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i95Dev

ERP and eCommerce Are Two Different Systems


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ERP and ecommerceBusinesses today are well aware of the benefits of having an eCommerce store and integrating it with their backend ERP system. Being in the business of eCommerce and integration for a long time we have witnessed many companies benefit greatly from eCommerce and integration and many companies struggle with it despite their best efforts. In our experience the primary reason for the struggle has been the failure on the business’ part to understand what integration can and cannot do and failure on the agency’s part to explain the same to their customers.

In most of those cases businesses expect integration to help one of their systems to replicate the functionality of the other. But they fail to realize that eCommerce and ERP are two very different systems and were built with very specific functionality in mind. The integration only enables the two systems to talk to and understand each other and it would be unrealistic to expect one to replace or replicate the functionality of the other.

Taking Magento (leading e-commerce cart) and Microsoft Dynamics GP as the two systems, the rest of the article briefly highlights the differences between the two systems to help you understand and appreciate the complexity and limitations of integration.

 

Pricing - Price Levels

  • Price Levels in Dynamics GP enables businesses to offer quantity-based discounts to customers based on their Customer Class; Magento has a similar feature called Tier Pricing (and Customer Group corresponding to Customer Class in Dynamics GP). While the objective of both Price Level (Dynamics GP) and Tier Pricing (Magento) is to provide quantity-based discounts, the way Dynamics GP and Magento handle (map, manage and implement) Price Levels/ Tier Pricing is very different.
  • In Dynamics GP a Customer Class can be mapped to multiple price levels, while Magento allows only one price level (tier price in Magento) to be associated with a customer class (customer group in Magento). Now if you would like to offer different prices to two customers belonging to the same customer class then it is possible in Dynamics GP but not in Magento.
  • With the above example it is important to note that the two systems might have similar but not same functionality. With integration we can connect them (like Tier Pricing in Magento with Price Levels in Dynamics GP) but might not be able to replicate the exact functionality.

 

Payments - Credit Limits and Net Terms

  • Credit Limits and Net Terms are very commonly used B2B features in Dynamics GP; credit limits allow customers to purchase a product on credit and net terms define the terms for payment of the same.
  • Magento does not support Credit Limits and Net Terms out of the box;  a B2B merchant, with Dynamics GP as ERP, will find it difficult to extend its eCommerce store to its B2B customers as most B2B customers purchase on credit and on pre-agreed net terms agreement. The merchant then  has the option to either build another e-commerce system for its B2B customers (replicating efforts), or extend the Magento e-commerce store to support the necessary features.
  • With the above example it is important to note that there are a lot of features that you might need but which are present only in one of the systems and unless you are willing to extend one of the systems, integration might not be very beneficial (for that feature/ functionality).

 

Order Processing - Order Fulfillment, Shipment and Invoice

  • Order Fulfillment (pick and pack), Shipment and Invoicing are usually the three vital steps required for completing a customer order. But, different systems are free to define and follow their own process. For instance, in Magento Shipment and Invoicing can happen in any order; shipment followed by invoicing or invoicing followed by shipment. On the other hand Dynamics GP’s Fulfillment workflow mandates Shipment to happen before an Invoice is generated. Now if a merchant were to integrate the two systems it is important to be sensitive to the fact that they will have to either mandate a specific workflow in Magento or risk not syncing information which does not follow that process.
  • With the above example it is important to note that for successful integration you might have to limit or mandate one of the systems (and teams associated with it) to follow a specific process/ workflow (for that feature).

 

Conclusion

Integration is a complex process; there are certain features in Dynamics GP which are either not available or differently implemented in Magento, and vice-versa. Integration enables these two unfamiliar systems to talk to each other by extending functionality of one, or by limiting functionality of the other, or both, but cannot render one redundant. To get more out of your investment in integration it is important to appreciate the complexity of the process and understand the limitations associated with it. This requires effort both from business seeking integration and the business providing it, to build the desired solution.

 

Like what you read? Download our e-book eCommerce and ERP are two Different Systems for more details.

by i95Dev

4 Responses to “ERP and eCommerce Are Two Different Systems”

  1. Why not just go with a solution that was designed from the ground up to integrate ERP / eCommerce / POS / CRM & Shipping in REAL-TIME? That was as requirements change, you can focus on growing your business and not a bunch of “connectors”.

    • i95Dev says:

      Hello Gary,
      That is a valid solution but does not work for a number of businesses. Few reasons include 1) limited features and functionality compared to platforms like Magento (a platform rated as #1 B2B and B2C e-commerce across multiple surveys with 500+ employees and 66,000+ developers working on it) 2) scalability and customizability of the solution (Magento as a platform can support 10M+ SKUs, 1M+ visitors,etc.) 3) community support (Magento has 10,000+ extensions available) 4) performance issues, 5) lack of support options and more.

  2. Sean Britt says:

    Very informative – Thanks i95 Team!