SYSTEMS INTEGRATION

Overview
• Chapter 2 will discuss what systems integration is and why it is
important for organizations and understanding the role of
enterprise resource planning systems in systems integration
Objectives
• Understand the impact of organizational structure on information
systems.
• Find out about the types of functional silos in organizations.
• Learn about the evolution of information systems technology
generations and architectures and its influence on silo
environment.
• Know what systems integration is and why it is important for
organizations.
• Understand the role of Enterprise Resource Planning (ERP)
systems in systems integration.
Contents
• Functional Silos
• Business Process and Silos
• Evolution of IS in Organizations
• Systems Integration
• ERP and Systems Integration
Introduction
• Systems integration means that you allow a heterogeneous
(hodgepodge) IS to communicate or integrate and share
information (or data) seamlessly with one another.

• Systems integration is a key issue for an organization for its

growth - Management needs to pay close attention to this issue.

• ERP systems are a major kind of enterprise information system

allowing organizations to integrate different systems into one
organization-wide application with an integrated database
management system.
Functional Silos
• Silos are basically compartmentalized operating units isolated
from their environment.

Horizontal Silos
• The POSDCORB (Planning, Organizing, Staffing, Directing,
Coordinating, Reporting and Budgeting) categorization by Luther
Gulick led to a set of formal organization functions such as
control, management, supervision, and administration starting in
late 1930s.

• Classification of organizations into departments like Accounting

and Human Resources, reflects the breaking of complex tasks into
smaller manageable tasks that could be assigned to a group of
people who could then be held responsible.
Figure 2-1 Functional Model of
Organization (POSDCORB)
Functional Silos (Cont.)
Vertical Silos
• Organizations also divided roles in hierarchical layers from
strategic planning to management control and operation control.

• CEOs and Presidents plan long-term strategy, midlevel

management focuses on tactical issues and on the execution of
organizational policy whereas the lower-level management task is
to focus on the day-to-day operations of the company.

• As organizations get big and complex they tend to break functions

into smaller units and assign staff the responsibility for these
activities allowing them to manage complexity as well as
specialize in activities that enhance productivity and efficiency.
Figure 2-2 Hierarchical Model of
Organization
Business Process and Silos
• The problem of functional silos gave birth to business process re-
engineering (BPR).

• The cross-functional business process can involve people and

resources from various functional departments working together,
sharing information at any level of the organization.

• The cross-functional organizational structure breaks the

functional silos by opening up the informational flows from one
department to another.
Figure 2-3 Matrix Structure of
Organization
Evolution of Information Systems
in Organizations
• The functions of an organization (e.g., sales, manufacturing, and
HR) are important as they provide a structure by which an
organization functions smoothly.

• A silo information system is inefficient, inaccurate, and expensive.

• The system creates bottlenecks for everyone and information is not
available in real-time.

• The evolution of IS suggests that its role has generally been to

support evolving information needs of the organization.
Figure 2-4 Functional Silos in
Organization
IS Architectures
• Rapid advances in computer and networking technologies and
changing organizational dynamics, drive the emergence of new
information system models.

• Web-based systems today use a distributed architecture which

allows the sharing of applications and data resources between the
client and the server computers.

• In this configuration, personal computers are connected via a

network to a Web server that provides a window to an application
and database server, which could be a mainframe or another type
of computer.
IS Functionalization
• In addition to serving the different management levels, IS also
supports major business functions, such as manufacturing,
marketing, accounting, finance, and HR.

• Each functional area has different information needs and report

requirements.

• Each functional area in an organization also has multiple levels of

management, each requiring different levels of analysis and
details of information.
Figure 2-5 Information Systems
Architectures
Figure 2-6 IS as Categorized by
Functional and Hierarchical Models
Systems Integration
Logical
• Develop information systems that allow organizations to share
data with all of its stakeholders based on need and authorization.
• Management needs to change organizational structures,
processes, and employee roles and responsibilities.

