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Procedia Technology 16 (2014) 52 – 58

CENTERIS 2014 - Conference on Enterprise Information Systems / ProjMAN 2014 -

International Conference on Project Management / HCIST 2014 - International Conference on
Health and Social Care Information Systems and Technologies

Application Integration: Enterprise Resource Planning (ERP)

systems in the hospitality industry
A case study in Portugal
Paula Serdeira Azevedoa*, Carlos Azevedob, Mário Romãoc
aAssociated
Professor, University of Algarve, Information Systems and Technology Department, ESGHT, Faro – Algarve, Portugal
b
Visiting Professor, University of Algarve, ESGHT, Faro – Algarve, Portugal
c
Associated Professor, ISEG, University of Lisbon, Portugal

Abstract

Business and technology evolution, globalisation and competitiveness improvement, are factors leading organizations to adopt last
generation technology, therefore creating heterogeneous technical environments in most cases. Thus, the technical issue of
Information Systems (IS) integration became more and more complex due to the need to share data and functionalities among
several systems. And this is a challenge in what flexibility and adaptability are concerned. This paper has the objective of focus the
problem in the context of ERP (Enterprise Resource Planning) systems, in particular in the sector of hospitality industry, through
a case study developed in Portugal, discussing strategies towards application integration projects.

©©2014
2014TheTheAuthors.
Authors.Published
Publishedby
byElsevier
ElsevierLtd.
Ltd.This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Peer-review under responsibility of the Organizing Committees of CENTERIS/ProjMAN/HCIST 2014
Peer-review under responsibility of the Organizing Committee of CENTERIS 2014.
Keywords: Information Systems; ERP Systems; Application Integration; Hospitality Industry.

* Corresponding author. Tel.: +351-289-800-100.

E-mail address: pscorreia@ualg.pt

2212-0173 © 2014 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Peer-review under responsibility of the Organizing Committee of CENTERIS 2014.
doi:10.1016/j.protcy.2014.10.067
 Paula Serdeira Azevedo et al. / Procedia Technology 16 (2014) 52 – 58 53

1. Introduction

The fact that ERP Systems don´t automate all processes of any organization implies the existence of other
application software, either legacy or to be developed, that must be connected to the ERP system [1] [2].
In the hospitality industry, where the need to integrate internally and externally is even more marked, it is critical
to map all available technology to integrate the applications running within the organization, as well as the connections
to external players in the industry value chain.
Each type of integration has solutions focused on determined areas, sometimes sharing functionalities with the rest.
This reality difficult the choice of the most appropriate solutions and complicates the understanding of existing
technology. It is important therefore to describe and analyze such solutions.
Section 2 of this paper resumes evolution and status of ERP in the hospitality industry, while section 3 presents the
methodology used in the investigation. Section 4 lists underlying reasons why integration is an issue and section 5
presents major integration standards offered by the software industry. Section 6 is dedicated to the results of the case
study investigated, discussing some of its more relevant assumptions concerning integration. Finally section 7 presents
the conclusions of this paper.

2. ERP Systems in the hospitality industry

The modifications offered by the impulse of technologies force the change in the way business is conducted in the
hospitality industry. IS/IT in the hospitality industry must provide the required flexibility and efficiency by facilitating
the understanding of customer needs and adapt consequently [3].
ERP Systems emerged as a way to automate repetitive processes and provide managers with a global vision and
real-time all operations, solving the problems of disintegration and fragmentation of information [3]. The problem of
fragmentation of information is felt, as in other activities, within the hospitality industry [4]. In this industry, ERP
Systems have a particular relevance for the diversity of applications and specific systems for various functions. The
predominance of legacy systems, of difficult upgrading, maintenance and incompatibility, makes its updating more
complex [3].
The international chains, or larger units and groups, have adopted ERP Systems traditionally used in other
industries. SAP is market leader, in particular for larger hotels [5]. With regard to the specific processes of the hotel
units, primarily front office, for example, reservations, stock and supply, F&B (Food & Beverage), or point of sale
management (POS – Point of Sales), specific solutions are adopted, often from suppliers who do not offer integration
with the back office and the implemented ERP System [4]. As a consequence integration of applications is an
increasingly relevant issue.
In a study carried out at the hospitality industry in Israel, Heart et al. found that 97% of the hotel units were
computerized (but not by what could be considered ERP Systems), including those who had less than 50 rooms. The
most common front office applications were the reservations and the front desk; the most common back office
application was accounting. Unlike other industries, less common applications were sales and marketing, and human
resources [4].
In the same study, Heart et al. found the absence of ERP Systems targeted for the hospitality industry in Israel,
which forced the hotel units to acquire isolated applications from different suppliers. He also noted the absence of
integrated applications that share the same database. The diversity of applications from different suppliers increases
the complexity of the updating and maintenance of the applications implemented [4].

