IS-447 Unit 2 (ch02) PDF

CHAPTER 2 SYSTEMS INTEGRATION 1 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Learning Objectives Understand the impact of organizational structure on information systems. Find out about the types of functional...

CHAPTER 2 SYSTEMS INTEGRATION 1 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Learning 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. 2 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Preview 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. 3 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 4 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Figure 2-1 Functional Model of Organization (POSDCORB) 5 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 6 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Figure 2-2 Hierarchical Model of Organization 7 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 8 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Figure 2-3 Matrix Structure of Organization 9 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 10 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Figure 2-4 Functional Silos in Organization 11 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 12 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 13 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Figure 2-5 Information Systems Architectures 14 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Figure 2-6 IS as Categorized by Functional and Hierarchical Models 15 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 16 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Steps in Integrating Systems 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. 17 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Steps in Integrating Systems (Cont’d) 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. 18 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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) 19 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 20 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 21 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 22 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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 23 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 24 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  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. 25 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Summary (Cont’d) 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. 26 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Review Questions 1. What are functional silos and how did they evolve in organizations? 2. What is the relationship between organizational functional silos and IS functional silos? 3. Compare and contrast centralized, decentralized, and distributed IT architectures. Which do you think is most appropriate for ERP and why? 4. List the horizontal and vertical levels of systems that exist in organizations. 5. What is logical integration and how is it different from physical integration? 27 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Review Questions (Cont’d) 6. Describe at least five steps involved in system integration. 7. What are the key benefits and limitations of system integration? 8. What is the role of ERP systems in system integration? 9. Summarize the role of management in systems integration. 28 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 29 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall