Sunday, December 14, 2014

CIO as “Chief Integration Officer”: What is Driving the Need for better IT Integration

 Integration is not always cost effective, but to ensure that the application eco-system offers real value and future agility.

It is the digital era, IT organizations are transforming from “Build to last”, to “Design to Change” and “Cloudify to Speed Up”. Especially, In large complex enterprises where there are many revenue streams, many business units, many geographies involved, many products and services will be having a variety of data, variety of systems to handle the business. Whether the cloud is used or not, here comes the need for integration and with much complexity as well. From the management perspective, what is driving the need for better integration of IT systems, and how to manage it effectively.  

Integration is the key to ensuring that the application eco-system offers real value and also is necessary for future agility. A holistic integration strategy & framework is a key for an effective application portfolio. The first thing to understand is that "integration" is not always cost effective, especially with highly disparate systems. Integration is the key to ensuring that the application eco-system offers real value and also is necessary for future agility.

The ultimate business goal for IT integration is to maximize the value from existing IT systems and the need for better business intelligence. Integration is very simply the task of connecting systems so they can share and consume each other's data. Sounds simple, but in practice is extremely complex. It has to be done with an architecture in mind that supports business strategy and business objectives like customer satisfaction, revenue growth, and margin improvement.
- Ability for applications to integrate with each other and exchange messages / enable workflows between them as part of a business process value chain 
- Ability to measure process performance 
- Ability to extract data from source systems and manage data life cycle holistically via: 
-Dashboard: to provide single pane view of business performance 
-Scorecard: to provide segment level business performance view 
-Report: how business has performed in a detailed way 
-Data mining: enabling business to predict what could happen with historical data.etc.

 Integration is not always cost effective and it depends on how you calculate the ROI. It might not be cost effective on the short term but on the long term in 90% of the cases it will be. In the  large enterprises where integration of legacy systems is found to be not cost-effective, so the simplest solution is new systems. Or the real issue is not integration, but the efficiency of legacy systems and inability to streamline through integration, as the result you have to replace the systems to further integrate them.  Any organization is a combination of the set of enterprise-wide processes like. 
- Hire to retire 
- Order to cash 
- Procure to pay 

The question is how does an organization look at the process maturity which will give real-time or near real-time view to business performance. Therefore having business architecture which is aligned with 
- Business capability map 
- Business process maps 
- Process maps aligned with application portfolio as well as partners or customers application portfolio 
- KPI based framework to measure the business process and business performance etc. are key for
real-time business operations view. 

Apply the law of Newton - "To every action there is an equal and opposite reaction" to IT management; that each "integration" effort can spin off into a chain reaction that may not be recognized until the budget is gone. Integration can be very difficult, costly and hard to justify the ROI. But, integrating the right systems for the right business reasons can be extremely valuable.

Hence, from a CIO's perspective, they need to understand the business drivers for the integration to align the technology investment to the business value. Also, having clear measurements (KPIs) in place will hopefully demonstrate the value of the integration over time.


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