COLLEGE OF INFORMATION AND COMPUTING SCIENCES

Unit 1

Overview of Systems Integration

Topic 1.1: Introduction to System Integration and Enterprise Resource Planning

Time Allotment: 1 hour

Learning Objectives

At the end of the session, the students should be able to:

1. Describe system integration

2. Understand what is an enterprise resource planning (ERP)
3. Understand the ERP goals
4. Determine the ERP components
5. Understand the ERP architecture and its type
6. Distinguish the system and business benefits and limitations of ERP systems.

Presentation of Contents

A. System Integration and Enterprise Resource Planning (ERP)

Systems integration means that you allow a heterogeneous

Information System (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.

Business organizations have become very complex. This is due to an

increased layer of management hierarchy and an increased level of
coordination across departments. Each staff role and management layer has
different information needs and requirements. As such, no single information
system can support all the business needs.

Prepared by: RICHARD R. AYUYANG, PhD Page 1 of 9

Associate Professor IV
CICS, CSU-Gonzaga
 COLLEGE OF INFORMATION AND COMPUTING SCIENCES

Figure 1-1 shows the typical levels of management and corresponding

information needs. Management is generally categorized into three levels:

 Strategic
 Middle or mid-management
 Operational

At the strategic level, functions are highly unstructured and resources

are undefined, whereas functions are highly structured and resources are
predefined at the operational level. The mid-management level is
somewhere in between depending on the hierarchy and organizational size.

The pyramid shape in Figure 1-1 illustrates the information needs at

each level of management.

The quantitative requirements are much less at the strategic level than
they are at the operational level; however, the quality of information needed
at the top requires sophisticated processing and presentation. The pyramid
should assess and display the performance of the entire organization.

For example, the CEO of a company may need a report that quickly
states how a particular product is performing in the market vis-à-vis other
company products over a period of time and in different geographical
regions.

Such a report is not useful to an operations manager, who is more

interested in the detailed sales report of all products he or she is responsible
for in the last month.

Prepared by: RICHARD R. AYUYANG, PhD Page 2 of 9

Associate Professor IV
CICS, CSU-Gonzaga
 COLLEGE OF INFORMATION AND COMPUTING SCIENCES

The pyramid therefore suggests that managers at the higher level

require a smaller quantity of information, but that it is a very high quality of
information. On the other hand, the operational-level manager requires more
detailed information and does not require a high level of analysis or
aggregation as do their strategic counter- parts. Today’s enterprise systems
are designed to serve these varied organizational requirements.

Enterprise systems, therefore, are a crucial component of any

successful organization today. They are an integral part of the organization
and provide computer automation support for most business functions such
as accounting, finance, marketing, customer service, human resource
management, operations, and more.

What is ERP?

Enterprise Resource Planning (ERP) systems are a major kind of

information system allowing organizations to integrate different systems into
one organization-wide application with an integrated database
management system.

Prepared by: RICHARD R. AYUYANG, PhD Page 3 of 9

Associate Professor IV
CICS, CSU-Gonzaga
 COLLEGE OF INFORMATION AND COMPUTING SCIENCES

 ERPs, shown in Figure 1-2, are basically integrated information

systems that support such enterprise functions as accounting,
financial, marketing, and production requirements of
organizations. This allows for real-time data flows between the
functional applications.
 ERP systems are comprehensive software applications that
support critical organizational functions. As shown in Figure 1-2,
they integrate both the various functional aspects of the
organization and the systems within the organization with those
of its partners and suppliers.
 ERP systems are comprehensive software applications that
support critical organizational functions. They integrate both the
various functional aspects of the organization and the systems
within the organization with those of its partners and suppliers.
 ERP systems are “Web enabled,” meaning that they work using
Web clients, making them accessible to all of the organization’s
employees, clients, partners, and vendors from anytime and
anyplace, thereby promoting the business units effectiveness.
Business units (BU) within organizations integrate personnel from
the various functional units to work together on a variety of
projects within an organization.

ERP systems goals:

 Make information flow be both dynamic and immediate,

therefore increasing the usefulness and value of the information.
 Acts as a central repository eliminating data redundancy and
adding flexibility.
 Increase supply chain efficiency,
 Increase customer access to products and services
 Reduce operating costs
 Respond more rapidly to a changing marketplace
 Extract business intelligence from the data.
 Integrate departments and functions across an organization
onto a single infrastructure that serves the needs of each
department.

ERP Components

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Associate Professor IV
CICS, CSU-Gonzaga
 COLLEGE OF INFORMATION AND COMPUTING SCIENCES

In order to perform the input, process, and output (IPO) phases of an

ERP system, it needs:

1. hardware (i.e., servers and peripherals)

2. software (i.e., operating systems and database)
3. information (i.e., organizational data from internal and
external resources)
4. process (i.e., business processes, procedures, and
policies)
5. people (i.e., end users and IT staff)

 The key components for an ERP implementation are hardware,

software, database, processes, and people. These components
must work together seamlessly for the implementation to be
successful.
 The implementation team must carefully evaluate each
component in relation to the others while developing an
implementation plan.
 Hardware, software, and data play a significant role in an ERP
system implementation.
 Failures are often caused by a lack of attention to the business
processes and people components. Both people involvement
and process integration will need to be addressed from the very
early stages in the implementation plan.
 Staff must be allowed to play a key role in the project from the
beginning.

