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42 Chapter 2 • Systems Integration

EVOLUTION OF IS IN ORGANIZATIONS
As described earlier, the role of information systems has been and always will be one of support-
ing business activities and enhancing the workers efficiency. Over time, however, as business
changes and expands, systems need to change to keep pace. The result is sometimes a wide
variety of information systems and computer architecture configurations creating heterogeneous
or independent nonintegrated systems. These systems ultimately create bottlenecks and interfere
with productivity. These systems lack control and coordination. They become the breeding
ground for inconsistent, inaccurate, and incompatible data and ultimately lead to mismanage-
ment. The information systems that work independently and are grouped by the various
functions and departments, or both, are known as silos. These systems cannot share data and
therefore require users to access multiple systems to integrate the data manually. As a result, the
chance increases for data errors and inconsistencies. Silo systems focus on individual tasks or
functions, or both, rather than on a process and team. In addition, these systems make it very
difficult for organizations to be customer-centric because data cannot be assimilated from differ-
ent functional areas to address customer needs. For example, if a customer support process
requires information to be pulled from the accounting and the shipping departments, the task
requires access to two separate systems and then visually matching the shipping information
with the billing information. This can be time consuming and prone to errors, resulting in poor
customer support.
The essential problem with functional silos is that organizations design, manage, and
reward their employees and managers by functional performance, yet they deliver value to
customers via cross-functional processes. Today, many organizations reward employees on their
performance on multiple areas that includes personal performance, business unit performance,
and corporate-level performance.
Getting the right balance between functional management and process delivery is at the
heart of organizational performance. Organizations have been designed around functions for a
very long time and for good reason. The functions of an organization (e.g., sales, manufacturing,
claims assessment, HR, and warehouse) are important. They provide a structure by which an
organization functions smoothly. For example, the warehouse department and the warehouse
manager are essential for maintaining control over the product inventory.
When the emphasis is strictly on functional performance, organizations tend to create silos
that optimize functional outcomes, perhaps at the expense of end-to-end process performance.
Organizational performance cannot be optimized by focusing on process tunnels at the expense of
functional operations. Replacing functional silos with process tunnels will be a self-defeating func-
tion because it will only make the process efficient without delivering value to the customer. In
today’s organization, a silo information system creates bottlenecks for employees, vendors, and
clients. As shown in Figure 2-4, a 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 and overall effectiveness because key information
never makes it out of the different pockets of the organization in time for the decision maker. In a silo
system environment only selective employees from that department have access to information;
customers, partners, and suppliers are dependent on these employees to provide them with answers.
For example, before UPS implemented its publicly accessible package tracking system for
customers, partners, and suppliers, there were tremendous bottlenecks in finding the status of a
package in UPS’s vast distribution network. It was costing UPS millions of dollars to answer
customer queries on package status. Implementing an integrated package tracking system was a