Magento

Magento ERP integration: 4 important things to know beforehand

Posted by Pixafy Team

Integrating Magento into existing ERP (Enterprise Resource Planning) became easier when Adobe acquired the ecommerce platform back in 2016. Magento announced the deal during the Shop.org annual conference that year, speculating that the partnership would improve merchants’ ecommerce capabilities by enabling them to design and deliver consistent, remarkable customer experiences across multiple channels.

“With this joint solution, merchants now have limitless flexibility and powerful personalization to better differentiate themselves from competitors,” Magento Commerce CEO Mark Lavelle explained upon the announcement of the acquisition.

The capabilities that came out of the Adobe-Magento partnership established in 2016 have certainly made it easier for retail companies to develop and deploy eye-catching front-end experiences. However, these components constitute just one half of the operational equation — ecommerce success also depends on numerous behind-the-scenes functions that benefit from more mundane connections between the Magento framework and other software — most notably, enterprise resource planning platforms. ERP solutions propel essential backend workflows, including customer order processing and shipping and logistics. These digital tools also support key day-to-day operations such as inventory control. The nature of the modern ecommerce paradigm dictates that data flows from the ERP into the ecommerce platform and vice versa, thus necessitating integration.

Unfortunately, this is an especially touchy subject among information technology stakeholders, as connecting two or more pieces of high-powered software is never easy nor problem-free. However, retailers embarking on Magento-ERP integration are not doomed to do this alone — numerous other sellers have traveled the same route and found success while contributing to an immense body of best practices along the way. Here are four of those items:

1. Pinpoint the right solution

There are numerous ERP platforms on the market, from massive suites based from legacy software providers to specialized best-in-class solutions from insurgent enterprise technology startups. Navigating this ever-growing sea of systems can be confusing. However, retailers must avoid panicking in this uncomfortable situation. Careful consideration is the ideal strategy here. Internal stakeholders overseeing ERP sourcing activities should collect data internallyand perform gap analysis to decide what specific operational needs a potential solution would need to address, CIO reported. With this information, they can then formulate an exhaustive list of requirements. Luckily, Magento compatibility is rarely an outright system must-have since the ecommerce platform’s customizable framework allows developers to forge connections with almost any ERP.

There are, of course, some common solutions that see widespread use among merchants using Magento. These include:

  • Sage: Sage is a global company with various ERP and accounting software solutions used by both B2B and B2C companies. Each platform is business software suite offering a single solution for your managing core business processes including inventory, sales, customer service, finances, and more. Sage ERP and Magento work together and can adapt to your needs, making it easier and quicker for you to run your business.
  • Microsoft Dynamics 365 for Finance and Operations:This platform, formerly known as Dynamics AX, supports international operations conducted via multiple websites and offers ancillary support for mission-critical business functions such as finance, human resources and operations management. Of course, this product also props up processes associated with ecommerce, including stock database integration and shipping and fulfillment management. Dynamics 365 Finance and Operations is primarily an on-premise solution, meaning it should be used with client-owned and -operated servers.
  • NetSuite: NetSuite specializes in cloud-based ERP and business intelligence solutions for medium-sized organizations. The platform supports multiple ecommerce functionalities, including customer and product data sharing and queuing, both of which can be controlled via Magento. The ERP is also popular due to its open-source Magento integration connector, which developers can customize to fit their companies’ needs.

Sellers are not confined to choose between these ERP products, as there are numerous other options available. Finding the right ERP solution is what matters most in the end.

2. Consider core functionalities

Modern ERP platforms come packed with countless features. However, not all of these system components are created equal — some contribute to mission-critical ecommerce processes while others are made for getting reactions during sales demos and little else. Sellers must learn to distinguish between these two prevalent feature archetypes and focus on platform modules that make a difference when paired with Magento. They include:

  • Inventory management: This operational function is key to success within the retail arena, especially nowadays when sellers must strike a balance between being prepared to meet customer demand and mitigating the financial impact of wastage. ERP inventory management features can help retail companies find this middle ground by facilitating big-picture planning and addressing the tiny variables that can affect inventory levels.
  • Backorder management:ERP technology can transform backorder management, which ranks among the hardest backend tasks for modern retail companies. Most platforms can capably automated this function and link warehouse data flows to Magento so that product pages automatically update when new stock gets scanned in. That said, sometimes sellers choose to opt out of this particular platform capability to embrace high-risk, high-reward demand-based workflows.
  • Business intelligence:Although ERP systems are known as functional workhorses, they actually possess much higher potential thanks to their data collection capabilities. Retail decision-makers can mine ERP data flows to develop long-term forecast and coordinate important organizational moves. This is why most vendors offer business intelligence features to go along with the most traditional modules mentioned above.

Retailers embarking on the Magento-ERP integration journey should most spend their energy assessing these core features to better understand how they can improve ecommerce operations and what said enhancements might do to the bottom line.

3. Unpack the expenses

ERP integration with Magento can come with significant costs, especially for retailers implementing completely new systems. Of the companies across all industries that implemented ERP software in 2018, 84% devoted between 0.5% and 2% of their annual incometo implementation, with smaller enterprises sliding closer to the higher end of the scale, per Panorama Consulting Solutions. Numerous variables influence this amount, including business process adjustment and data migration. There are also a number of so-called hidden costs that tend to inflate ERP implementation spend, starting with custom code. Vendors typically charge extra for bespoke platform components, which almost 90% of adopters requested in 2018, according to Panorama. While minor adjustments do not normally catalyze much budgetary growth, larger ERP adjustments that affect between 25% and 100% of the ERP source code — 46% of adopters requested this level of solution customization in 2018 — can carry major financial repercussions.

Sellers should do their due diligence in assessing the costs that come with bringing new ERP technology to work with Magento and decide whether this is a wise move.

4. Find an effective integration partner

Most retail companies do not handle Magento-ERP integration independently — and for good reason. This work is best left to external vendors that have completed hundreds or perhaps thousands of these jobs and therefore know the software inside and out, and understand the various risks. Internal teams may be able to handle Magento’s open-source framework but connecting this delicate mission-critical code to another massive enterprise solution requires special expertise. Luckily, outside assistance is not difficult to find with Magento, which is known for its huge community of developers and technology partners. An estimated 3,000 certified contributors write code for the platform while 1,150 partners take over large duties like implementation.

Pixafy is among these trusted technology organizations and maintains the Gold Solutions Partner designation. Why? We collaborate with retailers of all sizes and leverage our award-winning ecommerce development team to produce Magento-based online shopping experiences that engage customers and boost the bottom line. This work involves the development of seamless infrastructure, meaning our developers craft compelling frontend frameworks that deliver high-quality service through strong backend connections, including ERP integrations. In the end, retail companies intent on taking advantage of Magento’s connective code via ERP integration are likely to see the most return on investment by collaborating with an external technology partner like Pixafy.

Contact us today to learn more about our work and services and how we can help you navigate Magento-ERP integration.