Challenges in business systems integration

Hans-Henrik Hvolby
a,
*, Jacques H. Trienekens
b
a
Centre for Logistics, Aalborg University, Denmark
b
Department of Social Sciences, Wageningen University, The Netherlands
1. Introduction
The last decades have witnessed great changes in the business
environment of most industries. Technological developments and
the vast increase of communication capabilities in and throughout
industries have fuelled competition on a world-wide scale.
Companies must deal with the new situation by being more
responsive to customers and at the same time develop lean and
efcient processes by adapting and integrating business functions
within and between companies in the supply chain. Research has
answered to these developments by designing concepts and
frameworks for business systemdevelopment and integration that
can support companies to meet these challenges. Concurrently,
business service providers, software developers and system
integrators have developed information system solutions for
Enterprise Resource Planning (ERP), customer relationships
management and supply-chain management.
In the late 1980s and early 1990s various (reference)
frameworks for business analysis and information system design
were developed by the academia: for example CIM-OSA [13], PERA
[14] and GRAI [4]. Concurrently, in the 1990s a new generation of
process-oriented mapping methods emerged to analyse and
redesign business processes. Examples of these are Event Process
Chain, the Activity Chain Model and GRAI Grids. These mapping
methods reect distinct, though complementary, dimensions of
business (or supply-chain-) management and entangle different
representation purposes. For example, Event Process Chain focuses
on time relationships; Activity Chain Model focuses on business
process ow whereas GRAI Grids focus on decision structures. The
models were mostly applied to single business cases, although also
supply-chain applications have been made [5].
These (reference) frameworks and mapping methods can be
considered predecessors of reference information models that
were developed in the second half of the 1990s and later. Reference
models were mostly developed to be used as a basis for software
development and applications. Two examples are Baan Dem and
SAP. Baan Dem was developed by Baan Company in the mid 1990s
to support implementations of Baans ERP-system. Major elements
of Dem were business control models, decompositions of business
functions (including predened parameter settings) and detailed
process models (including roles, work instructions and links to the
specic Baan transactions). The Baan Dem reference models
started as a single industry model but moved to a multiple-domain
reference model in the late 1990s. SAP was another software
company and system integrator that developed a reference model
to support their implementation processes. Major elements of the
model were process diagrams and data models. The SAP reference
model is a multiple-domain model, i.e. set up for many industries
[2].
In the last decade a second generation of (reference)
frameworks has emerged in response to developments in
supply-chain management, to model inter-company relationships
as a basis for inter-enterprise software development with
examples such as SCOR and CPFR. Parallel to this, industry
applications in Customer Relationships Management (CRM),
Advanced Planning Systems (APS), Product Life Cycle Management
Computers in Industry 61 (2010) 808812
A R T I C L E I N F O
Article history:
Available online 25 August 2010
Keywords:
Reference models
Supply chain management
Business integration
A B S T R A C T
Four main frameworks for intercompany relationships (SCOR, CPFR, ISA95 and OAG) are discussed and
compared. The link between the frameworks and different supply chain integration applications such as
ERP, CRM and VMI are pictured. Finally the state-of-the-art, future state and challenges of the supply
chain integration applications are discussed. It is concluded that the main challenge with respect to
frameworks supporting business systems integration is to extend them with implementation
functionality to better support business system application development. An example of this is
customer requirement fulllment processes such as product development and order fulllment. Not
only do they cross the borders of the companys departments (sales, logistics, purchasing, etc) but also
various companies in the supply chain. In spite of this development, business integration across systems
and borders are still not matured and to a large extend based on human interaction.
2010 Elsevier B.V. All rights reserved.
* Corresponding author.
E-mail address: hhh@celog.dk (H.-H. Hvolby).
Contents lists available at ScienceDirect
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0166-3615/$ see front matter 2010 Elsevier B.V. All rights reserved.
doi:10.1016/j.compind.2010.07.006
(PLM), etc. have been further developed to exploit and support
these frameworks. In Section 2 the major frameworks currently
applied will be discussed and in Section 3 the main developments
in industry applications are discussed.
