The Empty Promise of Integration When Your Modules Dont Actually Talk to Each Other

Published on: Tue Jun 25 2024 by Ivar Strand

The Empty Promise of Integration: When Your Modules Don’t Actually Talk to Each Other

One of the most powerful value propositions offered by vendors of modern Enterprise Resource Planning (ERP) and financial management systems is that of a “fully integrated suite.” The promise is one of seamless data flow between modules, creating a single source of truth and enabling robust, automated, cross-functional controls.

However, the term “integration” can be ambiguous. Organizations often assume it means instantaneous, real-time data exchange, when the reality can be a much looser connection. This disconnect between assumed and actual integration can mask significant fiduciary risks.

The Illusion of Real-Time Control

Consider a common and critical process: budget control for procurement. An organization believes its procurement module is fully integrated with its finance and budgeting module. A program manager creates a new purchase order (PO), and after it passes through the necessary approvals within the procurement system, it is finalized.

The manager, and likely the internal auditor, assumes that at the moment of final approval, the procurement system has communicated with the finance module in real-time to check the available budget and place a commitment or “hold” on those funds.

In our experience, this is frequently not the case. Many systems labeled as “integrated” do not perform this function in real-time. Instead, the procurement module and the finance module may only synchronize their data in a “batch process” that runs periodically—often overnight, or in some cases, only at the end of the month.

The Consequence: A Critical Control Gap

This timing delay creates a critical control gap. In the period between the PO being approved in the procurement system and the batch process running, the funds are not actually encumbered in the master budget.

This opens a window of risk where multiple purchase orders from different users could be approved against the same, limited pool of funds. The organization’s budget holders are effectively making spending decisions based on latent data. The automated, preventive budget control that the organization believed it had does not exist. What exists instead is merely a periodic, detective reconciliation that can only identify budget overruns long after the financial commitments have already been made.

How to Test the Reality of Your Integration

Organizations must verify, not assume, the nature of their system integrations. This does not require a deep technical audit; a simple, practical test can reveal the truth of your system’s architecture.

1. Step 1: Isolate a Specific Budget Line. In your core finance or budget module, identify a budget line with a known, small available balance. For example, a line with $1,000 remaining.

2. Step 2: Create and Approve a Test Transaction. In the separate module (e.g., procurement), create and fully approve a transaction that encumbers most of that balance. For instance, a purchase order for $900 against that specific budget line.

3. Step 3: Immediately Check the Source of Truth. Do not wait for the end of the day. As soon as the PO is approved in the procurement module, immediately navigate back to the finance module and check the real-time available balance on that budget line.

4. Step 4: Analyze the Result. The result will be unambiguous. If the available balance now shows $100, your systems are integrated in real-time. If the balance still shows $1,000, your systems are using a periodic batch sync, and you have just uncovered a significant control vulnerability.

The term “integration” on a feature list is a claim that must be tested. Independent verification must extend beyond the functions of individual modules to the integrity of the connections between them. This is a fundamental component of a mature monitoring strategy and is essential for building a genuinely secure control environment.