How Important Is Business Process Integration?

Business process integration technologies may be very sexy and all, but companies can’t afford to start projects for that reason alone. Management needs to be convinced that an integration project will bring bottom-line results before it will agree to fund it. How do we build a case for business process integration, then? Let me count the ways:
1) Customers no longer accept disintegrated business processes;
2) integration provides a measurable financial return;
3) a service-oriented architecture cuts costs.

Let’s say you just made a cash deposit at your bank but, when you walk into another branch, you’re told that they have no record of the deposit, and that it will take a day or two for the transaction to be reflected in you account. Unacceptable, right? Bank customers today won’t accept delays in the information transfer between systems. In other words, they demand that the bank’s processes and systems be integrated. In fact, the customers of any business expect integrated processes. If you don’t offer an integrated experience to your customer, be sure that your competition will.

So providing the level of quality expected by the market is important because it helps in the battle for market share; but are there any other financial reasons for integrating processes? The answer is "yes, many". Let’s see two examples: better cash flow and reduced loss of revenue.

I’ve been involved in a case where a company integrated its CRM software with a legacy system that calculated the total cost of complex orders so they could provide a quote on the spot instead of the next day. Not only was their customer service improved, but so was their cash flow. The revenue for each order now comes in one day earlier, which by itself raises their gross income by 3% to 5%.

In another case, a large corporation had several customer databases (which is quite common in large corporations), which held different data: a customer that existed in one database did not exist in another, or a change of address was not updated in one or more databases. The result? Invoices were sent to wrong addresses; worse, expensive equipment was delivered to unknown addresses, never seen again and never paid for.

OK, so business process integration provides a satisfactory return on investment, but some companies want to cut costs now, not to invest money so they can obtain results in the future. Even from that point of view, integrating processes makes sense. Some level of integration must exist between a company’s systems. Somehow the information in one system must get to the other systems: someone may key in the data again (yes, it happens), or a batch export/import interface may be created, or something else altogether; but the information must get from this software to that one. As it turns out, maintaining these interfaces is very expensive, and the cost is proportional to the square of the number of interfacing systems. Using a service-oriented architecture, the cost becomes proportional to the number of systems. But the big payoff is when there are routine changes in the data coming out of a particular system: instead of changing the interfaces to all others applications, you only change one piece of software. In short, considering that interface building can represent as much as 25% of the IT budget, a service-oriented architecture actually saves money instead of spending it.