2. Frameworks for business systems integration
In this section four major frameworks will be briey discussed:
Supply Chain Operations Reference-model (SCOR) developed and
endorsed by the Supply-Chain Council;
Collaborative Planning, Forecasting, and Replenishment (CPFR)
industry initiative based on the Voluntary Inter-industry
Commerce Standards Association;
ISA-S95 standards for enterprise and manufacturing integration
developed by the Instrumentation, Systems and Automation(Isa)
Society Consensus Committee.
Integration Specications developed by Open Applications
Group (OAG) which is widely supported by industry and
software companies (e.g. IBM, SAP, Oracle, Boeing, Ford,
Automotive Industry Action Group).
SCOR has been developed as the cross-industry standard for
supply-chain management [11]. The SCC was organized in 1996 by
PRTM and AMR Research, and initially included 69 voluntary
member companies (mainly in the U.S.). At the moment more than
800 companies are members of SCC and the model is internation-
ally broadly acknowledged. The SCOR-model originally focused on
4 types of processes: Plan, Source, Make and Deliver. In later
versions Return has been added to support the End of Life
considerations. It provides process models on three aggregation
levels: the top level with the generic process types mentioned, the
conguration level with different production strategies (make-to-
stock, make-to-order, engineer-to-order) and specied process
categories and the process element level with decomposed
processes. Further SCOR includes performance metrics (in the
categories Delivery Reliability, Responsiveness, Flexibility, Costs
and Asset Management Efciency), and best-practice descriptions.
SCOR focuses on production processes including order fullment
and supplier relationships. Separate frameworks have been
developed in recent years for design processes (DCOR) and
customer relationships (CCOR).
CPFR has developed a set of reference business processes, which
can be used for collaboration on a number of buyer/seller functions
towards overall efciency in the supply chain. The framework
focuses on efcient and effective retailermanufacturer relation-
ships to support high consumer value. The key supply-chain
functions in CPFR are planning, forecasting and replenishment. On
manufacturer and retailer level specic business processes are
dened (such as logistics and execution monitoring for the
manufacturer and store execution and supplier scorecard for the
retailer). On the interface level processes such as joint business
plan, sales forecasting and order-planning are dened and worked
out. Their XML specications have been integrated with the
broader set of EANUCC XML specications endorsed by the Global
Commerce Initiative (GCI) to ensure full coverage of the CPFR
process without creating overlapping or redundant message
formats. The existing core EANUCC messages for item synchroni-
sation, party (trading partner) synchronisation, purchase order,
invoice, dispatch (shipment notice) and other information have
been augmented with the CPFR product activity, forecast and other
transactions (www.cpfr.org).
ISA-S95 (IEC62264) addresses the interface or exchange of data
within the enterprise systems (planning, scheduling and procure-
ment) and the production management systems (production
dispatching and execution). The ISA-S95 standards are based upon
4 functional levels: business planning and logistics (level 4),
manufacturing operations management (level 3), manufacturing
process systems for batch, continuous and discrete control (level 2)
and nally level 1, which e.g. is sensing the production process. The
scope of the standard is limited to describing the relevant functions
in the enterprise and the control domain and which objects
normally exchanged between these domains. The standard
consists of three parts: Models and terminology, Object model
attributes and Models of Manufacturing Operations. The develop-
ment is based on the work by Williams [15] on the Purdue
Reference Model (PRM) for Computer Integrated Manufacturing
(CIM), but two other works have also a great deal of inuence,
which are the ISA Sp-88 Batch Control committee and the Mesa
International MES context model.
OAG includes a broad set of XML schemas for sharing business
information. OAGIS XML is the most mature XML language today,
based on over 10 years development. It addresses the needs for
traditional ERP integration as well as supply-chain management
and e-commerce. This specication provides the structure of
business documents and additional meta-data, which is required
as a part of the application processing. ISA-S95 standardizes a
variety of models and terminology that is limited to describing
the relevant functions, and serves only as a foundation for
implementation elements. OAGI, on the other side, denes
implementations elements, but without explicitly dening
standardized models and terminology, as ISA-S95. OAGI and
ISA-S95 are collaborating on development of integration
standards for process, discrete, and mixed-mode manufacturers.
