Challenges of ERP API integration

Unfortunately, taking advantage of API integrations is not always straightforward. Common challenges include the following:

• Legacy system limitations. Legacy ERPs might not support integrations at all or provide limited API availability. Workarounds exist, such as importing and exporting data using file formats like CSV, but they are kludgy and can be difficult to implement. And upgrading to a newer ERP environment with better API support can be an expensive, years-long endeavor.
• Inconsistent API standards. Different ERP vendors use varying API protocols or architectures, such as REST or Simple Object Access Protocol (SOAP), to drive connections between their platforms and external systems. Authentication and authorization processes can also vary. As a result, businesses must find and hire engineers or consultants who are skilled in particular types of API design.
• Data formatting challenges. In a similar vein, the data formats of systems that integrate with ERP platforms can vary widely. APIs must therefore be capable of interpreting data in a wide array of formats; they might sometimes have to convert it as well. This increases the complexity of API design and implementation, as well as the risk that APIs won't function as expected due to unforeseen data formatting or normalization issues.
• Compliance complexity. In some cases, compliance laws impose mandates on the movement of certain types of data between regions. For instance, the GDPR prohibits data transfers to jurisdictions that lack adequate data security protections. APIs, however, often lack the built-in ability to enforce limits on how data can move geographically, so relying on them to move data can create compliance challenges.
• Maintenance burden. Updates to both ERP platforms and external systems could cause API integrations to break unless the APIs are also updated. This places a maintenance burden on organizations, which must allocate resources to keep APIs up to date over the long term.

API integration strategies for ERP systems

Solving the ERP API integration challenges described above requires a strategy. Ad hoc approaches are likely to fail, given the technical and operational complexity at stake.

Popular strategies for developing and managing ERP APIs include the following:

1. The "one-by-one" approach

It's possible to develop custom APIs for every ERP integration a business wants, handling issues like data normalization on a case-by-case basis. Unfortunately, this is an inefficient strategy that is difficult to scale. Still, it might be the simplest overall approach for organizations seeking only a small number of ERP integrations, which might be the case if most data remains centralized in their ERP and they rely on relatively few external applications.

2. Unified API platforms

A unified API platform -- available from vendors like Merge, Apideck and Kombo -- functions as a middleman between ERP systems and third-party applications. Rather than having to integrate with each external app, the ERP integrates with just the unified API platform, which, in turn, connects to other applications.

The result is a simplified approach to ERP integration. The main downside is that functionality and control might be limited because the business can only implement capabilities supported by the unified platform.

3. iPaaS

Integration platform as a service (iPaaS) products provide a low-code way to implement connections between ERP systems and external platforms. They're similar to unified API platforms in that they can operate as a central integration hub, but they provide more customizability.

IPaaS options for ERPs can also be more complex to implement, however, and more expensive to operate.

Some ERP vendors have their own iPaaS offerings, including SAP, which offers one that is compatible with modern versions of the SAP platform. Third-party providers, such as DCKAP, also have iPaaS products.

4. Enterprise service bus

An enterprise service bus (ESB) is another technology that can serve as a middleman between ERP systems and external applications. ESBs tend to be more complex to deploy and operate than the other options. Their benefit is that they can often support legacy ERP systems that provide limited -- if any -- native API capabilities.

Tips for successful ERP API integration

The chances of ERP API integration success go up when organizations adopt strategies like the following:

• Upgrade ERP systems before integrating. Generally speaking, API integrations are much easier to implement for organizations that use modern, cloud-based ERP systems. Those dependent on legacy ERP systems should upgrade if possible before trying to build integrations, particularly because there is a risk that APIs could cease to work if the organization later upgrades to a more modern ERP system.
• Clean ERP data before integrating. Building integration APIs is also easier if the data stored inside ERP systems is clean, consistent and complete. To this end, consider investing in a data quality initiative prior to tackling API integration.
• Assess API integration needs upfront. Before embarking on an ERP API integration project, it's critical to identify which ERP integrations will actually benefit the organization. Just because a connection might be useful occasionally doesn't mean it will deliver enough value to justify the complexity or cost of building and maintaining it.
• Aim for consistency. When designing and implementing integrations, consistency -- in terms of API architectures, data formats, performance metrics and so on -- is key. In addition to enabling repeatability in design, consistency also simplifies maintenance and monitoring.
• Start with low-stakes integrations. Before deploying APIs that drive mission-critical processes, such as sales transactions, implement ones that connect to less critical systems or processes (e.g., periodic reporting) to validate your approach without inviting undue risk.
• Compare upfront vs. operational costs. When selecting ERP integration software such as iPaaS or ESB, it's important to consider not just the direct acquisition or licensing costs of products but also operational costs, such as fees the vendor might charge for importing or exporting data through its platform.
• Prioritize security and compliance. Ensuring that ERP integrations are secure and compliant should be a focus from the start of API implementation projects, not tacked on. This is important in any context, but it's especially critical given the highly sensitive nature of much of the data that typically lives in an ERP system.

Chris Tozzi is a freelance writer, research adviser, and professor of IT and society. He has previously worked as a journalist and Linux systems administrator.