Organizational paradigms not only determine organizational structures, they also influence other factors in the information management environment. These factors include information systems and architectures, organizational policies and procedures, funding models, project tracking models, staffing models as well as cognitive models. The functional organization creates a closed-model environment, while the class-based organization creates an open-model environment.
A closed-model environment is relatively self-sufficient, autonomous, and locally focused. It constructs rigid boundaries around itself which are difficult to penetrate. Business models within a closed-model environment are separated from each other and are difficult to integrate. Organizational units are represented as sets of disconnected hierarchical structures. Information systems are also represented as somewhat disconnected. A closed-model environment is thus more likely to exhibit fragmentation between business models, organizational structures and information systems, leading to symptoms of organizational dysfunction.
A closed-model system is one that internalizes within its system boundaries all of the processes and data entities that are necessary for the system to fulfill its business requirements. Aggregation refers to the bundling and inter-twining of entities and functions, that are otherwise logically unrelated, into an independent standalone system. The boundaries around the closed-model system are difficult to penetrate, since the interfaces to the system may require special encoding and decoding. The functional organization ignores the possibility that similar data entities and processes might redundantly co-exist within other closed-model systems. For example, multiple systems may contain similar customer setup, account processing, transaction history, statement preparation and other data-function combinations. The organization ends up spending incalculable amounts on building redundant system functions.
Object technology deployed in a functional organization simply results in costly, closed-model, object-oriented systems. Many of the attributes associated with the functional organization also appear in closed-model systems. Commonalities include slowness to respond to changing external conditions, slowness to internally reorganize, barriers that obstruct communication, and a localized focus. From a budgetary point of view, the functional application is only funded to support the localized requirements of the business unit that is its benefactor.
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