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Thoughts from the Integration Consortium:
Integration Competency Centers

online columnist  Integration Consortium     Column published in DMReview.com
January 6, 2005
 
  By Integration Consortium

DM Review would like to thank John Schmidt, president of the Integration Consortium and founder and president of World Wide Integration, Inc., for contributing this month's column.

Integration is a Competitive Differentiator

Your competitors can buy the same software from ERP vendors and industry solution providers, so how can you differentiate your company from others using information technology? The answer lies not in optimizing the parts, but in optimizing the whole effective end-to-end integration of business processes and information.

Integration is everywhere. Customers demand consistent treatment regardless of which channel they use, and they expect you to have all the information about them at your fingertips. Suppliers throughout the entire value chain are connected more tightly to your internal systems than ever before to meet the market demands. Senior executives are insisting on "one version of the truth" when it comes to customer information, market intelligence and business performance measures.

If Integration is so Important, Why Does it Have Such a Poor Track Record?

Consider these facts:

  • The Standish Group collects data every year on thousands of projects. The latest survey shows that 15 percent of projects fail (never finish), 51 percent are challenged (cost, schedule or scope goals are not met), and only 34 percent are successful (meet all three criteria).
  • The statistics for projects over $10 million, which are by definition complex integration initiatives, are even worse: 39 percent fail, 60 percent are challenged, and only 1 percent are completely successful.
  • A 2004 Information Week survey shows that 30 percent of companies that use ERP applications aren't buying new applications because they're too busy integrating the ones they already own.
  • Integration challenges are cited as key factors in some highly publicized failures such as the following:
    • Multiple breakdowns in the massive HP/Compaq IT integration resulted in a $120 million order backlog.
    • ERP integration issues at Indiana University left students with no financial aid and required the university to dip into its reserve accounts in 2004.
    • The AT&T Wireless meltdown in 2003 was fueled by a botched CRM upgrade that cost the telco thousands of new customers and an estimated $100 million in lost revenue.

A common knee-jerk reaction to these challenges is, "Let's buy all our software from one vendor, then the integration problem goes away." Many organizations attempted this in the 1990s and failed because:

  • Buying only from one vendor requires taking the bad with the good; many business leaders are not prepared to make this drastic compromise.
  • Mergers and acquisitions introduce redundant systems which may take years to consolidate, if ever.
  • The big ERP vendors are so big, and also grow by acquisitions, that they themselves have integration challenges.
  • It is not cost beneficial to replace legacy systems and infrastructure every time a new technology emerges (typically every seven years), so most organizations have multiple generations of technology in production.

There must be a better way to integrate information systems in an adaptable and flexible way that doesn't constrain the business. Fortunately, there is.

The Integration Competency Center Solution

The Integration Competency Center (ICC) is an enterprise-shared service for performing systematic application integration. The goals of the ICC are to:

  1. Reduce integration costs so that a larger percentage of the IT budget can be focused on business value-added systems. It does this by enforcing standards, utilizing highly tuned processes and driving a high level of software and data reuse. The result is less development cost, less testing and lower support costs.
  2. Create an adaptive enterprise and allow the business to rapidly change as the market changes. It does this by allowing individual applications to be loosely coupled so that they can change independently (with fewer dependencies they can change more rapidly) yet still be tightly integrated to enable efficient business processes.


Figure 1: Five Competency Center Models

The ICC can be deployed in one of five models depending on the organizational structure, maturity of business processes, enterprise architecture discipline, geographic distribution of IT functions and autonomy of business units. Each model provides business benefits with the higher-maturity models providing the greatest value add.

How the ICC is Different

The ICC is fundamentally different from traditional project integration approaches and is based on the following principles:

  • Integration systems are distinct entities with their own life cycle managed separately from application systems.
  • The "run" part of the life cycle is more important than the "build" phase - emphasis is on adapting to change.
  • End-to-end business processes are modeled first then applications are fit into the model.
  • Documentation is stored in structured (searchable) repositories with processes to maintain it (always current).
  • Solutions are based on open standards; proprietary tools or "lock-in" methods are avoided to allow an exit path.

Implementing an ICC is not without risks. According to Gartner in a November 2004 Research Note, "The top-performing one-third of ICCs will save an average of 30 percent in data interface development time and costs and 20 percent in maintenance costs, and achieve 25 percent reuse of integration components .... The remaining two-thirds of ICCs will fall short of those benefits because of insufficient sponsorship and other organizational execution problems ..."

One way to ensure that your organization is one of the successful third is to get some help. Collaborating with other end-user organizations through the Integration Consortium (www.integrationconsortium.com) is a great first step. If you need more direct help, check out the ICC resource page in the same Web site for consulting firms and vendors that have a track record in helping organizations build an ICC operation.

John Schmidt is president of the Integration Consortium and is founder and president of World Wide Integration, Inc. He has practiced as an information systems professional for 27 years and has experience in applying information technology in a wide range of industries including retail, communications, finance, education and government. Schmidt has a record of consistent leadership in breaking new ground and "getting results" as evidenced by his role at Best Buy as highlighted in the November CIO story about ICC's http://www.cio.com/archive/110104/office.html. He has written numerous articles about systems integration and is a frequent speaker at industry conferences.

...............................................................................

For more information on related topics visit the following related portals...
Data Integration.

The Integration Consortium is a non-profit, leading industry body responsible for influencing the direction of the integration industry. Its members champion Integration Acumen by establishing standards, guidelines, best practices, research and the articulation of strategic and measurable business benefits. The Integration Consortium's motto is "Forging Integration Value." The mission of the member-driven Integration Consortium is to establish universal seamless integration which engages industry stakeholders from the business and technology community. Among the sectors represented in the Integration Consortium membership are end-user corporations, independent software vendors (ISVs), hardware vendors, system integrators, academic institutions, non-profit institutions and individual members as well as various industry leaders. Information on the Integration Consortium is available at www.integrationconsortium.org

The Integration Consortium is thrilled to bring the 3rd Annual Global Integration Summit to Boston from May 22-24, 2006, and is pleased to announce the theme of the 2006 Summit as Integration is for Everyone. Register today at http://www.globalintegrationsummit.com/about.htm.

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