Understanding composable ERP

If you've worked with ERP systems for any length of time, you most likely eventually encountered the same recurring challenge: they're hard to change- and that creates friction when market conditions shift or internal priorities shift.

Rather than relying on a single, tightly connected system, composable ERP offers an alternative where the components are broken down into independent business capabilities that can operate both independently and together.

This provides businesses with the ability to modernize areas of the system when required without taking on a full system replacement.

What is composable ERP?

Composable ERP is a modular enterprise resource planning system where the architecture is composed of modular micro-services designed to collaboratively deliver ERP functionality.

This enables businesses to add/ remove specific elements without overhauling the entire system, allowing greater flexibility, scalability, and faster implementation.

How does composable EPR differ from modular approaches?

Though both modular and composable ERP systems employ discrete functional units, composable ERP is distinguished by its granular modularity and architectural flexibility.

Modular ERP solutions offer functionality in discrete groupings, finance, inventory, manufacturing, etc. but these are still tightly coupled under the hood and are difficult to isolate – change one, and you risk breaking others, especially when third-party solutions are introduced.

Composable ERP is predicated on decoupling – each component can be deployed, scaled, and retired independently.

That means you can upgrade your warehouse management service without touching your finance logic, or bring in a third-party CRM without fighting your ERP vendor over compatibility. And most importantly, scale or retire individual components without disrupting the system.

How does composable ERP work?

Composable ERP works through a network of independently deployable services. Each handles a single business capability and communicates with others through APIs.

There's no shared backend, no common codebase tying everything together. Instead, orchestration happens at the integration layer, often using an API gateway or service mesh.

Modular components

In a composable ERP, each component is built as a standalone service. You might have one for general ledger, another for product lifecycle management, and another for procurement. Each one exposes its functionality through APIs, consumes standardized data formats, and runs on its own release cycle.

From a business perspective, this means you can prioritize high-value areas for modernization—say, customer-facing operations—while leaving more stable areas untouched, reducing your upgrade risks dramatically. There's no “big bang” ERP rollout, just a series of well-scoped deployments aligned to business goals.

Common types of ERP modules in composable architecture

When we talk about composable ERP, we're not redefining what ERP does but how those functions are delivered and consumed – instead of one massive platform, you apply distinct, purpose-built services that can be deployed individually, easily integrated, and independently upgraded, while still maintaining a centralized logic.

Financial management

In a composable model, financial functionality is split into granular services—general ledger, accounts payable, receivables, fixed assets, cash management—each as a standalone component.

That allows you to implement a real-time payments gateway without waiting for a full GL upgrade, or plug in tax compliance automation without disrupting month-end close.

Composable finance modules are especially valuable when operating across multiple entities, regions, or currencies.

You can standardize the data model at the orchestration layer while allowing for local variation in processing logic. And because each service exposes APIs, integration with banks, auditors, and tax authorities becomes much simpler.

Supply chain management

Traditional supply chain modules tend to be rigid and tightly bound to outdated logic around lead times, batch updates, or static warehouse structures. In a composable approach, inventory visibility, procurement workflows, vendor performance management, and shipping coordination- are all handled by independent services.

That means you can optimize one segment of your supply chain without impacting others. You can also roll out features like automated reordering, IoT-driven tracking, or third-party logistics integrations- incrementally.

Manufacturing

In manufacturing environments, composability allows you to decouple planning from execution, quality control from scheduling, and resource tracking from compliance reporting.

For example, your production planning engine could run as a separate service, feeding orders into a shop floor system that's optimized for real-time machine data ingestion.

Customer relationship management

A CRM module in a composable ERP environment is a collection of modular services that handle specific customer-facing functions, like account data, engagement history, support interactions, and loyalty tracking.

These services are designed to be reusable across the organization, supporting consistent customer experiences in sales, marketing, service, and eCommerce.

Each component- order history, support tickets, campaign responses, loyalty programs, is exposed via APIs and operates as a standalone service, allowing data to be accessed by any interface or system that needs it, whether that's a mobile app, web portal, or in-store POS.

