Systems Integration PDF

SYSTEMS INTEGRATION 1  Systems integration – to allow a heterogeneous IS to communicate or integrate and share information (or data) seamlessly with one another considered as a challenge in IS Systems integration – refers to the process of combining d...

SYSTEMS INTEGRATION 1  Systems integration – to allow a heterogeneous IS to communicate or integrate and share information (or data) seamlessly with one another considered as a challenge in IS Systems integration – refers to the process of combining different, often separate, computer systems and software applications, physically or functionally, into a unified whole. 2 Benefits of System Integration Increased Revenue and Growth Leveling the Competitive Environment Enhanced Information Visibility Increased Standardization 3 Limitations of System Integration High Initial Setup Costs Power and Interdepartmental Conflicts Long-Term and Intangible ROIs Creativity Limitations 4 ERP and System 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 system - is a strategic tool that helps the organization improve its operations and management Ø typically commercial software packages § Finance § Accounting § HR § Inventory § Procurement § Customer Service 5  Functional Silos 6 Source: http://processdriven.livejournal.com/923.html Functional Silos organizations are structured into division and department based on functionality of each division and department includes hiring people who are expert in doing that specific function organization structure tends to create ‘Silo Thinking’ Ø each department stands alone with less or no interaction with other department within the same organization 7  Business Process Business processes - cut across these functional silos different activities in a process require different skills process involves a number of people and departments vexample is the selling process to customer ü involves several departments such as Sales, Distribution, and Finance department ü also involves people in those departments 8 Business Processes and Information Systems Business process is a group of activities or tasks that are coordinated for achieving a business goal Business processes refer to the manner in which o Work is organized, coordinated, and focused to produce a valuable product or service o concrete workflows of material, information and o Ways in which organizations coordinate work, information and knowledge and the ways in which management chooses to coordinate work business - a collection of business processes business processes are tied to a specific functional area, for example: o sales and marketing - responsible for identifying customers o human resources - responsible for hiring employees Business Processes and Information Systems Other business processes cross many different functional areas and require coordination across departments. For example fulfilling customer order: Ø First sales department would receive a sales order. Ø The order will pass first to accounting to ensure the customer can pay for the order. Ø Then, production department pull the product from inventory and finally product needs to be shipped. Silos Silos - are basically compartmentalized operating units isolated from their environment Horizontal Silos The functional model POSDCORB (Planning, Organizing, Staffing, Directing, Coordinating, Reporting and Budgeting) categorization proposed 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. 11 Functional Model of Organization (POSDCORB) 12 Functional Silos Vertical Silos Organizations also divide roles in hierarchical (vertical) layers from strategic planning to management control and operation control. CEOs and Presidents plan long-term strategy midlevel management (e.g. VP, general managers) focuses on tactical issues and on the execution of organizational policy lower-level management task (e.g. supervisors) focuses 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. 13 Hierarchical Model of Organization 14 Business Process and Silos The problem of functional silos gave birth to business process re- engineering (BPR). Organizations focused on business processes such as : selling products product development order processing Business process provides an alternative view of grouping people and resources focusing on an organization’s activity, which involves interactions between sales , warehousing and accounting functional areas 15 Business Process and Silos cross-functional business process - involves people and resources from various functional departments working together, sharing information at any level of the organization Business process - moved management thinking away from a functional department to business process This organizational evolution from functional silos to business processes and to even customer centric approaches has had a big impact on the evolution of information systems. 16 Matrix Structure of Organization 17  Evolution of Information Systems in Organizations As business changes and expands, the results sometimes lead to a wide variety of Information Systems and computer architectures creating heterogeneous independent nonintegrated systems (silos). These systems lack control and configurations, so they become breeding ground for inconsistency, inaccurate and incompatible data and ultimately lead to mismanagement. A silo information system is inefficient, inaccurate, and expensive. These systems can not share data therefore require users to access multiple systems to integrate the data manually. Silos systems - focus on individual tasks or functions or both, rather than on process or team 18 Evolution of Information Systems in Organizations Organizations have been designed around functions for long time (e.g., sales, manufacturing, and HR). 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. 