Case Study: Enterprise Resource Planning
Today's most successful companies understand and practice enterprise application integration through innovative approaches and techniques. A composite story, drawing from experiences applying Enterprise Resource Planning (ERP) software with companies in the employment services sector, provides an example of how such companies would apply integration models to ERP objectives.
The packaged software that is provided by ERP vendors such as PeopleSoft, SAP, JD Edwards, and Baan delivers improved enterprise application integration by offering an integrated suite of applications to perform standard business functions. Back-end functions such as accounting, inventory, and shipping are supported, as well as front-end functions such as call-center and sales-force automation. ERP packages are used in conjunction with business process reengineering techniques to upgrade big chunks of a company's supporting systems.
Until recent years, packaged-software vendors concentrated on one application or a suite of applications that they automated without regard to other applications that a company might have in its systems portfolio. Consequently, large corporations that purchased and installed packaged applications found themselves with islands of data and processing that must be bridged to other islands. As these bridges grew, the maintenance of a system and its interfaces also grew to take up more and more resources. In response to this dilemma, software vendors expanded their offerings to include all or many of the related applications that a company would require, delivering them pre-integrated by the vendor.
Companies undertake ERP implementations when they need to integrate multiple systems quickly. Sometimes business competition forces companies to undertake ERP initiatives when competitors, because of tight integration of their own systems, can offer more desirable services and product features. At other times, technological advances require that a company upgrade all its systems to keep up with new opportunities. Yet another reason companies install ERP systems is when outsourcing initiatives have failed and they want to reinstate their own information technology systems support. When bringing this function back inside a company is a good time to overhaul the systems and make sure they're integrated and maintainable.
The new Chief Information Officer's charter was to replace obsolete computer systems with current packaged systems, providing a competitive advantage through technology. This meant using advanced systems to bring more resources to market (that is, filling jobs more quickly with their temporary employees) while at the same time slashing prices by reducing operating margins. The goal was to implement improved business processes by configuring and installing packaged ERP systems according to the results of an enterprisewide reengineering effort.
The sales and service delivery team would be able to fill jobs more quickly with temporary employees by using sales support applications that were configured based on best practices identified and propagated throughout the organization's distribution network. New business acquisition and retention of existing customers would be enhanced through customer management software and customer information reporting.
The field offices would be able to reduce operating margins by using packaged applications that support field office functions such as billing, payroll, time accounting, and collections. The definition of core business processes, flow of activities and decision support needs would ensure the proper configuration of the packaged software to take advantage of reengineered processes with the latest technologies.
The pre-integrated nature of the ERP packaged software would provide a new baseline for all of the company's systems, including those that would not be involved in the initial installation. Those included isolated systems without integration requirements, systems that were not included in the available ERP functions and unique in-house applications and customized applications. Systems would be converted into the new order on a scheduled basis, and new development would target the standards established by the ERP implementation. As all applications migrated into the new systems environment, integration would increase and the company would begin to develop sophisticated knowledge management at the corporate level to be used for decision-making.
The CIO's main problem was the seemingly insurmountable gap between what he knew (the fragmented puzzle of the company's current systems) and what he needed to know (business requirements for the new systems). He had very little information about how the existing systems were actually being used to conduct business. His technical managers, field managers, and the headquarters staff that supported them all wanted the package installation to succeed. All held a piece of the information needed to make it a success, but none could see the whole picture. Without the crucial understanding of the use of current systems as a basis for defining future business requirements, the implementation project risked missing the mark.