A FRAMEWORK FOR ERP INTEGRATION

Delvin Grant

College of Commerce, Depaul University, Chicado, IL 60604

Qiang Tu

College of Business, Rochester Institute of Technology, Rochester, NY 14623

Keywords: Enterprise Resource Planning

, System Integration

Abstract: Companies try to seamlessly integrate all areas of their business by adopting technologies such as business

process reengineering, supply chain management, ERP and customer relationship management in an attempt

to address increasing global competition. ERP is still the most used technology for enterprise integration. This

paper presents a six-level framework of ERP enterprise integration and defines the prerequisite requirements

for effective integration at each level. The proposed framework should provide ground for some interesting

future research directions in ERP integration.

1 INTRODUCTION

ERP is the most used technology for enterprise

integration. Its primary strategic advantage is

enhanced enterprise integration (Bingi et al., 1999;

Saccomano, 1999) that provides a comprehensive,

updated and realistic view of the business. Estimates

suggest that the ERP market will grow to $60 billion

by 2004 (Callaway, 2000; Mabert et al., 2000).

However, 50-66% of all system projects fail (Scheer

et al., 2000) because success depends on disruptive

changes in business processes (Kremers et al., 2000;

Soh et al., 2000) and corporate culture that are

aligned with the ERP system (Hasselbring, 2000).

Consequently, managers find it difficult to justify

large IT expenditures when financial benefits are

uncertain (Davenport, 1998; Deutsch, 1998).

Nevertheless, it is widely believed that seamless

integration of an enterprise improves company

performance (Chalmeta et al., 2001).

Since ERP is a solution to integration, we address

two prim

ary research questions. (1) Are there

different levels of ERP integration that may be

appropriate for companies seeking to integrate their

business? (2) What does it take to satisfy integration

at a particular level? To address question one we

present a framework of ERP enterprise integration

and for question two we define the prerequisite

requirements for effective integration at each level.

2 ERP AND INTEGRATION

DEFINDED

Today’s ERP systems are rooted in MRP II (Markus

et al., 2000) but differ in many ways. They

commonly run on client/server architectures instead

of MRP II’s server-based technology. ERP systems

support an even broader range of business processes

and functional areas than MRP II, and are used in a

variety of industries including manufacturing.

Integration is the bringing together of related

com

ponents to form a unified whole. It provides the

foundation for coordination, collaboration, and

synergy, and provides a holistic approach to

decision-making, management, and control.

Integration is a collection of computer information

systems, manufacturing systems, engineering

systems, production systems, management systems,

distribution systems, financial and accounting

systems, and people, that perform as a unit. When

these entities are optimally combined, they perform

in concert to achieve the organization’s objectives

(Grant, 1995). Organizations should be seamlessly

integrated if they are to successfully compete in the

global economy. The timely information required to

run a successful agile company cannot be realized if

companies avoid taking a holistic approach to

integration. ERP is the technology of choice for

achieving integration. However, the success and

379

Grant D. and Tu Q. (2005).

A FRAMEWORK FOR ERP INTEGRATION.

In Proceedings of the Seventh International Conference on Enterprise Information Systems, pages 379-382

DOI: 10.5220/0002519203790382

 SciTePress

failure of ERP depends on how effectively

companies use the system to improve integration.

An examination of companies that implemented

ERP systems reveal that they are at very different

stages of integration. Main (1990) has questioned

whether some firms have achieved it. He thinks there

is no universally accepted definition and objective

measures of integration. Multiple definitions,

subjective measures, and their concomitant

interpretations, are testament that integration is

neither static nor absolute. Therefore, we need a

framework that accommodates multiple levels of

ERP integration and better definitions of integration.

This may aid in the understanding, managing, and

implementing of ERP. This is why we propose this

framework of varying degrees of integration. It

provides some measure of objectivity for future

deliberations on integration.

