SYSTEM INTEGRATION AND ARCHITECTURE

Chapter 1

Integration Drivers

INTRODUCTION

As the world continuously advance, business and education must keep pace and
immediately adopt to these changes in order to take advantage of the benefits that technological
advancement brings. System integration is becoming very popular nowadays. When the
integration is properly implemented, it will naturally increase productivity by improving the quality
of work.

Learning Outcome

At the end of the unit, the student should be able to:

 Identify Integration Issues upfront in the process of System Integration and should be able
to identify the best practices that ensure successful system integration.
 Have understanding of the technical and business process
 Understand the benefits and limitations of systems integration and its implication for
management and;
 Construct deeper understanding on the different roles of ERP, benefits and limits of ERP
and different types and vendors of ERP

Learning Content

What is System Architecture?

A system architecture or systems architecture is the conceptual model that defines the
structure, behavior, and more views of a system. An architecture description is a formal description
and representation of a system, organized in a way that supports reasoning about the structures
and behaviors of the system. A system architecture can comprise system components, the expand
systems developed, that will work together to implement the overall system.

There have been efforts to formalize languages to describe system architecture, collectively
these are called Architecture Description Languages (ADLs). Various organizations can define
systems architecture in different ways, including:

 The fundamental organization of a system, embodied in its components, their

relationships to each other and to the environment, and the principles governing its
design and evolution.
 A representation of a system, including a mapping of functionality onto hardware and
software components, a mapping of the software architecture onto the hardware
architecture, and human interaction with these components.

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  An allocated arrangement of physical elements which provides the design solution for
a consumer product or life-cycle process intended to satisfy the requirements of the
functional architecture and the requirements baseline.
 An architecture comprises the most important, pervasive, top-level, strategic inventions,
decisions, and their associated rationales about the overall structure (i.e., essential
elements and their relationships) and associated characteristics and behavior.
 A description of the design and contents of a computer system. If documented, it may
include information such as a detailed inventory of current hardware, software and
networking capabilities; a description of long-range plans and priorities for future
purchases, and a plan for upgrading and/or replacing dated equipment and software.
 A formal description of a system, or a detailed plan of the system at component level to
guide its implementation.
 The composite of the design architectures for products and their life-cycle processes.
 The structure of components, their interrelationships, and the principles and guidelines
governing their design and evolution over time.
 One can think of system architecture as a set of representations of an existing (or future)
system. These representations initially describe a general, high-level functional
organization, and are progressively refined to more detailed and concrete descriptions.

System architecture conveys the informational content of the elements comprising a system,
the relationships among those elements, and the rules governing those relationships. The
architectural components and set of relationships between these components that an architecture
description may consist of hardware, software, documentation, facilities, manual procedures, or
roles played by organizations or people.

A system architecture primarily concentrates on the internal interfaces among the system's
components or subsystems, and on the interface(s) between the system and its external
environment, especially the user. (In the specific case of computer systems, this latter, special,
interface is known as the computer human interface, AKA human computer interface, or CHI;
formerly called the man-machine interface.)

One can contrast a system architecture with System Architecture Engineering (SAE) - the
method and discipline for effectively implementing the architecture of a system:

 SAE is a method because a sequence of steps is prescribed to produce or to change

the architecture of a system within a set of constraints. SAE is a discipline because a
body of knowledge is used to inform practitioners as to the most effective way to
architect the system within a set of constraints.

In very broad terms, system integration is the process of connecting different sub-systems
(components) into a single larger system that functions as one. With regards to software solutions,
system integration is typically defined as the process of linking together various IT systems,
services and/or software to enable all of them to work functionally together.
The main reason for organizations to use system integration is their need to improve
productivity and quality of their operations. The goal is to get the organizations various IT systems

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to “talk to each other” through the integration, to speed up information flows and reduce
operational costs for the organization. But system integration is not used only to connect an
organization’s internal systems, but also third parties that the organization operates with.
System integration is the process of linking many elements to one single IT system.
Integration creates a coordinated system with joined databases and data sources.
System Integration Implies that user permit an interdependent Information System (IS) to
communicate or connect as well as exchange Information or Data effortlessly amongst each
other.

