. This model eliminates ongoing hardware costs, as the cloud ERP vendor assumes responsibility for application maintenance, upgrades, innovations, data storage and security.

In contrast, on-premises ERP lives on a company's own hardware and servers, requiring management by an internal IT team or an outsourced vendor. This traditional approach often involves higher initial costs and ongoing maintenance responsibilities.

One of the primary reasons firms move to cloud systems is their ability to process vast amounts of data efficiently. As cloud computing becomes more cost-effective, companies can easily leverage these platforms to handle complex data operations. The result? Firms make informed decisions based on real-time insights.

From a user perspective, cloud ERP solutions offer a more agile work management experience, enabling them to take more intelligent action more quickly. Plus, the mobile accessibility of these systems allows employees to work from nearly anywhere and on most every device. As firms continue to prioritise ERP trends, the adoption of cloud-based ERP platforms is expected to grow in value from $49.80 billion in 2023 to $140.14 billion by 2030.

Cloud ERP integration is a transformative process that connects a business’s diverse cloud-based software applications to an ERP system, creating a cohesive, integrated solution. By seamlessly linking various platforms, cloud ERP integration empowers companies to gain or maintain a competitive edge.

Consider a scenario where a business uses a standalone customer relationship management (CRM) system for managing customer data. Through cloud ERP integration, this CRM system can seamlessly connect to the company's ERP platform, automating data transfer between the two systems. Integration ensures consistency and up-to-date financial, supply chain and other information across all platforms, ultimately enhancing customer service quality.

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Let’s look at the different types of cloud ERP integrations that midsized businesses and enterprises leverage to improve operations:

Pre-Built Cloud ERP Connections

Integrating cloud-based ERP applications has never been simpler, thanks to pre-built solutions. Software vendors develop ready-to-use integrations that firms can quickly implement with minimal technical know-how. These pre-configured options are ideal for common scenarios, like linking eCommerce platforms to ERP software.

iPaaS: Your Integration Ally

An Integration Platform as a Service (iPaaS), such as Deltek Unionpoint, is a cloud-based solution for connecting diverse software systems. With an array of pre-built connectors and user-friendly tools, iPaaS lets businesses craft custom integrations faster and without headaches. Simple is the watchword for this type of ERP integration.

Tailored Point-to-Point Solutions

For unique or intricate use cases, point-to-point integrations deliver a customised approach. These bespoke connections between two specific software systems demand technical expertise and development resources. While they are highly tailored solutions, point-to-point integrations can be time-intensive to create and maintain.

ESB: The Integration Hub

An Enterprise Service Bus (ESB) serves as the backbone of your software ecosystem. This architectural approach facilitates seamless connections among various applications and systems. ESBs excel at automation and enabling data sharing across platforms. While highly customisable and capable of complex integrations, ESBs require technical proficiency.

Cloud ERP integration offers numerous benefits to businesses, enabling them to stay adaptable in a rapidly changing market. Here are some key advantages:

• Continuous Innovation: By integrating cloud ERP, businesses gain access to the latest software upgrades, ensuring they can leverage the newest functionalities. This constant innovation allows companies to profitably adapt to evolving market conditions.
• Real-Time Data Access: Cloud-based ERPs provide real-time data visibility across the organisation, facilitating quick responses to market shifts. Immediate access to data enables businesses to respond promptly, relying on data instead of hunches.
• Simplification and Automation: Simplify processes, reducing the need for manual data entry and improving accuracy. This leads to process automation, reducing errors and lifting effectiveness.
• Lower Staff and Hardware Requirements: Reduce the need for additional people and hardware, resulting in less overhead. As a result, allocate the business resources you do spend money on more wisely.
• Scalability and Flexibility: Cloud ERP integration can scale up or down based on business needs, allowing companies to adapt to changing customer demands. It also offers high flexibility, enabling businesses to customise their software systems to meet specific needs.
• Cost Savings: Reduce IT infrastructure expenses and eliminate expensive hardware upgrades, contributing to overall cost savings. Spend more strategically.
• Enhanced Collaboration: Centralised data and integrated processes foster better teamwork among different departments and locations. Communication naturally improves throughout the business.
• Compliance and Security: Cloud-based ERP offers airtight security measures and compliance with industry regulations, avoiding data breaches. Businesses can operate with confidence, knowing their data is protected.

Cloud ERP integration projects do sometimes present unique hurdles. By addressing these challenges head-on, firms can maximise the benefits of their new systems:

• Time Constraints: Cloud ERP integrations can be time-intensive, especially when dealing with large data volumes. Legacy systems further complicate matters, requiring developers to bridge the gap between outdated code and modern APIs.
• Business Continuity: Data incompatibilities often emerge as a significant obstacle in integration projects. Differences in structure, format and semantics frequently require substantial conversion efforts. Additionally, integrations can disrupt business operations if not executed carefully. A well-crafted integration strategy minimises downtime and maximises system availability.
• Change Management: Employees can resist new integrations, afraid of disruption to their tried-and-true workflows. To mitigate this, involve staff in the integration process early. When implemented effectively, software integrations can enhance efficiency without causing undue workplace drama.