3 A FRAMEWORK FOR ERP

INTEGRATION

The proposed framework of ERP integration (figure

1.) was developed after considering previous models

of integration (Mathew, 1988; Bullers and Reid,

1990; Burbidge et al., 1987; Meredith and Hill, 1990;

Truman, 2000)

Figure1: A Framework of ERP Integration

Level-I: System-Specification Integration

Level-I is concerned with two types of integration:

specification integration and compatibility

integration. Specification integration must satisfy the

system technical design specifications at the

software, hardware, and application levels of stand-

alone equipment. This is similar to middleware

integration discussed by Hasselbring (2000). The

primary concern is to ensure that the system performs

its prescribed function as required by users in the

most efficient and effective manner. Compatibility

integration deals with the level of compatibility

between the various components of the system. For

example, application programs and the related

software must be compatible with the operating

system.

Level-II: System-User Integration

This level is primarily concerned with ensuring

that users are integrated with the technology, both

hardware and software. At this level there are two

types of integration: ergonomic integration and

cognitive integration. Ergonomic integration ensures

that the system is ergonomically designed. This

includes ensuring that computer screens, keyboards,

and other hardware are ergonomically positioned

with respect to the user. It also includes making sure

that software is user-friendly. Cognitive integration

ensures that error messages are intelligible and

meaningful, and that the information returned to

users is useful and consistent with their frames of

reference. Integration between the user and

technology cannot be achieved if users suffer

cognitive dissonance. Therefore, the primary concern

of integration is ‘oneness’ and ‘harmony’ between

the user and the technology.

Level-III: Islands of Technology Integration

This type of integration links geographically

dispersed islands of technology throughout the firm.

Integration at this level concerns the ability of islands

of technology to communicate with each other. Two

types of integration are required: technical horizontal

integration and technical vertical integration, both of

which are necessary for sharing information between

the islands. Horizontal integration is the passing of

data between islands to facilitate coordination,

collaboration, decision-making, and task

performance. Vertical integration is required for the

passing of data for management control. The data

that are shared consist primarily of technical

instructions used to monitor and control technology.

Global

Socio-Organizational

Organization

User

Specification

Islands of

Techology

Islands of

Technology

Level-IV: Organization Integration

This level ensures that organizations are integrated

and not just the technology. The focus of integration

is the ability of islands of technology to support the

organization’s objectives. There are four types of

integration at this level: (1) internal vertical

integration, (2) internal horizontal integration, (3)

strategic integration, and (4) internal temporal

integration. This level of integration is different from

Level-III because it focuses on the speed, quality and

quality of information being passed, the way

information is presented, and the ability to analyze

and disseminate information, rather than simple

technical data format compatibility. The Business

ICEIS 2005 - DATABASES AND INFORMATION SYSTEMS INTEGRATION

380

Intelligence (BI) modules of ERP play an important

role here.

Level-V: Socio-Organizational Integration

Level-V integration extends beyond the brick and

mortar of companies. It seeks to integrate customer

relationship management, supply chain management,

and the coordination of the task environment

(Truman, 2000). There are five types of integration at

this level: (1) Domestic government and legal, (2)

external horizontal, (3) external vertical, (4) external

temporal, and (5) shared vision integration. Local

governmental and legal issues must never be

underestimated. Firms typically have to satisfy

government reporting requirements in very specific

format. External horizontal integration is similar to

internal horizontal; the difference is that it takes

place outside the firm. It measures the level of

integration of one company to other companies in the

industry. External temporal integration measures how

well companies coordinate their activities with

external constituencies on a timely basis. External

temporal must also consider the effect of doing

business in different time zones. Shared-vision

integration is the extent to which business partners

share a common vision because it is extremely

important for collaboration.

Level-VI: Global Integration

Level-VI is integration across national and

cultural boundaries, the highest level of integration

(Rochester & Douglass 1992). Global integration

must consider six types of integration: (1)

international horizontal integration, (2) international

vertical integration, (3) International temporal

integration, (4) cultural integration, (5) international

governmental & legal integration, and (6) shared

vision integration. International horizontal and

vertical integration are concerned with the

effectiveness of doing business across national

borders and refer to all data and information that

cross those national borders. International temporal

integration is the effectiveness of doing business in

several countries where different time zones exist.