Figure 1. Integration Diagram

In this system integration diagram above, you can see external trading partner’s
communications and eCommerce data from Walmart, Target, Shopify, Amazon, and Magento
being connected to Acumatica, a back-end ERP solution, through the use of an integration
platform.

In this system integration flow diagram, external (front-end) data is moved from left to right,
transformed, and then automatically integrated into the internal (back-end) system.

Let’s focus on human communication for a second. If two people who speak in two different
languages want to communicate, they can try communicating with their arms, legs, and facial
expressions (which we surely all had to do a few times in our lives). Or they need a person who
can understand them both. That person, the translator has the same role as the integration
system.
“Integration is communication (translator) between systems.
Every system has its own language, the way it understands input commands and responds with
output. If another system wants to communicate, that system would need to know how, it needs
to know the language of other system.

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 Figure 2.Integration Module

However, integration doesn’t always have to act as a middleman, it can be done on one
side only. In technical terms, when a solution can connect to a database or some other system,
integration module is present inside that solution. Then, integration module translates to a
language of other system.
There are numerous ways and technologies and use cases of system integrations.

What is the Purpose of System Integration?

In short, the objective of integration is to put a puzzle together. There are scattered pieces
of an organization’s information subsystems that need to fit together into one well-coordinated,
cohesive architecture or integrated application mesh. It’s a complex building process that
connects an organization’s functions from varying systems, streamlining disparate systems,
including existing hardware, software (customized or out-of-box), and communications.
The value of an integrated system is an organization improves working relationships with
customers and partners while increasing work-flow efficiency and lowering operational costs for
the business. A system integrator can do this through business process management, computer
networking, enterprise application integration, and/or manual programming.

Implementing a modernized, B2B integration software platform infrastructure provides

multiple benefits and moves businesses into a future-ready state. Before you decide on an
integration platform, it is important to understand the different types of system integration.

3 Types of System Integration

Based on the area and the type of use, integration services can be divided into three categories:

 Enterprise Application Integration (EAI)

 Data Integration (DI)
 Electronic Document Integration/Interchange (EDI)

1. Enterprise Application Integration (EAI)

Enterprise Application Integration is a service-based integration. It’s a process that communicates
with different services, gathers data, and then proceeds with further steps based on desired action
or a workflow. Process can be triggered with the exposed service.

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 2. Data Integration (DI)
Usually, every company has a lot of different data sources (or databases). When you want to
consolidate your services into one central point of access you need data integration. Data
integration enables gathering of data from all services, aggregating, and transforming them into
a central place for interactive reporting, most commonly used for management.

3. Electronic Data Interchange (EDI)

Electronic Document Interchange is core business to business-oriented process. It functions on
paperless exchange of documents and electronic standards. By automating paper-based
business, companies save time and eliminate cost and errors.

If you are new to system integration world or you want to know how system integration can help
your business talk with solutions architect.

Nailing down suitable integrated solutions isn’t exactly simple. But selecting the right parts
to deploy and the precise location to deploy them depends on how well a company, as well as its
partners and vendors, understand the necessary processes, security needs, resources, and
business objectives. In turn, proper alignment with the business delivers better value from
integrating scattered systems, applications, services, and software.
However, solutions are more than just vertical and horizontal integration. Here are four key system
integration examples:

1. Vertical integration

What is vertical integration? The vertical integration definition under the construct of system
integration is a process of connecting unrelated subsystems as one functional unit with each
subsystem benefiting from another. This vertically integrated concept is also known as creating
“silos,” wherein each layer or element works upward. The simplest and fastest method only
comprises a handful of vendors, partners, and developers to begin with, but over time, then
expands as the process evolves and attempts to include newer functions to meet further business
requirements.
Let’s briefly consider a vertical integration example in radiology. A Radiology Information System
(RIS) tracks results and orders as a Picture Archive and Communication System (PACS)
preserves the image. This is where the term “silo” comes into play since the system is tightly
integrated to serve a specific and narrowly defined radiology business function, holding the data
in one place without coordinating with other siloes.

