These are clearly turbulent times in business. Research in the US and Canada by Mergerstat.com shows that throughout the 1990’s the number of mergers and takeovers announced in North America quadrupled between 1991 and 2003. Probably low stock prices and the need to consolidate to fight off competition have fuelled these forces. Nonetheless, CIOs have been left with the task of tying together a myriad of disparate systems to establish the brand new united company. Perhaps this explosion in merger and acquisition activity is why IDC research highlights that the fastest growing challenge reported by New Zealand CIOs is integrating multiple systems. Certainly, their CFO counterparts believe that a lack of integrated data is the biggest deficiency in corporate data. In 2003 IBM undertook a global survey of CFOs. Interestingly, the primary concern of CFOs was that decision-making in their organisations was being hampered by the lack of integration of data across the business. Less than 10% of respondents believed their management had access to integrated information. In effect, CFOs seemed worried that decision-making was being done in silos.
It would appear that many CIOs have got the message. An IDC report last year revealed that nearly half the respondents had established an application integration architecture and more than a third had plans to implement one. The same report highlighted that the dominant business driver behind these integration initiatives was to provide companies with a single point of access to many data sources. Other motivations in a similar vein were to eliminate duplication and to streamline internal processes. Clearly, CIOs recognise that these activities will produce cost efficiencies as well as enabling the business to better service its clients.
Nevertheless, it is not as if application integration is a new phenomena. It seems it is the tactics taken by CIOs to tackle these problems that are changing. Previously, the approach taken centred around process re-engineering (BPR) and integrating systems through application programming interfaces (APIs). However, many CIOs found these methods long-winded and laborious and not appropriate at a time when the need for business was to respond rapidly to change. In the past a major and costly integration effort could be rendered superfluous by a sudden business decision to restructure. The IDC report showed that the average time span of the traditional integration and BPR projects was around 16 months, although a striking 40% of respondents were unable to quantify this timeframe.
While many CIOs are investigating the promise of web services for application integration, the most popular approaches today revolve around building standalone systems such as a portal or a data warehouse to take feeds from all other applications. Clearly much effort is required to establish common data definitions between all the various systems utilised by the new organisation. Furthermore, many purists might see this as a somewhat agricultural solution, compared to the traditional integrated systems approach of the past. Nevertheless, they clearly give the business what it wants. They represent a single source of truth that users can interrogate to get a total picture of the business. Moreover, if the business changes yet again it is comparatively simple to uncouple some applications and to integrate fresh ones into these standalone systems.
The IDC study showed that effective integration activities had far reaching benefits to an organisation. In particular, over 66% of IS executives saw that such initiatives enhanced the efficiency of gathering corporate performance data and its availability to staff for decision-making. In addition, over 50% recognised that integrated data gave a better appreciation of the significance of customers and improved the relationship of the business with them. The reality is that the businesses that will succeed in these uncertain times will be those that make better decisions faster and forge closer bonds with the customers who pay the bills. As such, it is likely that New Zealand CIOs will be giving even more focus to the challenge of integrating multiple systems in the years ahead.
Peter Hind is a freelance consultant and commentator on IT with nearly 25 years of industry experience. He established the InTEP CIO gatherings in New Zealand and ran these forums for nearly five years.
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