ISA-SP95 has started this effort by including a portion of the
OAGIS standard in its ANSI/ISA-S95 Part 5 Business to
Manufacturing Transactions standard. Also delivery of the ISA-
S95 Part 4 Object Models and Attributes of Manufacturing
Operations Management standard has greatly accelerated by
leveraging the work of OAGI.
Fig. 1 depicts the scope of the four examples. SCOR focuses on
the main company, integrating demand and supply; CPFR focuses
on collaboration between buyer and supplier; whilst ISA and OAG
focus on integration (standards) between in-company manage-
ment and manufacturing layers. SCC has in the last years designed
specic reference architectures for customer relationships (CCOR)
and design processes (DCOR). Further, SCOR level 4 (implementa-
tion level below the level 3 processes) process specications and
supporting modelling are further being developed. CPFR has
developed to the main retail-manufacturer standard, now includ-
ing a roadmap with three stages of progression to support
company implementation: basic (no CPFR), developing (tuning
planning, forecasting and replenishment from a single company

Fig. 1. Systems integration scope of four major frameworks/reference architectures.

H.-H. Hvolby, J.H. Trienekens / Computers in Industry 61 (2010) 808812 809
point of view) and advanced (integrated retail-manufacturing
forecasting and planning). ISA-S95 so far has mainly focused on the
food and beverage and pharmaceutical industries. These industries
are pushing the standard further to extend to tracking and tracing
functionality. ISA-S95 approaches integration of manufacturing
and administration (ERP) levels in the company bottom-up; OAGI
top-down. ERP-system vendors are supporting OAGI to deliver
further integration solutions between their ERP-systems with MES
systems. ISA-S95 and OAGI are now converging standards for
manufacturing interoperability. The groups are collaborating on
development of integration standards for process, discrete, and
mixed-mode manufacturers.
3. Current business systems integration solutions
Concurrently and in line with the development of systems
integration frameworks described in the previous section, industry
has adapted a broad spectrum of business system solutions,
focusing both on in-company vertical and horizontal integration
and supply-chain integration Lee and Whang have dened four key
dimensions of business system integration information integra-
tion, synchronised planning, workow coordination and new
business models. In Table 1 an adapted version of elements and
benets of the dimensions are listed.
A well-coordinated and effective support infrastructure in
current supply networks consisting of individual companies or
company departments can only be accomplished by allowing
individual decision-making. To allow this, each partner needs to
have relevant, accurate and timely information from the entire
supply chain, and the information should be provided in a seamless
way using the least resources at exchanging data. This will be
difcult to obtain by using the present ERP-systems as most of
these do not support information sharing among companies in the
supply network [10].
3.1. Business integration roadmap
The benets of business systemintegration have to be obtained
by new technology combined with organizational and behavioural
changes. According to Gulledge [7] some of the challenges are:
lack of trust and an unwillingness to share supplier data with the
separate exchange company (e.g. because of missing alignment
of goals and insufcient procedures and protocols);
unwillingness to outsource supply-chain operations to a third
party (the exchange company), especially if the third party is also
hosting a competitor;
channel conict and inability brand products;
lack of consensus among partners about where functionality
should reside;
high costs of integrating partner back-ofce systems with the
exchange technology;
inability to recruit and integrate suppliers.
These formsome of the main hurdles that prevent or slowdown
business systems integration within and among companies.
Experiences from a recent research project among Danish SMEs
support several of the identied problem areas (Hvolby et al.,
2005). This study clearly shows that SMEs are not willing to invest
in expensive, integrated IT-solutions. Instead they prefer low-cost
and non-integrated solutions. An example of this is a company
supplying ofce equipment on a B2B basis, who invested in a
stand-alone web-application for 24-h sales, of which the orders
manually were entered in the ERP-system afterwards. For test
purposes this kind of procedure seems to make sense, but on a
long-term basis this will be far too expensive.
The challenges mentioned have to be tackled both in-house and
among the partners in the supply chain to jointly move towards
integrated solutions as well as a culture shift towards long-term
trusted relationships supported by intra- and inter-organizational
arrangements such as contracts. At the same time, further
development and integration of business systems on the systems
design level has to take place to support these developments.
Communication and information exchange are key elements in
building balanced in-company and supply-chain relationships
between companies.
