Thursday, May 8, 2014

Standardization vs. Integration

Overall, the costs and benefits of standardization and integration are case-specific.

The balance between standardization and integration, at the business or enterprise level, was the defining characteristic of the industrial age. Organizations today are even more complex and hyper-connected, hence, standardization and integration are more crucial, not less, as at all levels in life and business, there is an understanding about standards and why - and in this day of globalization and global market places - the use of standards and the benefits they bring as to forming a foundation, enabling integration, market and customer potential and speed to market. The point is: Are they always good, or are there scenarios where they might not be feasible? Both standardization and integration normally come with a cost. What mechanisms, practices, or methodology would you normally use to justify these costs to the business?

The justification for standardization or integration: Like anything else you do in business, there should be some justification for standardization or integration. To try and standardize just for the sake of standardizing, or where doing so requires compromising on the functional or performance needs of one or more groups involved, then obviously it is not a good idea. Standardization should be done at the solution level and should only occur when the functional requirements for the different groups are the same or where there is a core set of functional requirements that all groups need and additional requirements are easily added without having an adverse impact on the performance of the solution for those groups that do not need these added functions. Similar scenario: You integrate when a justification can be made for doing so. By integrating, you are creating a case where you force an organizational alignment to the integration. You also create a more ponderous entity which has a difficult time adjusting to change. Change management becomes a more complex problem because multiple business lines are impacted. Those costs should be offset by benefits before attempting integration.

Overall, the costs and benefits of standardization and integration are case-specific; and so it is difficult to make universal generalizations about them. It is fair to say that it is not possible to make a valid evaluation of their potential in any case without the type of systematic thinking and architectural designing. Their very meanings are varying: Integration - are you talking about technical integration, operations integration, governance integration or GRC policy integration or customer centric integration - Also where is the point of standards - are you talking about  vocabulary - industry standard codes, language standards, engineering standard, or performance standard, etc.

Standardization and integration normally come with a cost. Standardization may impose two types of costs--dictating modifications to something that has already been implemented in order to be consistent with a specification; or mandating the implementation of a standard which imposes costs above those that the enterprise would incur by implementing an alternative, non-standard solution. Ideally, standardization should provide benefits through reuse that accelerates solution implementation and reduces expenses and risks. Similarly, integration has a set of costs and benefits that are determined by the situation and what is integrated. Integrating business processes in dissimilar businesses that have little in common makes little sense.

Operation model quadrant: When you are dealing with a wide variety of businesses and a wide variety of standardization and integration efforts, the demonstration of the benefits also varies, you need to make a methodology out of thinking process to decide: 1) On which quadrant your current operating model is; 2) Where you would like to be; 3) Draw conclusions based on the roadmap between the first two point.
Diversification: Low Standardization, Low integration 
Replication: High Standardization and Low integration 
Coordination: Low Standardization and High integration 
Unification: High standardization and High integration 

Standardization and integration are strategies / responses to particular demands, which will give rise to the outcomes being sought and thereby the benefits. And both standard and integration do not stay still - they do evolve and grow. When developing new thoughts about information engineering - build on what has been standardized and move forward - may be in the hope of creating new standards so that many will benefit. And the purpose of integration is to enforce collaboration and unification in order to create business synergy and catalyze growth continually.






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