Migrating an ERP system to the cloud requires careful execution. Navigate this complex process successfully by focusing on proven methodologies:

Survey the Status Quo

Before embarking on a cloud migration, thoroughly evaluate the existing ERP infrastructure. Facets could include analysing current software capabilities, operational processes and business objectives. A comprehensive SWOT analysis—assessing the current on-premises system’s strengths, weaknesses, opportunities and threats—helps identify areas ripe for improvement and potential challenges that may arise during the transition.

Choose the Optimal Migration Strategy

Businesses face several migration pathways, each with its own merits:

• The "lift and shift" approach offers speed but may not fully capitalise on cloud benefits.
• "Replatforming" balances optimisation and efficiency, requiring moderate adjustments to the existing system.
• "Re-architecting" represents the most transformative option, redesigning the ERP system to harness the full potential of cloud capabilities.

Prepare Data & Infrastructure

Data integrity and infrastructure readiness form the foundation of a successful migration.

Firms must ensure:

• Data cleanliness, accuracy and consistency across all systems
• Robust backup and recovery protocols
• Infrastructure and security compatibility
• Sufficient bandwidth and storage to support cloud operations

Choose the Right Cloud ERP Solution

Selecting a cloud ERP solution that aligns with organisational needs is crucial. Decision-makers should thoroughly research available options, such as Deltek ERP, prioritising features that address their most urgent business requirements.

Create a Comprehensive Rollout Plan

A well-crafted rollout plan anticipates technical challenges and fosters clear communication throughout the organisation. This roadmap guides the migration process and keeps all stakeholders aligned.

Empower Staff Through Training

User adoption is pivotal to the success of any cloud ERP implementation. Organisations should:

• Communicate the benefits and expectations of the new system
• Provide comprehensive training and support resources
• Establish clear roles and responsibilities for system management

Establish Performance Metrics

Key performance indicators (KPIs) serve as benchmarks for measuring the success of cloud migration. Organisations may need to refine existing metrics to accurately reflect the capabilities of their new cloud-based system.

Address Skill Gaps

IT teams may require additional training or support to manage cloud-based applications effectively. Invest in upskilling where necessary.

Implement a Phased Approach

Start with less critical applications, which allows businesses to refine their migration process and address any issues before tackling mission-critical systems.

Rigorously Test & Monitor

Comprehensive testing across various dimensions—functional, integration, performance, security and user acceptance—ensures the cloud ERP solution meets all requirements. Ongoing monitoring helps maintain optimal system performance and identifies gaps for continuous improvement.

Cloud ERP integration costs represent a significant portion of the overall ERP software development expenses. Businesses considering a cloud-based ERP system should be prepared for integration costs ranging from $50,000 to $400,000, depending on various factors. Here are the key components that influence cost:

• Licensing Fees: One of the primary expenses in cloud ERP integration is licensing costs. These fees encompass the ERP system itself and any additional software required for integration. The total licensing expense varies based on organisational size, complexity, user count and required features.
• System Complexity: The intricacy of the ERP system to be integrated plays a crucial role in determining costs. More sophisticated systems often necessitate advanced integration techniques and tools, potentially increasing the project's overall expense.
• Integration Volume: The number of integrations required significantly impacts the total cost. As the quantity of systems needing integration increases, so do the time and resources necessary for project completion. This factor directly correlates with the scope and scale of the integration effort.
• Data Considerations: Data volume and quality are critical factors. Larger data sets demand more processing and storage resources, while poor data quality may necessitate additional time and effort for cleaning and validation. These data-related aspects can substantially influence overall integration expenses.
• Customisation Requirements: Unique customisation needs can drive up integration costs. Implementing specialised features or adapting the system to specific business processes may require additional time and resources, potentially leading to higher project expenses.
• Integration Technologies: The choice of integration tools impacts the cost structure. Specialised tools may come with higher price tags but offer enhanced functionality. Conversely, more straightforward tools might be more cost-effective but lack the necessary features for complex integrations.
• Ongoing Operational Costs: Account for IT and related staff expenses. These include maintenance, support and training on the integrated systems, as well as potential costs for temporary IT personnel to manage the new environment. These recurring expenses contribute to the total cost of ownership for cloud ERP integration.

Let's explore the various categories of tools that can revolutionise cloud ERP integrations:

• API-Based Integration: At the heart of modern ERP integration lies API-based technology. These powerful interfaces enable smooth communication between software applications, allowing developers to craft custom integrations for a genuinely interconnected ecosystem.
• Point-to-Point Integration: For businesses seeking specialised connections, point-to-point integration offers a solution. This approach creates customised adapters or applications that link your ERP software with other essential tools, such as supply chain management systems. The result? A seamlessly integrated network of business-critical applications.
• Multi-Tenant SaaS: A multi-tenant SaaS model delivers a single version of the ERP and its infrastructure to multiple organisations. A delivery approach like this ensures optimal efficiency while maintaining strict data segregation, guaranteeing that each organisation's information remains private and secure.