SYSTEMS

INTEGRATION
WMSU
What is System Integration?
• 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.

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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.

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Figure 2-1 Functional Model of Organization (POSDCORB)

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Functional Silos (Cont’d)
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.

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Figure 2-2 Hierarchical Model of Organization

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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.

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Figure 2-3 Matrix Structure of Organization

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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.

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Figure 2-4 Functional Silos in Organization

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IS Architectures
• Today’s IS can be configured using a wide range of system architectures
depending on the information needs of the organization.

• 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.
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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.

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Figure 2-5 Information Systems Architectures

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Figure 2-6 IS as Categorized by Functional and Hierarchical Models

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Systems Integration
Logical (Human Level)
• 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 (Technical Level)

• 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.

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Steps in Integrating Systems

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Benefits and Limitations of Systems
Integration
Benefits Limitations
Increased Revenue and Growth High Initial Set-up Costs

Leveling the Competitive Environment Power and Interdepartmental Conflicts

(due to the sharing of information)

Enhanced Information Visibility Long-term and Intangible ROI (Usually

several years)

Increased Standardization Creativity Limitations (Restricts

Creativity and Independence)

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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.

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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.

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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.

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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
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Implications for Management (Cont’d)
• 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.

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 SYSTEMS
INTEGRATION
WMSU