1: Definition of Research Terms – ERP and Information Systems

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Definition of Research Terms

This chapter defines the research terms. We turn our attention to the definitions of the artifacts under consideration because the study of a discipline is principally the study of the language of the discipline [POS 88]. Agreed-upon terms lead to agreed-upon meanings [DAV 05].

  1. – an enterprise resource planning (ERP) system is an integrated software solution, typically offered by a vendor as a package that supports the seamless integration of all the information flowing through a company, such as financial, accounting, human resources, supply chain and customer information [DAV 98]. An ERP consists of a set of fully integrated modules that run out of a single database. It covers all functions of the company and allows users to have real-time access to data. ERP systems contribute to integration in two ways, process-wise and data-wise: “the uniqueness of the database and the adoption of workflow management systems support the integration of the information flows that connect the different parts of the firm” [BER 02]. These systems are comprehensive packaged software solutions which aim for total integration of all business processes and functions [GAR 05]. For the purpose of our research, we distinguish between two types of ERP (first or second generation):
    1. - ERP first generation (1st G): we have chosen to use “1st G” to indicate an ERP system that comprises old modules only (finance, accounting, controlling, treasury, human resources, production, material management, sales and distribution, plant maintenance, project system and quality management). Most ERP systems before 2005 can be considered to be from this first generation. According to the definition of ERP, this package must be sold by one vendor,
    2. - ERP second generation (2nd G): we use the term “2nd G” to refer to an ERP system that comprises both old modules (ERP 1st G) and new modules (customer relationship management (CRM), supplier relationship management (SRM), supply chain management (SCM), product lifecycle management (PLM), business intelligence (BI), e-business, etc.). ERP systems after 2005 can be considered to be progressing toward the second generation. According to the definition of ERP, this package must be sold by one vendor.
  2. – A total integration of information system (IS) (TIIS) is indicative of complete integration (integration rate is 100%); for example, when the IS of a firm consists of only one ERP system such as SAP or Oracle [ANI 01]. This ERP system could be 1st G or 2nd G, according to the users’ needs and/or the implementation date (for example, 2000 or 2013).
  3. – A hybrid integration of IS (HIIS) describes architecture that is more or less integrated. For example, the IS comprises different applications and ERP systems. It is a well-known fact that some legacy systems are not replaced when companies adopt the ERP solutions [THE 01]. HIIS is a set of subsystems (including ERP systems and other applications) that are more or less integrated [SAM 04].

In addition, an IS could become an HIIS when the architecture comprises many “Best of Breed (BoB)” applications. Some organizations have developed their own customized suites of enterprise applications, an approach known as a BoB information technology (IT) strategy [LIG 01]. Due to the fact that the packages of BoB applications come from different vendors, this strategy can be associated with extensive compatibility and integration issues [MAC 08].

A BoB IT strategy could also lead to an HIIS that is composed of many ERP systems. “If a customer prefers combining several ERPs by a Best of Breed approach instead of an ERP, that is fine. I simply say good luck. Such architecture could work at a given time T, but what will happen when the software in question undergoes updates? You should know that companies must make sooner or later these updates because no vendors ensure maintenance of the T minus 2 versions of its software. And every update is likely to jeopardize the integration work that holds this assembly. In short, if a company wants to spend 80% of the workforce of the IT maintenance, Best of Breed is probably a good way… But I also believe that management may be more sensitive to the functional argument of the approach that we offer with our E-Business Suite” [ANI 01].

  1. A disintegrated information system (DIS) is not at all integrated or weakly integrated. It comprises disparate legacy systems including applications and ERP systems. These applications are often not developed in a coordinated way but have evolved as a result of the latest technological innovation [THE 00]. For the purpose of our research, a DIS could consist of some applications and many ERP systems that are not at all integrated or weakly integrated in an uncoordinated way.
  2. – An integration rate for an information system could be measured, according to our definition, by the presence of an integration indicator such as an ERP system and interfaces (enterprise application integration (EAI), enterprise service bus (ESB), extraction, transformation, loading (ETL), extensible markup language (XML), etc.) in the IS. Changing user needs continuously affect the IS integration rate. The integration rate is favorable (integration) when there is an increase in the ability of all subsystems in a given information system (IS) to exchange data, whereas the integration rate is unfavorable (disintegration) when there is a decrease in the ability of all components (subsystems) of a given IS to exchange data.

Table 1.1. Comparisons between different degrees of integration: DIS, HIIS and TIIS

Elements of comparison DIS HIIS TIIS
Estimated overall vision < 50% Between 50 and 80% 100%
Satisfaction of users’ needs Low Between average and high High
Architecture coherence Low Between average and high High
Number of vendors Many Between two and many One
Technologies used Different and varied Different and varied One technology
Number of databases Many Many One
Degree of coupling intersubsystems Missing or low Between average and high High
Communications intersubsystems Asynchronous Asynchronous and synchronous Synchronous
Interoperability between subsystems or modules Missing More or less effective (not native interoperability, EAI, ESB, API, ETL, XML, etc.) Native interoperability
Number of interfaces Neither or maybe a little bit Many Native interface
Estimated integration rate ≤20% >20 and <100% 100%
Type of interfaces Manually: different tools (universal serial bus (USB), floppy, compact disc (CD) and mails) Manually, semiautomatic and automatic Automatic
Importance of the interfaces’ configuration settings There are no interfaces to be configured Very important Priority given to the ERP system’s configuration
Processing time Batch processing Batch and real time Real-time processing
Evolution strategy of IS Missing Often an urbanization, rarely a total overhaul Often a total overhaul is needed, rarely an urbanization
  1. An information system’s perimeter could consist of different subsystems (ERP systems, BoB applications, applications developed in-house, etc.); many examples are given in Table 1.2. Changing user needs continuously affect the perimeter of an information system.