Figure 1-4, each component must be layered appropriately and each

layer must support the efficiency of the other layers. The layered
approach also provides the ability to change layers without
significantly affecting the other layers. This can help organizations lower

Prepared by: RICHARD R. AYUYANG, PhD Page 5 of 9

Associate Professor IV
CICS, CSU-Gonzaga
 COLLEGE OF INFORMATION AND COMPUTING SCIENCES

the long- term maintenance of the ERP application because changes

in one layer do not necessarily require changes in other layers.

ERP Architecture

The architecture of the ERP implementation influences the cost,

maintenance, and the use of the system. A flexible architecture is best
because it allows for scalability as the needs of the organization change and
grow.

A system’s architecture is a blueprint of the actual ERP system and

transforms the high-level ERP implementation strategy into an information flow
with interrelationships in the organization.

The ERP architecture helps the implementation team build the ERP
system for an organization. The role of system architecture is similar to the
architecture of a home, which takes the vision of the homeowners with the
system components similar to the wiring, plumbing, and furnishings of a home.

The process of designing ERP system architecture is slightly different

from other IT architectures. Whereas other IT architectures are driven by
organizational strategy and business processes, if purchased, ERP architecture
is often driven by the ERP vendor. This is often referred to as package-driven
architecture.

The reason for this reversal is that most ERP vendors claim to have the
best practices of their industry’s business processes captured in their system
logic. This argument has proven very powerful in convincing organizations to
spend millions of dollars for the ERP package. In order to leverage this
investment and maximize the return on investment, an ERP implementation is
driven by the requirements contained in the package.

Prepared by: RICHARD R. AYUYANG, PhD Page 6 of 9

Associate Professor IV
CICS, CSU-Gonzaga
 COLLEGE OF INFORMATION AND COMPUTING SCIENCES

In the architecture of a large university, an ERP system can be very

complex and must be designed and tested thoroughly before implementing
it in the organization (Figure 1-5). The architecture sets the stage for
modifications or customizations to support an organization’s policies and
procedures, data conversion, system maintenance, upgrades, backups,
security, access, and controls.

Many organizations often make the mistake of ignoring the system

architecture stage and jumping directly into ERP implementation because
they have planned a “vanilla” or “as-is” implementation. This can be
disastrous because the organization will not be prepared for long-term
maintenance and upkeep of the system.

Types of architectures for an ERP system

1. Logical (see Figure 1-6) - The

logical architecture, shown in
Figure 1-6, focuses on supporting
the requirements of the end
users.

Prepared by: RICHARD R. AYUYANG, PhD Page 7 of 9

Associate Professor IV
CICS, CSU-Gonzaga
 COLLEGE OF INFORMATION AND COMPUTING SCIENCES

2. Physical or tiered (see Figure 1-7) focuses on the efficiency (cost, response
time, etc.) of the system.

The logical architecture provides the database schemas of entities

and relationships at the lowest tier, followed by the core business processes
and business logic handled by the system at the second tier. The third tier
provides details on the applications that support the various business functions
built in to the ERP system. The end users do not ever see the first and second
tiers because they interact primarily with the client–user interface application
tier that provides them access to the functional applications.

Benefits and Limitations of ERP

The system benefits and limitations of ERP systems are as follows:

1. Integration of data and applications across functional areas of the
organization (i.e., data can be entered once and used by all
applications in the organization, improving accuracy and quality of
the data).
2. Maintenance and support of the system improves as the IT staff is
centralized and is trained to support the needs of users across the
organization.
3. Consistency of the user interface across various applications means
less employee training, better productivity, and cross-functional job
movements.
4. Security of data and applications is enhanced due to better controls
and centralization of hardware, software, and network facilities.
5. Complexity of installing, configuring, and maintaining the system
increases, thereby requiring specialized IT staff, hardware, network,
and software resources.
6. Consolidation of IT hardware, software, and people resources can be
cumbersome and difficult to attain.

Prepared by: RICHARD R. AYUYANG, PhD Page 8 of 9

Associate Professor IV
CICS, CSU-Gonzaga
 COLLEGE OF INFORMATION AND COMPUTING SCIENCES

7. Data conversion and transformation from an old system to a new

system can be an extremely tedious and complex process.
8. Retraining of IT staff and personnel to the new ERP system can produce
resistance and reduce productivity over a period of time.

The business benefits and limitations of ERP systems are as follows:

1. Increasing agility of the organization in terms of responding to changes
in the environment for growth and maintaining the market share in the
industry.
2. Sharing of information across the functional departments means
employees can collaborate easily with each other and work in teams.
3. Linking and exchanging information in real time with its supply chain
partners can improve efficiency and lower costs of products and
services.
4. Quality of customer service is better and quicker as information flows
both up and down the organization hierarchy and across all business
units.
5. Efficiency of business processes are enhanced due to business process
reengineering of organization functions.
6. Retraining of all employees with the new system can be costly and
time consuming.
7. Change of business roles and department boundaries can create
upheaval and resistance to the new system.
8. Reduction in cycle time in the supply chain from procurement of raw
materials to production, distribution, warehousing, and collection

Summary

In summary, ERP systems are the mission-critical information systems in today’s

business organization. They replace an assortment of systems that typically existed in
those organizations (e.g., accounting, finance, HR, transaction processing systems,
materials planning systems, and management information systems). In addition, they
solve the critical problem of integrating information from various sources inside and
outside the organization’s environment and make it available, in real time, to all
employees and partners of the organization.

References

Enterprise Systems for Management by Luvai Motiwalla, Jeffrey Thompson

Prepared by: RICHARD R. AYUYANG, PhD Page 9 of 9

Associate Professor IV
CICS, CSU-Gonzaga