The Rise of Integration as a Strategic Imperative
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by Craig Stasila, Global Go-To-Market Lead for SAP Cloud Platform Integration Suite, SAP
Over the last several years, SAP has seen its customers increasingly prioritize integration as a strategic imperative. Rather than existing merely as back-office plumbing, integration is becoming part of a broader goal to be more agile and respond to customers and stakeholders more efficiently and quickly. At the same time, cloud computing and the proliferation of software solutions that address all facets of the end-to-end value chain have made it far more challenging to integrate the myriad of different solutions in an efficient and flexible manner.
Let’s focus in on a real-world challenge being faced today. Previously, if organizations wanted to focus on their customers, they looked to a customer relationship management (CRM) system. This approach is no longer enough — organizations need to be able to support customers in person, interact with them on social and digital channels, and provide them with customer service, potentially across three or more different software solutions. To attain a 360-degree view of the customer, businesses need to integrate the applications that are driving innovation to ensure the right data is in the right place at the right time and is being securely accessed.
This is but one example of the numerous factors that are leading companies to focus on integration — the need to integrate different software solutions quickly and cost-effectively and then support them and evolve with them. Recent industry research can attest to this increased attention on integration. For example, SAPinsider research conducted in October 2020 found that more than half (57%) of respondents are currently working to create a consolidated integration strategy.
What Is Driving the Increased Focus on Integration?
The faster pace of business in an increasingly digital world has led to an emphasis on agility and responsiveness, which in turn is driving an increased focus on integration. SAP knows, from working with its customers, that connected enterprises are better able to respond and react to changing market conditions. And SAP is seeing a significant split between organizations that understand the strategic value of integration and those that do not see it as strategically important. In fact, a July 2020 TBR study on integration found that 84% of respondents see integration as supporting their business needs. Companies that focus on agility and embrace the changing landscape of their industry are succeeding far better than those that are lagging and slow to react. Forward-thinking businesses see integration as the technical underpinning of innovation and the path to converting digital insights into real-world business action.
Over the past five years or so, the pace of business has picked up considerably in an increasingly competitive environment where speed wins the day. The pressure to more quickly respond to customers and suppliers has led to organizations recognizing that integration is crucial to achieving a 360-degree view into their business data. And now, COVID-19 has compounded the situation by requiring organizations to become even more responsive amidst significant disruption. The pandemic has revealed that companies that can quickly become more agile and innovative are the ones that can more easily weather the storm, while those that follow older modes of working often struggle to respond to the curveballs they face.
Although a majority of organizations recognize the strategic importance of integration for agility and responsiveness, according to recent studies, research also shows that most do not feel their current strategy will prepare them to meet future business needs. The SAPinsider research on integration revealed that while many respondents are working to create a consolidated integration strategy, less than half (46%) said their current strategy is mostly meeting their needs, with 35% reporting it is only partially meeting their needs. Based on these results, companies do not have what they need to move the needle on integration within their organizations. Fortunately, there are some guiding principles SAP customers can follow to help make gains in this area.
Guiding Principles to Improve Business Outcomes Through Strategic Integration
Business and IT leaders who are serious about improving their business by developing the strategic importance of integration for their enterprise can increase their chances of success by adhering to the following guiding principles: secure executive support, establish an integration center of excellence (COE), conduct an integration maturity assessment, and devise and execute the strategy.
Secure an Executive Sponsor
Making integration a strategic imperative requires an executive sponsor within the organization who understands the value of reacting quickly, or even proactively, to customer needs and changes in the broader industry. For some organizations, that executive sponsor will be a chief information officer or chief integration officer. For others, it might be a chief revenue officer or chief sales officer who is looking to transform the business into an agile and digital enterprise.
