Integrating cloud ERP and CRM applications? Show how it can pay

Getting such apps to work together is challenging, but doing so can streamline data and improve customer experience management, analysts say.

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CRM systems were some of the earliest business systems to head to the cloud. Now as ERP systems are increasingly being moved off-site, the next step for customers is integrating cloud CRM and ERP applications, industry observers say.

CRM and ERP integration

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Why is that integration so natural? It's not because both these sets of enterprise applications can be delivered by the cloud. No, it all comes back to business demands -- the cloud is just a delivery mechanism of choice because of cost advantages, even though it can pose some unique challenges to integration.

According to China Martens, an analyst for Forrester Research Inc. in Cambridge, Mass., companies are seeking more insight into their business operations as more employees are accessing data from CRM and ERP applications.

Companies want a full picture of their customers, one that’s generated from CRM -- particularly sales, marketing and customer engagement service -- and ERP, which includes the financial status of customer accounts, supply chain information and even warehouse management data. All of this contains useful information for engaging with customers.

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"There's more interest in making end-to-end business processes more efficient," Martens said. "Some of those processes -- for instance, order to cash -- begin in sales/CRM and end up in ERP/finance. The same is true of project management, where the initial project quote starts in CRM and ends up with the billing and invoice in ERP."

CRM and ERP cloud integration removes barriers

One of the biggest benefits of cloud-based services is the ability to roll out application access to employees anywhere at any time, as well as take advantage of new functionality that cloud-based providers can often deliver more quickly than is possible with in-house CRM and ERP systems. The key word here is speed.

"The value of integrating CRM and ERP is in how it increases the pace at which you can do business," said Mark Walker, vice president of technical services for Scribe Software in Manchester, N.H. "By taking down barriers between applications, you enable people to do a better job for customers by putting the right information in front of them at the right time."

For example, Walker explained, "Would a company find it valuable to enable their sales team to see the invoice history of their customers right in their CRM system? Sales representatives can see what customers purchased, what they paid and their buying patterns, which opens the door to cross-selling opportunities."

Similarly, Walker said, CRM systems may typically have a place to keep track of the customer’s credit information, such as the credit status, payment terms and credit limit. Just as often it’s accounting or ERP that’s the system of record for this information, but the accounting team does not have time to re-key the credit information into the CRM system. 

The case for integrating cloud CRM and ERP applications

An integration effort will provide benefits, but those benefits may not deliver a positive return to the business, said Chris Wynder, an analyst for Info-Tech Research Group Inc. in London, Ontario.

"Individual companies need to decide if the benefits are great enough to balance the pain."

While you start with benefits to build a business case, they have to be connected to risk and cost, Wynder said, and that can be more difficult to ascertain with cloud applications, which aren’t as easy to customize as on-premises versions of the same applications.

"If you have complex compliance needs for your financial data, which is stored in your ERP, can those compliance rules be replicated on your CRM?" Wynder said. "For an on-premise solution you can customize the integration between the two applications to respect the security settings of the more stringent app. It’s not clear whether that is always possible for cloud versions."

While pricing plans for cloud-based applications are sometimes clear and easy to figure out, pricing integration is more difficult. Usually, though, Wynder said you can break down your cost concerns into three areas of further study, each of which comes with a set of questions businesses should ask: 

Implementation. Can a company integrate the pointer indicating memory location of data from each app? Is the CRM and ERP data labeled in such a way that it can be automatically rationalized? "ERP data integration is difficult, and when attempting to move legacy data into newer systems, it is often time-consuming and incomplete," Wynder added. 

Operations. To get value out of the integration, what else does a business need? Does it need a full business intelligence system? Will it need additional infrastructure or cloud services to manage and store the data? "These kind of … [new] costs need to be scoped at the beginning of the project," Wynder said. 

People. Does the company have the end users to make use of the integration? Does it need to hire analysts? Who now has control of the system -- sales? finance? someone else? In addition, Wynder said, a business case must be important enough to the enterprise that the end users stay engaged throughout the project.

There's one more thing necessary for integrating cloud CRM and ERP applications, according to Benoit Lheureux, a vice president of research for Gartner Inc. in Stamford, Conn., and that’s giving the project the respect it’s due.

In the rush to use cloud-based applications, Lheureux said, companies have treated cloud-cloud or cloud-on-premises integration as a "second citizen" requirement, often choosing the cloud app then addressing security and availability before even imagining integration.

"Integration is a big deal," he said. "Integration comes up in almost all cloud-related projects, and if not done well -- or at all -- it has a high impact on the overall success of your cloud project."

This was first published in August 2012

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