Cloud ERP evolution shifts the focus onto integration

Back in 2014, SAP declared that monolithic enterprise resource planning (ERP) systems were dead and would be replaced by “post-modern” ERP. The ERP megasuite, according…

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Ville Parkkinen

August 17, 20215 minute read

Back in 2014, SAP declared that monolithic enterprise resource planning (ERP) systems were dead and would be replaced by “post-modern” ERP. The ERP megasuite, according to some, was killed by user interest in specialist cloud vendors delivering targeted subsets of the suite. Fast-forward to today, and we see that this cloud adoption trend is still ongoing. However, the transition to cloud-based ERP has encountered some challenges. Chief among these is ERP integration.

Cloud ERP solutions offer freedom of choice…

For some time now, cloud has been the destination for hosting most enterprise applications. And there’s no reason that ERP should be any different. The emergence of cloud-native ERP vendors such as NetSuite began to change the game by introducing portfolios of software-as-a-service (SaaS) applications for ERP, customer relationship management (CRM), financials and e-commerce, among others.

While cloud-native ERP solutions continue to mainly take market share among small and mid-sized companies, major ERP vendors such as SAP and Oracle—which cater to the more complex needs of enterprises—have had little choice but to follow suit. Loosely coupled cloud-based ERP solutions allow organizations to select best-of-breed applications to meet their specific business needs while enjoying unlimited scalability, continuous updates and other benefits of cloud computing. This makes them an appealing choice for any organization.

…at the cost of increased need for integration

The module-based megasuites came with native integrations allowing high interoperability between modules. But the new world of cloud-based ERP is an ecosystem that spans multiple, independently designed applications, potentially across multiple cloud environments. These applications must integrate not only with each other, but also with the remaining on-premises and legacy systems.

As organizations transition away from the traditional monolithic ERP installations, such integration becomes increasingly challenging. Even where vendors provide pre-packaged connectors to other business solutions, they can only do so much to help with the underlying complexity. And none covers the entire ecosystem of software solutions used by the average organization. While this is the case even for mid-sized companies, in enterprises, the complexity can quickly grow to overwhelming proportions.

In short, a great deal of specialist integration work remains to be done. Take NetSuite as an example: to meet all its integration requirements, an organization will typically need a thorough understanding of NetSuite’s own JavaScript language and its SOAP and REST APIs to complement the system’s pre-packaged integration technology.

This means there’s a price for the cloud’s scalability, flexibility and agility—and that’s a proliferation of connectivity requirements, along with an increase in the integration capabilities and resources needed to meet those requirements. APIs might be cheap and fast to create. But API integration and management is becoming a major challenge. In addition, API connectivity alone is unlikely to be enough—it needs to be combined effectively with long-established traditional integration methods such as electronic data interchange (EDI), which is used for connecting with suppliers, customers and other trading partners.

Need for modern integration capabilities and overarching integration strategy

ERP integration is vital to enable the automation of business processes and support business growth. In fact, poor integration can mean the difference between success and failure when it comes to digital transformation initiatives. However, traditional integration approaches are no longer sufficient and modern ones must be carefully managed and resourced. A unified integration strategy has become essential.

An overarching strategy for modernizing integration technology is often missing. This can lead to organizations acquiring disparate integration tools with overlapping capabilities, fragile point-to-point solutions and poor utilization of integration resources. Organizations soon discover they lack agility in developing new integrations, which leads to further information sprawl and silos as well as rising costs for integration support and maintenance.

The key to addressing these challenges lies in finding the optimal balance between centralized control and agility in delivering integrations. A modern enterprise integration platform—such as OpenText™ Trading Grid™—allows organizations to deploy, manage, govern and integrate data, systems and applications on an any-to-any basis. Even so, technology alone is not enough for building efficient integration operations.

How managed services can help with ERP integration

Without the necessary integration skills and resources, organizations can end up building integrations with suboptimal design and poor quality that negatively impact performance and incur high costs. Entire ERP projects can end up being delayed or compromised as a result.

Modern integration technologies and techniques require new skills and resources that are scarce within many in-house integration teams. And finding these skills in today’s job market can be challenging and expensive. Complementing the organization’s internal integration team with partners can therefore be a good option for extending capabilities.

Pressures are high to build the various in-house IT skills required by modern businesses. For example, recent research showed that 80% of companies yet to complete their cloud migration had postponed or canceled their migration of SAP applications to the public cloud due to a shortage of SAP skills. A similar squeeze is affecting NetSuite users who are struggling to find the required talent. Facing challenges on multiple fronts, organizations need to decide which core competencies must be developed in-house, and where they can leverage partners to reduce their IT teams’ workloads.

Managed service providers like OpenText offer a way to do just this by establishing clear responsibilities and a governance model for integration operations. This approach complements in-house IT experts where needed, allowing them to focus on activities that yield the highest business value.

Regardless of the delivery model and technology choices, integration needs to be a strategic consideration in an organization’s IT strategy. To meet the accelerating demands of business, getting your ERP integration right is essential for success.

Interested in ERP integration? Learn more by reading these whitepapers: “Integrating NetSuite: How cloud ERPs are creating a need for unified integration strategy” (OpenText), “Optimizing your SAP S/4HANA integration strategy—How managed services help succeed in the cloud-first world” (OpenText) and ERP modernization and growing data challenges drive 91% of enterprises to modernize integration s” (IDG).

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Ville Parkkinen

Ville Parkkinen is a Director of Product Marketing for Business Network at OpenText. Working closely with OpenText’s Product Management, Engineering, Solution Consulting and Sales teams, Ville enjoys taking complex technical concepts and translating them into tangible business value in customer context. Solution areas that Ville focuses on include digitization and automation of supply chain processes including order-to-cash and procure-to-pay; electronic invoicing solutions; B2B/EDI integration; data visibility and analytics; and managed integration services.

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