ERP Integration Process

ERP systems constitute a significant area of investment by global firms. But when managers consider making an investment in such system, as with any other IT investments, a major concern is whether this investment will add value to their organization. Performance differences across firms investing in similar ERP systems can be attributed to the way the technology is integrated with the actual IT infrastructure and business processes of the firm. Indeed, ERP systems address issues of integration by bridging traditionally separated organizational functions and geographically dispersed locations through business and technical integration. A recent study* explained the process to achieve ERP integration, which is composed of searching and developing integration opportunities. Additionally, the process depends on the degree of alertness of managers and their perceived gap between actual processes and the ERP system. It was demonstrated that there exist four ways to achieve ERP integration, which influence the degree of integration achieved differently. All processes were not equally effective in achieving higher integration. When managers were alert to integrative opportunities and there was a high gap between the ERP system and actual system, it appears that the benefits from ERP were maximized. The different types of integration process found provide evidence for the notion of searching for and exploiting unique opportunities as an important factor explaining how to achieve higher integration. Also, the conventional wisdom that organizations should change their business processes to fit the ERP system, which embeds “best practices” showed to not always be the best solution. Managers should realize that it is no longer sufficient for them to be passive functional experts as in the traditional system development projects: they have a much bigger role in ERP implementation projects. When there is a high gap, managers need to: 1. Understand the uniqueness of their processes and identify integrative opportunities by: • Reading publications and talking to other divisions/companies about how they have implemented similar ERP modules. • Looking for ways to do things with the ERP module that no one else seemed to know about. • Searching for ways to improve their business processes and/or the ERP module. 2. Actively design solutions or have expert design solutions to adapt the new ERP system by modifying their processes and/or the system. They should also challenge the solutions proposed to have the best solutions and if needed mobilize knowledgeable people to get their input about a specific process or a specific part of the ERP system. In all situations, even if the gap between the new ERP system and the actual way of working is low, managers should look for integrative opportunities with the system instead of implementing the system as-is by figuring out what is going on with the technology and how it is going to affect their unit, the organization, and the industry by: • Being attentive to the unique needs of their unit and what opportunities the ERP module can bring. • Being prepared to think about counterintuitive opportunities with the ERP module. • Being alert for new opportunities with the ERP module. While it may be possible for all firms to acquire the same ERP systems, not all firms are equally successful in extracting the full potential of these systems, which will depend on the process to achieve integration. *Gagnon and Pinsonneault (2009), Extracting Value from ERP Investments: A Closer Look at the Integration Process, Thirtieth International Conference on Information Systems, Phoenix, Arizona 2009. Written by Elisa Gagnon Ph.D candidate Desautels Faculty of Management McGill University This e-mail address is being protected from spambots. You need JavaScript enabled to view it http://www.mcgill.ca/desautels/research/specializations/is/erp-research/