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Chapter 2 • Systems Integration 49

3. Long-Term and Intangible ROIs. The return on investments (ROI) from systems integration
often do not show up until several years after the implementation, and many of these returns
come in intangible form and are therefore not recognized on the bottom line of the
organization. Financial managers get very upset with this situation and can create pressures
that will ruin the long-term impact of systems integration; therefore, top management’s
understanding and support for the long term are key ingredients for the success of systems
integration.
4. Creativity Limitations. One of the drawbacks of standardization is that it restricts creativity
and independence in the functional areas; however, this can be minimized with a better
integration policy that provides flexibility and better communication from top management.

As you can see, the benefits generally outweigh the drawbacks when implementing
systems integration projects, particularly in the long run. In industries with competitive markets,
systems integration is very necessary regardless of the cost. For example, suppliers of automo-
bile manufacturers (e.g., Ford or GM) or retailers (e.g., Walmart) do not have a choice for
systems integration. If they skipped systems integration, they would not be able to do business
with these large companies, which moved to electronic data interchange (EDI) systems in early
2000 with electronic commerce.

ERP AND SYSTEMS INTEGRATION

Enterprise resource planning (ERP) systems are integrated, multimodule application software
packages designed to serve and support several business functions across an organization. An
ERP system is a strategic tool that helps the organization improve its operations and management
by integrating business processes and helping to optimize the allocation of available resources.
These systems are typically commercial software packages that facilitate collection and integra-
tion of information related to various areas of an organization, including finance, accounting,
HR, inventory, procurement, and customer service. By becoming the central information center
of the organization, ERP systems allow the organization to better understand its business, direct
resources, and plan for the future. ERP systems enable the organization to standardize and
improve its business processes to implement best practices for its industry.

ERP’s Role in Logical Integration
ERP systems play a very crucial role in enabling systems integration at various levels of the
application architecture. At the logical level, ERP systems require organizations to focus on
business process rather than on functions. ERP systems come with built-in processes for a wide
variety of common business functions. An ERP system implements the best practices via specific
built-in steps for processing a customer order in terms of how the order information is entered into
the system, how it will be routed through various departments for actions or decisions, and how
the output from system is communicated to the various parties, including the external customer
and suppliers. While ERP systems can address data integration, if business processes do not
change, an organization will not be able to take full advantage of the ERP capabilities. The term is
business process reengineering (BPR). With the implementation of ERP business processes,
organizational structures and even roles and responsibilities within an organization will change.
To revisit a previous example, when Dell computers receives an order from the customer,
the order is divided by its major components and transmitted to the various units of the company,