SCSP 3744

ENTERPRISE SYSTEM DESIGN

AND MODELING
 CHAPTER 2
1.1 SYSTEM INTEGRATION
 System Integration
• Systems integration means
- Allow a heterogeneous (hodgepodge) IS to
communicate or integrate and share information (or
data) seamlessly with one another.

• A key issue for an organization for its growth

• 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.
 CHAPTER 2
1.1.1 Horizontal and Vertical Silos
 Horizontal Silos
• Silos - 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.
 Horizontal Silos

• Classification of organizations into departments

- E.g: 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)
 Vertical Silos

Vertical Silos
• Organizations 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.
 Vertical Silos

Vertical Silos
• 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.
 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 IS in Organization

• The functions of an organization (e.g., sales,

manufacturing, and HR):
- 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.
 IS Architecture

• 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.
 IS Architecture
• 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.

Figure 2-5 Information Systems Architectures

 IS Functionalization

• IS also supports major business functions:

• E.g.: 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.
IS Functionalization
 System Integration

1. 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.
 System Integration

2. 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 System

Step 1 Resource Instituting IT support for an integrated systems

categorization environment is necessary to avoid support and
maintenance problems with the integrated
system.
Step 2 Compliance and Develop a single sign-on policy because all
standards employees and external partners will need
access to an integrated system from anywhere,
anytime.
Step 3 Legacy systems Develop a policy in support of older legacy
support applications.

Step 4 Middleware tools Middleware tools are essential for integration in

the short term if existing applications must be
used by the organization.
 Steps in Integrating System

Step 5 Authentication Single sign-on policy for application and data

and authorization access because all employees and external
policies partners will need access to an integrated
system from anywhere, anytime.

Step 6 Centralized IT The IT staff needs to be able to support all

services and applications and platforms with a centralized IT
support help desk support.

Step 7 Back-up, A good back-up and recovery system is

recovery, and essential if there is a system failure or a major
security disaster.

Step 8 Hardware and Develop organization standards and policy on

software acquisition of new hardware and software which
standardization is aligned with organization IT strategy.
 Benefits and Limitation of System 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)
 ERP and System Integration

• ERP systems are:

1. Integrated, multi-module application software
packages designed to serve and support several
business functions across an organization.
2. Commercial software packages that facilitate
collection and integration of information related to
various areas of an organization.
3. 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.
 ERP’s Role in Logical Integration

• An ERP system implements best practices via specific

built-in steps for processing a customer order in terms
of:
1. Order entry.
2. Routing through departments.
3. 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.
 ERP’s Role in Physical Integration

• 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.
 Implication 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.
 Implication for Management
• 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

• Systems integration raises many new ethical

issues.
• Possibility of some employees exploiting
information for personal advantage and illegal
access of information.
 Implication for Management

• 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.