The Business of Systems Integration

The Business of Systems Integration

The Business of Systems Integration

The Business of Systems Integration

Synopsis

Over the past decade or so, systems integration has become a key factor in the operations, strategy and competitive advantage of major corporations in a wide variety of sectors (i.e. computing, automotive, telecommunications, military systems and aerospace). Systems integration is a strategic task that pervades business management not only at the technical level but also at the management and strategic levels. This book shows bow and why this new kind of systems integration has evolved into an emerging model of industrial organization whereby firms, and groups of firms join together different types of knowledge, skill and activity, as well as hardware, software and human resources to produce new products for the marketplace. This book is the first to systematically explore systems integration from a business and innovation perspective. Contributors delve deeply into the nature, dimensions and dynamics of the new systems integration, deploying research and analytical techniques from a wide variety of disciplines including the theory of the firm, the history of technology, industrial organization, regional studies, strategic management, and innovation studies. This wealth of research capability provides deep insights into the new model of systems integration and supports this with an abundance of empirical evidence. The book is organized in three main parts. The first part focuses on the history of systems integration. Contributors trace the early history of systems integration using different industrial examples. The second part presents theoretical and analytical aspects of systems integration. Contributions concentrate on the regulatory and cognitive features of systems integration, the relationships between systems integration and regional competitive advantage, and the way in which systems integration supports the competitive advantage of firms. The third part takes industry and firm-level approaches. Contributions focus on different sectors and highlight the specificity of systems integration in various industrial domains, stressing its importance for systems integration in the case of complex capital goods, such as aircraft and telecommunications equipment as well as consumer goods, such as personal computers and automobiles.

Excerpt

Airplanes, automobiles, an electric power system, the process of producing a microprocessor, a hospital, all are complex systems, in the sense that each has a number of different components or elements, and for effective performance all these have to fit together, and work together. Making things work together well is what the authors of this book call the business of systems integration. The book is largely concerned with complex product systems and how these are designed, produced, integrated, and provided.

Although many contemporary product systems have properties many of us consider annoying, for instance personal computers, or the check-in process at airports, by and large the systems that we have work tolerably well. How does this minor miracle happen?

Partly it is the result of Adam Smith's invisible market hand working decently well. Producers of gasoline have powerful incentives to have their gas work with the engines in contemporary automobiles. Tire manufacturers design their wares so that they will fit on the wheels of contemporary cars. In many cases market mechanisms tend to create standards so that things that need to fit together do so, to the mutual benefit of the firms that produce the different things that need to fit, as well as of their customers.

Partly it is the result of Alfred Chandler's visible hand. Companies often themselves produce the key components that must fit together in their systems product or service they are selling. Indeed Chandler's historical discussion of the rise of the large and modern corporation is to a considerable extent a story of how companies selling systems products vertically integrated so that they could control the design and production of the components as well as the system as a whole.

Partly the mechanisms that generate effective systems involve the mixture of market mechanisms, and internal coordination. Often firms in an industry have formed industry associations for the express purpose of establishing standards. Sometimes government agencies have been involved in this process. Companies designing and selling large, complex systems traditionally have outsourced a number of their components, at the same time that they have produced certain key ones in house.

It is clear that the business of systems integration is both about engineering design, and about organization and management. A company cannot design both the overall system and the details of all of its components if it intends to contract for or generally use the market for the procurement of many of its components. If companies designing and producing components are very strong, a systems assembler is more or less forced to rely on them for much of component design, and in effect build the system design around the available components.

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