Bolt-on Software Supercharges Your ERP
May 2, 2023
Enterprise Resource Planning (ERP) systems are broad software application suites that integrate and automate various business functions. These functions include finance HR, finance, supply chain, manufacturing, etc. In addition, ERP systems provide a single repository for an organization’s data, which helps improve visibility, decision-making, and overall business performance.
Current and legacy ERP systems such as SAP, Oracle, JD Edwards, and PeopleSoft, etc., have been the backbone of business operations for decades, providing companies an integrated solution to manage and streamline their processes. However, while ERP systems offer a comprehensive suite of functionalities, they are generic and do not always meet the specific needs of individual businesses. This is where “bolt-on” Software as a Service (SaaS) systems come in. By integrating bolt-on SaaS systems with your existing ERP software, you can enhance the utility of your ERP system and improve your overall business operations with focused solutions.
Bolt-on systems are usually offered as “software as a service” (SaaS) and are software applications that integrate with your ERP system to provide specific functionality and performance, fill gaps in the ERP system, and provide features beyond a generic ERP system. Bolt-ons can be integrated with your ERP system, enabling seamless data exchange between systems using “middleware,” to be discussed later.
Examples of bolt-on systems include Accounts Receivable (AR), Collections, Deduction Management, Trade Promotion Management (TPM), Customer Relationship Management (CRM) systems, Supply Chain Management (SCM) systems, Human Resource Management (HRM) systems, and Business Intelligence (BI) systems.
Bolt-on SaaS AR Software, such as Carixa, can supercharge your accounts receivable operations with fully automated cash application, credit risk monitoring, automatic collection dunning, validation of deductions and trade promotion chargebacks, and AR reconciliation. In addition, the SaaS system integrates seamlessly with ERP systems, including SAP, Oracle, and Microsoft Dynamics. This integration ensures that all data is synchronized between the ERP and the AR SaaS system, providing real-time visibility into AR performance. Similarly, an HRM system can provide employee self-service features, such as leave requests and time tracking, that are unavailable in the ERP system.
Integrating SaaS systems with your ERP system can improve efficiency by automating processes and reducing manual work. For example, an SCM system can automate the procurement process by integrating with suppliers’ systems to enable automatic purchase order creation and tracking. This can save time and reduce errors associated with manual data entry.
SaaS systems can provide real-time data to make informed business decisions. For example, a BI system can provide real-time analytics on sales data, enabling managers to make data-driven pricing and inventory management decisions.
Bolt-on SaaS systems can improve customer service by providing a unified view of customer data. For example, a CRM system can provide a 360-degree view of customer interactions, enabling sales and customer service teams to offer a personalized and seamless customer experience.
Integrating bolt-on SaaS systems with your ERP system is cost-effective as it eliminates the need to modify the ERP or develop in-house software solutions. Instead, you can choose a SaaS system that meets your specific business requirements and integrates it with your existing ERP software. Then, you license the SaaS software; the vendor usually configures it for your needs.
Bolt-on SaaS systems are highly scalable and easily scaled up or down per business needs. That flexibility ensures businesses can add or remove functionalities per their evolving needs without significantly investing in new software.
Bolt-on SaaS systems are designed to integrate seamlessly with ERP software, making integration relatively easy and painless. In addition, with APIs, data can be exchanged between systems in real-time, enabling a unified view of business operations.
The SaaS provider can customize Bolt-on SaaS systems to meet specific business needs. For example, a marketing automation system can be configured to match a business’s branding and messaging, ensuring a consistent customer experience.
One area where ERP systems fall short is in specific features and automation for AR, including Credit, Collections, Deduction Management, and Trade Promotion management. With best-in-class AR software like Carixa, companies can significantly improve their financial results and customer experience while streamlining processes.
With an Accounts Receivable bolt-on system, organizations can automate many AR processes, such as credit risk, collections, reconciliation, validation of trade promotions, and cash application. This automation reduces the workload on AR staff, helps reduce errors, and improves overall process efficiency. In addition, many labor-intensive functions, such as access to other internal or trading partner systems, can be handled with robotic technology.
Cash application is a critical AR process that is time-consuming and prone to errors. With the best bolt-on AR software, organizations can automate their cash application process, which reduces the time and staffing to match payments to open invoices. This automation also helps improve accuracy and reduces the risk of errors.
