For manufacturing firms, the concept of integration is hardly novel. The Total Quality, JIT, and supply chain management movements required improved internal and external coordination. While these movements centred on the manufacturing function, research suggests that integration of several functions at different organisational levels achieve above average financial and performance results. However, studies show enterprise integration is associated with many problems; at the root of these is a fundamental assumption: that all enterprise integration initiatives are equally important. This article challenges this assumption and argues that enterprise initiatives differ by their purpose; and proposes a framework for typifying enterprise integration initiatives that is based on the capabilities developed for the organisation. Four types of enterprise initiatives are identified. Each type is illustrated with organisational examples. Discusses the managerial implications.

Copyright MCB UP Limited (MCB) 2002

Introduction: contemporary demands for Enterprise Integration

All organisations face the strategic challenge of achieving sustained profitable growth. To meet this challenge, organisations develop capabilities that enable them to compete in their market space (Barney, 1991). When set against an organisation's structure chart, these capabilities rarely fit neatly into the functional silos. Senior managers are learning that the exploitation of capabilities requires high levels of integration across the enterprise's functions. Although much has been written by academics and practitioners on enterprise integration, the actual integration of functions in practice is less frequent and less deep than one might expect, having read the literature. A closer examination of projects that can lead to capabilities, such as Internet Technologies, Enterprise Resource Planning (ERP) systems, mass customisation and supply chain management, reinforce the imperative to integrate across functions.

Organisations that want to exploit Internet technology opportunities are advised to develop strategies to progress beyond brochure-ware and electronic catalogues and offer complete services such as order fulfilment (Baker, 1999; Venkatraman, 2000). Organisations require several functions such as sales, production, and finance to work together seamlessly to complete such transactions; however, peoples' willingness to knit their activities is altogether uncertain (Braganza and Morgan, 2000). In the pre-Internet, electronic data interchange, era, sales people and account managers chased customers' orders around the organisation, overcoming functional obstacles and discrete systems. Overlaying a Web interface on a dysfunctional organisation makes internal anomalies visible and transparent to customers, suppliers and shareholders. Unified Web-based services challenge the silo structure and prevailing power bases, as it becomes near impossible for people in the recesses of a large function to manipulate prices, delivery dates and discounts (El Sawy and Bowles, 1997). Hence, Internet technologies require organisations to integrate across silos.

Many organisations have invested significant sums of money into ERP systems. These are off-the-shelf packages that can be configured to match the needs of organisations (Markus et al., 2000). At the heart of ERP packages is a database that enables organisations to structure data so that these can be shared across several applications. The database and its accompanying modelling and mining tools provide the opportunity for information to flow through the organisation (Oliver, 1999). However, recent evidence suggests that, whereas ERP has provided some benefits in terms of software standardisation, the substantive benefits of information integration have barely been realised (Kumar and Van Hillegersberg, 2000). This has led to organisations stopping ERP projects because there are too few benefits gained for the management time and financial costs invested. The ramifications of ERP are significant changes to the traditional functional structure. Hence the difficulties associated with implementing ERP can become unmanageable (Van Everdingen et al., 2000). There is widespread agreement that for ERP implementation to succeed, organisations need to be integrated (Willcocks and Sykes, 2000).

For many organisations, the strategic aim of mass customisation has the potential for competitive advantage (Kotha, 1995). Mass customisation describes an organisation's ability to develop and supply products and services that are tailored to each customer's needs (Da Silveira et al., 2001). It requires organisations to be flexible, quick and responsive. They need to be able to configure and re-configure people and systems in different functional departments. Therefore, organisations that pursue a mass customisation strategy need to have in place effective integration across departments in different functions (Pine et al., 1993).

