What Is System Integration? Types, Advantages, and Methods

According to Allied Market Research, the global system integration market was worth nearly $352 billion in 2021 — and that value is expected to increase by more than five times by 2031. But what is system integration, and why is it so important?

Simply put, system integration is the practice of connecting smaller systems into one seamless structure. Digital system integration connects software, services, and IT systems for greater functionality.

Use system integration any time you want to simplify communication within your business or between your business and a third party. For example, many vendors use electronic data interchange (EDI) to streamline communication with their customers.

Interested in implementing system integration? We’ll introduce system integration tools to transform your business.

Types of system integration

Businesses use several types of system integration to streamline communication, including:

• Business-to-business integration: B2B system integration makes it easier for companies to exchange real-time data with suppliers, customers, and other stakeholders.
• Electronic data interchange: EDI enables businesses to exchange documents in a standardized format, increasing efficiency and preventing data-entry errors. This type of system integration makes it easier to transition from paper documents to digital ones.
• Data integration: With data integration, it's possible to compile data from several sources. For example, if your company has separate human resources, accounting, and inventory management systems, you can pull data from each of those systems into a centralized repository.
• Enterprise application integration: This type of integration improves data flow between software applications. For example, you may use enterprise application integration to bridge the gap between your customer relationship management (CRM) software and enterprise resource planning (ERP) system.
• Legacy system integration: If your company is still using a legacy system developed decades ago, you can use system integration to connect that system to modern IT components, improving the flow of data within your business.

5 advantages of system integration

The benefits of system integration extend across all industries, from manufacturing to food distribution. Here are just a few advantages to using system integration:

1. Increased productivity

Manual processes have multiple steps that all require intervention from employees. Computerized processes take less time, but it's difficult to ensure everyone is on the same page without integration. When you integrate your internal systems, employees don't have to spend as much time collecting or formatting data.

2. Reduced costs

If your company uses an outdated legacy system, you have two options: create a brand-new system or integrate the existing one with something more modern. Building a new system from scratch takes tremendous work and expense. Integration allows you to modernize without spending as much money.

3. Enhanced decision-making capabilities

System integration gives employees access to data on everything from inventory counts to production costs. Even better, that data updates in real time, providing insight into what's going on minute-by-minute. This enables employees to make better decisions.

A prime system integration example is the combination of Salesforce with Microsoft Outlook. These tools are helpful on their own, but integrating them facilitates better decisions. Customer service professionals can use the information in Salesforce to determine the best time to follow up with a customer about a recent purchase.

4. Improved accuracy

Manual processes require human intervention across many steps, making them prone to errors. If a team member has to type every purchase order by hand, they're likely to make a mistake once in a while. Such mistakes lead to delivery delays, increased costs, and other problems. System integration consolidates data from multiple sources, eliminating the need to transfer it manually.

5. Better business relationships

Without system integration, processing orders, responding to inquiries, paying invoices, and completing other logistical activities takes longer. Delays may harm your relationships with vendors, customers, investors, and employees. The system integration process speeds up the flow of information, helping you promptly meet stakeholders' needs.

Common system integration challenges

Although system integration has many benefits, there are some roadblocks typically associated with the process.

Changing business circumstances

Creating a plan, gathering resources, and executing the integration process takes time. That said, it's in your best interest to complete the process as quickly as possible. If the project drags on for years, changing business circumstances will likely render some aspects of the new system obsolete before they’re complete.

Organization-wide coordination

The system integration process involves people at all levels of the organization, from managers to IT professionals. Each department handles just one aspect of the integration, so it isn’t easy to hold everyone accountable for the project's success. Additionally, you may include suppliers or other stakeholders in the process. These stakeholders don’t share the same obligation or assume the risk of the project's outcome, but you must still consider their input.

High resource demand

You need the right equipment and the right employees to integrate two or more systems. If you don't have a strong IT team, you may have to hire an in-house team or pay a third-party consulting firm to help.

Methods to connect systems

Businesses use a variety of methods to connect discrete systems. Some of the most common include:

• Star integration: This integration method uses point-to-point connections to integrate subsystems. Although star integration improves functionality, managing the connected system is more difficult. Therefore, star integration is best for connecting just a few subsystems.
• Point-to-point integration: Firms use point-to-point integration to connect two system components. This type of integration is ideal if you only need to manage one function at a time. If you need to create a complex system, other types of integration are more appropriate.
• Hub-and-spoke integration: This type of integration connects each subsystem to a central hub. This hub handles all requests, increasing the system’s security.
• Horizontal integration: Firms use horizontal integration to enhance communication between subsystems. An enterprise service bus (ESB) connects everything, allowing data to flow seamlessly.
• Vertical integration: Used to connect a limited number of systems, vertical integration creates silos arranged by complexity. The most basic functions are at the bottom, and the most advanced functions are at the top.

4 steps to implement system integration

If you're ready to proceed, follow these steps to implement your integration.

1. Plan the process. Careful planning is the best way to prevent costly problems during the integration process. You should assess your current systems, define your integration requirements, and map out how you want the new system to look so you can determine the expected cost and timeframe.
2. Engage in architecture modeling. This involves choosing one of the integration models described above or developing a custom solution for your business. Then, you create a blueprint to show how the subsystems will communicate with each other.
3. Test and implement the integration. Testing ensures each subsystem interacts with the others without producing errors. Implementation involves rolling out the new system and educating users on its operation.
4. Maintain the system. It's vital to make regular security updates and run system diagnostics to identify errors that could affect functionality.

Simplify B2B integration with Orderful

Companies of all sizes use system integration to connect with trading partners across the globe, making B2B integration more essential than ever. Integration also connects cloud-based applications and processes large volumes of data.

Orderful offers a cloud-based EDI solution with modern APIs, simplifying the integration process. Speak to an expert for more information about how EDI can transform your business