Physical
• Provide seamless connectivity between heterogeneous systems.
• Business process reengineering involves changing the mindset of
the employees in the organization, encouraging and enabling
them to do their tasks in a new way.
Steps in Integrating Systems
Steps in Integrating Systems
(Cont.)
Benefits and Limitations of
Systems Integration
ERP and Systems Integration
• Enterprise Resource Planning (ERP) systems are integrated,
multi-module application software packages designed to serve
and support several business functions across an organization.

• ERP systems are typically commercial software packages that

facilitate collection and integration of information related to
various areas of an organization.

• ERP systems enable the organization to standardize and improve

its business processes to implement best practices for its industry.
ERP’s Role in Logical Integration
• ERP systems require organizations to focus on business process
rather than on functions.

• ERP systems come with built-in processes for a wide variety of

common business functions.

• An ERP system implements best practices via specific built-in

steps for processing a customer order in terms of:
• order entry.
• routing through departments.
• communication of output to various parties.
ERP’s Role in Physical Integration
• Before installing the ERP system, an organization may have to
upgrade or install middleware or get rid of their legacy system’s
hardware and software.

• Integration is also required at the Data level, Client level, and at

the Application level.

• A good ERP implementation improves operational efficiency with

better business processes that focuses on organizational goals
rather than on individual departmental goals.

• Improved efficiency with a paperless flow and electronic data

interchange (EDI) or business-to-business (B2B) commerce
environment with partners.
Implications for Management
• Silos do not work.
• Most organizations lose out in the long-term when information is not
shared in real time across the functional boundaries within the company.

• System integration has many hidden benefits.

• Allows decision making to be cascaded to all departments
• Allows employees at lower-levels to make better decisions while
interacting with clients or partners.

• System integration has many challenges.

• Replacing old hardware and software
• Working with IT consultants
• Human challenges, such as impact on IT staff, department heads losing
control of data, and rumors of layoffs
Implications for Management
(Cont.)
• Systems integration raises many new ethical issues.
• Possibility of some employees exploiting information for personal
advantage and illegal access of information.

• Remedies can consist of:

• Develop policies on ethical usage of information.
• Install proper security software and hardware (like firewalls).
• Allocate resources for training and education on accessing information.
Lesson Overview
• In fact, systems integration is a key issue for an organization for its growth; therefore,
management needs to pay close attention to this issue.
• Enterprise information system plays a key role in systems integration, as discussed in this
chapter.
• ERP systems are a major kind of enterprise information system that allows organizations to
integrate the heterogeneous systems into one organization-wide application with an
integrated database management system.
• Enterprise resource planning (ERP) systems are integrated, multimodule application
software packages designed to serve and support several business functions across an
organization.
• An ERP system is a strategic tool that helps the organization improve its operations and
management by integrating business processes and helping to optimize the allocation of
available resources.
• These systems are typically commercial software packages that facilitate collection and
integration of information related to various areas of an organization, including finance,
accounting, HR, inventory, procurement, and customer service.
• By becoming the central information center of the organization, ERP systems allow the
organization to better understand its business, direct resources, and plan for the future.
• ERP systems enable the organization to standardize and improve its business processes to
implement best practices for its industry.
Summary
• Functional silos categorize an organization’s tasks and activities
into groups to improve efficiency and responsibility of work in the
organization.

• Silos can improve productivity, but they often lead employees to

achieve departmental goals rather than overall organizational
goals.

• IS over the years have been divided horizontally by functions and

vertically by hierarchical levels.

• IS architecture has evolved from centralized mainframe

architecture to personal computers with distributed or client–
server architecture.
Summary (Cont.)
• In order for systems integration to be successful, organizations
have to focus both on the human or logical level and on the
physical or systems level.

• ERP systems thus make the process of systems

integration easier, but they are expensive and often require
organizations to start from scratch.

• System integration involves the whole organization, requiring top-

management support and resources for a long-term period.
Management must be ready to face the human and ethical
challenges in a systems integration project.
Question & Answers