3. Methodology

With the purpose of identifying major critical success factors when implementing ERP Systems, as well as factors
that may obstruct organizations from being competitive, a case study was carried out based on data gathered on an
important economic Portuguese group. The study also intended to understand how the hospitality industry can solve
the problem of the disintegration of information of the various implemented business applications. The research did
not seek to confirm or refute hypotheses or the quantitative measurement of the influence of variables in a particular
54 Paula Serdeira Azevedo et al. / Procedia Technology 16 (2014) 52 – 58

phenomenon. Instead, it attempted to answer proposed questions, interpreting, through the systematic analysis of the
collected data, ratings, perceptions, needs and limitations of IS/IT submitted by the people involved in the study.
Therefore, an inductive logic followed, with emphasis on the analysis of qualitative data and using the case study
method. Although the dominant approach in research processes in the area of IS has been, until some time ago, the
quantitative analysis, the research using the case study method, with qualitative data collection, has become
increasingly accepted in the area of IS. This appears to stem from a growing recognition of the potential to help
researchers understand the interpretations and meanings that govern activities of organizational stakeholders, as well
as how technology is faced and used.
The research presented followed an interpretative approach. In view of the issues to investigate, an approach to
understanding and interpreting facts was adopted, by the insertion of researchers in the organizational context of hotel
units. This interpretative option permits that a group of people, including managers, directors of IS, or users, in an
organizational context, can express, conceptualize and assess the objectives defined by the research.
The research method adopted combines several techniques, such as semi-structured interviews with the Chairman
of the Board of Directors of the hotel group, the director of IS/IT’s department of the group, as well as the heads of
logistics, human resources and financial areas of the IS/IT’s department of the hotel group, in order to find
inefficiencies and inconsistencies in the information used and facilitate the analysis of the processes involved.
Interviews with key elements of the organization are a way of ensuring an experienced vision of who is inserted in it
and could induce a faster knowledge of what is analyzed. A questionnaire survey for 66 key users was also used.
Respondents are users of IS, heads of each department in each hotel unit, with the purpose of understanding the
users’ satisfaction in relation to the IS/IT implemented in the group, serving, at the same time, the purpose of
confirming data consistency. The criteria for choosing key users included: professional experience in the tourism
sector; experience on IS/IT of the group; active participation in decisions and implementation of IS; leading roles or
responsibilities in their departments; represent the geographical dispersion of the group.
The process was completed through documentary analysis of data collected in the hotel units and by direct
observation of the use of installed applications. As a way to collect opinions and suggestions on the information
collected, a panel of experts in the field of IS/IT was consulted. This process lasted for the first 3 quarters of 2011.

4. Reasons for IS integration

The need to share information among heterogeneous systems along with opening internal systems to business
partners or the need to automate internal processes, are some of the situations organizations need to solve, under a
constant technical evolution. This is a complex reality where a fierce competition fights to offer solutions to the market
[8].
IS integration can be defined as the sharing of information and processes within an organization or among
organizations [9]. Linthicum defines integration as a strategic perspective of sharing information and services between
two (or more) applications through the combination of several technologies, allowing to move and exchange
information among applications and business processes, either within or out of the organization [9].
The nature of each organization dictates the most appropriate approach [10].
The surge of new norms and new technologies inducting integration, such as XML (eXtensible Markup Language),
EDI (Electronic Data Interchange), RosettaNet, BizTalk and ebXML (Electronic Business using eXtensible Markup
Language), can be a good motivation for using an integration strategy in the organization [9].
The impacts of insufficient integration or no integration at all, are amongst the reasons to design a global integration
strategy. According to Cummins, some of these reasons are [12]: Loss of competitive edge by incapacity to reduce
execution time of certain processes; non integration of processes forces manual intervention which leads to redundant
data, and consequent off-line database synchronization (asynchronous); reduction of the capacity to relate with
business partners, for non-integration between organizations; difficult to obtain global and consolidated information
about the business and the organization itself.
With the growing request to IS integration, several solutions emerged, normally called Enterprise Application
Integration (EAI), enabling several forms of application integration, with less costs and less code [13]. The context for
IS integration was no longer in the applications structure, but spread onto the whole organization [8].
 Paula Serdeira Azevedo et al. / Procedia Technology 16 (2014) 52 – 58 55

The acronym EAI is, according to Linthicum, a buzzword to define the IS integration process, and it means the
integration of several applications in order to share information and processes.
Linthicum underlines some differences between a traditional approach to IS integration and EAI [15]:
x EAI favors integration of data and business processes, while traditional integration is data oriented;
x EAI includes reutilization and distribution of data and business processes;
x EAI allows integration to be made with less code and consequently in a more friendly way.
ERP Systems emerged in the 90’s oriented to control internal processes. These systems offer to respond to the
problem of integration, or non-integration, by replacing legacy systems [13].
This type of solution guarantees a more efficient process and data management. However there was the need to
complement it by integrating others, like Client Relationship Management (CRM), Supply Chain Management (SCM)
and other existing applications [16]. That is why organizations need to share data among heterogeneous systems [17].
Nowadays it is possible to find different solutions for the same problem, all of them valid ones [18].
IS integration is one of the major issues to IS / IT management. A study conducted by the Gartner Group revealed
that more than 30% of IS/IT investments are oriented to systems integration (referenced by [19]).