19  Functional Silos in Organization Silo environment is inefficient, inaccurate and expensive. Information is captured and re- entered several times and is not available in real time. Silo environments hamper enterprise decision making, because key information never makes it out of the different pockets of the organization in time for decision maker. In Silo environment, only selective employees from that department have access to information, customers, partners, and suppliers are dependent on there employees to provide them with answers. 20  IS Functionalization 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. 21 IS as Categorized by Functional and Hierarchical Models 22 Categories of IS by Functional and Hierarchical Models Office Automation System (OAS): support the activities of employees Transaction Processing System (TPS): record detailed information in all the major functional areas. Ø supports the organization's operations and record every transaction, whether it is a sale, a purchase, or a payment. Ø categorized by the functional areas in the organization (sales, purchasing, shipping, etc.) Management Information System (MIS): reporting systems that categorize and organize information as required by the midlevel managers. These report can be sales by product for a quarterly period. 23 Categories of IS by Functional and Hierarchical Models Decision Support Systems (DSS): are analytical systems that use mathematical equations to process data from TPS to assistant managers in conducting what-if analysis, identifying trends and in generally assisting in making data driven decisions. (e.g. go-seeking, pivot tables, etc using spreadsheet or more sophisticated such as OLAP software). Expert System also assist managers in their decision making using qualitative analysis that captures problem solving to identify solutions. Executive Support System (ESS): provide visual dashboard of strategic information to top level management in real time (snapshot of the organization performance 24 visual dashboard of strategic information 25 Integrated Systems Integrated systems - allow companies to accomplish something that will provide : the linking of demand and supply side functions to enable a quick and flexible response to changes Logical (human level) integration Develop information systems that allow organizations to share data with all of its stakeholders based on need and authorization. allowing access to a shared data resources by people from different functional areas of the organization Management needs to change organizational structures, processes, and employee roles and responsibilities. 26 Integrated Systems Physical (technical level) integration 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. Shifting the focus of employees from achieving the departmental goals to organizational goals - an essential task for management requires changes in traditional hierarchical management structures that are purely functionally oriented Teamwork is an essential component if organizations want to break functional silos and have workers from all levels of management collaborate on solving organizational problems. 27  Steps in Integrating Systems Silos Functional Organizational structure and organizations business processes Step 1 Resource Take an inventory of the various hardware and categorization software resources focusing on vendors, operating systems platforms, IS architectures used in these resources. Step 2 Compliance and Check whether the database and other standards technologies used in various applications are such supporting standards as JDBC/ODBC compliance for database. 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. 28  Steps in Integrating Systems (Cont’d) Step 5 Authentication and Single sign-on policy for application and data 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 help support desk support. Step 7 Back-up, recovery, A good back-up and recovery system is essential and security if there is a system failure or a major disaster. Step 8 Hardware and Develop organization standards and policy on software acquisition of new hardware and software which is standardization aligned with organization IT strategy. 29  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) 30  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 are typically commercial software packages that facilitate collection and integration of information related to various areas of an organization including finance, accounting, HR, customer services, etc. 31 ERP and Systems Integration ERP system - is a strategic tool that helps the organization improve its organization and management by integrating business processes and helping to optimize the allocation of available resources ERP systems - enable the organization to standardize and improve its business processes to implement best practices for its industry 32  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. Example: Dell computers: Receive an order – divide the order by major components and transmit to various units, partners and/or suppliers 33  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 (one database), Client level (standardizing on all client platforms), and at the Application level (common user interface design, back end access and back-up recovery plan). 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. 34 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. In today’s globally competitive environment, organizations have to compete both on lower cost, and by providing better customer services through alliances and partnerships with competitions. 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 in developing middleware Human challenges, such as impact on IT staff, department heads losing control of data, and rumors of layoffs 35 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. 36 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. 37 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. 38 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? 39 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. 40