Some advantages to vertically integrated solutions are:

 Efficient supply chain coordination

 Streamlined vendor communication
 Enhanced competitiveness
 Greater control of processes
 Lower operating costs

2. Horizontal integration

What is horizontal integration (aka enterprise service bus (ESB))? The horizontal integration
definition under the construct of system integration is more than a one-off process. A specialized
subsystem is assigned to communicate with other subsystems. This integrated method also

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involves the creation of an application layer to allow programmatic connections between various
applications and to the ESB. In turn, it becomes a systemic system integration.
Some horizontal integration examples can be found throughout the healthcare sector, helping to
simplify integrated medical systems. Through customized development, ESB integration
interfaces can effectively work with customer systems generating data or requiring data
movement and integration. There is usually seamless communication to provide business rules
and policies for HIPAA standard compliance. The ERP functionality can be extended by also
implementing EDI software, managed file transfer (MFT) tools, and application connectors to
transfer, transform, and integrate data originating across numerous systems.
Some advantages to horizontally integrated solutions are:

 Higher operational efficiency

 Scalability for dynamic workloads
 An incremental or phased approach to SI
 High Availability for business continuity
 Expand to include additional technology
 Versatile communication capabilities

3. Point to Point Integration (Star Integration)

What is point to point integration (aka star integration)? The definition is in the name. Star
integration relies on the point-to-point method of integrating system components. When this
system integration method interconnects each system to the remaining subsystems, the series of
connections can look like star polyhedron. Although, the presentation of the diagram as a whole
can look messy and interwoven like a plate of spaghetti. In other words, the whole neat and tidy
IT infrastructure becomes quickly disorganized if a company approaches SI through point-to-point
integration.
An example of star integration is if a company segments its processes. A separate accounting
system would track finances; a web analytics system manages website traffic, and a customer
resource management (CRM) system would integrate Salesforce. Data from each system could
be pulled and combined as needed.

Thus, star integration is simultaneously the simplest and most complex version of SI. Currently,
star integration is often employed outside of a comprehensive technology strategy. For instance,
point-to-point integration may be used to meet the data analytics needs of a specific business unit
in sales or marketing while going unchecked by IT.

While the integrated star system cost is unpredictable, as integration fees and deployment time
can skyrocket when subsystems export heterogeneous or proprietary interfaces, there are some
limited advantages to this integration method, including:

 Quick application feature implementation

 Deployment flexibility
 Simplicity (granted there isn’t much IT scale)

4. Common data format

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 What is a common data format? To effectively ensure reliable and accurate integration,
most financial, accounting, customer management, and storage applications require specific and
often singular data formats.
A high-performance integration solution establishes a common format to remove the reliance for
an adapter to translate between various application formats. An enterprise application integration
(EAI) system providing an application-independent data format and data transformation service,
helping to alter between a common format and an application-specific format.
An example of a common data format is converting zip codes to city names by merging or dividing
objects from one app or database to another.
Some advantages to common data format integration are:
 Seamless data translation
 Automation

Key Questions for Overcoming Software Integration Problems

Asking the right questions before creating an IT system integration strategy and laying out
system integration project steps are both critical to creating an efficient path to the finish line. Here
are a few questions to keep in mind:

1. What is the correct integration strategy for a company?

 Don’t try to fit a square peg in a round hole. An IT department must justify an integration
recommendation to benefit vital B2B technology. Avoid forcing something to extract
functions and capabilities that are missing. Make sure a modernized IT infrastructure
is ready for a system integration method that includes data, application, business-to-
business (B2B), and legacy infrastructure. Planning appropriately with the right vendor
offers multiple benefits.

2. What integration interface options are offered?

 There several connector choices (B2B/EDI, RESTful, SOAP, Web Services, custom
development, etc.), and these options impact implementation, infrastructure, and
design. Think about the pros and cons of things like vertical integration vs. horizontal
integration. Make sure the vendor explains if the interface solution will be complex or
simplified.

