Company execs must collaborate for real integration

Surveys conducted by business publications and research houses reveal that more than 70% of companies using Internet technologies could save substantial amounts of money in the short- to medium-term, if they were to integrate their IT and business strategies.

The Economist reports that fewer than 10% of organisations have realised cost savings through the deployment of e-business or e-commerce applications.

Michelle Beetar, sales manager, industrial and commercial division at Oracle South Africa, says that, historically, companies have left technology decisions to the specialists, but following the downturn in the economy in 2001, they are realising that technology decisions now have to be taken in the boardroom and not in the IT department.

"Significantly, the IDC research group has revealed that in the US last year 14% of the technology budgets of large corporate organisations was spent on new software purchases, while a massive 43% was spent on integrating these systems into existing corporate infrastructures.

"Companies looking to drive down these costs must begin by adopting a more calculated and measured approach to IT and move away from ownership of multiple, independent systems to the point where they have one system, with a `single version of the truth` or a single database that addresses all areas of the organisation.

"In the past, the impact of new technology investments on the business model was not as thoroughly probed as it is today," she says. "Decisions on technology upgrades are now based largely on return on investment and, as a result, we are seeing greater collaboration at boardroom level from various departments within organisations as they look for ways to pool their resources and optimise their purchases."

Beetar says this trend is ridding organisations of the `silo mentality` that was so prevalent in the years when corporate IT decisions were left to the technologists.

"In that era, decisions were made in isolation with little regard for the `big picture`," she says. "The advent of the Internet and the need to integrate business processes to accommodate new business flows associated with online selling, buying and administration, has placed a greater emphasis on strategic thinking.

"For example, a technology purchase, such as a customer relationship management [CRM] solution will have significant influences on the sales, marketing, finance, logistics, purchasing and many other departments.

"The decision-makers today are realising that a solution must be implemented in such a way as to touch all relevant areas of interaction. There must also be one version of the data concerning customers - otherwise huge sums of money could be spent on integrating independent duplicated systems with little advantage from a ROI perspective.

"This is being increasingly realised by the business strategists who are urging caution in the deployment of new systems and solutions. They are witnessing the chaos that has been caused through haphazard purchasing," she says.

"For instance, in the `dot-com` boom of a year or two ago, it became common practice for organisations to simply `bolt on` a dot-com element to their business with scant regard for its integration into the mainstream of business activity.

"Today the ghosts of these decisions are coming back to haunt these companies, which have, in many cases, spent huge sums of money on integrating new technologies with legacy systems only to end up cumbersome, slow and inherently flawed solutions."

Beetar says that, when looking to the future, the key to any new development must be its structure, in terms of the overall business activity, and its contribution towards competitive advantage from the perspectives of cost, efficiency and longevity - or return on investment.

She maintains that increasingly this goal will be realised through the adoption of Internet technology and the introduction of outsourcing strategies and business models in which solutions are obtained from application service providers (ASPs).

"Cost and efficiency will not be the only drivers for the future," she says. "Increasing emphasis on security is creating a business climate that is ideal for the proliferation of ASPs and the sharing of systems between companies within a secure environment.

"In the future, we might even see traditional marketplace adversaries - competitors with similar technology requirements - sharing proven business systems and solutions in a bid to increase efficiency, drive costs down and increase security."

They would do this through the adoption of the ASP business model - provided that the shared systems provide no competitive advantage. However, when marketplace advantage is an issue, resources will be channelled to specific areas for localised software development and integration."