Procurement Integration with Your ERP

As the procurement function expands its role and reach across an organization, it becomes increasingly important that procurement data not live in a silo of its own, but connect with other vital business systems, including ERP.

Many procurement applications promote ERP integration, but just what does it mean? Integration can mean different things to different procurement software vendors.

Here we highlight the benefits of integration and detail what matters and what to look for when evaluating an procurement integration to your ERP for your organization.

Benefits of procurement integration to ERP

Integrating procurement solutions with ERP simply makes smart business sense. Integration promotes many of the attributes businesses are looking for in their procurement and finance systems, including flexibility, control, visibility and forecasting.

• Flexibility refers to the ability to integrate new systems quickly while adapting to the changing business environment.
• Control speaks to influencing and controlling spending decisions on the front lines of the business.
• Visibility provides insight into both spending activity and decisions, plus broader budgets and the ability to proactively manage cash more efficiently and effectively.
• Forecasting involves using procurement intelligence for finance-driven forecasting, scenario building, budget building, etc.

These attributes are also represented in a set of 2019 ERP trends that include a focus on functionality over price, favoring solutions that provide real-time business insights and an increasing move to a two-tier model, that combines more than one software or vendor.

What to look for and why it matters

How do you define ERP integration?

Gartner refers to “postmodern ERP”—a technology strategy that automates and links administrative and operational business capabilities with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility.

The “appropriate levels of integration” Gartner refers to can mean very different things to different eprocurement software vendors. We’ve seen vendors promoting their application’s integration with ERP when that “integration” took the form of imports into and out of the two solutions.

Others use the term integration when there may be only one or two touchpoints, greatly limiting the overall functionality. To truly add value, the integration between applications needs to be deep and far-reaching.

Here are a few questions you should ask a procurement solution vendor as you shop for an integrated procurement solution.

1. Is the software vendor an ERP development partner?

A simple question with a simple answer.

Does the vendor have a development partnership with the ERP? A development partnership ensures that the integration is developed according to specifications required by the ERP and is e-certified, when there is a required certification for the integration.

2. Does the integration occur in real time?

This is an important one. Without real-time integration, efficiencies are slowed, and worse—requisition and order activity could lead to an undetected over spend and over-budget situation.

3. How deep does the integration go—what are the touch points?

You’ll see a lot of variation here. Some vendors may list their solution as integrated to an ERP when they offer minimal integration touchpoints—perhaps just to the general ledger or account payable invoices.

This means key areas of automation and efficiencies are lacking, leaving it to the user to find another way to transfer or capture the data.

4. What will you need to continue to do manually?

Vendors are usually good at promoting what they do, but not as good at telling you what they don’t do. Walk through the entire workflow and determine what the system cannot help you automate.

This way you can make an educated decision on which vendor to select and how much you will need to automate other areas of your workflow or who will manually handle these areas.

5. Is it flexible enough to match our workflows?

Any solution you select needs to be configurable to match your organization’s workflows. Make certain your goals won’t be limited by limited configuration functionality that the vendor offers.

6. Is the integration out-of-the-box, or does it require customizations?

Consider whether the solution offers out-of-the-box integration, where all that is required of you is the configuration of your workflows, users and roles.

Some solutions that promise integration require code customizations in order to deliver the promoted functionality.

7. Is the data synchronization automatic or manual?

Ask if the data exchange is an automated, behind-the-scenes function that requires no user interaction. Some solutions require manual synchronization where someone must run a script to start the synchronization.

Procurement applications, even those promoted by your ERP publisher, vary widely in their functionality and the depth and breadth of the integration. One missing piece of functionality could cost you time, efficiencies and money.

So, ask the right questions, view a demonstration and talk to other users before you make any decision.