The companies that are leading the charge to set integration as a strategic imperative have some level of executive sponsorship in place. Without that sponsorship, the business case could fail to secure approval or the necessary investments of money or time. Often the biggest challenge in moving toward integration as an organizational strategic focus is corporate culture. Many organizations tend to be siloed, from the supply chain to manufacturing, human resources, or other areas of the business, which can make organizational change a significant challenge. An executive-level sponsor can secure buy-in from the rest of the executives, effect change, and pressure constituent silos to interact with one another and participate in the evolution.
Establish an Integration COE
An executive sponsor also plays a crucial role in the creation of an integration COE, which is a team composed of a mix of business/functional/technical resources with diverse professional backgrounds that works together to execute on integration goals and plans. This team must have a good functional understanding of the company’s business processes and how to extract value from them, as well as deep technical skills and strong interpersonal skills to get loosely grouped individuals to communicate and work well together. Assembling the right team of people for the integration COE is critical to its success.
The ideal team for an integration COE includes stakeholders and team builders from across the organization. Ideally, the multi-disciplinary group would represent every facet of the board areas and lines of business. It would include technologists with a wide range of technical skills and a good understanding of the existing software systems and their limitations, because the best way to integrate certain software, such as SAP S/4HANA, with other systems can vary widely. The integration COE should also include people in an architect or strategist role who understand the overall enterprise integration strategy, the technology, and the way existing teams operate. These individuals should be responsive to business needs, develop a realistic plan looking forward, and be driven to accomplish the goals set out collectively by the team.
Conduct an Integration Maturity Assessment
It is important to assess an organization’s current integration resources, skillsets, tools, and capabilities, and match that against what is needed to achieve the goals of the enterprise integration strategy as mandated by the executive sponsor. Even if there is no executive sponsor, an honest understanding of where things are — whether that is achieved by creating a survey, writing a report, performing self-analysis, or bringing in a third party to assess the organization’s tools, technologies, end-to-end processes, and value streams — is critical. Understanding how components cut across different business and board areas, along with what is working and what isn’t, is integral to identifying areas for improvement that can be mapped to the integration strategy.
To help its customers understand where they are on the path to a mature and successful integration strategy, SAP has developed a technology- and solution-agnostic framework called SAP Integration Solution Advisory Methodology for conducting assessments based on an integration maturity model. More than 1,600 companies worldwide have successfully used this methodology and its best-practice framework to assess their landscape’s components and requirements. It helps organizations identify the tools they need, the skills they lack, the governance model they need, and the blueprints and architectures they can reference from a technology perspective. The framework is also flexible — it is designed to support a range of needs and goals, from a company that needs to start with the basics, to one that wants to adapt established best practices, to one that wants to come up with its own maturity model. In addition, there is no predefined decision matrix for tools and technologies — governance, decision trees, and processes for making those decisions are added based on the organization’s assessed level within the maturity model.
Whatever methodology a business uses to conduct its integration maturity assessment — whether it’s SAP Integration Solution Advisory Methodology or another framework — the key is doing the research, making the recommendations, and executing those recommendations. The goal is to minimize friction as a business requirement moves from a concept to an actual implementation of that concept. Clear key performance indicators (KPIs) based on the integration maturity assessment can be extremely helpful in reducing this friction. KPIs establish a contract between the integration COE and stakeholders that signals to leadership and the broader organization what will be achieved. They provide a framework for understanding and measuring the changes taking place to ensure they continue to deliver the desired outcome going forward.
Devise and Execute the Strategy
From the results of the integration maturity assessment, an organization will be in a good position to know the gaps in resources, skills, and technology that need to be filled to devise and execute an integration strategy and achieve stated goals. Resources who can bridge the business and IT sides of the organization are crucial to a successful integration. A business liaison that is a functional expert — someone who truly understands the business and serves as a translator for IT and business needs — plays a central role. This person must have a good working relationship across all business teams, not just one or two, to have the best chance of reaching the entire organization and inciting all areas to be more responsive. Having this relationship with the business helps an integration COE better understand what is driving the need to be more agile and reactive. Success can ride on the ability of these translators to break down existing silos.