And if you want to swap in a new marketing automation engine, you can do that without rearchitecting the entire CRM layer.

Analytics and business intelligence

In a composable ERP architecture, analytics isn't tied to a monolithic reporting engine, instead it's built on a network of data services—real-time data ingestion, semantic modeling, KPI tracking, visualization—that can pull from multiple sources.

This delivers insights through whatever tools your team already uses, giving you freedom to evolve your transactional modules without breaking reporting structures.

Specialized industry-specific modules

Niche industry requirements, or specific use cases like lot tracking for food and beverage, regulatory traceability in pharma, or field service scheduling for utilities often force companies into expensive customizations or force-fitting horizontal ERP tools.

With a composable architecture, those edge capabilities are standalone components that run in parallel with your core modules and evolve on their own timelines – so you don't have to bend your business to fit your ERP, instead, your ERP will adapt to how you operate.

Benefits of composable ERP

What makes composable ERP worth considering is that it fundamentally changes how you respond to change. In most organizations, ERP is often either the blocker or the bottleneck.

A composable ERP, however, becomes the enabler—lets you move faster, adjust in real time, and bring in new capabilities without triggering a months-long project every time.

Faster innovation and deployment

In a traditional ERP setup, small changes like introducing a new approval workflow tend to run up against a wall of interconnected modules where every change ripples through the system.

When services are independent, you can roll out new capabilities without touching the rest of the platform – that makes it easier to test ideas, deploy iteratively, and respond to feedback in real time and deliver business value continuously, instead of in waves.

Greater business agility and responsiveness

Business agility means being able to swiftly shift direction according to changes in conditions (new regulations, supply chain disruptions, or a change in strategy), and make precise changes where they're needed, fast.

When one part of the business needs to adjust you only update the relevant service. The rest of the system keeps running as-is. No major reconfigurations and no chain reactions.

Tailored ERP experiences

Different teams have different needs. What's essential for one region, product line, or department might be completely irrelevant for another.

With a composable ERP, you're not forced to deploy massive feature sets across the board, instead, you can pick and choose the capabilities each part of the business needs, and leave out the rest.

That translates into simpler user experiences, faster training, and far less customization work.

Reduced vendor lock-in

When your entire ERP stack depends on a single vendor, you're limited to their roadmap, pricing model, and integration points.

In a composable ERP, while APIs, data contracts, and orchestration are still standardized, once in place, you're free to bring in the best tools of your choice for the job.

You're not locked into one vendor's ecosystem or stuck waiting for development of features you need now – you control the architecture and the change pace.

Scalability and future-readiness

Since in a composable services are loosely coupled and independently deployable, you can scale parts of the system as demand grows- if order volumes spike, you “upgrade” the order service.

And when new technologies emerge—AI, machine learning, event-driven processing- you can easily plug them in as part of the architecture.

Steps to developing a composable ERP strategy

You can't just “go composable” by picking a few APIs and calling it done, and like any real transformation, it starts with strategy.
Here's how we typically advise organizations to think through the transition.

Assess current ERP and business architecture

Before you make any decisions, you need a clear view of what you already have.
Begin with a comprehensive audit of your existing ERP environment – Map current modules, identify embedded customizations, analyze integration points, and document legacy dependencies.

Assess the business architecture- where are the bottlenecks? which processes lack flexibility? Where has the business outgrown the capabilities of the current ERP?
These analyses will provide a baseline that will support both the prioritization and the design of the modular components.

Define business outcomes first

The change initiative must be grounded in business value- Don't start with capabilities. Start with outcomes.

Define clear, measurable results that the strategy is expected to achieve—faster product launches, improved margin control, accelerated close cycles, better customer visibility, etc.

These will become the lens through which every design and implementation decision is evaluated.

Map out modules aligned with business needs

Once you've defined outcomes, you can start mapping those to functional areas. This is where you decide which business capabilities should be delivered as independent services—and in what order.