Cultural integration forces companies to recognize

the differences and nuances of other cultures.

Different cultures pose unique language, cultural,

legal, economic, and political problems. The ability

to adjust to these situations determines the success of

global companies. The international governmental

and legal integration may well be the biggest issue

for companies doing business in a multi-national

setting. International trade laws of different countries

may dictate the level and type of knowledge and

technology sharing across countries. International

shared vision integration refers to the extent to which

multinational business partners (vertical or

horizontal) share a common vision in terms of short-

term goals, long-term strategy, market orientation,

product quality standards, and corporate culture

4 DISCUSSION AND FUTURE

RESEARCH DIRECTIONS

Insufficient research on ERP and integration

motivated the discussion of this topic. Given the

limitations of existing models of integration, we

decided to develop our own. The integration

framework builds on the discussion from the

literature. It requires that each succeeding level of

integration builds upon lower levels. One example is

that level-I integration is necessary for the successful

linking of ERP islands of technology at level-III.

This is why companies that claim level-IV

integration while level-III remains elusive are really

at level-II. Global integration is the highest level but

it may not be appropriate for all firms.

ERP is very capable of satisfying integration at

level-I, but by itself, cannot achieve Level-II

integration. For this to happen, developers must

address the people and ergonomic issues. For

example, users require extensive training and

technical support on the use of the newly

implemented ERP systems. Failure to provide it often

leads to ERP implementation failure. According to

Bhatt (2000), ERP is a good solution to level-III

integration. However, he argues against a piecemeal

approach to implementing ERP because it could lead

to isolated islands of ERP technologies. Therefore,

we recommend an enterprise-wide roll out of ERP

(Markus et al., 2000; Markus et al., 2000b). Success

at Level-IV is more difficult to achieve because the

technology by itself is not enough. It requires

additional change management initiatives like BPR.

Moreover, successful ERP implementation at level-

IV requires satisfying four types of integration. The

most difficult type is strategic integration that

supports the organization’s strategic objectives and

mission. Current and earlier versions of ERP do not

support level-V integration because they are grossly

inadequate when it comes to markets, competitors,

industries, and distribution-channels support. There is

speculation that future releases of ERP may attempt

to overcome these limitations. Another type of

integration that must be satisfied is shared-vision

integration. There has been no public announcement

that future releases of ERP will satisfy this type of

integration (Markus et al., 2000). We believe that

ERP does a satisfactory job at achieving integration

at levels one, two and three, but is severely

challenged at levels four through six.

Future research should address several questions:

A FRAMEWORK FOR ERP INTEGRATION

381

(1) The usefulness of the framework for furthering the

discussion on the relationship between ERP and

integration. We need to investigate how the six

levels of integration may aid decision makers in

recognizing the level of ERP integration

companies have achieved and provide insight into

the requirements needed to attain higher levels.

(2) Identify, refine, and characterize important issues,

problems and success factors associated with each

of the levels of integration.

(3) Test the existence of each of the six levels in

practice. This will help to validate and legitimize

the model, and its potential for research and

practice.

(4) Develop measurement criteria to analyze the

implementation success of particular levels of

ERP integration. This will help to determine

critical success factors for achieving particular

levels of ERP integration.

(5) Identify and develop appropriate management

techniques, methods, and frameworks for

managing the various stages of integration. We

believe that different levels require different

management philosophies, strategies, training,

and education. For example, Global integration

requires employees to be knowledgeable and

sensitive to cultural issues. Diversity is also an

important issue.

REFERENCES

Bhatt, G.D. (2000). An empirical examination of the

effects of information systems integration on business

process improvement. International Journal of

Operations & Production Management, Vol. 20, No.

11, pp. 1331-1358.