Supply chain management is another challenge facing organisations, especially those in the manufacturing sector. It requires organisations to optimise their operations across interfaces with stakeholders, e.g. customers, suppliers, and regulators. Supply chain improvements require organisations to collaborate, share knowledge and work towards shared goals based on recognition of mutual interdependence (Narasimhan and Das, 2002). However, as with any chain, it is only as strong as the weakest link. This link may not be at the conjoint of two organisations and may, in fact, exist at the interface of two functions within one of the supply chain partners. This is exemplified by the marketing director in one manufacturing organisation who wanted to develop joint business plans, which included sales and production figures, with key customers. His idea was to create a strong sense of partnership with these customers. An integral part of the joint business plan was the sourcing of raw materials to prepare production figures. The manufacturing director decided that raw material information was too sensitive to divulge to customers. Although the board, including the managing director, did not share this view, the manufacturing director's view prevailed. The moves to share forecast information and collaborate with customers and suppliers were stymied because the manufacturing director did not want the purchasing and sales functions to be integrated more closely. Hence, the challenge of supply chain management requires enterprise integration.

Each of the above suggests that enterprise integration remains critical to organisational prosperity. Yet past experience and research suggests that a headlong rush into cross-functional integration initiatives is unlikely to succeed. Nor is forming cross-functional or project teams an answer. These teams have seldom thrived in functionally structured organisations.

Charting previous attempts at enterprise integration

The structures of contemporary organisations can be traced back to some of the earliest armies: functional specialists embedded within a defined hierarchy. Almost 100 years ago, at the start of the Industrial Revolution, Taylor codified the rules for structuring organisations so that they could cope with the demands of that revolution. A wide range of theories were developed for managing organisations and people through the study of organisations such as General Motors, Standard Oil of Jersey and Du Pont. These theories remained within the confines of Taylor's principles (Taylor, 1911). However, a recurrent theme in the literature is organisations managed through a structure with strong functional walls are slower to adapt to fast changing environments (Bartlett, 1995). Consequently, there have been several attempts at traversing the functional silos.

Lawrence and Lorsch (1967) suggested that the role people adopted influenced the balance between functional and cross-functional dimensions. They argued that, as organisations become more complex, people specialise in a particular function. People fulfilling a specialist role become experts in carrying out a particular task, as exemplified by a tax accountant in a finance function or a researcher in a consumer marketing function. Their study showed that people in functional units pursued their objectives often to the exclusion or detriment of other function's goals. Lawrence and Lorsch (1967) argued that to achieve a higher level of collaboration between specialists in different functions, people in an integrator role acted as a bridge between the functions. In this role they resolved inter-departmental conflicts, mediated information, and ensured smooth operations across the functions (Lawrence and Lorsch, 1967). Integrators occupied general management or head office positions with job titles like: group managers, regional managers, divisional managers and geographic sector managers. During the third quarter of the last century while organisations grew by expanding their product and geographic range, so did the number of people in integrator roles. In many organisations, the numbers of people in general management or integrator roles grew disproportionately to the number of people in specialist roles (Bartlett, 1995). Head offices became bloated; fulfilling an integrator role became an end in itself. They formed a wedge between specialists in the factories, sales offices and distribution warehouses and senior managers on the board. Information as it passed from specialists, through the hands of head office general managers, to the board was changed, filtered, or withheld. People had several reporting lines and consequently decision making became slow and bureaucratic. In time, boards questioned the value of integrator roles and the numbers of people in head offices shrunk. Nonetheless, academics and practitioners recognised the need for cross-functional integration.

Through the 1970s and early 1980s, a further attempt at cross-functional co-ordination came in the form of matrix management. This involved creating a structure that could be overlaid on the existing functional silos (Burns, 1989). Matrix management structures developed liaison roles, similar to that of integrator roles, with the aim of co-ordinating across departments, so that organisations could deal with diverse and complex markets, products and services, customers, and channels to market (Galbraith, 1972; Thompson, 1967). To give the liaison role a modicum of authority, organisations appointed matrix directors, established matrix departments and developed a horizontal hierarchical structure that rivalled the prevailing vertical-functional hierarchy. The rationale for adopting a matrix structure was to create a hybrid organisation underpinned with function-by-project principles, in which authority and power shifted from being solely in the hands of functional directors to these directors and matrix directors. These principles promoted cross-functional co-ordination, participation in decisions and knowledge sharing. The matrix management concept appeared to be a simple solution when drawn on a structure chart (Burns and Wholey, 1993).

