Enterprise_Application_Integration

ENTERPRISE APPLICATION INTEGRATION(EAI): AN EMERGING TECHNOLOGY FOR INTEGRATING ERP AND SUPPLY CHAINS Adoption of ebusiness applications and practices has transformed enterprises and changed the way of doing business hence, competition among companies has increased and organizations are focusing on supply chain co-ordination and collaboration to increase their business benefits. For many years, Enterprise Resource Planning (ERP) systems supported supply chain management. However, the limitations of ERP systems on integrating disparate systems have led organizations to seek for new approaches to integrate their systems and supply chains. WHY ERP SYSTEMS FAILED TO SUPPORT INTEGRATED SUPPLY CHAINS AND THE NEW APPROACH TO SYSTEM INTEGRATION INTRODUCTION Since future competition centers on supply chain against supply chain, challenges arises in integration of intra and inter-organizational supply chain systems. As companies strengthen their relationships and collaborate at an inter-organizational level, the chain itself gains more links and therefore, increases management and co-ordination efforts. Kalakota, 2000; Kalakota and Robinson in 1999) view an enterprise as a loose collection of trading partners that can contract with manufacturers, logistics companies, and distribution organizations hence, fostering a comprehensive integration of business processes both intra and inter-organizational involving application to support long-term co-ordination, survival and growth. Advantages of such integration include * increases the automation of business processes * significantly reduces manual tasks occasioned by redundancy of data and functionality * reduces costs (e.g. maintenance, management, operational) supports the achievement of competitive advantages through improving real-time response. The problem of integrated Information Systems to many businesses, involve a supply chain involving independent systems that cannot communicate with one another. These autonomous and in many cases heterogeneous systems are historically not designed to collaborate with other applications, as supply chain partners have tended to develop their systems independently and without any co-ordination. This may result in a lack of enterprise architecture, common definitions, structures, protocols and business concepts (Duke et al., 1999). There is also the complexity of existing information systems, which in many cases have fixed and rigid structures for messages, interfaces and databases. As a result the integration of applications along a supply chain is a difficult and complex task. In recent years, Enterprise Resource Planning (ERP) systems have been seen as more than resources that support various business processes. It has been recognized that ERP have the potential to act as a force that can be used by companies to integrate their supply chains and gain significant advantages over competitors. In this context, the genesis of organisations supply chain often lies within ERP systems. Interest in the integration of supply chains through ERP has steadily increased since the late 1980s, when the benefits of collaborative relationships with suppliers started to surface. As companies work together in extended enterprises, the chain itself tends to gain more links and become more complex to manage. Such complexity requires a shift in corporate thinking across this form of business network. An enterprise is now no longer a single corporation; it is a loose collection of trading partners that can contract with manufacturers, logistics companies, and distribution organisations. The supply chain has to have end-to-end enterprise application integration to survive in the dynamic and customer-driven digital economy, i.e. the plan, source, make, and move concept. The benefits of adopting an ERP system impact the supply chain with an outward process conformance view of the supply chain. The reasoning is that ERP requires an organization to be process orientated and for all internal business units to conform to the same precise process. As a result, providing the organization with an infrastructure that is built around value adding activities through efficiency and effectiveness. Such infrastructure has the scope to reach out into the supply chain and thus, impact customers and suppliers. LIMITATIONS OF ERP SYSTEMS In spite of being introduced as “integrated suites”, as ERP systems have failed to achieve application integration and supply chain integration (Makey, 1998; Themistocleous et al., 2001) as a result of the following reasons (a) ERP do not cover all IT requirements; (b) they can not meet all business processes and (c) customization is a difficult task that causes serious integration problems as ERP systems are complex, non-flexible and often not designed to collaborate with other autonomous applications (Glass and Vessey, 1999; Sumner, 1999).Linthicum (1999) and Zahavi (1999) characterize. ERP systems as monolithic solutions that are not designed to co-operate with other applications. As a result, enterprise integration can be achieved when organisations abandon existing applications and develop a complete ERP solution. Therefore, the more ERP modules adopted, the more incorporation is achieved. * Makey (1998), Markus and Tanis (1999) and Themistocleous et al. (2001a) indicate that companies do not adopt all ERP modules but a subset of them. Even in cases where organisations purchase all ERP modules from a single vendor, ERP packages can not automate more than 30% of company’s application (Seeley, 1999; Stefanou, 2000). * In contrast, Makey (1998), Holland and Light (1999) and Kelly et al. (1999) report that ERP systems cover up to 70-80% of IT requirements. Regardless, organisations do not abandon all their existing systems when adopting ERP packages, several applications (e.g. legacy systems) often co-exist alongside enterprise systems (Makey, 1998; Themistocleous et al., 2001). Many school of thoughts are against the removal of legacy systems as shown by the folloing contributions * The amount of legacy systems in use remains high as they provide reliable solutions (Lloyd et al., 1999). * Themistocleous et al. (2001a) report that 38% of companies do not replace their legacy systems when adopting Enterprise Resource Planning (ERP) solutions. * Ring and Ward-Dutton (1999) suggests there is often no time to replace legacy systems * Ruh et al. (2000) explain that replacement is a high risk process. * O'Callaghan (1999) supports the claim that the replacement of legacy systems is too expensive * Brodie and Stonebraker (1995) explaining that it takes too long to realise the benefits. In summary, ERP systems can be considered as a partial solution to enterprise and cross enterprise integration as other applications co-exist along-side ERP packages because a robust contextual architecture to support the supply chain concepts and the supply chain process have been lacking such that firms can no longer effectively compete in isolation to their suppliers, and as a result are beginning to interact and support their supply chains to achieve a competitive advantage. Consequently IT/IS is being used as an enabler in an attempt to enhance organizational efficiency, by integrating disparate enterprise business applications into highly functional and dynamic application networks (Holland 1995; Lin 2000). There is a growing number of IT/IS architectures that are beginning to represent the development of ERP as well as enabling ebusiness technologies. It is this limitations on the part of ERP that give rise to a new technology called Enterprise Application Integration(EAI) for integrating systems and supply chains. 3. ENTERPRISE APPLICATION INTEGRATION: AN EMERGING TECHNOLOGY FOR INTEGRATING ERP AND SUPPLY CHAINS Advantages of EAI over others include 1. It addresses more effectively the need to integrate both intra and inter-organisational systems. In doing so, it securely incorporates functionality from disparate applications. 2. It combines traditional integration technologies (e.g. database-oriented middleware) with new EAI technologies (e.g. adapters, message brokers) to support the efficient incorporation of information systems. Thus, application integration results in supporting data, objects and processes incorporation as well as custom applications, packaged systems and e-business solutions integration. Numerous approaches were proposed in normative literature to describe application integration. Duke et al.(1999) among others suggest that a solution based on application integration involves the transportation and transformation of information between one or more applications. 3. It also supports (a) the timing and sequencing rules that govern when the transportation and transformation takes place and (b) the integrity constrains that determine the success or failure of the integration. It was proposed that EAI is achieved at 3 integration layers which are transport, transformation and process automation layer. When the retailer’s stocks availability is equal to limit (e.g. stocks = x units of product P) then notify supplier (target application) and order z = y-x units of product P (where y is the maximum agreed quantity of product P). However, there are many problems in retrieving data from one system that is running for instance on a mainframe and processing them in another ERP system running on different platform or having a different version. The existence of all these systems (ERP’s, legacy and ebusiness) support the claim that ERP systems do not efficiently support the integration of IS. This situation causes problems regarding the integration, automation and coordination of its supply chains because customers still demanded a closer collaboration and thus the latter started examining possible approaches to integrate its internal and external supply chains. The first approach focused on developing manual point-to-point connections to interconnect applications in which programmers write low-level communication code between 2 applications to exchange messages and data. But the limitation of this result in applications spaghetti, which increases the complexity of the integration solution as the number of interconnected applications rises. However, interconnectivity has other problems since point-to-point connections have an invasive nature, which requires changes to applications. In doing so, new subroutines that support interconnections by mapping all interconnected applications are added and thus, applications code is extended. This soon leads an organisation with a