Magento 2 ERP Integration in 2021: Step-By-Step Guide
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Have you ever felt like you can’t keep track of all the processes in your online shop? If the answer is ‘yes’— your webshop has grown and needs some extra tools to keep operating more effectively. Your store needs a decent backend system, an ERP (Enterprise Resource Planning). With this tool, online store owners can increase sales, deliver better service to customers, and run the business smoothly.
In this post, you will learn when you need to integrate an ERP system into your business, how to choose the best embedded ERP for Magento, and what features of this system you should take into consideration to manage your online store more effectively. We will provide you with some good answers, so read further!
What is ERP for?
Image credit: jaisonjacob.com
Is it hard to take care of the rapidly growing order volume? Do you have delays in your orders more and more often? Or do you have a feeling that your customers are becoming more dissatisfied with the service? To solve all these issues, you need to integrate an ERP system into your online store.
ERP (Enterprise resource planning) software is what an organization needs to manage its business process effectively, using a system of integrated applications to automate many back-office functions related to technology, services, and human resources.
In ecommerce, ERP helps to streamline business processes and manage sales.
How does the shopping experience look like with an integrated ERP?
A customer adds the product to the cart and completes the checkout. Then ERP software automatically sends a confirmation email to the customer, creating a shipping label. ERP also can send a customer tracking email and show the profit you made from a sale.
Thanks to ERP, all data remains accurate, and well-managed, as each step of the sales process is automated and tracked. In other words, ERP helps companies manage ecommerce sales in one place from a single application.
ERP integration is a suitable solution for omnichannel marketing. Omnichannel retail is a modern approach to commerce that aims to create a cohesive user experience for customers at all stages of the interaction.
Omnichannel is one of the hottest trends in ecommerce. Modern stores declare their movement towards the omnichannel ecommerce approach. The prefix “Omni” translates to “existing everywhere.” And, this means the following:
• A store is equally well represented both offline and online (the same prices, service level, promotions, and assortment)
• An online store is equally well represented on any device (laptop, tablet, smartphone)
• The buyer gets the same experience both when visiting the online store and when visiting an offline store
Consumers use various channels to conduct purchases and create an exceptional experience at each step of the customer journey. And, the best way to implement the omnichannel strategy is to integrate your ERP and ecommerce systems.
Why consider Magento ERP with omnichannel features?
The integration of ERP and ecommerce creates a central data hub for multi-channel interaction without compromising the manufacturer’s bottom line. ERP helps streamline and process your business data, such as sales, orders, inventory, and customer data.
If you already have a Magento 2, you can easily integrate it into any ERP system with the help of Improved Import & Export. Integrating Magento ERP solutions will allow you to work more efficiently, improving customer experience and loyalty.
How to choose an ERP?
There are different ERPs you might find. Each of them works differently and provides numerous functionality. It is recommended to define what do you want your ERP system to cover to exclude overwhelming processes and data you do not need. Understanding the system and its functionality will bring you to smooth integration, work efficiency, and proper system operation. You can implement the integration yourself as well go under the service of the third party.
If you are afraid that you are unable to predict all the functionality you might need for your ERP platforms — no worries. Some features may be added as extensions to the system. Many out-of-the-box features can also be modified or customized following your business needs. Thus, you may plan the choice of your ERP based on the data you need to be processed between the system.
Here’s your little helper. It’s the list of data you might want to exchange between systems, so everything just keeps up to date.
Product management:
basic information about the product, changes in pricing and category
new category created or deleted
Inventory management:
update of product info and quantity after inventory sync up on the website from ERP
out of stock and In-Stock update respectively to the changes
update of product quantity after cancellation/return customer cancels/return
customers’ notification, when something is back In Stock
Order management:
order number
customer info
product info
quantity
shipping details
tax info
coupon info (if applied)
invoice info
payment details
change in inventory respectively to the quantity purchased/canceled
Customer info:
name
email
billing and shipping info
The ERP system should have several basic modules:
CRM module (Customer Relations Management) – a module to conduct sales and interact with clients, tracking the stages of each contract, the history of closed projects with each client, and so on.
Production management module – planning and control of the material resources to ensure the continuity of production processes.
HR-module (Human Resources) – a personnel management module, which includes management of sick leave, time off and vacations, notes of the HR manager for each employee, etc.
Analytical module – business analytics, visualization of indicators, generation of internal reports for building a business strategy.
Financial module – accounting and invoicing, tax reporting, and financial planning.
While choosing an ERP, consider the following:
Understand what you need for your business. Since the introduction of a new solution should help solve certain problems, it is necessary to describe the existing obstacles as clearly as possible, and what effect is expected from the implementation of the ERP solution. Collect complaints from the whole team and different departments about the current challenges and wishes on how the new system should solve them.
Make sure your chosen ERP system fits all ecommerce systems you are currently using. The data should be able to flow from your e-commerce system to your ERP system. This will help avoid inventory and delivery delays and ensure consistency between systems.
The ERP should provide you with real-time data to make strategic decisions for the business and provide insights that help understand what can be improved.