Reducing the critical metric of DSO is crucial for companies, directly impacting cash flow and financial performance. State-of-the-art AR systems can help companies reduce DSO by providing real-time visibility into AR performance, identifying bottlenecks and areas for improvement, and automating many AR processes that contribute to DSO. Improving cash flow is crucial for most businesses. Bolt-on AR SaaS systems can help organizations improve cash flow by reducing DSO, enhancing the efficiency of AR processes, and providing real-time visibility into AR performance.
Revenue and profit leakage due to excessive customer AR deductions represent significant profit losses for many companies. Automated AR deduction validation, reconciliation, and problem resolution workflow ensure that processing time is accelerated, systemic root causes are identified, and deduction losses and write-offs are reduced. In addition, this software can include trade promotion management, accrual accounting, and validating bill backs against invoicing.
Customer relationships are the lifeblood of any organization, and providing a positive customer experience is critical for driving growth. Bolt-on AR SaaS systems can help improve the customer experience by providing real-time visibility into invoice and payment status and offering self-service options for customers.
AR processes are costly, requiring manual intervention or involving complex workflows. With bolt-on AR SaaS systems such as Carixa, companies can reduce the cost processing by automating many of the manual tasks and workflows involved in AR management. As a result, the best software reduces the workload on AR staff and helps reduce errors, and improves overall process efficiency, ultimately leading to cost savings.
There are different ways that bolt-on software can be integrated with ERP systems. One approach is through an application programming interface (API), which is a set of protocols and tools used to build software applications.
Another approach with great advantages is “middleware,” which is a software layer that sits between the ERP system and the bolt-on software. Middleware acts as a bridge between the two systems, enabling them to communicate and exchange data without requiring direct integration.
Using middleware allows organizations to benefit from the added functionality and features of the bolt-on software, while still maintaining the integrity and consistency of their core ERP system.
For Carixa, which is a robust Order-to-Cash platform including Accounts Receivable, Collection Management, Trade Promotion, and Deduction Management, we consider “middleware” as a best practice for connecting systems.
Middleware acts as a bridge between different applications, systems, and technologies. It enables seamless data exchange and communication between software systems, making it a critical component in any enterprise IT ecosystem. For example, in the context of SaaS and ERP systems, middleware can play a crucial role in facilitating data communications between the two systems, offering a range of benefits.
Middleware simplifies integrating bolt-on SaaS with ERP systems, which typically have different data structures. Middleware is an intermediary that maps the data between the two systems, eliminates the need for complex custom coding, and allows quicker, easier integration. Middleware can also handle any data transformations required to make the data compatible between the two systems, further streamlining the integration process.
Middleware facilitates real-time data exchange between SaaS and ERP systems, sharing data seamlessly and quickly, allowing up-to-date information across the enterprise. In addition, real-time data exchange can significantly improve operational efficiency, ensuring everyone can access the same information.
By automating the data exchange process, middleware can significantly reduce the likelihood of errors, improving the overall accuracy and quality of the data shared between systems.
Middleware provides flexibility by allowing for changes made in the ERP or the SaaS system without affecting the other, allowing for greater flexibility and agility in response to changing business needs. In addition, middleware acts as a buffer between the two systems, ensuring that any changes to one system do not affect the other.
By automating data exchange, middleware can significantly reduce the time and effort needed to transfer data between systems, freeing up resources to focus on other critical tasks. This can lead to increased productivity and efficiency across the enterprise.
Middleware provides a secure channel for data exchange between SaaS and ERP systems. It ensures that data is encrypted and transmitted securely, reducing the risk of data breaches and cyber-attacks. Middleware can also help manage access controls, ensuring only authorized users can access sensitive data.
Middleware enables data analytics by providing a unified view of SaaS and ERP systems data. By combining data from multiple sources, middleware can give a more comprehensive view of business operations, enabling more informed decision-making.
Bolt-on software refers to additional software applications that can be integrated with an organization’s existing software, such as enterprise resource planning (ERP) systems. These bolt-on applications can add new functionalities or features to the existing system without requiring a full replacement or upgrade of the core system. This can save both time and money and can help organizations to adapt to changing business needs more quickly and effectively.
However, it is important to carefully evaluate any bolt-on software provider’s subject matter competence, flexibility, integration capabilities, and corporate culture because this will be a multi-year relationship. This includes using best practices, such as middleware, to facilitate data communication and system integration.