non-flexible, unmanageable jumble of code holding the business system together. In contrast, application integration addresses integration problems more effectively by developing a central integration infrastructure and in doing this, point-to-point interconnections are eliminated, since each application is connected with the integration infrastructure e.g. a hub and spoke communication mechanism (Bernus et al., 1996), which is often based on a message broker. In EAI solutions, when an application requires changes the rest of the system is rarely affected, as it is not interconnected with the application that requires changes. Therefore, only the application that requires changes and its connection to the central integration infrastructure are altered. This makes the cost of a solution based on EAI technology to be much less. These applications are pieced together based on application integration technology, which integrates not only applications but also business processes. The central integrated infrastructure receives application elements from one application and translates/formats it into a compatible format for the target solution. In addition, the integration infrastructure synchronises and routes the data to the appropriate applications. The integration achieved is non-invasive and thus limited (or no) changes to existing applications code are needed. As a result, the integration solution is manageable, flexible and maintainable as the altering of one application does require changes to the code of other solutions that collaborate with it. The reasoning is that a diversity of products and technologies address integration problems but there is no single technology or EAI product solving all integration issues (Ring and Ward-Dutton, 1999). To address this issue, the various EAI products using an evaluation frameworkis accessed. Evaluation criteria test integration requirements such as maintainability, flexibility etc. Some of the criteria focus on vendor and test (a) whether the vendor has a global presence; (b) collaborates with designed solution; (c) is reliable etc. This set of criteria affects somehow the selection of EAI products since the selected products from its existing vendors (e.g. IBM) or from collaborators of its vendors (e.g. CrossWorld is SAP partner for EAI). Nonetheless, the adopted solutions supported the majority of evaluation criteria. This proves that there is no single EAI product solving all integration problems. Another important issue came out from this case study is that the OILCORP spent around the 60% of overall time to redesign its business processes. In doing so, OILCORP maximises the benefits from EAI adoption, as data and application redundancy was significant reduced. Due to business process reengineering the 90% of custom systems and the 96.4% of ERP systems that used for the automation of the specific supply chain were phased out. As a result, OILCORP reduces the operational cost from running these systems and shorten the business cycle. However, this has an impact on employees as the operators and the users of those systems that were phased out resisted the change. At a technical level the integration of packaged, custom and ebusiness solutions was achieved as described below: Legacy Integration: Most legacy systems follow a monolithic model (Zahavi, 1999) in which data, processes and interfaces are not separated but are built together (Bernus et al., 1996). As such, legacy systems have limited number of interfaces that can be used for integration with other applications. In most cases, user interfaces are used to access the data and the logic of legacy systems (Andrew, 1998). In the case of OILCORP screen wrapping tools were used to capture data from a legacy systems screen, or map them as objects. Data or objects were then sent to the message broker, which translates the data into an appropriate format and forward them to target application. ERP Integration: Data extracted from ERP’s database can be transformed into XML format and then transmitted to the target application. In addition, a message broker was used to support the distribution of XML messages (in cases of ebusiness applications). Apart from XML technology, data integration was achieved through traditional database middleware such as Open Database Connectivity (ODBC). Message based technologies such as IBM MQSI were also used to transfer the data from source application to the target using the integration infrastructure. At interface level, Application Programming Interfaces (API) are provided by ERP systems to allow other applications to access ERPs functionality or data (Zahavi, 1999). In the case of OILCORP applications communicate with APIs and gain access to the data or the processes they demand. As a result, applications send or retrieve data through APIs or invoke an ERP service to obtain some value in order to integrate their functionality. In many cases, information extracted from one API needs to be mapped so as to be compatible to target application. For that reason, adapters and/or message brokers were invoked to map the data and interconnect the ERP system with the target application. In many cases Distributed Object Technologies (DOT) such as Microsoft’s COM/DCOM, CORBA and Enterprise Java Beans collaborate with ERP systems