However, in practice, senior managers found themselves faced with complex and unmanageable organisational structures. Matrix organisations required people to have at least dual, and often multiple, reporting lines that led to internal conflicts. Instead of facilitating the free-flow of information, people hoarded their knowledge. Committees took decisions and the number of committees mushroomed in many organisations. People had unclear and overlapping responsibilities and accountabilities resulting in interdepartmental warfare for control of, and power over, resources. The significant inherent drawbacks to matrix management led to it being discredited as an effective mechanism for cross-functional integration (Bartlett and Ghoshal, 1990; Burns and Wholey, 1993).

The late 1980s and early 1990s saw the emergence of the re- engineering movement (Hammer, 1990). Academics and practitioners recognised that traditional functional structures fragmented people's day-to-day jobs to such an extent that they chased functional goals and optimised their departmental activities rather than pursue organisational goals and optimise business processes. Senior managers were being advised to integrate activities across silos even if that meant taking radical measures such as dismantling the functional structures (Hammer and Champy, 1993). The radical re-engineering movement developed at a phenomenal rate with academics, consultants and practitioners developing various "how to" methods (Kettinger et al., 1995). Radical re-engineering became associated with information technology initiatives (Davenport, 1993). Radical re-engineering took on negative overtones as it became almost synonymous with sacking large numbers of people (Willmott, 1994). Many senior management teams entered into radical initiatives unprepared for the significant changes that would be required in the organisation (Stoddard et al., 1996). Therefore, initiatives failed to be fully implemented and re-engineering, which set out to integrate functions, has become discredited (Buchanan, 1997).

Attributes of enterprise integration: current perspectives

Three key attributes emerge from the subset of the literature that focuses on enterprise integration. The first is the characteristics that define enterprise integration. The second is the scope of enterprise integration. The third theme is the range of organisational elements that would need to be co-ordinated, and hence changed in some way, as an integral part of an organisation's integration plans. Each attribute is examined below.

Attribute 1: characteristics

Enterprise integration is linkages between parts of an organisation (Fuchs et al., 2000). The parts that are to be aligned include strategic direction, market focus, resources, skills and culture (Porter, 1980). Senior managers establish a clear strategy in terms of its competitive position (Mintzberg, 1987), understand its resources (Hamel and Prahalad, 1994) and identify its processes (Braganza, 2001; Ghoshal and Bartlett, 1995a, b). They ensure that physical and intellectual resources, skills and internal culture necessary to execute the strategy are aligned (Fuchs et al., 2000).

Enterprise integration is characterised as co-operation and communication between internal teams and functions (Millson and Wilemon, 2002). Co-operation involves people in different functions creating common goals, acting cohesively and avoiding creating problems for each other (Millson and Wilemon, 2002; Pinto and Pinto, 1991). Communication refers to the two-way flow of information, horizontally between teams and across functions, and vertically between senior managers, departmental heads and people on the shop floor (Robinson and Weldon, 1993; Teigland and Wasko, 2001). Communication between people is often mediated with technology; however, this can have adverse effects on communication where, for example, organisations have evolved internal islands of information (Sarker and Lee, 1999). While the need for effective communication is recognised as vital (Newell et al., 1998) evidence that it is inadequately managed in organisations is apparent (Andersson and Bateman, 1997).

