Companies that master the seamless merger of
information from diverse sources will achieve a higher level of process
performance, operate on the basis of better insight and intelligence, and be
well equipped to exploit new business possibilities.
By Jon Hill,
David E. Plesko and Anthony Roby Outlook Special Edition, May 2004
  Imagine
beginning your day by looking at an economic weather report—an online graphic
representation of the global business environment, organized by region and
based on continuously updated external information, including stock and
commodity market reports, foreign exchange and interest rate fluctuations,
trade and employment data, even geopolitical threat levels.
Further imagine that your company or division could overlay
onto the screen all information from your internal and external systems that
was relevant to your daily decision making—including, depending on your
business, information such as the location of the fleets that distribute your
products, or the current status of business assets like hotel occupancy or
daily oil production.
In other words, imagine basing your decisions on a visual
representation of real-time, global reality.
New Business Possibilities For many
companies, that fictional online report would be a gold standard for
information integration— the seamless merger of data from diverse streams,
which include not only an enterprise’s internal systems but also external feeds
such as marketplace information and visual and numeric data from sources such
as RFID tags, sensors and web cams.
Today, this level of information integration exists only in
pockets within organizations, or in laboratory prototypes. But it is coming.
And companies that master integration will achieve a higher level of process
performance and operate on the basis of better insight and intelligence.
These companies will be able to do much more than share data
efficiently. They will be able to measure business performance in real time
through a fully transparent view—down to the slightest detail—of their business
processes and customer data. With this information in hand, decision makers
will not only be able to run the current business better, they will also be
well equipped to envision new business possibilities.
Some companies are already well along the road to
successfully integrating streams of business data. Delta Air Lines, for
example, understands that every flight delay causes a ripple effect that has an
impact on flights and customers around the world. The company created its
“Delta Nervous System” to focus not on which systems had to be connected but on
what could be done to solve the ripple-effect problem. As a result, the
airline, using 70 applications, has integrated data across 13 business units,
30 customer databases and 40 flight databases.
Now, when a flight is delayed, information on its status
cascades through the system. Departure times for connecting flights are
readjusted, or passengers are booked on other flights. Baggage handlers learn
which bags need priority treatment. Customers can learn their flight’s status
in real time at self-service kiosks or via messages transmitted to their
wireless PDA or mobile phone. Soon the Delta Nervous System may be accessible
through the Internet to customers, employees and business partners.
Reality Check
Although most
executives have heard exciting stories like these, their concerns are more
basic. Haven’t they already made major investments to integrate their systems?
Why aren’t they getting more benefits now?
 To understand the difficulty in achieving
more complete information integration, it helps to lay out what that would mean
for today’s complex organizations.
- Integration within organizational boundaries means linking
all business unit data and enterprise application data to better leverage that
information. Many companies still have islands of applications, stranded after
a merger or reorganization, that need to be incorporated.
- Because almost no organization today is self-contained,
operating in today’s business environment also requires business-to-business
integration of information and collaborative business process. This, in turn,
requires not only the integration of applications, systems and processes but
also the development of a standard platform on which all can be built to enable
interoperability. This allows information from various sources in various
formats to fit together easily.
- Finally, there is real value in integrating the strategic
design and business processes used for building and testing applications.
Without this level of integration, any future changes to applications would
take considerable time and effort, because of the difficulty of modifying the
underlying codes and processes.
Given this level of complexity and difficulty, it is not
surprising that only 58 percent of respondents to an Accenture survey report
that their companies have integrated all or most of their own enterprise
solutions; 19 percent report they have barely started the process. Integration
outside the firewall is even rarer. Substantial numbers of organizations report
that they do little or no data sharing with customers (71 percent) or with
suppliers (75 percent).
Even as many organizations work on basic integration within
their own enterprise systems, the bar is being raised. Systemwide
integration—including the company’s suppliers and trading partners—will soon be
a competitive requirement, and it already is an essential component of
innovative solutions that ultimately contribute to high performance.
The good news? Most organizations, despite their
discouraging self-assessments, have made a meaningful start. And new technology
advances are making integration more achievable. Significant benefits from
integration are now within reach.
Interchangeable Data So what has happened
to make integration more achievable now? Primarily the adoption of web
services, which allow organizations to assemble isolated application functions
into more complete business solutions.
Despite the name, web services aren’t services but an
evolving set of industry-determined technical standards that enable
applications to be integrated and systems to communicate. With the addition of
certain software components, it is already possible to integrate diverse data
streams. Web services enable faster and less expensive enterprise application
integration, the wrapping of existing systems for reuse and application
restructuring, and distributed computing. (For a related article, see “How Web Services Will Redefine the Service
Economy,” Outlook, July 2002.)
 Web
services enable data to be interchanged among all players in an industry, and
several efforts are under way to develop such standards for the IT,
electronics, semiconductor, telecommunications and chemicals industries. The
Web Services-Interoperability Organization, for example, is an open industry
group chartered to promote web services interoperability across platforms,
applications and programming languages, and it is making good progress on this
front.