While the integration COE drives the initial creation and implementation of integrations, as a company moves through the integration maturity levels, lines of business can strategically start driving their own value from these integrations, usually by exposing their business logic as consumable, reusable application programming interfaces (APIs). When the integration COE empowers lines of business to take advantage of existing assets and resources on their own — and not just take advantage of data, but also leverage collaboration with one another — the integration COE can spend less time on tedious technical work and more time on tasks that can add value to the business, such as bringing new technologies into the fold.
Many organizations are starting to look at new technologies such as automation to keep pace with a rate of change that continues to rise rapidly. In particular, artificial intelligence (AI) and machine learning are beginning to play a bigger role in the execution of business processes to help ensure resiliency, adaptability, and efficiency, and forward-thinking businesses are starting to layer in skills and technologies in this area. Integration COEs will need to have resources in place that are versed in these emerging technologies, and also be able to quickly and easily introduce them to the different lines of business without requiring them to become machine learning and conversational AI experts. This is why there is no end state when it comes to filling in gaps in resources, skills, and technology — it will always be an evolving, iterative state.
How to Achieve Integration Wins
When building the business case for integration and securing an executive sponsor, demonstrating the return on investment (ROI) is essential, and this is where a partner can often help. Many partners in the SAP ecosystem have long-term relationships with SAP customers as trusted advisors and histories that help them understand the industry and technologies. Some of these partners are having candid conversations with the 46% of organizations that reported (in SAPinsider research) that their current integration strategy is mostly meeting their needs to let them know that they are being left behind. Partners can help companies look at integration more strategically and help with tasks such as getting the integration COE started, performing an assessment, supplementing technical skills, and helping with change management. In fact, in the previously mentioned TBR survey on integration, 52% of the respondents felt that the role of a partner was critical in achieving integration benefits.
Organizational change management is hard, and many companies struggle to handle it themselves, so they turn to external partners that have tried-and-true methods to help effect those changes. On the technical side, partners can also help close skills gaps and can train an organization’s employees on how to use the new technology. This is especially important for those that did not previously view integration as a strategic imperative, because those organizations were likely using older integration technologies that will require significant changes. The real innovators in this space — those that have undergone integration transformation and are driving forward with agility — follow an API-first methodology that can scale horizontally. One customer that has adopted an API-first strategy is energy company Eneco, which credits much of its success to working with a trusted partner, Proxcellence.
Another customer having success in the integration space is Murphy Oil, which started out low on the integration maturity assessment model, with no integration COE, executive sponsorship, governance model, or framework in place to push forward integration initiatives. After engaging with partner Incture, which helped the business identify a very high total cost of ownership (TCO) due to overlapping integration tools, Murphy Oil adopted a more strategic approach, retired tools, and chose to migrate to SAP Cloud Platform Integration Suite because it had the lowest TCO and fastest ROI. Incture assisted the company with the migration, with putting a governance model in place, and with technical and organizational change management.
In addition to working with SAP partners to ensure integration success, SAP customers can also enlist the support of SAP itself. For example, Endress+Hauser worked with SAP to conduct an integration maturity assessment using SAP Integration Solution Advisory Methodology and to help create its integration COE. And there are some SAP customers that have enough in-house resources to move through the levels of the integration maturity model without relying on the support of SAP or SAP partners. For example, Sika is currently developing an integration COE on its own to handle its hybrid landscape amidst a move to SAP S/4HANA.
A successful business case for integration hinges on several factors, but the most important is the need to stop looking at integration as a cost center, and start seeing it as a profit center that will save money and generate revenue, and as a strategic imperative at the heart of digital transformation. Digital transformation is not just digitizing business processes to save costs — it is making traditional business processes consumable in the digital realm to drive new forms of revenue from them, which can only be achieved through integration. Whether or not an organization’s integration needs are currently being met, there are many ways to look at integration more strategically and avoid falling behind the competition, which is most likely already focusing on the agility and capabilities that integration offers. To learn more, visit here.