Enterprise integration is considered the co-ordination of knowledge across functional boundaries (D'Adderio, 2001). Sources of knowledge can be external or internal to the organisation (Leonard, 1998) and can reside at several levels: individuals (Fahey and Prusak, 1998), group (Leonard and Sensiper, 1998), functions (Davenport and Klahr, 1998), process (Braganza et al., 1999), organisation (Teece, 1998), and the industry (Leonard and Rayport, 1997). Both explicit knowledge, that which is structured, codified and encased in databases, and manuals (Nonaka and Takeuchi, 1995), and tacit knowledge; namely, behaviours, routines and people's innate skills and abilities (Nonaka, 1994; Polanyi, 1966) need to be aligned across silos (D'Adderio, 2001). Enterprise integration from a knowledge perspective recognises the inherent tensions that exist and arise where new knowledge is being created. The creation of knowledge requires people in different parts of the organisation to accept that their existing knowledge may no longer be relevant. Nonetheless, people need to feel that they can expose their tacit knowledge and that this will be treated with a degree of care. They accommodate current standardised practices with novel, non-routine practices. New knowledge impacts on practices, locally at team, department or functional levels within a strategic business unit, or globally across business units (D'Adderio, 2001). The need for change is implicit in the knowledge perspective of enterprise integration. The changes can affect the strategy, structure and behaviours across the organisation (Earl, 2001). Co-ordinating heterogeneous knowledge, asking people to share the knowledge they have built up over years and making knowledge available to all requires senior managers to break the "knowledge is power" mindset. Hence, while scholars advocate creation of a knowledge-sharing culture, in practice such initiatives are very difficult to achieve (Davenport et al., 1998).

Enterprise integration is characterised as co-ordinating cross-functional processes that fulfil stakeholders' expectations (Braganza and Lambert, 2000; Hammer and Champy, 1993). The notion of cross-functional co-ordination goes beyond setting up multi-disciplinary project teams (Malone et al., 1999). It impacts on the structure of the organisation (Davenport and Nohria, 1994), roles and responsibilities (Brynjolfsson et al., 1997), power structures (Buchanan, 1997), workflows (Hammer and Stanton, 1999) and information technology (Guha et al., 1993). The changes required to bring about enterprise integration, from the process perspective, can be radical and incremental (Jarvenpaa and Stoddard, 1998). This perspective of enterprise integration is associated with technology developments or enhancements that enable cross-functional interaction and communications (Broadbent et al., 1999; Davenport and Nohria, 1994; Van Grembergen and Van Belle, 1999). Many of these IT implementations have been shown to fail (Larsen and Myers, 1999; Sarker and Lee, 1999). Consequently, many organisations have outsourced not only the IT function (Lee, 2001), but also other functions such as human resource management, administrative services and call centres (Marshall, 2001). Outsourcing functions involves senior managers taking a decision to contract out or sell the functions, assets, people, information, IT and activities, to a third-party supplier who, in return, manages the people and assets and provides a service for a financial return (Loh and Venkatraman, 1992). Outsourcing a function that forms part of a business process without understanding the relationship between the two makes integration problematic.

Attribute 2: scope

Studies of the scope of functions to be integrated have been undertaken from the perspective of one function in relation to either one or more other functions. This is exemplified by two studies. The first examines the integration between manufacturing and marketing from the manufacturing function's vantage point (Weir et al., 2000). The other is a study of the research and development function's relationships with marketing and manufacturing (Sherman et al., 2000). Researchers have contributed by studying functional dyads such as the marketing function's collaboration with the R&D function and vice versa (Kahn and Mentzer, 1998). Product development has been studied, as it requires cross-functional involvement (Sherman et al., 2000). These studies have attempted to show the relative importance of integrating combinations of functions. The studies demonstrate that significant benefits can be gained from cross-functional integration, in terms of reductions in product development times (Sherman et al., 2000), higher profits (Weir et al., 2000), successful marketing programmes (Millson and Wilemon, 2002), better relationships with customers and suppliers (Narasimhan and Das, 2002) and being better able to respond to industry changes.

The integration of strategic business units involves the co-ordination of separate elements of each business unit so that efficiencies or market prominence can be achieved (Fuchs et al., 2000). Strategically, SBU integration combines competencies and resources from different units to exploit emergent opportunities, develop innovative products and services or extend current strategies (Burgelman and Doz, 2001). Operationally, SBU integration aligns and co-ordinates initiatives in each unit (Herman, 2001). The lack of SBU integration is noticeable through their Web sites:

A manufacturer discovered there were 175 different Web pages on its Web site presenting information about an important industry trend. The pages, which had been developed by various business units from around the world, presented contradictory claims and projections (Herman, 2001, p. 22).