In Fig. 2, a roadmap consisting of an application layer and an
enabling layer is illustrated (adapted from Gulledge et al. [8]). The
application layer is divided into customer-oriented applications,
internal organizational applications, supplier orientated applica-
tions and product oriented applications. The enabling layer
includes mapping and modelling tools, service architectures,
standards and protocols on system components process, data,
integration and infrastructure. Reference frameworks have a
position in between the application and enabling layer and form
the mortar on the semantics level between both layers. Supported
by tools, architectures, standards and protocols, they form the
bridge to the various industry applications.
The following section will focus on the application layer. For
each type of application the state of the art, the expected future
state and the challenges will be discussed. The applications
selected are Customer Requirement Management (CRM), Material
Requirement Planning (MRP) and Enterprise Resource Planning
(ERP), Advanced Planning Systems (APS), Vendor Managed
Inventory (VMI) and Product Lifecycle Management (PLM).
3.2. Applications
The keywords in describing the current state of art for
customer-oriented applications are functional orientation and
Table 1
Key elements and benets of business systems integration (adapted from [9]).
Dimension Elements Benets
Information integration Information sharing and transparency Reduced bullwhip effect
Direct and real-time accessibility Faster response
Optimized capacity utilization
Efciency and accuracy gains
Lower cost
Improved service
Workow coordination Coordinated planning, procurement and order processing
Integrated and automated business processes
Synchronized planning Joint design and engineering changes Lower cost
Mass customization Earlier time to market
Able to penetrate new markets
H.-H. Hvolby, J.H. Trienekens / Computers in Industry 61 (2010) 808812 810
missing integration. The main challenge for ERP-systems regarding
customer relationships is to support process orientation, in
particular in the daily operations (e.g. workow support) and
setup of appropriate (joint) planning parameters. In general
parameter settings seem to be a major problem in industry. Even
in large companies we have found many examples of contrasting
parameters (in-house) leading to inefcient control, increased
inventories and loss of money and opportunities. Workow
support is a strong tool to reduce resource consumption and
lead-time. To implement supply-chain integration with customers
require both improved systems support, cultural changes and trust
building.
The internal organizationapplications are more or less the same
as for customer-oriented applications, but the view is somewhat
different. Regarding APS-systems the mathematical capabilities far
exceed the capability to exploit them. Only few companies have
high quality manufacturing data (setup and operation times,
alternative process routes, part lists, etc.) and for many companies
it does not make sense to run an APS optimization. The
inappropriate counterbalance of late delivery and cost has also
previously been discussed [12].
The applications for suppliers and customers are the same
except for CRM and VMI. In this connection VMI, besides
continuous replenishment (CR) a main element of Efcient
Customer Response, is a concept that is now successfully applied
by many industries. CR and ECR are primarily used in the retail
industry, whereas VMI is also used in the manufacturing industry.
The current VMI functionality is expected to merge into future
ERP-applications. The challenges are once again trust and to
establish a joint goal of reducing costs instead of putting the
pressure on the single suppliers [6]. The major weakness of VMI
lies in the insufcient visibility of the whole supply chain [1].
Regarding PLMa major challenge is for standards to mature and
converge. Due to the dominance of ERP-systems and the need for
integration it is expected that the functionality of the current
specialized systems (CRM and PLM) will merge into the ERP-
systems (and CAD-systems for the technical functionality of PLM),
a process that is already ongoing (e.g. at SAP). Regarding APS-
applications integration is not the main issue, as most APS-
applications are add-ons to the major ERP-systems such as Oracle
and SAP. Instead a more holistic viewis needed if the intention is to
involve customers (and suppliers) in the planning process. An

Fig. 2. Supply-chain Integration Roadmap Organization (adapted from Gulledge et al. [8]).
Table 2
State of the art, expected future state and challenges in the application layer. Adapted from Gulledge et al. [8].
