Systems Integration Lesson-3-System-Integration PDF

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...

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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 2 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 3 Figure 2-1 Functional Model of Organization (POSDCORB) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 4 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 5 Figure 2-2 Hierarchical Model of Organization Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 7 Figure 2-3 Matrix Structure of Organization Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 8 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 9 Figure 2-4 Functional Silos in Organization Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 10 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 11 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 12 Figure 2-5 Information Systems Architectures Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 13 Figure 2-6 IS as Categorized by Functional and Hierarchical Models Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 14 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 15 Steps in Integrating Systems 16 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) Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 17 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 18 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 19 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 20 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 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 21 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. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 22  SYSTEMS INTEGRATION WMSU