To provide a seamless customer experience, many e-commerce companies rely on cloud applications, such as Enterprise Resource Planning (ERP). Manual processes, such as emailing spreadsheets and repetitive data entry, just aren’t scalable for growing enterprises nowadays.
By incorporating e-commerce ERP eCommerce integration into your system architecture, you have a dedicated “source of truth” for order-to-cash and other business processes.
In this article, we’ll discuss the value of ERP e-commerce software and recommend the next steps for designing an integration roadmap for your organization.
ERP, a foundational SaaS model
The history of ERP systems can be traced back to the 1960s in the form of inventory management systems that tracked raw materials and finished products against consumer demand. Materials Requirements Planning (MRP) emerged in the 1970s, as a type of software that somewhat resembled our more modern solutions.
The term ERP surfaced in the 1990s when that software began centralizing data across the whole enterprise into a core repository. For multiple industries and departments, today’s ERP supports a wide range of everyday operational and administrative processes.
According to Gartner, four key business benefits of ERP software include:
- Business innovation
- Business process efficiency
- Process standardization
- IT cost savings
For many business processes, an ERP is considered a foundational SaaS application. In other words, this software has a broad sense of responsibilities and footprints within the organization, owning the system of records for key business objectives.
For an e-commerce business, this includes sales orders, purchase orders, order fulfillment, payouts reconciliation, and more.
Also Read: 9 Tips For Success In Ecommerce
The importance of e-commerce ERP Integration
While an ERP is an essential tool in its own right, it’s even more powerful when it’s integrated with other applications in your tech stack.
Without integration, e-commerce companies face significant challenges such as error-prone data entry, out-of-stocks, and delayed fulfillment. Bad customer experiences caused by these issues will result in lower ratings, negative reviews, and reduced sales.
On the other hand, by integrating disparate cloud applications and data sources, you can automate your business processes. This results in less overhead, improved conversion rates, faster processing, and real-time visibility into financial and order data.
In addition, e-commerce ERP integration also supports company growth. By building a system architecture that integrates your ERP with your scaling e-commerce sales channels and warehouses, you can speed up time-to-market.
Types of ERP solutions by system model include:
- Generalist systems provide many modules and can be implemented by a wide variety of industry types. However, companies need to purchase all pieces of a single product as one, semi-comprehensive system, which may be rigid and inflexible when it comes to customization. Generalist ERP systems are a great choice if you’re looking for a cutting-edge, well-run, and quality system to handle the broad functions of your business.
- Modular systems allow you to implement different ERP components one at a time based on your needs, reducing your overall software spending. These are mostly suitable for specialized industries or niche applications. An additional benefit of modular ERP software is that it can provide specialized features to ensure proper risk management for businesses handling highly sensitive information. However, managing large organizations can be difficult on a truly modular system.
- ERP suites include a variety of applications that are fused together to create a single ERP system. ERP vendors offer Suites by partnering with software vendors to create a single solution for specific customers, typically large organizations with wide-reaching operations. The key benefit of ERP suites is the broad functionality and utility of a full ERP system alongside specialized modules.
Types of ERP by deployment models include:
- On-premise ERP is manually installed on the local servers owned and operated by the company itself. This type of deployment can be particularly suitable for manufacturing, healthcare, construction, or other industries that need a system to help manage specific records and ensure data security.
- Cloud ERP runs on a vendor’s cloud platform and is typically cheaper and faster to implement compared to an on-premise solution. Another benefit of this type of system is that you don’t need a dedicated, on-sight IT team for your organization that can help roll out updates and keep your data secure.
- Hybrid ERP combines the various benefits given by on-premise and cloud solutions. For example, financials and accounting modules can be hosted on-site and other modules are delivered through the web-based on departmental needs. You might want to consider a hybrid ERP system if your company is already using a legacy in-house system or you require integration with web-based services.