Considering these issues and basic requirements will help you to make the right choice of an ERP system for your store.
Magento ERP integration
Image source: demo.magento.com
Once you have a general idea of what you are looking for, it’s the right time to define what your Magento store needs, and how ERP software can satisfy these needs.
To conduct an ERP integration with Magento, follow this step-by-step guide:
1.You have to understand the workflow of the orders and data setup in Magento. To set up everything correctly, you have to know how order management works in Magento, as well as how to add and manage products.
In Magento, you can control product data by attributes. With attributes, you can also process other important order information that is relevant to the one that is passed to ERP.
Thus, understanding how your data is already organized or how you want it to be organized is the primary step towards successful integration. Data includes product types, attribute sets, attributes, and data you need to send to your ERP platform.
Wrapping up the first step, you have to create the workflow design you want to follow. The more complex your workflow is, the more complex the integration will be. Another point to consider — future integration of other systems such as POS or PIM, and how they affect your Magento/ERP. Considering these issues at the beginning will guarantee suture smooth operation of the whole integrated system.
Another bonus of Magento is out-of-the-box integrations on the market to all major ERPs, such as SAP, Microsoft Dynamics, Sage, NetSuite, and so on.
2.While integrating ERP and Magento, retailers have multiple inventory management configuration options. These options give the opportunity to import orders through one single channel as well as develop separate pathways for orders received online.
3.Take advantage of automation of the whole integration processes. Store owners can avoid manual order entry and tracking number distribution workflows, saving time and money. Some ERP features bring the opportunity to users to automate the picklist generation process, a small tweak that reduces the need for front-office handling and further simplifies and accelerates fulfillment.
4.You should also define how ERP and Magento should interact.
There are different ways of integration you might choose. Most common ERP integrations in Magento are point-to-point, custom-built, or by a multichannel integration platform. To decide which one will suit you best, let’s figure their main advantages and disadvantages.
Point-to-Point Solutions
This option would be the best for smaller traders, however, they won’t fit the needs of fast-growing businesses. Connecting your ERP to Magento, in this case, is very affordable (around $100/month), and you can find this solution in Magento Extension Marketplace. Their main feature is offering a point-to-point connector, which means that your Magento store and your ERP are connected on both ends to each other. This connection allows for synchronizing data.
However, managing data won’t be possible right away, since there’s no operational platform in between them. There will be an additional need to choose a system to manage the data. Another restriction is in the flexibility of the platform while adding more sales channels.
A point-to-point integration doesn’t allow for as much flexibility as you add sales channels. The reconfiguration of the system will become obligatory after there’s a sales channel added.
Custom Magento-ERP Integration
A good way to integrate Magento with ERP could be a custom integration. This integration will work using both applications’ programming interfaces (APIs) to synchronize needed data.
Of course, custom integrations are more complex, and as a result, more expensive. That’s why there are companies that actually offer these services as their primary business offering. Therefore, the solution would be best for organizations with specific resources and requirements. To sum it up, there’s no need for a custom solution for SMB, at least because the expenses will be unjustified.
Multichannel Magento 2 ERP integration
The multichannel solution is the platform specifically designed to integrate systems such as Magento and ERP systems. This option already includes an operational hub to store and manage your data. The primary data types, such as item, inventory, order, customer, and shipping are automatically synchronized.
The platform uses connectors for Magento and your ERP, which makes configuration easy and flexible.
This solution is more expensive than point-to-point solutions. It costs up to several hundred dollars per month. The set up is free though. We recommend this solution to both SMB and Enterprise sellers.
The management in multichannel option is more efficient as well as the platform is scalable itself. Thus, it’s easily adjustable to all the changes in the system. Furthermore, the solution scales along with your business, fulfilling all the needs occurring.
Best ERP options to choose from
The ERP market today has a wide range of solutions to offer. However, when it comes to integration with Magento, it gets more complicated. The structure of both Magento and ERP is complex, so the integration is not that easy to implement. Nevertheless, many of the popular platforms have prebuilt Magento ERP connectors created by third-party integration companies. As a result, the implementation of the system goes easier and faster.
A lot of prebuilt integrations are available at Magento Connect. There is also an option of connecting your ERP to Magento by using the vendor’s solutions while contacting them directly.
No surprise, that several years in a row SAP is the best enterprise resource planning system existing. So what makes it so awesome?
A lot of prebuilt integrations are available at Magento Connect. There is also an option of connecting your ERP to Magento by using the vendor’s solutions while contacting them directly.
No surprise, that several years in a row SAP is the best enterprise resource planning system existing. So what makes it that awesome?
SAP is one of the clear leaders in the industry and one of the most trusted solution providers among customers. SAP has a variety of services to provide, especially for enterprises, that need complex and feature-rich solutions.
Advantages of SAP:
First of all, it meets industry-specific needs. Harness proven best practices and built-in processes for a wide range of industries – from manufacturing and distribution to professional services and retail. Secondly, it manages your entire business. It means, that SAP applications give all the tools you need to operate more efficiently.
