SYSTEM INTEGRATION AND ARCHITECTURE 1
MODULE 1:
OVERVIEW OF SYSTEMS
INTEGRATION:
CHALLENGES AND
DRIVES
RODELINE A. DE JUAN
INSTRUCTOR
SYSTEMS INTEGRATION
Systems integration means Systems integration is a Enterprise Resource Planning
that you allow an key issue for an (ERP) systems are a major
heterogeneous organization for its growth kind of information system
Information System (IS) to – Management needs to allowing organizations to
communicate or integrate pay close attention to this integrate different systems
and share information (or issue. into one organization-wide
data) seamlessly with one application with an integrated
another. database management
system.
FUNCTIONAL SILOS
Silos are basically compartmentalized
operating units isolated from their
environment.
HORIZONTAL SILOS VIRTICAL SILOS
Classification of – Organizations also divided
organizations into roles in hierarchical layers from
departments like Accounting strategic planning to
and Human Resources, management control and
reflects the breaking of operation control.
– CEOs and Presidents plan
complex tasks into smaller
long-term strategy, midlevel
manageable tasks that could management focuses on
be assigned to a group of tactical issues and on the
people who could then be execution of organizational
held responsible. 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.
INFORMATION SYSTEMS
IN ORGANIZATION
Information Systems are a critical component of a
successful organization today.
Information Systems play a major role in primary
and secondary activities of an organization’s value
chain.
– The evolution of IS suggests that its role has
generally been to support evolving information
needs of the organization.
Information Systems provide a high level of
computer automation to support business
functions such as: Accounting, Finance, Marketing,
Customer Service, Human Resource Management,
Operations, Manufacturing
– Supporting horizontal silos of organization
INFORMATION SYSTEMS
IN ORGANIZATION
Information systems provide analytical and
decision making support for management, which is
generally categorized into
three levels- Strategic, Middle, and Operational.
– Supporting vertical silos of organization
Each business functions and management levels
has different information requirements.
FUNCTIONAL SILOS IN ORGANIZATION
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.
To increase efficiency and productive,
organizations developed various information
systems to support each major activity and
responsibility.
MANAGEMENT PYRAMID WITH
INFORMATION REQUIREMENTS
Each management level has different information requirements.
IS AS CATEGORIZED BY FUNCTIONAL AND
HIERARCHICAL MODELS
INFORMATION SILOS AND
SYSTEMS INTEGRATION
Over time, organizations created a hodgepodge
of independent nonintegrated systems
ultimately creating bottlenecks and interfering
with productivity.
Organizations need to be agile and flexible and
will require their
information systems to have integrated data,
applications, and resources
from across the organization.
A silo information system is inefficient,
inaccurate, and expensive.
– The system creates bottlenecks for
everyone and information is not available
in real-time.
INFORMATION SILOS AND
SYSTEMS INTEGRATION
To compete effectively, organizations have to be
customer focused.
– This requires cross-functional integration
among the accounting, marketing
and other departments of the organization.
The cross-functional integration 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.
SYSTEMS INTEGRATION
Logical or 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 or 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.
BENEFITS AND LIMITATIONS OF SYSTEMS
INTEGRATION
IMPLICATIONS OF 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 OF MANAGEMENT
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.
INTEGRATED SYSTEMS - ENTERPRISE
RESOURCE PLANNING (ERP)
Goal of ERP is to integrate
departments and functions
across an organization into
a single infrastructure
sharing a common database
and serving the needs of
each department.
ERP systems replace an
assortment of systems that
typically existed in
organizations. Moreover,
ERP solves critical problem
of integrating information
from different sources and
makes it available in real-time
ERP AND SYSTEMS INTEGRATION
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 AND SYSTEMS INTEGRATION
ERP systems are the first generation of enterprise
systems meant to integrate data and support all
the major functions of organizations.
ERP systems integrate various functional aspects of
the organization as well as systems within the
organization of its partners and suppliers.
The goal of an ERP system is to make the
information flow dynamic and immediate,
therefore, increasing its usefulness and value.
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-
tobusiness
(B2B) commerce environment with
partners.
IMPLICATIONS FOR MANAGEMENT
In the early days of ERP implementation most
management did not understand the magnitude of
issues an organization has to consider before,
during, and after implementation.
– ERP systems are very different from
conventional packaged software, such as
Microsoft Office and others.
ERP systems implementation is a complex
organizational activity.
– There are no shortcuts when it comes to
implementing an enterprise system.
IMPLICATIONS FOR MANAGEMENT
It is important to evaluate and learn from the
successes and failures.
ERP systems implementation requires strong
project management oversight.
EVOLUTION OF ERP
E-BUSINESS AND ERP
ERP SYSTEMS COMPONENTS
ERP ARCHITECTURE
The architecture of an ERP system influences the
cost, maintenance, and the use of the system.
The ERP architecture helps the implementation
team build the ERP system for the organization.
If purchased, ERP architecture is often driven by
the vendor (Package-Driven Architecture).
There are two types of architectures.
– Logical focuses on the supporting needs of the
end users.
