SYSTEM
INTEGRATION
Learning
Outcomes
1. discuss the impact of organizational structure on information
systems;
2. identify the types of functional silos in organizations;
3. trace the evolution of information systems technology generations
and architectures and its influence on the silos environment;
4. expound what systems integration is and why it is important for
organizations;
5. discuss the role of enterprise resource planning (ERP) in system
System
Integration
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“ Systems integration means that you
allow a heterogeneous IS to
communicate or integrate and
share information ( or data)
seamlessly with one another.
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System
Integration ▸ Systems integration is 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.
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Functional Silos
“Silos are basically
compartmentalized
operating units
isolated from their
environment.”
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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. 7
Functional Model of
Organization (POSDCORB)
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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. 9
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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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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Functional
Silos in
Organizati
on
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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.
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Information Systems
Architectures
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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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IS as Categorized by Functional
and Hierarchical Models
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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.
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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. 23
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.
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