3. How will this integration process affect current systems?

 An integration vendor should have full real-time visibility into an IT infrastructure from
the very beginning and before a project is even started. As explained earlier, a
disjointed ecosystem comprised of varying and constantly evolving protocols, formats,
technologies, and data use patterns can often cause a domino effect.

4. How will this integration project affect future processes?

 Implementing a new project likely won’t be a one-off venture. Take into account the
scalability of the business and IT ecosystems as well as what system integration offers
the best flexibility, versatility, and upgrade options going forward.

No doubt, there are a ton of moving parts when it comes to centralizing an organization’s
physical and digital IT infrastructure. The very thought of taking on a project to solve integration
and data movement challenges can seem overwhelming and complex.

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But the fact is, with the direction digital transformation is headed, not aligning and modernizing
cloud, API, and B2B technologies will ultimately just add complexity on top of convolution. Luckily,
approaching system integration with the right strategy can simplify it all.

How to Eliminate System Integration Issues & Complexities

Development teams and IT departments are no doubt wrestling with myriad new and existing
applications, as they embark on a digital transformation strategy, many with different architectures
and payload formats. A single integration platform, however, can provide the ability to connect
and centralize the best-of-breed systems and applications that enable business processes and
tackle software integration challenges.

 Consolidate Disparate Applications

Rather than continuing to rely on disparate, legacy, and outdated systems, modernizing your IT
environment allows you to streamline communications while gaining more automation, control,
and visibility, which strengthen those partner relationships.

 Built-In Connectors for the Most Common Applications

A centralized platform comes pre-loaded with applications, SaaS, and EDI

integration connectors to power an enterprise, whether it’s on-premise or in the cloud. The right
solution allows you to customize and integrate applications to suit your business needs without
any additional scripting.

 Automate Common Business Processes

Automation saves time and money by replacing manually initiated processes with software that
reduces errors, enhances your work and process flow while lowering expenses and improving
efficiency across the board.

 Reduce Dependency on Customized Solutions

Remaining dependent on customized solutions also means you sink more up-front costs into your
tools, and it requires developer sources that have inherent risks, as well as needing developers
to communicate throughout the software development cycle.

 Free Up Valuable Resources for Other Projects

By automating the majority of your business processes, your precious IT resources to spend
valuable time on other core tasks. A digital transformation strategy means that time-consuming
projects are no longer a burden on employee resources and bandwidth.

SYSTEM INTEGRATION CHALLENGES

System integration is not rocket science by any means, but there are a number of issues
that make system integration challenging for all organizations. According to certain studies, up to
70% of all integration projects fail in some aspect. This is probably more common for complex
projects, but sometimes even relatively simple system integration projects can run into trouble.

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Most of the failures are not due to the chosen integration technology itself or technical difficulties
with the systems in the scope, but due to project and change management issues.

WHAT IS THE SYSTEM INTEGRATOR’S ROLE?

On broad terms in the IT world, a Systems Integrator (“SI”) is regarded as a company that
specializes in implementing, planning, coordinating, scheduling, testing, improving and
sometimes maintaining IT systems. Good examples of SIs are, e.g., Deloitte, IBM, Accenture,
TCS, etc. They deliver large IT projects (e.g., ERP projects) trying to manage such projects and
the numerous suppliers involved. However, in terms of system integration, the role of the systems
integrator is narrowed down to enabling the data integrations between the different existing
systems of the end customer defined in the project scope. This may mean anything starting from
simple internal point-to-point connections to very complex many-to-many integrations both
internally and with third parties.

The systems integrators role in this equation is normally to design, implement and test the
integration solution, but the role of the systems integrator may also include continuous
management of the solutions as well as contacting third parties to enable connections with them.
Most importantly, however, the systems integrator brings to the table integration expertise that
the customer is otherwise lacking internally (or has a shortage of available internal resources at
hand).