Senior managers face obstacles when implementing SBU integration. A business unit might need to alter its strategic trajectory, which the leaders of that business unit might not be willing to do. There is also the need to share or release resources to pursue integration aims. Consequently, achieving SBU targets becomes difficult for people left behind. Internal control systems such as budgets, targets and incentive schemes prevent SBU integration (Eisenhardt and Brown, 1999). Hence, control systems need to change to ensure board's prioritise SBU integration (Burgelman and Doz, 2001).

Attribute 3: elements

Researchers have identified organisational elements that would need to be integrated. The organisation's strategy is a key element and other elements such as culture, resources and products should be aligned to it (Fuchs et al., 2000). Others suggest that each function's strategy should be aligned into a single coherent document (Kahn and Mentzer, 1998). Other studies show that senior managers might have to create structures that align scarce resources such as finance, people, skills, capital equipment and management time (Burgelman and Doz, 2001; Van Grembergen and Van Belle, 1999). There is a need to integrate day-to-day routines with control mechanisms, incentive and reward systems to ensure effective cross-functional co-ordination between people (D'Adderio, 2001). Another set of elements that need to be aligned is intangible resources. They include the organisation's reputation, intellectual capital, brand and patents (Burgelman and Doz, 2001; Fuchs et al., 2000).

Synthesising the literature

The literature shows that there are several characteristics of enterprise integration. Each is useful and necessary as it is improbable that an organisation can achieve and sustain enterprise integration to any meaningful extent without, for example, co-operation and communication or co-ordinating cross-functional knowledge. There are several useful options in terms of the scope of integration: involving strategic business units, functions or some combination of both. Several organisational elements can be leveraged to foster enterprise integration; these elements are self-evidently important. The need for a well articulated and communicated business strategy, for reward schemes that create unity of effort, or for clear brand values, are necessary for enterprise integration.

However, the characteristics, scope and organisational elements discernible from the literature are problematic. They form a set of theoretical options that can be used to craft an organisation's enterprise integration strategy. The options raise interesting questions: Which options should senior managers choose? On what basis should decisions be taken for or against a particular option? How should enterprise integration be managed?

The literature is missing a conceptual framework that links the array of options to the purpose of the enterprise integration initiative. Such a framework would enable managers to make decisions about structuring, resourcing, managing, and implementing enterprise integration initiatives. Without some guidelines, senior managers are left to attempt a trial-and-error approach to enterprise integration. It is perhaps not surprising, therefore, that researchers conclude that enterprise integration remains a key capability where there seems to be very little connection between practice and theory (Chilean, 2001).

The enterprise integration capabilities framework

An assumption that permeates current thinking on enterprise integration is that all enterprise integration initiatives are equally important to the organisation's strategic success. However, an initiative that is aimed at "knowledge across functional boundaries" can deliver strategic advantage across several or more modest operational efficiencies at a functional level. Similarly, "co-operation and communication" between functions can bring about new day-to-day routines that are either innovative or rather mundane. It is apparent, therefore, that enterprise integration initiatives have substantively different purposes. Thus, it is vital to understand the underlying purpose of any such initiatives.

The enterprise integration capabilities framework agrees with and extends the argument that enterprise integration initiatives build organisational capabilities as shown in Figure 1 (Barney, 1991; Hamel and Prahalad, 1994; Johnson, 1999). Its dimensions are constructed to bring into focus the contribution a capability makes to future competitiveness (Barney, 1991) and whether the impact of the capability will be felt at a strategic or operational level (Hamel and Prahalad, 1994). Hence, an enterprise integration initiative's purpose can be understood along these two dimensions: its contribution to improving future competitiveness and its consequences on the organisation.