Many e-commerce enterprises rely on an ERP to provide their consumers with a pleasant shopping experience (ERP). A growing number of firms are abandoning manual activities like mailing spreadsheets or manually inputting data. Integrating e-commerce ERP into your system architecture can help you reach a “source of truth” for order-to-cash and other company activities.
ERP comes in a variety of flavors, depending on the ERP model:
- Because of the significant number of modules available, generalist systems may be used in various sectors. However, when personalizing a single product, organizations must obtain all of its components as a single, semi-comprehensive system, which might be rigid and inflexible. A generalist ERP system is an ideal choice for managing all of your company’s activities in an effective and well-run way.
- By adopting separate ERP components one at a time in a modular system, you may lower your overall software investment. They can, for the most part, only be employed in highly particular sectors. Modular ERP software provides additional benefits for businesses that handle sensitive information, such as specific features that ensure effective risk management. A truly modular system, on the other hand, may struggle to manage large organizations.
- ERP systems are made up of a group of connected software packages known as ERP suites. ERP suppliers collaborate with software vendors to create Suites to give a unified solution to a specific clientele. These clients are frequently large corporations with vast operations. The key benefit of ERP suites is that they comprise both the entire ERP system and particular modules.
Understand data variety and quantity
Your ERP’s principal role is to keep track of your company’s history. This data is required to understand anything from production trends to the influence of seasons on sales. However, the vast volume of data generated by the ERP brings its own set of issues. The more fields there are in a data system, the more difficult it is to combine them.
A strategy for ERP integration is required for a successful implementation. Put another way, you must determine early on what data from your ERP system should be integrated and connected with your e-commerce system. Understanding the types of data shared across ERP and e-commerce systems is critical to achieving interoperability.
For consumers to receive the item, they purchased correctly, the product’s name, SKU, and description must all be consistent.
Further, to guarantee correct shipment and invoicing, contact, shipping, payment conditions, and credit status must be notified.
Pricing and rules:
Because most B2B transactions are based on negotiated prices, both systems must use the correct prices and laws. In addition, the exchange of data between the two systems is crucial for shipping, inventory, and account management.
Customers, purchasing managers, and warehouse employees all rely on reliable inventory information. In this manner, stock levels (such as available, back-ordered, and discontinued), quantities, and lead times must be synchronized.
Complete Order Information:
This contains data for the accounting, customer service, and the customers themselves. This provides information on prior orders as well as current orders. This comprises order line item information, past order/invoice history, current order/invoice status, sales and purchase order status, and payment information.
Interstate and international commerce are governed by a diverse set of tax laws, rules, and rates. For instance, to maintain compliance and reduce risk, these two systems must interact in real-time. Tax codes, rates, and regulations must be shared for the two systems to function together.
Authorizations for returned items and credit memos are required to deal with concerns such as product defects, shipping difficulties, and other issues. Customers and employees must have access to the same account information on both platforms.
Also, the total size of the database should be taken into account as well. If e-commerce systems are to be utilized for product sales, they must handle massive amounts of data.
Look for technology that has been around for longer than a decade
Because ERP is so critical to a company’s success, it is seldom changed. It’s conceivable that the system was updated. Even if it has been improved, older technology is widespread in ERPs. Modern ERP systems for distributors may have been in use 10 to 20 years ago.
From a practical aspect, an ERP for manufacturing may be unable to interface with third-party systems. Integrations may become much more challenging since the old technology must seamlessly interface with the new technology.
IT employees may have spent years setting up, fixing, and applying workarounds in a typical ERP setup. As a result, we get to the third reason for the difficulty of ERP system integration.
Integration of B2B e-commerce with ERP systems may have a significant influence on a company’s performance. Centralization, automated procedures, decreased human error, and cost reductions are just a few of the numerous benefits of integration.
For e-commerce and ERP integration in B2B to be effective, a flexible platform that adapts to new demands is required. You may prevent data silos, bottlenecks, and juggling processes by using software that turns the data you already have into the information you need to grow.
The tips shared above on selecting a secure and ready-to-use ERP-integrated B2B e-commerce system will assist you in achieving success in the digital transformation process.