– Physical focuses on the efficiency of the
system.
LOGICAL ARCHITECTURE OF AN ERP SYSTEM
TIERED ARCHITECTURE EXAMPLE OF ERP
SYSTEM
SYSTEM BENEFITS OF AN ERP
SYSTEM
Integration of data and applications across
functional areas (i.e., data can be entered once
and used by all applications; thus improving
accuracy and quality of the data).
Improvements in maintenance and support as IT
staff is centralized.
Consistency of the user interface across various
applications means less employee training, better
productivity, and cross-functional job movements.
Security of data and applications is enhanced due
to better controls and centralization of hardware.
SYSTEM LIMITATIONS OF AN ERP
SYSTEM
Complexity of installing, configuring, and
maintaining the system increases, thus requiring
specialized IT staff, hardware, and network facilities.
Consolidation of IT hardware, software, and people
resources can be cumbersome and difficult to
attain.
Data conversion and transformation from an old
system to a new one can be tedious and complex
process.
Retraining of IT staff and end users of the new
system can produce resistance and reduce
productivity.
BUSINESS BENEFITS OF AN ERP
SYSTEM
Agility of the organization in terms of responding to
changes in environment for growth and maintaining
market share
Sharing of information across functional areas helps
collaboration between employees.
Linking and exchanging information in real-time with
supply-chain partners improves efficiency leading to
lower costs.
Better customer service due to quicker information
flow across departments.
Efficiency of business processes are enhanced due
to the re-engineering of business processes.
BUSINESS LIMITATIONS OF AN ERP
SYSTEMS
Retraining of all employees with the new
system can be costly and time consuming.
Change of business roles and department
boundaries can create upheaval and
resistance to the new system.
ERP IMPLEMENTATION
Before implementing ERP, an organization has to
plan and understand the life cycle of these systems.
The key to a successful implementation is to use a
proven methodology, take it one step at a time, and
begin with an understanding of the ERP life cycle.
ERP system implementations are very risky, and
using a well-defined project plan with a proven
methodology will assist in managing those risks.
There must be a strong well-communicated need to
make the change from the existing information
systems/applications to an ERP system.
ERP IMPLEMENTATION
SOFTWARE AND VENDOR
SELECTION
It is best for an organization that does not
have the experience in developing ERP
systems to purchase one on the market.
Before selecting a vendor, the organization
must carefully evaluate its current and future
needs in enterprise management systems.
Review the organization’s existing hardware,
network, and software infrastructure, and the
resources available for the implementation.
VENDOR EVALUATION
Business functions or modules supported by their
software
Features and integration capabilities of the software
Financial viability of the vendor as well as length of
time they have been in business
Licensing and upgrade policies
Customer service and help desk support
Total cost of ownership
IT infrastructure requirements
Third-party software integration
Legacy systems support and integration
Consulting and training services
Future goals and plans for the short and long term
OPERATIONS AND POST-
IMPLEMENTATION
Going live (“Go-live”) is one of the most critical
points in a project’s success.
It is vital to focus the efforts of all project teams to
ensure that task and activities are completed before
going live.
Five areas of stabilization are important:
• Training for end-users
• Reactive support (i.e., help desk for troubleshooting)
• Auditing support to make sure data quality is not
compromised by new system
• Data fix to resolve data migration and errors
revealed by audits
• New features and functionalities to support the
evolving needs of the organization
PEOPLE AND ORGANIZATION
Project Management
For an ERP system to be implemented
successfully, project management must provide
strong leadership, a clear and understood
implementation plan, and close monitoring of
the budget.
Consultants
It is often the case for organizations without
much ERP implementation experience to use
implementation partners such as consultants.
PEOPLE AND ORGANIZATION
Change Management
Role is essential because it prepares for changes
to how business is done. In implementing new
systems, communicating, preparing, and setting
expectations is as important as providing training
and support.
Business Process Re-engineering
Business processes will need to be changed,
adjusted, or adapted to the new system to use the
functionality of an ERP system fully.
Global, Ethical and Security Management
Outsourcing overseas, ethical issues, and
problems with system security have also attracted
a lot of attention in ERP implementation.
ERP VENDOR
ERP VENDORS
SAP
SAP is the recognized global leader among ERP
vendors with over 12 million users. Its solutions are
for all types of industries and for every major market.
www.sap.com
Oracle/Peoplesoft
As the second largest ERP vendor, Oracle provides
solutions divided by industry category and promises
longterm support for customers of PeopleSoft-
(acquired in 2004). www.oracle.com
Microsoft Dynamics
Formerly Microsoft Business Solutions or Great Plains,
Microsoft Dynamics is a comprehensive business
management solution built on the Microsoft
platform.
ERP VENDORS
Infor
The world’s third largest provider of enterprise
software. It delivers integrated enterprise solutions in
supply chain, customer relationship and suppliers
management.
Lawson
Industry-tailored software solutions that include
enterprise performance management, distribution,
financials, human resources, procurement, and
retail operations. www.Lawson.com
THANK YOU
FOR YOUR ATTENTION
