System integration in an organization refers to a process whereby two or more separate systems are brought together for the purpose of pooling the value in the separate systems into one main system. A key component of process consolidation within any organization is the utilization of IT as a means to achieve this end. As such, system integration as a means to cost reduction offers organizations the opportunity to adopt and implement lean principles with the attendant benefits. The implementation of lean techniques requires an adherence to stated methods to facilitate the elimination of wastage in the production of goods and services. In summary, the lean philosophy seeks to optimize the speed of good and service production, through the elimination of waste.
While analyzing some of the traditional sources of waste in organizational activities, things like overproduction, inventory, underutilized ideas, transmission of information and ideas, transportation of people and material, time wastage and over-processing stand out. The fact is that companies can eliminate a significant portion of waste through the utilization of IT to consolidate processes within their organization.
Adopting lean principles calls for the identification of all of the steps in the company value stream for each product family for the purpose of the eliminating the steps that do not create any value. In other words, this step calls for the elimination of redundant steps in the process flow. This is exactly what the utilization of IT to consolidate processes offers a company. For instance, the adoption of a central cloud system across a large organization with several facilities could increase efficiencies in that company. Such a company would drastically reduce the redundancies that used to exist in the different facilities, eliminate the instances of hardware and software purchase, maintenance and upgrade, modernize quality assurances processes and identify further opportunities for improvement.
Perhaps, from the company’s point of view, and from the perspective of lean process implementation, the most important factor is the effect it has on the bottom line. Reducing the number of hardware, eliminating the need for maintaining and upgrading hardware, removing the necessity for software purchase and upgrade across facilities also contributes to a significant reduction in operational costs. This reduction in the cost of operations leads to a corresponding increase in the profit margin of the company.
Applying system integration as a means to cost reduction can also lead to the reduction in the number of people needed to operate the previous systems that have been integrated into one primary unit. Usually, companies must hire people with specialized knowledge to operate and maintain the various systems. Such employees must also receive special training and frequent ongoing education to constantly stay informed of the latest trends in process management. With the integration of the system, the number of people needed to maintain the central system will be significantly reduced, also improving the security of information and other company trade secrets.
Based on an analysis of the specific needs that exist in a particular company environment, a system integration method that is peculiar to the needs of that organization will be worked out. Some companies may find it more cost-effective to use the services of independent cloud service providers. Others with more resources and facilities may decide to set up their own cloud service systems. Often, private cloud service system capabilities far exceed the requirements of the initiating company, meaning that they could decide to “sell” the extra “space” on their cloud network to other interested parties.
A company that fully applies the lean principles towards the integration of its systems will be able to take on additional tasks as a result of the system consolidation. This leads to an increase in performance, and more efficiency due to the seamless syncing of information in a timely and uniform manner.
Companies have to combine a top-down and a bottom-up approach towards their system integration methods. A top-down approach simply utilizes the overall system structure that is already in place as a starting point, or as a foundation. The bottom-up approach seeks to design new systems for integration into the system. Other methods of system integration include the vertical, star and horizontal integration methods. In the horizontal method, a specified subsystem is used as an interface for communication between other subsystems. For the star system integration method, the subsystems are connected to the system in a manner that resembles the depiction of a star; hence, the name. Vertical integration refers to the method of the integration of subsystems based on an analysis of their functionality.
The key to successful system integration for the purpose of cost reduction is to take a manual approach towards identifying the various applicable lean principles, with respect to the system integration process. For instance, when value has been specified, it becomes easier to identify value streams. The other process of removing unnecessary or redundant steps will be easier to follow when the whole project is viewed from the whole, rather than the part. Creating an integrated system needs some patience in order to work out kinks and achieve the desired perfect value that creates no waste.