Perceived value of information systems integration

Complex, large organisations and multi-divisional businesses require the design of an enterprise architecture plan in order to support the businesses‟ access to data and systems. Data should be in formats that are accessible and usable by many different users, and of sufficient quality to share and adopt in business processes.

Zachman‟s framework (1997) differentiates data, processes and technology factors for the architecture plan, by thinking about the evolution through time that the organisation will have. This means the architecture plan takes into consideration the evolution of the information systems, the user evolution, as well as the changes in the policies, experiences, culture, documentation and strategy support.

Additionally, the stage of evolution of the organisation modifies the use of tools and approaches to problem solving. Gottschalk (2008) indicates the stages of the design of organisational systems, such as people to technology, people to people, people to documents, and people to systems. Each one of these options could need standardization of “personal productivity tools”. Maier and Hadrich (2008) indicate additionally, the need of a platform with: a much different functionality with IT, human centric design and that integrates services as well as including the architecture that connects knowledge shared and services.

The steps in the process of defining a business strategy (David 1999) are presented independently, but it is not clear how the areas involved have to be coordinated in order to achieve goals and gain value from common efforts. A key element in this strategy

model is the concept of the business model and how to organise the company around it based on information systems support. Organisation processes consume information from various sources and with different applications, the orientation to integration policies might be positive to the organisation.

For example, Earl (2000) explains the evolution of organisations looking to adapt their capacities to business in an information age. The transformation process of the organisation is the last stage, after passing from external communications to e-commerce, e-business and e-enterprise. The concept of the transformation stage has a critical factor that is continuous learning. This factor is affected by change under a dynamic model of mindset that requires higher coordination and consolidation.

Organisations are changing, and there is a request for new processes and technology support to adapt to new business challenges. Financial institutions appear to be preparing themselves for that stage currently. This research regards KM as a piece of this transformation and aims to understand how KM can help to manage risk and to help financial institutions reach the transformation stage. Particularly, information systems have to be more efficient, effective, and integrated in order to help people to make more complex decisions in a transformation process. Then the hypotheses formulated were:

H7a: The perceived integration of the information systems is positively associated with the perceived quality of risk control.

H7b: The perceived integration of the information systems is positively associated with the perceived value of the ERM implementation.

The variable perceived value of information systems integration (variable label isi) was constructed based on the following 6 items:

• Laware (2008) indicates that: “Without naming, defining, categorizing, standardizing, and storing both data and metadata, the utility of Web mining, warehousing and KM is suspect.” This refers to a key aspect of standards in information management.

However, the standards are a piece to improve KM. Rollet (2003) concludes that there is another level of standards, that is the one that allows exchange of

information. ”Trying to standardize the functionality of systems may not make much sense but appropriate standards for exchanging information will allow different tools to work together.”

Besides, the different regulatory frameworks in financial institutions are advocating an integral RM view (Crouhy et al., 2001). The practice of RM includes principles that are common for different risks, such as the search for quantification, the need of getting the best option to protect the organisation based on insurance or derivatives, etc. One of the points that Levine (2004) notes is the flexibility capacity of the system this because of compliance that is part of the management objective. The system needs to provide RM basis for applying the normativity to different risks. Levine (2004) identifies that access, control standards and real time are components that should be common to different departments in the RM organisation.

This view was complemented by Mitchell (2006) who indicates that format for applications, interfaces, synchronization, and transference are fundamental points to align. These two above points indicate that the risk management system should probably start with the definition of what is an applicable standard for RM groups and systems tools. Therefore, the item used was: the same standards are used.

• Maier and Remus (2003) indicate that the process-oriented KM strategies have different approaches, content, and technology to provide access to knowledge and storing all the knowledge related to various participants of the strategy. Data is the basis of the process control and operation. The point is how data is organised in a business process in order to develop the value-creating activities. The standards can be in place and the application that can be common to RM areas but the point is if regarding data the standards are well defined. This means that it is part of the process of a risk management system design to identify the way in which to keep a repository of data that supports different areas, users and risk analyses. Data architecture is the basis of the proper data use. Similar to the previous item, Karr (2005) expresses the need for a common data structure to support alignment of objectives and the management of strategic linkages for risk performance measurement. This is complemented by Mitchell (2006) who introduces the issue of

dealing with the data legacy of different applications. The item used was: a common data structure is used.

• Sharma et al.(2008) indicate that the data warehouse is the main component of KM infrastructure. Then, a system structure could be required that includes the development of a data structure common to RM groups. The data system structure is represented by a central data repository of common access. Crouhy (2001) expresses the need to have integrated risk models, standards, risk limits, information technology, and architecture best practices in order to manage risk across the organisation. In addition, Samoff and Stromquist (2001) identify the concept of knowledge databases that can be the basis for integrative actions in the organisation;

databases that in an ERM environment are part of the support for the ERM implementation. Thus, the need for a data system structure is part of the system design and the improvement of risk knowledge needs work in the integration of RM areas. Then, the item used was: a common data-warehouse is used.

• Jennex (2008) expresses the view that there are some recommendations that a system has to meet in order to support a KM process and some of them include:

common architecture and interfaces, data base access to users, and documents under some standards. One of these is report integration as it is needed when data is reviewed, but risk control and ERM need to connect users to the system and offer options that provide access to different areas. One of the ways to provide access and interaction with the systems in risk management is through the development of connection means that are accessible to organisational layers. One is the presence of a common interface when different people are in front of the system, in particular in the ERM program (Abrams et al. 2007). There is not a clear indication that people from different RM areas can get access to the risk management system using a common interface. Then the item used was: a common user interface is used.

• The bases of integration introduce the point of what happens with the possibility of generating reports using common and consistent report system modules. Karr (2005) and Damianides (2005) present analyses regarding reporting and performance measurement and indicate how report structures and control of data reported provide

consistency to the organisation. However, the reports can be created by different areas and in RM sometimes using different data, different definitions of exposure or loss etc, These differences of reports definitions introduce complexity to the interpretation of the results. The need of integrated actions is described as part of the compliance of regulation, but the unification of report production is not presented as a specific point to take into consideration. Then, the item used was: a common report system is used in the ERM program.

• Kim et al. (2003) indicate that: “Knowledge management architecture, the most important outcome of the proposed methodology, consists of knowledge, process, organisation, and information technology architecture.” These components of the KM architecture include applications. The access in RM is fundamental because many of the actions require simultaneous access, for example, market information, transactions and analysis, which can be supported by independent tools. Moreover, Dinner and Kolber (2005) use Zachman‟s model to identify the integration of applications and data in systems integration actions through portals.

However, in RM applications the integration is not clear because applications can be associated with pricing, production, exposure and many other areas. The applications can be defined in different settings and to have different means to access them. RM can have different applications and to reach them through one means for all users can support the RM processes and possibly KM processes. Additionally, Boh and Yellin (2006) identify issues before the integration and the capacity of the organisation in order to leverage technology across the organisation. Then, the item used was: a common application access is used in the ERM program.

The integration concept in the RM setting is part of the possible risk management system design. This is complemented by the analysis of the general concept of network for connecting people in the RM group. Thus, the next section examines the variable Network capacity for connecting people.