Typical reasons for system integration project failure include for example:

1. CONSTANT CHANGES OF THE INTEGRATION LANDSCAPE

The longer the project takes, the more significant this issue becomes. To manage this risk,
time is of the essence, keeping the integration projects short improves the success rate of the
project. Further, an agile working methodology that can cater to changing requirements along
the way and also after the project is essential for the success of the systems integration.

2. LACK OF SKILLED RESOURCES

System integration requires expertise that is not easy to come by. Having excellent
integration technology is not enough if the required expertise is not there. Most companies
struggle to find and retain employees with the required skills set for system integration. The
best way to tackle this issue is to use an external third-party provider that can bring the needed
integration expertise into the table as required, in addition to providing the integration
technology.

3. LACK OF ACCOUNTABILITY
When you’re integrating many different sub-systems, the accountability for the success of
the integration becomes blurred very easily. You may have multiple stakeholders (e.g.,
vendors, system owners, etc.) in the equation, none of whom is responsible for the entire
system integration. They only care and handle their side of integration at best, but they will
not venture outside their own territory. But integration always has more than one party. So,
when something goes wrong, the situation turns very easily to finger pointing and blaming the
other parties, instead of someone “owning” the integration. If a single party handles the system

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 integration project, that party is also (often contractually) responsible for the success of such
a system integration project, and there is no ambiguity over accountability.

Aligning Strategies, Processes, and Information Technologies

A business alignment process guides information technology assessment, acquisition,

and implementation. This demonstrates how business strategies, teams, operations, processes,
and information technologies can be carefully and successfully aligned.

STRATEGIC ALIGNMENT MODEL

“Strategic alignment between IT and business occurs when IT is use to dynamically create
and exploit business opportunities. It can be use then to transform business process and also to
create business dislocations in the Market Place”.
(Boar: 1994)

STRATEGIC ALIGNMENT

The process of aligning an organization’s decisions and actions such that they support the
achievement of strategic goals.
Four fundamental Domains of strategic choice:

1. Business Strategy
2. Information Technology Strategy
3. Organizational Infrastructure and processes
4. Information Technology Infrastructure and processes

ABOUT…
 Inability to realize value from IT investment is, in part, due to lack of alignment
between Business and IT strategies in an organization.

 Strategy involves
o Formulation – decision making
o Implementation- Execution

 Two fundamentals
o Economic performance is directly related ability of management.
o Strategic fits inherently dynamic.

Examples

 Organizations leveraging IT capabilities to shape and support their business strategies.

o Eastman Kodak and IBM
o Baxter Healthcare Corp. launched Value link material management.
o Electronic filling of taxes in US

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 o Procter and Gamble Co. and Wal-Mart Stores- to manage the movement of
products from different channels.

 These highlights the different facets of aligning IT strategy and Business strategy.

STRATEGIC ALIGNMENT: The emerging concept

This is based on two building blocks
 Strategic fit- need for addressing External and Internal domains.
 Functional Integration- how choices are made in the IT domain those made
impact in the business domain.

Positioning of an organization in an IT Market place involves three choice.

 IT scope
 System competencies
 IT Governance

Fig. 3. STRATEGIC ALIGNMENT MODEL

DEEP DIVE
This model identifies the need to specify two types of integration between business
and IT domains.

 Strategic Integration- link between business and IT strategy

 Operational Integration- link between organizational infrastructure and
processes.
ALIGNMENT PERSPECTIVE

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 1. Strategic Execution – Anchored on the notation that business strategy has been
articulated and is driver of both organizational design and IS design
 Classic and heretical view of strategic management.
 Top management should play the role of “strategy formulator” and the IS manager
should be “strategy implementer”.

Figure 4.1. Strategic Execution Model

2. Technology Transformation – this involves implementing business strategies through

appropriate IT strategy and processes.

Examples: USAA, American Express

In contrast to strategic execution, this perspective is not constrained by current
organization design but seeks to identify best IT competencies and corresponding.

Figure 4.2. Technology Transformation

3. Competitive Potential – involves ne implementing IT strategies to impact new products

and services.
Examples: Baxter Healthcare , Federal express corp, American Express thru IDS
financial corp.

