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50 Chapter 2 • Systems Integration

as well as to Dell’s external partners, suppliers, or both. Each department is then regularly
updated on the status of the order, as it moves through the various stages of the order-processing
cycle. When the supplier delivers the parts to the manufacturing department, all parties will be
notified of this process. When the computer is assembled and sent to the warehouse for shipping
again all parties are updated on this information. Depending on Dell’s company policy on
sharing data, some of this updated information is sent to the customers to notify them of the
progress. As the order is processed through the various stages of the order-processing cycle, any
of the functional department employees responsible for this order can enter the ERP system and
find out the current status of the order in real time.
The preceding example suggests that if a company has functional silos, either the silos will
have to go or the ERP system implementation will be a failure. With their built-in bias for cross-
functional business processes, ERP systems force organizations to abandon their silos. In the
early days of ERP implementation projects, many organizations tried to implement ERP with
their existing silos, which resulted in major ERP failures. For example, in 1997, Hershey Food’s
Nestlé division spent more than $200 million for implementing its ERP system without breaking
the functional silos, which led to a system implementation failure. 11 Hershey had to face the
wrath of its customers who did not receive the products they had ordered for Halloween. Instead
of modifying their business processes, some organizations tried to modify the ERP functionality,
which also led to implementation failures and additional costs for maintaining or upgrading the
modified system. One key lesson to take from these early ERP implementation projects is that
change in business processes and systems integration are the necessary precursors to ERP
implementation. Some modifications to the ERP systems’ built-in process functionality are fine
as long as they are done for unique business processes; however, if these process changes are
done to avoid user resistance even when they are inefficient or to support a silo organization, then
ERP implementation could result in a costly failure.

ERP’s Role in Physical Integration
In addition to the logical level, system integration is also necessary at the physical level. Before
installing the ERP system, an organization may have to upgrade or install middleware and plan
for the removal of their legacy system’s hardware and software. Although it is possible to
preserve some of the legacy systems and, if essential, integrate them via middleware tools,
current-generation ERP systems do not work well with the centralized architecture on legacy
platforms. As we will discuss later in the book, layered systems architecture must be adopted to
integrate the systems into a common enterprise platform. Integration is also required at the data
level (i.e., by transforming all the data resources into one database), client level (i.e., by standard-
izing on all the client platforms), and application level (i.e., via common user–interface design,
back-end access to the system infrastructure, and backup and recovery plans).
ERP systems have therefore become a platform application for organizations to achieve the
flexibility and fluidity to survive in the globally competitive world. A good ERP implementation
improves operational efficiency with better business processes focusing on organizational goals
rather than on individual departmental goals. Efficiency is also improved with a paperless flow
within the organization and electronic data interchange or B2B commerce environment with its
external partners. Organizations that want to implement a B2B e-commerce (or a supply chain
management system) with its partners and suppliers will not be able to do a good job without a

11 Worthen, B. (May 15, 2002). Nestlé’s ERP Odessey. CIO Magazine.