Bingi, P., Sharma, M.K., and Godla, J.K. (1999). Critical

Issues Affecting an ERP Implementation. Information

Systems Management, Vol. 16, No. 3, pp. 7-14.

Bullers, W. and Reid, R. (1990). Towards a

Comprehensive Conceptual Framework for Computer

Integrated Manufacturing. Journal of Information and

Management, North-Holland, Vol. 18, pp. 57-67.

Burbidge, J.L., Falster, P., Riis, J.O., Svendsen, O.M.,

(1987). Integration in Manufacturing. Computers in

Industry, Vol. 9, pp. 297-305.

Callaway, E. (1999). Enterprise Resource Planning:

Integrating Applications and Business Process Across

the Enterprise. Computer Technology Research Corp.,

Charleston, SC.

Callaway, E. (2000). ERP - The Next Generation: ERP Is

Web Enabled for E-Business. Computer Technology

Research Corp., Charleston, SC.

Chalmeta, C., Campos, C., Grangel, R., (2001). References

architectures for enterprise integration. The Journal of

Systems and Software, Vol. 57, pp. 175-191.

Davenport, T., (1998). Putting the Enterprise into the

Enterprise System. Harvard Business Review, Vol. 76,

No. 4., pp. 121-131.

Deutsch, C., (1998). Software that can make a Grown

Company Cry. New York Times, November 8, 1998.

Grant, D., (1995). Six Levels of Integration. International

Association for Computer Information Systems,

Toronto, Canada.

Hasselbring, W., (2000). Information System Integration.

Communications of the ACM, Vol. 43. No. 6, pp. 32-

38.

Kremers, M., and Van Dissel, H., (2000). ERP System

Migrations. Communication of the ACM, Vol. 43, No.

4. pp. 52-56.

Mabert, V., Soni, A., Venkataramanan, M., (2

Qtr, 2000).

Enterprise Resource Planning Survey of U.S.

Manufacturing Firms. Production and Inventory

Management Journal, pp. 52-58.

Main, Jeremy, (1990). Computers Of the World Unite.

Fortune Magazine. Sept. 90.

Markus, M. L. and Tanis, C., (2000). Multisite ERP

implementations. Communications of the ACM, Vol.

43, No. 4. pp. 42-46.

Markus, M. L. and Tanis, C. (2000b). The enterprise

system experience-Form adoption to success. In R.

Zmud, Ed. Framing the Domains of IT Research:

Glimpsing the Future Through the Pact. Publ.

Pinnaflex educational Resources Inc., Cincinnati, OH:,.

Mathew, P., (1988). Integration for Manufacturing

Growth.Third International Conference on

Manufacturing Engineering, Newcastle, August 4-6.

McGowan, Williams, (1989). Why Global.

Telecommunications, April 89.

Meredith J. and Hill, M. (1990). Justifying New

Manufacturing Systems: A Managerial Approach. ref.

in MIS Readings and Case edited by Boynton, A.C.,

and Zmud, R.W., Scott, Foresman/Little & Brown

Higher Education Publishing, London.

Saccomano, A. (1999). ERP Lives. Traffic World, Vol.

259, No. 10. pp. 38-39.

Scheer, A., Habermann, F., (2000). Making ERP a Success.

Communications of the ACM, Vol. 43, N0. 4, pp. 57-

61.

Soh, C., Kien, S., Cultural fits and misfits: Is ERP a

universal solution? Communications of the ACM. Vol.

43, No. 4. pp. 47-51.

Truman, G.E. (2000). Integration in Electronic Exchange

Environments. Journal of Management Information

Systems, Vol. 17, No. 1, pp. 209-244.

Zheng, S., Yen, D.C. and Tarn, J.M. (2000). The New

Spectrum of the Cross-Enterprise Solution: The

Integration of Supply Chain Management and

Enterprise Resource Planning Systems. Journal of

Computer Information Systems, Fall, pp. 84-93.

ICEIS 2005 - DATABASES AND INFORMATION SYSTEMS INTEGRATION

382