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 - In contrast to earlier perspective allow the adoptation of business
strategy via emerging IT capabilities.

Figure 4.3. Technology Transformation

4. Service Level- this involves building world class IS service organization.

 This requires understanding of external dimensions of IT strategy with
corresponding internal design of infrastructure and processes.
 Specific role of top management is that a “Prioritizer” and the role of IS manager
is one of Executive Leadership.

Figure 4.4. Service Level

Differences between Strategic Alignment and Traditional Linkages

 Predominant focus of information system and technology

 Management objectives

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  IS executive roles
 Dominant criteria for performance assessment

Characteristics Traditional Linakge Strategic Alignment

Predominant focus of information
system and technology
Management Objectives
I/S executive roles
Dominant criteria for performance
assessment
Internaal I/S function and organization
Ensuring that I/S activities are linked to
business requirements
Line Leadership and I/S functionl support
Cost and considerations
Internal I/S function and organization and
external IT marketplace
Selecting appropriate alignment perspective
for achieveing business objectives.
Multiple execcutive roles for line and I/S
managers
Multiple criteria

MANAGEMENT IMPLICATIONS
 Understanding of the enabling strategic choices that binds a business strategy with IS
infrastructures and IT strategy with organizational infrastracture.
 Reconceptualise the scope and power of IT strategy of the firm.
 The criteria to asses the performance of the IT function should be reonceptualised.
 Strategic alignment is a journey , not an event.
THE ENTERPRISE RESOURCE PLANNING SYSTEM AS A STRATEGIC SOLUTION

Enterprise systems (ES) are large-scale organizational systems which composed of

people, processes and information technology built around packaged enterprise system
software:
 is a set of packaged application software modules, with an integrated architecture,
that can be used by organizations as their primary engine for integrating data,
processes, and information technology, in real time, across internal and external
value chains;
 impound deep knowledge of business practices that vendors have accumulated
from implementations in a wide range of client organizations, that can exert
considerable influence on the design of processes within new client organizations;
 is a generic “semi-finished” product with tables and parameters that client
organizations and their implementation partners must configure, customize, and
integrate with other computer-based information systems to meet their business
needs.

ENTERPRISE SYSTEM SOFTWARE (ESS)

Enterprise system software (ESS) includes:

 Enterprise Resource Planning (ERP)
 Customer Relationship Management (CRM)
 Supply Chain Management (SCM)
 Product Life Cycle Management (PLM)
 Enterprise Application Integration (EAI)
 Data Warehousing
 Decision Support

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  Intelligent Presentation Layer
 eProcurement/eMarketplace/electronic exchange software

ENTERPRISE RESOURCE PLANNING SYSTEMS (ERP)

“ERP comprises of a commercial software package that promises the seamless

integration of all the information flowing through the company – financial, accounting, human
resources, supply chain and customer information” (Davenport, 1998).
“One database, one application and a unified interface across the entire enterprise” (Tadjer,
1998).
“ERP systems are configurable information systems packages that integrate information
and information-based processes within and across functional areas in an organization”
(Kumar & Van Hillsgersberg, 2000).
“ERP systems are computer-based systems designed to process an organization's
transactions and facilitate integrated and real-time planning, production, and customer
response” (O'Leary, 2001).
“A method for the effective planning and controlling of all the resources needed to take,
make, ship and account for customer orders in a manufacturing, distribution or service
company“ (American Production and Inventory Control Society, 2001).
Core software used by companies to coordinate information in every area of the business
such as planning, manufacturing, sales, marketing, distribution, accounting, financial, human
resource management, project management, inventory management, service and
maintenance, transportation and e-business monk.

Over all an ENTERPRISE RESOURCE PLANNING SYSTEMS (ERP) ERP programs help to
manage company-wide business processes, using a common database and shared management
reporting tools.
ERP software supports the efficient operation of business processes by integrating throughout a
business tasks related to sales, marketing, manufacturing, logistics, accounting, and staffing.