The framework suggests that the capability developed as an end outcome of an enterprise integration initiative will be different in each quadrant, which gets its name from the capability being developed. Locating an enterprise integration initiative in the framework is with reference to these dimensions. Enterprise integration initiatives are positioned in the bottom right-hand quadrant when senior managers are unsure of the extent to which an initiative will improve the organisation's future competitiveness or the potential benefits to be gained are uncertain. Enterprise integration initiatives are located in the top right-hand quadrant when senior managers are confident that the initiative will significantly improve the organisation's future competitive position and the consequences will affect the future strategic direction. Initiatives are sited in the top left-hand quadrant when senior managers are sure that it will lead to improved competitiveness and the consequences enhance or maintain current operational aspects of the organisation. Initiatives in the bottom left-hand quadrant are important to achieving efficiency and avoiding disbenefits in the short-term, but will have a minimal impact on improving competitiveness and the consequences will be felt at an operational level. Each quadrant is examined and illustrated with an organisational study. Qualitative data for one case was gathered from action-research carried out over a 12-month period, whereas data for the other three studies was drawn from various public sources. The examples are not intended nor are they held out to be comprehensive studies of these organisations; rather data that elucidates each quadrant of the framework is highlighted.

Implications of the framework

Inimitable enterprise integration initiatives

These develop capabilities that definitely enhance the organisation's competitive position. These capabilities are very difficult to mimic and are sustainable over time. The effects of these capabilities are to reshape the organisation's future strategic direction, aims and objectives. The impact of inimitable enterprise integration initiatives will be felt across the organisation and its industry, as the basis of competition is changed. A prime case in point is Tesco.com, Tesco plc's electronic grocery channel. It has required a high degree of integration between several functions of the group, such as the local store, warehouses, order handling, IT, marketing and finance in order to provide a complete online shopping experience to consumers. Tesco.com's online capability has enabled it to gain one million registered users and transact about 70,000 orders each week. Since its launch, it has built up sales in the region of 300 million each year and operates in four countries: the Republic of Ireland, the UK, South Korea and the USA (Tesco.com, 2002). Its entry into the highly-competitive US market was through a 35 per cent equity stake in GroceryWorks, Safeway Inc.'s e-grocery retailer. GroceryWorks operated in Texas only but will implement Tesco.com's e-shopping capability of local store deliveries to expand across the USA. Tesco.com has reinforced its parent company's market leadership position. The impact of Tesco.com's capability has been felt across the industry, as none of its UK rivals have been able to copy this strategic move (Tesco.com, 2001).

Local enterprise integration initiatives

These lead to capabilities that make a minor contribution to the organisation's competitive position. These capabilities are easily replicable and replaceable. They can be sourced from the organisation or externally. The consequences of local initiatives lead to operational efficiencies and cost reductions. The impact of local initiatives will be felt by a team, department or specific function. This type of initiative is exemplified by a study conducted in a major telecommunications company - referred to as Telco to preserve anonymity. Telco's

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provisioning function consists of seven departments; each plays a part in fulfilling a customer order. According to the function's director, departmental heads "were at war with each other" when he joined. As a result, 90 per cent of orders were delivered late, or in the parlance of the organisation, were classified "DOA" for dead on arrival. The director set out to improve the provisioning function's performance so that 98 per cent of orders were delivered on time. He identified processes and knowledge requirements that people in each department said they required, changed the bonus scheme such that departmental heads received 25 per cent of their bonus if their department's targets were achieved, a further 25 per cent of their bonus if departments either side of theirs in the process achieved their targets, and the remaining 50 per cent of the bonus if the function's overall target of 98 per cent on time deliveries was met. Within a matter of months, departments were meeting their targets and the provisioning function achieved its performance turnaround. However, when this initiative is considered in terms of the whole organisation, its contribution to competitiveness was marginal and its consequences were at an operational level. In spite of the capabilities developed by the provisioning function, the organisation's wider competitive position has collapsed for a host of industry and financial reasons.