It's important to be pragmatic. You're not trying to break everything into microservices on day one. You're identifying where separation creates real business value. Maybe that's isolating procurement so it can evolve independently or separating financial reporting so you can move to real-time dashboards without changing your core ledger logic.

Focus on the functional building blocks that tie directly to outcomes. Build a capability map, align it with the org structure, and identify which components will benefit most from being decoupled.

Establish data foundation and integration architecture

This usually involves standardizing how business entities are defined and shared.
Define standard data models for core entities- customers, products, orders, transactions, and establish shared APIs or integration protocols to ensure consistency across services.

The architecture must support consistent data models across services, standardized APIs, and governance mechanisms for access control, validation, and monitoring.
This layer becomes the connective tissue between services—defines the data lineage, and access control, and ensures that data flows are reliable, auditable, and secure.

Balance short-term needs with long-term architecture

Not everything needs to change at once. Identify a small number of high-impact, low-risk processes as candidates for initial modularization. These might include functions with high change velocity, recurring pain points, or limited upstream/downstream dependencies.

Plan for phased delivery but anchor that plan in a long-term vision – avoid fixes that can create new silos or technical constraints and progress incrementally.

Create a strategic vendor management framework

A composable ERP requires a vendor management framework that is focused on interoperability, openness, and lifecycle independence. Your procurement processes must reflect this operational model, and your vendor relationships must support long-term architectural control.

Establish clear evaluation criteria- API maturity, data model transparency, SLAs enforceability, and flexible licensing. Vendor SLAs should be scoped to the specific service, not just the platform.

Considerations when designing your strategy

As you develop your composable ERP strategy, a few foundational principles need to be accounted for early to make sure modularity doesn't become fragmentation.
Three areas in particular require clarity from the start: how modules will work together, how the system will feel to users, and how decisions around services and vendors will be made over time:

Ensuring interoperability across modules

One of the core assumptions of a composable approach is that the parts can operate independently but still function as a whole.

This means you must agree on common business definitions – shared entity models, standardized API contracts, and aligned message schemas (your strategy must define how services expose functionality, how data is exchanged, and how contracts are enforced).

User experience consistency across modules

User experience must remain unified across a distributed system- Fragmented UX is usually the result of inconsistent identity management, divergent front-end frameworks, or incompatible workflow logic across modules.
Users don't care that your ERP is made up of separate services. What they experience is one system. If each module looks and behaves differently, trust in the platform erodes fast.

Governance framework

Governance must be built in from the start and remove any ambiguity
The more autonomy you give teams to select or build their own modules, the more critical it becomes to enforce shared rules, clear ownership, and architectural discipline.

Your strategy must define how modules will be evaluated, approved, and maintained. Who is responsible for what? How are decisions made about shared services? What are the criteria for retiring a module—or replacing a vendor?

Can composable ERP components be implemented alongside legacy systems?

Yes, and in most cases, they should be. For most organizations, legacy systems are deeply embedded in core operations, and immediate replacement isn't practical—or necessary.

The more viable approach is to adopt composability incrementally, layering new capabilities alongside existing systems, and gradually shifting critical functions into modular services.

Does composable ERP require cloud infrastructure to be effective?

Strictly speaking, no—composable ERP does not require cloud infrastructure. But in practicality, composability at scale is extremely difficult to achieve without it.

The composable model depends on the ability to deploy services independently, manage them autonomously, and scale them based on demand.

Containers, orchestration platforms, managed APIs, elastic infrastructure, and serverless runtimes are inherently based on cloud-native architectures, making modular ERP architectures easier to implement, manage, and evolve.

How Priority Software can help

Priority Software delivers a flexible and agile ERP platform designed to support composable strategies, allowing organizations to adopt and scale business capabilities—such as finance, supply chain, CRM, and manufacturing—at their own pace.

Built on an open architecture with robust API support, the platform enables seamless integration with existing systems and the deployment of new services without disrupting core operations.

With flexible deployment options, Priority allows businesses to modernize gradually, extend functionality as needed, and respond quickly to changing requirements, while maintaining full, system-wide control and consistency.