Integration conversations are now part of 'due diligence'. Have you made the change?

What does Gwyneth Paltrow have to do with your competitive advantage?

When Hollywood star Gwyneth decided to call it a day with partner Chris Martin from Cold Play, she introduced us to ‘conscious uncoupling’. And while we may laugh, she inadvertently hit on an underrated competitive advantage for businesses around the world.

Achieving and sustaining a competitive advantage is a must for most CEOs. And understanding how and why your technology integration strategy can support that goal is critical.

So, what are two considerations that we think are the most important to you?

1. Interoperability

By achieving interoperability (over and above mere integration), your solutions are connected so they can freely exchange information and work together without any effort from your end. In effect, they can communicate in exactly the same language.

Why does this matter?

Interoperability allows your business to maximise its technology ecosystem so you can drive more value from what you already have while remaining flexible. Over time, you’ll need less integration because you've achieved a future-proofed state that enables you to beat your competition. While ‘they’ have rigid technology ecosystems that make it a struggle to pivot and adapt, you can change and scale at speed – so you’re first off the mark to take advantage of new opportunities.

For example, one large retailer we work with adopted our interoperability approach. So, when it came to the COVID era, they were able to quickly chop and change their systems to release a new online marketplace which brought together a range of new products available through local and offshore third-party suppliers. Due to this, they achieved a higher level of profitability than forecast when COVID first hit.

2. Conscious uncoupling

Structural separation is the other side of the coin to effective integration. Structural separation means that thanks to interoperability, you can remove integrations as easily as you put them in.

So, when it comes time to pivot in response to changing market conditions, unlike your competitors who face costly disintegration projects, you can ‘consciously uncouple’ with minimal disruption and expense.

Imagine this: Your supply chain has suddenly gone up in smoke due to volcanic activity. However, there are alternative suppliers in another country, and due to your interoperability strategy, you immediately uncouple your old allegiances (sorry, guys) and bring on board new suppliers with little effort and cost. In the meantime, it’s all integration hands on deck for the competitor whose supply chain was likewise reduced to ashes.

By adopting an integration strategy that prioritises interoperability, you can not only grab opportunities more easily and rapidly, but dismantle outdated initiatives just as quickly. And sometimes, that’s just as important.

Move over integration, hello interoperability.

While integration is doubtless a familiar term to you, Interoperability may not be. Yet, of the two, it’s the more important.

Integration vs Interoperability

Integration is about the connection between two things, for example, a system to an application. Once you have that connection in place, solutions can exchange information.

But that doesn't mean they're actually going to understand each other's data and be able to do their job without some help.

By comparison, achieving interoperability means that not only are your solutions connected so they can freely exchange information - but they can work together without any effort from your end.

In effect, they not only talk to one another but speak the same language without needing an interpreter.

Why should your goal be more interoperability and less integration?

Integration is the effort required to get things to talk to each other – one at a time. But when you have interoperability, you can happily chop and change those connections, knowing all your systems and applications speak the same language.

This makes building new integrations cheaper and faster as you can point systems and applications at one another, confident that they’ll work together.

Lost in translation

What does integration look like without interoperability? Imagine connecting your invoicing system to your warehouse and logistics system when each has a different understanding of what a customer’s address is. For one system, it’s where the invoice goes; for the other, it’s where the product gets delivered. Yes, the systems are connected, but the customer address means different things to the end users – and the correct one has to be looked up or manually selected from a drop-down list (which defeats the purpose of integration).  

With interoperability, each system knows which address is relevant to its purpose – no intervention is required.

Take your time – it’s evolution, not revolution

So, as CIO, how do you achieve interoperability, not just integration? It’s all in the strategy.

By prioritising an enduring interoperability strategy over the technology needed, you’ll minimise the need for manual integrations, eliminate API sprawl and unnecessary licenses, avoid the knock-on effect of making changes within spaghetti integrations, and spend less – while achieving more.

Best of all, you don’t need to take a new broom to all your existing integrations. Adopting an interoperability strategy means hello to a flexible evolutionary process – with each subsequent integration being easier. And old integrations can be phased out gradually as the tide of interoperability turns in your favour.

Is integration a better value proposition than a new solution?

As a CFO, you’re constantly confronted with technology to improve business processes, enhance decision-making capabilities, and drive profitability. And, as holder of the company purse strings, you usually have two options:  

1. Buy and implement new software and integrate it with your other systems.
2. Build on the systems and applications you already have to deliver the same outcomes.

The financial benefits of improving how you leverage your data through new capabilities are clear, but the question of total operating cost arises with both.  

Every man and his dog may be keen to tell you that a new application is the solution (and at times, we may tell you that, too). But in the real world, and when every dollar counts, that’s not necessarily the right or best answer.

You may already have the data and applications needed to power a new solution, and you just need to bring them together to deliver the desired capabilities.

Is it viable to build?

Let’s talk about Service-Orientated Integration (SOI). This is where your business is viewed as a set of Services to be used together to achieve outcomes.

An example of this is bringing together two existing applications, each corresponding to a different business function (say, admin and retail sales), to deliver a self-service portal for your customers.

The financial value of self-service is obvious. You eliminate data entry costs, and by allowing customers to select services or products they need online, reduce the load on your 8-5, six-day-a-week contact centre. Plus, users can log in 24/7, which makes them happier still.

Done properly, you can provision new functionality and capabilities based on the Services you already have across your organisation. So, there’s no need to introduce cost and risk or incur the expense of more licensing by buying a new system. You’ve used what you already had and made it smarter.

The ‘L’ word and why it matters

We’ve mentioned Licensing in passing, but as it raises red flags for most CFOs, it deserves more than a quick nod. So, what do you need to know?

In short, most applications and systems have completely different licensing models (for example, user-based vs connector-based), and this matters when you integrate them.

If done incorrectly, you can end up paying more than is needed, and the ongoing cost of ownership is greater than expected - which is never a ‘win’ from a CFO's point of view.

This is why it’s not only important that your partner can advise you where integration is the better option, but can guarantee that their approach doesn’t rack up additional licensing costs that negate the savings you’re about to make.