Appl. State of the art Expected future state Challenges
CRM and VMI Separate applications (more or less
integrated with other applications)
Integrated with or part of other
applications (ERP)
Integrate master proles
MRP and ERP Functional oriented implementation Process-oriented implementation Improving supply-chain performance
instead of putting pressure on single
suppliers
Functional-based design Process-based design Cultural changes needed towards process
ownership
Integrates sales, nance, manufacturing, etc. Include/absorb VMI, CRM, PLM, APS, etc. Process-based implementation
methodologies
APS Strong planning and scenario capabilities Integrated applications Qualifying internal data
Only implemented in individual companies
or suppliers owned/controlled by manufacturer
Supply-chain integration with special
attention on the individual partners
Standards need to mature and converge
PLM Fragmented data, structures and interfaces Process-oriented data integration Short product lifecycles
Separate applications Integrated with other applications (ERP) Dening the data-process links
H.-H. Hvolby, J.H. Trienekens / Computers in Industry 61 (2010) 808812 811
overview of state of the art, expected future state and challenges
are listed in Table 2.
4. Conclusions and outlook
Frameworks for business systems integration are more and
more used as a basis for business systemapplication development.
Frameworks like SCOR and CPFR have an extended view on inter-
company relationships in which SCOR has a focal company view
focusing on the company and its supplier and customer relation-
ships and CPFR focusing on the interface between companies in the
supply chain. ISA95 and OAG focus on in-company systems
support and integration. A main challenge with respect to
(reference) frameworks supporting business systems integration
is to extend them with implementation functionality to better
support business system application development. In this regards
also more work has to be done on the support of different company
or supply-chain functions (e.g. quality control, resource manage-
ment), the application of the frameworks to different sectors
(electronics, machine, food, etc.), and their implementation at
different production strategies (standard production, customized
production, etc.).
Although since the 1990s many companies have made a move
towards more process orientation, thereby supported by new ERP
functionality, B2B standards, Process Specication Languages and
in recent years SOA, the main challenge both regarding industrial
applications and company organization still is a, further, shift from
a function-oriented view to a process-oriented view. Process-
orientation focuses on fullment of customer requirements as a
joint aim of the functional silos in the organization [2,3]. In this
respect customer requirement fullment processes such as
product development and order fullment not only cross the
borders of the companys departments (sales, logistics, purchasing,
etc.) but may also cross various companies in the supply chain. To
make the move to process orientation a holistic view on the
processes of the company and supply chain is required, from staff-
members throughout the supply chain, implying a culture change
for many companies, from management, to administration, to
shop-oor levels. For the development of business systems
solutions this implies further integration of applications, e.g.
product lifecycles, vendor inventories and CRM, in large ERP like
systems, though with loosely coupled business functions, in order
not to lose the exibility of independent applications. In this
respect further development of Service Oriented Architectures
(SOA) are of great importance and promising. Therefore, we expect
that future applications will be server-based and user-interfaces
will be web-based to ease maintenance of client installations, ease
hardware requirements and increase user access and mobility.
Further research must support this development.
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Hans-Henrik Hvolby is professor at the Centre for
Logistics, Aalborg University in Denmark and visiting
professor at University of South Australia. He holds a
Ph.D. in Manufacturing Information Systems and has
published more than 100 peer-reviewed papers and
serves as associate editor and European of two
international journals and editorial board member of
5 international journals. He is originator or partner in
13 research projects raising national research funding
to a value of 14.7 million DKK (2 million s) and
European research funding to a value of 14 million DKK
(1.9 million s). He has organized more than 30
seminars and workshops, among others the SMESME International Conference in
2001. Accepted to organize the MITIP International Conference in 2010. Published
97 peer-reviewed publications since 1993. His research areas include manufactur-
ing information systems (MRP, ERP, APS, VMI), Logistics, Supply Chain Planning,
Supply Chain Integration, Value Chain Management and Order Management (BPR).
Dr. Jacques H. Trienekens is associate professor at
Management Studies Group of Wageningen University.
His research interests include (international) food chain
and network management and business operations
management. Jacques Trienekens has been visiting
professor at University of Bonn in Germany and
University of Pretoria in South Africa and was until
recently member of the board of directors of Interna-
tional Food and Agribusiness Management Association
(IAMA). He is editor and associate editor of Journal on
Chain and Network Science and International Food and
Agribusiness Management Review respectively, and
has published in a variety of peer-reviewed international journals such as
International Journal for Production Economics, British Food Journal, Production
Planning and Control, Computers in Industry and International Food and
Agribusiness Management Review.
H.-H. Hvolby, J.H. Trienekens / Computers in Industry 61 (2010) 808812 812