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.
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.
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
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
Grant D. and Tu Q. (2005).
In Proceedings of the Seventh International Conference on Enterprise Information Systems, pages 379-382
DOI: 10.5220/0002519203790382
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.
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
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.
Islands of
Islands of
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
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
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:
(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
(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.
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