Dynamic enterprise Integration initiatives

These deliver capabilities that are specifically identified as being necessary to maintain the organisation's current competitive position. The consequences of these enterprise integration initiatives are to ensure capabilities are aligned with and maintained to the same levels as key competitors. This continuous alignment and re-alignment is in terms of the quality of the capability and the ways in which the capabilities are combined to avoid losing competitive advantage. The impact of these enterprise integration initiatives will be felt across the organisation. The case of Marks & Spencer provide interesting insights into this type of initiative. They lost their competitiveness as new niche players entered the clothing market, focused on specific consumer segments, tailored products to meet their tastes. M&S lost sight of its customers, becoming product-push rather than customer-pull oriented. Inter-departmental rivalry was rife, leading to very poor co-ordination between departments (Bevan, 2002). However, a new executive chairman was appointed and made internal changes, particularly in the head office, to ensure better integration so that the organisation can, once again, compete effectively. In effect, M&S are developing capabilities that deteriorated over a period of time; bringing their capabilities in line with competitors.

Opportunistic enterprise integration initiatives

These create capabilities that have a high degree of uncertainty in terms of their contribution to the organisation's future competitive position. The capabilities developed by these initiatives may be vital to future success but then again may not be. The consequences of opportunistic enterprise integration initiatives are whether capability is proven to be critical to future strategic success, its effects can be far reaching. On the other hand, where these initiatives develop capabilities that do not contribute to maintaining the organisation's current or future competitive position, they should be stopped. FirstDirect, the 24-hour, 365 days a year telephone and Internet bank is a good case example of an opportunistic initiative. The concept of a telephone bank was formed by a handful of people from several different departments in what was then the Midland Bank (now HSBC). This cross-functional team commissioned significant research to understand, among other things, customers' behaviours, wants and interactions with their bank (Mayers, 1992). The team analysed the findings and developed the concept to a stage where they were able to demonstrate to the Midland main board that the potential for considerable competitive success in terms of being first to market. Hence, they were given the funds to develop a full banking capability (Ashworth, 1997).

Managing enterprise integration initiatives to achieve their purpose

The enterprise integration capabilities framework shows that enterprise integration initiatives are not all the same: because they have different purposes. Hence, when planning an enterprise integration initiative its design should match its purpose. Returning to the attributes of enterprise integration drawn from the literature, we can consider the managerial implications in relation to the four types of enterprise integration initiatives.

Inimitable integration initiatives require clarity of future strategic direction. This involves setting a new strategic direction and changing the very basis of competition in the organisation's sector or industry. This type of initiative requires organisations to understand their customers' needs and reflect this in their future product and market mix. This includes defining new customer segments, value propositions and service offerings. Inimitable initiatives establish new objectives and goals that the senior management team recognise, accept and share across the functional silos. New information flows are established, with people in different functions contributing their knowledge. Internet technologies can be particularly effective in enabling a significant degree of knowledge co-ordination across functions, where tacit knowledge is shared and developed to create new knowledge. Inimitable initiatives require tightly coupled processes that are aligned to stakeholders' expectations and the new strategic direction. Each process acts as the co-ordinating mechanism for cross-functional targets, roles and responsibilities. This type of initiative calls for Internet technology-based systems that are properly integrated across the organisation and are aligned to the processes. The scope of inimitable initiatives includes virtually all the functions in the organisation. The scope might well extend to other SBUs with resources being re-allocated and SBU specific targets and goals being re-prioritised. Several organisational elements are affected by these initiatives. Senior managers need to be prepared to change elements such as reward schemes, culture and day-to-day routines. Inimitable initiatives that are mismanaged pose risks to organisational elements such as reputation, brand and intellectual capital.