5. Integration Standards

The first attempts to IS integration didn´t follow any standards or technical rules, as they didn´t exist. The growing
need to use techniques and methodologies in this area, together with technological evolution, urged the creation of
specifications, amended later on. Although there are still proprietary solutions, the trend is to adopt technical rules to
ensure flexibility and certification [10].
In the context of IS integration, the identification of what rules to adopt may be confusing, as there are several
organizations participating in the construction of these specifications but with diverse objectives.
These are normally identified by the name “standard” and allow for the IS integration based on open and certified
solutions. There are several standards to document each technology as well as its functionalities [20].
For the Integration Consortium (previously called EAI Integration Consortium), a standard consists on a set of
definitions of file formats and communication protocols, enabling the connection of systems with diverse origin, brand
or vendor. Standards define common languages, of public access, essential to the coexistence of different systems and
their interoperability [21].
According to Craggs, the adoption of standards in IS integration has increased, in part given the following aspects
[21]:
x Need to integrate processes either internal or external to the organization;
x Need to integrate all applications in an organization;
x Support transactions in existing IS;
x Make services available to the outside;
x Growing complexity of technologies for IS integration;
x Cut costs of IS integration.
According to a study conducted by Delphi Group, perceived advantages by CEO interviewed about the use of
standards are very relevant. Thus, about 31% state that standards increase the value of current and future investment
on IS/IT, and 29% value data portability. The same study inquired about which standards should be present in solutions
offered by application vendors. XML is the top answer followed by two standards relative to application development
platforms: J2EE from SUN with 44% answers and the framework “.Net” from Microsoft with 36%. SOAP protocol
had 35% answers and is related to web services and data exchange based on XML [22].

6. Results and discussion of the case study

It is very hard for an ERP system to cover all business processes, as underlined by Kumar; Davenport e
Themistocleous [23] [24] [25]. That is why integration and compatibility among systems are so critical. The absence
of these means efficiency problems and raised implementation costs [26] [27] [28] [29].
56 Paula Serdeira Azevedo et al. / Procedia Technology 16 (2014) 52 – 58

Figure 1 – Usage of ERP and non-ERP Systems in the case study

In the hotel group investigated there are scattered applications, from different vendors, forcing interface
development in order to integrate data. This situation has negative impacts in performance and operational efficiency,
especially when integration is not made in real time or simply doesn´t exist.
The investigation revealed several applications in the areas of complementary business units, such as health centers
and golf courses. These are areas running specific applications, not integrated with the ERP system.
The absence of data integration in those areas during customer stay in the hotel affects timely invoicing, with
negative impacts on customer service. The customer account is not updated automatically and the customer has to wait
for some manual proceedings before the final bill.
In the case of booking there is no integration between the applications that deal with this service and major online
operators such as Booking or Expedia. Reservations are made through traditional channels like e-mail or fax. This
implies manual intervention from the booking department, doubling the necessary time to finalize the task and work
effort, therefore affecting the process efficiency.
In the case of non-ERP applications, integration is made through flat files, offline into the back-office ERP system.
Integration between CRM and front office applications, for marketing purposes, is made through a data file generated
from database enquiries. This not made in real time and only when the user wants access to this kind of information.
This not considered by top managers as having negative impact on operational efficiency.
Integration between cash management application and back office ERP system is made online through web services,
and so there are no negative impacts on critical success factors.
 Paula Serdeira Azevedo et al. / Procedia Technology 16 (2014) 52 – 58 57

The non-integration of processes forces manual intervention, and this has normally the consequence of data
redundancy and inconsistency. Software integration is referred by the respondents as being totally develop by internal
IT resources, and the major problem pointed out is that this integration isn´t made online. Authors Zornoza [30] and
Martínez et al. [31] obtained similar results in their investigations. On the other side, non-integration also reduces the
organization capability in relating to external business partners, as underlined by Ribalaygua [32], Kirk and Pine [33],
as they don´t take advantage of internet and new technologies potential.
The integration is normally developed by the internal IS/IT team, which is for some authors an important success
factor for ERP Systems implementation [23] [26].
The investigation concluded that it is difficult for an ERP system to cover all processes of an organization, and
eventually only back office processes are covered in full. This limitation is noticeable in the hospitality industry, where
many specific solutions are implemented by vendors with little or no integration to ERP Systems.
This fact has important and negative impact on at least two critical success factor stated by the investigated group:
customer service and continuous improvement of processes.

7. Conclusions

SI integration is a complex field that can be out looked by various perspectives, according to the type of organization
or activity, as well as the existing technology. According to Linthicum [9], each organization has its own specific
business and integration needs. In consequence, there isn´t a unique technical solution that can be globally adopted.
Any situation requires a full analysis at all levels. The emergence of new technologies and standards inducting
integration, such as XML, EDI, RosettaNet, BizTalk and ebXML, may be used as a motivation for an integration
strategy in the organization.
In the case study investigated it is possible to conclude that an absence of strategy for IS/IT, and in particular to the
integration needs, resulted in absence of investments that would have positive impact in some critical success factors.
Specifically, online integration would affect positively customer service and business knowledge.

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