Table 1.2 Examples of the various perimeters of information systems in firms

IS No. The IS perimeter consists of Integration rate (IS)
1 ERP 2nd G (only one vendor) TIIS
2 ERP 1st G (only one vendor) TIIS
3 Different old applications developed in-house: accounting, controlling, HR, buying, selling, production, etc. HIIS or DIS
4 BoB (many vendors): old software (accounting, HR, material management, sales and distribution, production, etc.) and/or new software (CRM, SRM, SCM, PLM, BI, e-business, etc.) A BoB IT strategy could consist of one or many ERP systems HIIS or DIS
5 Some or all modules of IS No. 2 + some applications of IS No. 3 and/or some BoB applications of IS No. 4 HIIS or DIS
6 Some applications of IS No. 3 + some BoB applications of IS No. 4 HIIS or DIS
7 IS No. 3 + new ERP modules: CRM, SRM, SCM, PLM, BI, e-business, etc. HIIS or DIS
8 IS No. 4 (old software) + new ERP modules: CRM, SRM, SCM, PLM, BI, e-business, etc. HIIS or DIS
9 Some or all modules of IS No. 2 + some applications of IS No. 3 and/or some BoB applications of IS No. 4 + some new ERP modules: CRM, SCM, BI, etc. HIIS or DIS
10 Others (e.g. many different ERP systems) HIIS or DIS

For IS numbers 3–10, the architecture could be an HIIS when all subsystems are integrated, whereas it could be a DIS when all subsystems are not integrated.

  1. An integration of information systems is, principally, the increase of the integration rate; that is an increase in the ability of all subsystems in a given IS to exchange data. For the purpose of our research, integration means a progression from DIS to HIIS or to TIIS and also from HIIS to TIIS. For example, a migration toward a total integration is a transformation from IS numbers 3, 4, 5, 6, 7, 8, 9 or 10 to IS number 1 (Table 1.2).
  2. A disintegration of information systems is, principally, the decrease of the integration rate; that is a decrease in the ability of all components (subsystems) of a given IS to exchange data. Disintegration indicates a regression from TIIS to HIIS or DIS and from HIIS to DIS. In other words, disintegration is the converse of an integration. For example, changing from IS numbers 1 or 2 to numbers 3, 4, 5, 6, 7, 8, 9 or 10 (Table 1.2).
  3. Scenarios of disintegration (some examples): we suggest three main reasons that could maintain or provoke the IS disintegration:
  1. 1) Firms desire to improve the integration of their IS but fail to select an ERP system (before implementation) because of some factors. This scenario leads to keeping the existing system that is already disintegrated. It may even increase its disintegration due to the evolution of users’ needs.
  2. 2) Firms fail to implement their ERP system because of some factors. This situation cannot help the IS integration.
  3. 3) After implementing an ERP 1st G, firms fail to continue to upgrade this package toward an ERP 2nd G. According to this scenario, firms prefer to combine this ERP 1st G with others’ ERP packages or applications. Therefore, a kind of integration regression could affect the IS during its evolution from the ERP 1st G to the new target.
  1. Examples of IS integration (firm X) and IS disintegration (firm Y): we suppose that an ERP 1st G, which was able to achieve an IS integration rate of about 100%, satisfied most users’ needs in 1998. After the appearance of new users’ needs (CRM, SCM, PLM and BI), the ERP 1st G became unable to satisfy all users because its level of integration decreased in the IS. From 100% in 1998, the level of integration became 70% before 2014. In fact, a given integration rate could decrease due to the appearance of new needs of users.

The old integration rate of 100% no longer applies, but it could be again recuperated depending on how the new needs are taken into account. Generally, according to the approach chosen by firms to evolve their IS, it is possible to determine if there will be integration or disintegration. A migration toward an ERP 2nd G, which allows a return to the initial rate of 100%, is a kind of IS integration. However, a migration from an ERP 1st G toward an IS numbers 5 or 9 (Table 1.2) signifies a kind of disintegration. In this case, the integration rate of 100% achieved initially by one ERP 1st G, which was alone in the IS, is decreased.

Example of IS integration (firm X: Figure 1.1 and Table 1.3):

Figure 1.1. Example firm X: migration from TIIS toward TIIS (maintaining the initial integration rate despite the evolution of users’ needs)

Table 1.3. Example firm X: migration from TIIS toward TIIS

Example of IS integration (firm Y: Figure 1.2 and Table 1.4):

Figure 1.2. Example firm Y: disintegration from TIIS toward HIIS

Table 1.4. Example firm Y: disintegration from TIIS toward HIIS

  1. Research factors: the seven variables that will be studied in order to determine the relationships between the ERP system’s evolution and the IS integration or disintegration (Table 1.5).

Table 1.5. Factors affecting the relationships between the ERP system’s evolution and the IS integration or disintegration

Research factor (variable) Acronym
Economic crisis and COmpetitiveness ECCO
Total dependency on the ERP vendor TDEV
Project management ERP PMER
INTEroperability of the ERP INTE
Evolution strategy of existing systems ESES
COmplexity of ERP COER
Evolution strategy of ERP vendors ESEV