Opportunistic integration initiatives enable the creation of new capabilities. They require clarity of the organisation's current strategic direction and use this as the starting point for identifying and evaluating options for new strategic directions. These options are developed into tangible goals and objectives. Opportunistic initiatives aim to prove in the shortest space of time which option achieves optimal strategic advantage. This type of initiative requires high levels of tacit knowledge to be shared. People managing opportunistic initiatives need room for creativity and openness to learning. People should feel able to question and discard "sacred cows" that impede future advantage. Because opportunistic initiatives set out to create future capabilities, they have little immediate impact on current day-to-day cross-functional processes and enterprise-wide technology. However, the outcomes of such initiatives might reconfigure entire business processes and introduce Internet technologies to ensure integration. The scope of this type of initiatives will span all functions in the organisation, although some will be more intensively committed than others. Opportunistic initiatives can span SBUs as people, equipment, premises and other resources are brought together to create new capabilities. In terms of organisational elements, opportunistic initiatives have little direct impact on any element while ideas and options are being evaluated. However, where senior managers pursue an option to full implementation, several organisational elements will be affected, some profoundly.

Local integration initiatives maintain or enhance levels of integration at team or departmental levels. These initiatives involve standardised linkages, which can be turned into a set of procedures. Communication and information flows are systematic. This type of initiative is weighted towards explicit knowledge that can be specified, codified and structured. Local initiatives would rarely lead to new knowledge being created. Such initiatives focus on one or more activities in a small number of functions, rather than an entire process. These initiatives co-ordinate activities to meet the expectations stakeholders value least. Local initiatives are unlikely to lead to enterprise-wide systems being developed. Any systems enhancements must be shown to deliver tangible benefits through improved co-ordination. Bespoke applications for any department or team should be avoided. Local initiatives are typically scoped on an intra-functional basis. However, there are benefits from sharing good practice across functions and SBUs. Local initiatives rarely require people and resources to be re-allocated across SBUs. A subset of organisational elements will be affected by local initiatives. These include day-to-day routines, incentive schemes and the culture of the functions) included in the initiative. Local initiatives have a marginal effect on elements such as brand, reputation and patents.

Dynamic integration initiatives ensure the organisation has capabilities to fulfil its current strategic direction. This requires a clear strategy and objectives that are quantified and prioritised. These establish improvements to business critical issues such as customer service, products and value. The capabilities developed by dynamic initiatives are gauged relative to the competitive environment in which the organisation operates: capabilities should be equal or better than competitors. People in different functions are able to agree quickly to changes to goals and objectives and communicate these across the organisation. Cross-functional information flows are effective at all levels of the organisation. Dynamic initiatives require people to share explicit knowledge across functional boundaries. Tacit knowledge in different areas is valued and developed. However, dynamic initiatives can lead to people changing knowledge flows to meet changing external demands. These initiatives re-align cross-functional processes to remain attuned to changing stakeholder expectations. Such initiatives recombine people, systems and resources. Dynamic integration initiatives suggest the use of enterprise-wide systems than can be based on Internet technologies that support entire processes rather than activities or functions. The scope of dynamic initiatives will be across all functions and require high levels of co-ordination. Dynamic initiatives affect many organisational elements. Some of these might be changed significantly to maintain the organisation's alignment to external environmental factors.

Summary

This paper sets out a framework that enables practitioners to focus their enterprise integration efforts to exploit capabilities. The framework requires business leaders to consider the capabilities they want to develop in terms of competitiveness and organisational consequences. Where an organisation wants to develop capabilities that revolutionise its industry, overturn the prevailing basis of competition and create a unique competitive space, it must pursue an inimitable enterprise integration initiative. In case the organisation wants to develop new, unproven capabilities, it should organise an opportunistic integration initiative. An organisation must avoid its capabilities degenerating to the point where they fall behind competitors and are unable to sustain growth; in which case, organisations must engage in a dynamic integration initiative. Organisations carry out local integration initiatives to ensure that their operations are efficient and that costs and wastage are being prevented. This approach to enterprise integration requires senior managers to consider the purpose of projects such as Internet Technologies, ERP systems, mass customisation and supply chain management, which require cross-functional integration, prior to their launch and then manage these project accordingly. The paper challenges conventional thinking: that all capabilities are the same. It suggests that there are different types of capabilities and that any one organisation should develop a portfolio of enterprise integration initiatives to ensure it has the capabilities to achieve sustained profitable growth.

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