BUSINESS PROCESS
A business process is a collection of activities that takes one or more kinds of inputs (raw
material, information, etc.) and creates an output, such as a goods, report or forecast, that is of
value to the customer.
A business process is a collection of linked tasks that find their end in the delivery of a
service or product to a client. A business process has also been defined as a set of activities and
tasks that, once completed, will accomplish an organizational goal. The process must involve
clearly defined inputs and a single output. These inputs are made up of all of the factors that
contribute (either directly or indirectly) to the added value of a service or product. These factors
can be categorized into management processes, operational processes, and supporting business
processes.

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 Management processes govern the operation of a particular organization’s system of
operation. Operational processes constitute the core business. Supporting processes, such as
human resources and accounting, are put in place to support the core business processes.

The definition of the term “business process” and the development of this definition since
its conception by Adam Smith in 1776 has led to such areas of study as operations development
and operations management and to the development of various business management systems.
These systems, in turn, have created an industry for BPM software, seeking to automate process
management by connecting various process actors via technology.

A process is defined as a series of actions to achieve a certain objective. BPM processes are
continuous but also allow for ad hoc action. Processes can be simple or complex based on the
number of steps required, number of systems involved, etc. They can be short or long running,
with longer processes tending to have multiple dependencies and a greater documentation
requirement.

BUSINESS PROCESSES IN CEMENT INDUSTRY

THE SAMPLE OF THE FUNCTIONAL ORGANIZATION CHART

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 A functional Organizational chart is one of the organizational structure types which
organize staff based on their specific skills and knowledge. In a functional organization
structure, the entire organization is divided into smaller departments based on their specialization.

MAIN FUNCTIONAL AREAS OF COMPANY’S OPERATION

 Marketing and Sales (M/S)

o Marketing of a product
o Taking sales orders
o Customer support
o Customer relationship management
o Sales forecasting
o Advertising
 Supply Chain Management (SCM)
 Accounting and Finance (A/F)
 Human Resources (HR)

 Marketing and Sales (M/S)

o Supply Chain Management (SCM)
o Purchasing goods and raw materials
o Receiving goods and raw materials
o Transportation and logistics
o Scheduling production runs
o Manufacturing goods
o Plant maintenance
 Accounting and Finance (A/F)
 Human Resources (HR)

 Marketing and Sales (M/S)

 Supply Chain Management (SCM)

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  Accounting and Finance (A/F)
o Financial accounting of payments from customers and to suppliers
o Cost allocation and control
o Planning and budgeting
o Cash-flow management
 Human Resources (HR)

 Marketing and Sales (M/S)

 Supply Chain Management (SCM)
 Accounting and Finance (A/F)
 Human Resources (HR)
o Recruiting and hiring
o Training
o Payroll
o Benefits

Functional Information System is based on the various business functions such as

Production, Marketing, Finance and Personnel etc. These departments or functions are known
as functional areas of business. Each functional area requires applications to perform all
information processing related to the function.
FUNCTIONAL AREA INFORMATION SYSTEMS: MARKETING & SALES

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 FUNCTIONAL AREA INFORMATION SYSTEMS: SUPPLY CHAIN MANAGEMENT

FUNCTIONAL AREA INFORMATION SYSTEMS: ACCOUNTING & FINANCE

FUNCTIONAL AREA INFORMATION SYSTEMS: HUMAN RESOURCES

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 FUNCTIONAL MODELS describe business processes and the interaction of an
information system with its environment. In object-oriented systems development, two types of
models are used to describe the functionality of an information system: use cases and activity
diagrams. Use cases are used to describe the basic functions of the information system. Activity
diagrams support the logical modeling of business processes and workflows. Both can be used
to describe the current as-is system and the to-be system being developed. This chapter
describes business process and functional modeling as a means to document and understand
requirements and to understand the functional or external behavior of the system.
INFORMATION AND MATERIAL FLOWS IN A FUNCTIONAL BUSINESS MODEL

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 DATA FLOW WITHIN AN INTEGRATED INFORMATION SYSTEM

TYPICAL TECHNOLOGICAL CHARACTERISTICS OF AN ERP

ERP systems are large integrated computer software packages consisting of components, each
with a given set of functions.