You get rich functionality for finance, HR, supply chain management, e-commerce, and more if choose SAP. Lastly, you rely on a top ERP vendor. The company offers world-trusted software, which seamlessly integrates with CRM and other applications, incorporates the latest technologies – and can be deployed quickly in the cloud or via ERP support services.
Disadvantages of SAP:
What you need to pay attention, is that each of the SAP modules has different features. Thus, not each of these modules may satisfy all your needs. That’s why it is so important to define what data should be passed between systems. Here’s a shortlist of data you need to define:
Order Data
Shipments
Customers
Inventory
Product Data
Customer Groups
Invoice Data
Credit Memos
Transactions
Tax Rules
Another disadvantage of SAP is the cost of software, which ranges from $3000 to $7,000 just for the extensions. We highly recommend SAP, since we consider it to be the best solution so far.
Oracle offers a complete set of products, covering a wide range of businesses, which makes it so popular with business owners. A wide variety of high-quality solutions are represented on the market. There are three most popular options from Oracle:
All of them are multi-site and multi-national as well as provide a rich variety of functions. We think, that Oracle solutions may become a good option for a B2B Magento ERP integration.
Disadvantages of Oracle:
Some of the solutions have limits on user range. Some of the functionality is cut in cheaper versions of Oracle. The price is fairly high. It starts with the lowest $12,000 and reaches up to $400,000 for JD Edwards EnterpriseOne.
While connecting your ERP to Magento, we also recommend taking into consideration the Microsoft Dynamics solution. It is a popular product on the market.
Advantages of Microsoft Dynamics:
Firstly, Microsoft is a certified Magento partner. There are 14 Microsoft extensions available, which cover a wide variety of companies of different types. With Dynamics, it is easy to drive innovation with an intelligent application that is handy to tailor, extend, and connect to other apps and services you already use. It also effectively modernize the supply chain with a unified, advanced warehouse, and inventory management to improve fulfillment, material sourcing, and logistics.
Disadvantages of Microsoft Dynamics:
Some of the extensions are fairly expensive. The price might reach up to $15,000. The integration itself is also complicated and expensive since it requires strong technical skills. There also may be some custom development needed to run the integration properly and meet your expectations.
Keep in mind that the choice of ERP will affect your workflow, so choose an ERP precisely. Follow this guide to make the right choice:
Define your Magento needs
What do you expect from your ERP?
Draw the pattern of interaction between Magento and ERP you want
Define data you want to pass between systems
Check on your budget
Let your needs meet your wants … and budget!
Questions or doubts left — let us know. We will provide you with professional advice or help you with your ERP integration.
Advantages of SAP:
First of all, it meets industry-specific needs. Harness proven best practices and built-in processes for a wide range of industries – from manufacturing and distribution to professional services and retail. Secondly, it manages your entire business. It means, that SAP applications give all the tools you need to operate more efficiently. You get rich functionality for finance, HR, supply chain management, e-commerce, and more if choose SAP. Lastly, you rely on a top ERP vendor. The company offers world-trusted software, which seamlessly integrates with CRM and other applications, incorporates the latest technologies – and can be deployed quickly in the cloud or via ERP support services.
Disadvantages of SAP:
What you need pay attention to, is that each of the SAP modules has different features. Thus, not each may satisfy all your needs. That’s why it is so important to define what data should be passed between systems. Here’s a short list just remind you:
Order Data
Shipments
Customers
Inventory
Product Data
Customer Groups
Invoice Data
Credit Memos
Transactions
Tax Rules
The other thing worthy to know is the cost of software, which ranges from $3000 to $7,000 just for the extensions. We highly recommend SAP, since we consider it to be the best solution so far.
Oracle offers a complete set of products, covering the wide range of business, which makes it so popular with business owners. The wide variety of high-quality solutions on the market. There are three most popular options from Oracle:
All of them are multi-site and multi-national as well as provide the rich variety of functions. We think, that Oracle solutions may become a good option for a B2B Magento ERP integration.
Disadvantages of Oracle:
Some of the solutions have limits on user range. Some of the functionality is cut in cheaper versions of Oracle. The price is fairly high. It starts with the lowest $12,000 and reaches up to $400,000 for JD Edwards EnterpriseOne.
While connecting your ERP to Magento we also recommend taking into consideration Microsoft Dynamics solution. It is a popular product with many types of businesses.
Advantages of Microsoft Dynamics:
Firstly, Microsoft is a certified Magento partner. There are 14 Microsoft extensions available, which covers a big variety of companies of different types. With Dynamics, it is easy to drive innovation with an intelligent application that is handy to tailor, extend, and connect to other apps and services you already use. It also effectively modernize supply chain with unified, advanced warehouse and inventory management to improve fulfillment, material sourcing, and logistics.
Disadvantages of Microsoft Dynamics:
Some of the extensions are fairly expensive. The price might reach up to $15,000. The integration itself is also complicated and expensive since requires strong technical skills. There also may be some custom development required to run the integration properly and meet your expectations.
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