Even more important, web services make it possible to
fundamentally change the way work is defined and carried out within
applications. IT specialists have known for years that linking one piece of
data to another through lines of code is cumbersome, and that changes are
difficult to make without extensive reworking.
Service-oriented architectures (SOAs) help address this
problem by allowing specific tasks or services (generating an invoice, for
example) to be handled as independent units and assembled and disassembled at
will. Web services make it easier to implement SOAs by providing a
standardized, easy interface between legacy systems and new systems, and
between existing systems such as SAP, Siebel and Oracle.
SOAs have changed the way systems are developed. Since they
are focused on business processes, they foster a closer working relationship
between the technical and business sides of an organization and force both to
think clearly about how best to carry out business operations. They also allow
applications to function as modules, to be mixed and matched, recombined and
reused as needed, which reduces development costs. The growth of web services
will continue and even accelerate this trend.
One-two Punch
The one-two
technology punch of web services and SOAs, combined with an integrated
framework that rationalizes processes and centralizes applications, enable
powerful business possibilities.
 For example, Generalitat de Catalunya,
the governing body for Catalonia, an autonomous region of Spain, implemented an
SOA and used web services to establish an innovative, intentions-based portal
that allows citizens and businesses to access government services. This
approach made the services supported by 50 back-office applications
interoperable, connecting standard enterprise systems, custom systems, legacy
systems and niche technologies.
One service, for example, makes it possible to record a
citizen’s change of address through a single procedure that automatically
ripples through to all relevant regional and municipal government entities.
SOAs and web services also enable a log-in service by which any portal can
authenticate any one of more than 6 million potential users, giving them easy
access to existing services as well as new features.
A Human Solution Service-oriented
architectures, web services and standards can help provide technical solutions
to integration challenges. The remaining challenges have a human face: They
involve how people work with one another.
Too often, the way an IT organization is structured has
contributed to the formation of silos, with different individuals responsible
for providing different applications, such as SAP or Siebel. Pockets of
expertise and repositories of knowledge have developed in isolation from one
another.
Furthermore, the IT organization does not often work closely
with the business side. As a result, IT experts are not challenged to think
broadly about larger business goals or solutions to companywide needs, and
integration efforts are driven by technology experts who may not understand the
business processes and their limitations as well as the actual business users
do.
Striving for integration mastery requires a human solution
as well as a technology solution. This starts with a basic rethinking of the
way information technology supports the underlying business processes. Business
objectives must drive the definition of business processes, technology
architecture and staff capabilities. Bolting technology onto “the way we do
things now” is a huge mistake. The first and fundamental question is, “What
needs to be done—and how?”
Then solutions need to be developed across those traditional
boundaries that create silos. The technical experts responsible for business
intelligence, analytical data, integration and portals need to work in tandem
with those from the business side, who should be project champions.
The attitudes that sustain silos are not easy to break down.
But they can be overcome through a comprehensive integration process that
brings people together as work processes are defined and solutions developed,
and that holds individuals responsible for the overall success of integration
efforts.
One example is a large utility company in the United States.
It is embarking on a wide-ranging, four-year integration project to enhance
customer service and field force management capabilities. As part of this
project, the company reorganized its teams according to business processes
instead of by application, as it had done traditionally. The effect was greater
awareness of cross-team dependencies early in the project, which resulted in
better resolution of integration challenges at the business process level.
Changing the way people work and think is often harder than
changing systems or bringing in new technology. But organizations that are
mature enough to strive for mastery are ready to accept the necessity of that
change.
Integration in Action While no company yet
has achieved a gold standard level of integration and interoperability, leading
companies are overcoming the obstacles to integration. And for their efforts,
they are realizing real economic value and business benefits.
When Paris-based Carrefour, the world’s second largest
retailer, adopted a vision that included building a global company and
optimizing resources and technology across geography, it needed to ensure its
systems were consistent across the entire organization. The company designed,
built, deployed and installed a fully integrated financial system to support
effective accounting and financial activities.
Local teams were involved in each step of the design and
implementation process. This made sure that the solution addressed local needs
and was being used in a consistent manner throughout the organization. The
infrastructure can support rapid expansion, making it possible for Carrefour to
add new stores with the flip of a switch.
For computer maker Dell, supplier-management processes had
typically relied on manual mechanisms, which limited the company’s ability to
scale its global business, maintain an optimal balance between supply and
demand, and react quickly to marketplace changes. So Dell customized,
integrated and implemented a supply chain management solution that gave the
company visibility across its business system. It was now able to move closer
to real-time order fulfillment by simultaneously evaluating supply concerns,
factory capacity, shipping constraints and the specific requirements of each
customer order.
Pirelli, a leading global manufacturer of automobile tires,
cables and systems, was able to drive down costs and increase market share
through integration. The company implemented more strategic processes that
enabled business-to-business capabilities and integrated its systems with those
of its global customers and dealers. It also was able to extend information and
services to its customers and trading partners and reduce administrative
activities.
Fully integrated and interoperable systems, along with a
robust infrastructure, form the backbone that enables IT to deliver value. Most
organizations already have much of this backbone in place. Stretching a bit
more to take full advantage of IT’s potential will have real payback.
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