through APIs. ERP systems are attempting to perform like distributed object applications by supporting APIs that provide access to ERP data, processes, services and objects. As a result the integration of objects is easier as DOT technologies can communicate, share data and reuse ERP objects and services through APIs. Such technologies were also used in the case of OILCORP to support objects integration. Ebusiness Integration: ebusiness solutions are often integrated more easily than the rest of applications due to the fact that are designed to collaborate with other systems and are based on more flexible and open architectures (Kalakota and Robinson, 1999). In the case of OILCORP data, objects, semantics and logic were extracted from e-business applications using database technologies, DOT, XML, application servers etc. Data, objects and logic were extracted from legacy systems and ERP applications (as described above) and sent to the message broker. The latter, maps, translates and routes the information to the target application. The implementation of the pilot EAI project provided advanced capabilities to the OILCORP and increased the functionality and efficiency of their IS. A number of business processes related with internal and external supply chains were redesigned, automated and integrated. The IT department used this pilot system to run various business cases and demonstrate systems functionality and benefits. The integrated infrastructure resulted from the implementation of this project increases organisation’s performance and systems efficiency and functionality as it automates business processes and integrates applications. The integration provides more understanding and control of business processes, as activities have been improved through reengineering. In addition it supports better coordination and collaboration among treading partners. The integrated infrastructure reduces the redundancy of systems, components and data and eliminates manual integration tasks that result in reduced employees, tasks, and systems that are needed for process fulfilment. The pilot system provides more reliable data and it is more flexible as integration was achieved with minimum changes to systems code. Thus, the systems are more manageable and maintainable. The advantages of the pilot system were so significant that led the managing board to take the decision for a global EAI project. 5. CONCLUSIONS Supply chains are considered integral to virtual organisations and the delivery of globalised competitive advantage. Although the concept of enabling a supply chain is fundamental to those seeking to develop responsive organisations, in reality the implementation and realisation of such a business entity can be complex and time consuming due to the limitations of existing IS. Although many organisations have sought to automate and integrate their supply chains through ERP systems, in reality, such software solutions have proved to be limited in the delivery of benefits and integration. ERP systems have historically been good at capturing classic business processes like supply chain functions but only from a process perspective. It is also widely recognised that ERP systems are very internally focussed within the organisation. The sharing of resource planning data with business partners and suppliers is typically seen as a complex and traditionally verbose process, and not one that naturally lends itself well to the monolithic architecture of ERP. In addition, ERP systems have problems in exchanging and integrating data and processes from other applications that co-exist alongside such enterprise systems. However, to support the linkages in supply chains, application-level integration is required to automate and integrate key business processes and hence overcome the limitations of ERP systems. EAI technology provide the need for integrating supply chain to overcome problems occasioned with ERP systems that failed to integrate supply chains. This involve how EAI technology efficiently integrates custom, packaged and ebusiness solutions and thus, resulting in integrated supply chains. However, the technological confusion surrounding EAI, is the barrier to its adoption. Also different integration technologies and products are in the marketplace with no single tool addressing all integration problems. Therefore, a combination of integration technologies is required to support applications integration. The authors argued that a framework that evaluates EAI solutions and technologies will support organisations in selecting and combine appropriate EAI technologies. When integrating applications there is a need to pay attention on process reengineering since, the purpose of integration is to integrate and automate business processes and applications. In the case study presented in this paper, it is estimated the redesigning business processes takes up to 60% of the overall integrated solution. Such, redesigning has resulted in phasing out the majority of existing systems (90% of legacy and 96.4% of ERP systems). This means that EAI solutions and reengineering reduces operational cost and shorten and improve business processes. However, this had an adverse impact on employees, which manifested itself in the form of resistance to the change initiative.