All available functions operate on a shared set of data, thereby achieving integration.

The idea of these systems is to support every single aspect of organizational storage, processing,
retrieval, and distribution of data.

TYPICAL ERP SYSTEM MODULES

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 INFORMATION AND MATERIAL FLOWS IN A PROCESS BUSINESS MODEL

ADVANTAGES OF ERP SYSTEMS

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WHAT BENEFIT HOW

Reliable information access Common DBMS, consistent and accurate data, improved reports

Modules access same data from the central database, avoids

Avoid data and operations redundancy
multiple data input and update operations

Delivery and cycle time reduction delays Minimizes retrieving and reporting

Time savings, improved control by enterprise-wide analysis of

Cost reduction
organizational decisions

Easy adaptability Changes in business processes easy to adapt and restructure

Improved scalability Structured and modular design with “addons”

Vendor-supported long-term contract as part of the system

Improved maintenance
procurement

Global outreach Extended modules such as CRM

E-Commerce
E-business Internet commerce, collaborative culture

DISADVANTAGES OF ERP SYSTEMS

DISADVANTAGE HOW TO OVERCOME

Minimize sensitive issues, internal politics and raise general

Time-consuming
consensus

Cost may vary from thousands of dollars to millions

Expensive
Business process reengineering cost may be extremely high

The architecture and components of the selected system should

Conformity of the modules conform to the business processes, culture and strategic goals of
the organization

Single vendor vs. multi-vendor consideration, options for “best of

Vendor dependence
breeds”, long-term committed support

ERP system may have too many features and modules so the
Features and complexity
user needs to consider carefully and implement the needful only

Look for vendor investment in R&D, longterm commitment to

Scalability and global outreach
product and services, consider Internet-enabled systems

Extended ERP capability Consider middle-ware “add-on” facilities and extended modules
such as CRM and SCM.

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SUMMARY
In this chapter, we learn about Systems Integration Drivers, Aligning Strategies,
Processes, and Information Technologies and ERP programs help to manage company-wide
business processes, using a common database and shared management reporting tools.
We learn also the ERP software supports the efficient operation of business processes by
integrating throughout a business tasks related to sales, marketing, manufacturing, logistics,
accounting, and staffing
Teaching and Learning Activities
Let’s have brain exercise! Make your brain think beyond.
Question 1: What is System Integration?
Question 2: What is the Importance of System Integration into your daily lives?
Question 3: Why is ERP important in to business today?
Question 4: Can you cite benefits of SIA now?
Question 5: If you were to propose a project, what SIA project would you present? Give some
details.

Now that you have answered confidently the questions above, you are now ready to take
the quiz. Login to your Classroom app in your computer or phone and take the quiz, or contact
me if you have problem taking the online quiz.

Recommended learning materials and resources for supplementary reading.

Flexible Teaching Learning Modality (FTLM) adopted
Online (synchronous)

 Edmodo application. Instructions can be viewed at Clammie Cullanan @

https://www.edmodo.com/ & Clammie’s Art youtube.com

Remote (asynchronous)
 Printed Module/Soft Copy

Assessment Task
Login to your Edmodo app in your computer or phone and take the online quiz, or contact
me if you have problem taking the online activity.

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References:
1. Ellen F. Monk and Bret J. Wagner. (2009). Concepts in Enterprise Resource Planning. –
Boston: Course Technology Cengage Learning.
2. O’Leary, D. (2000). Enterprise Resource Planning Systems. Cambridge, U.K.:
Cambridge University Press.
3. Liaquat Hossain, Mohammad A. Rashid, Jon David Patrick. (2002). Enterprise Resource
Planning: Global Opportunities and Challenges. London, Hershey: Idea Group
Publishing.
4. Graeme Shanks, Peter B. Seddon and Leslie P. Willcocks. (2003). Second-Wave
Enterprise Resource Planning Systems: Implementing for Effectiveness. – U.K.:
Cambridge University Press

Prepared by: Clammie S. Cullanan,LPT

Instructor I

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