Companies that grow through mergers and acquisitions often create integration problems just by acquiring new systems. The Hackett Group’s Global IT Advisory Program Leader John Reeves told me their research shows application consolidation is still the primary means of reducing integration costs.
“As a matter of fact, we refer to it as complexity, because with every new asset or every new data source for an entity that you add, that expands the number of connections significantly because you have to connect it to 10 other systems or what have you,” Reeves said. “So consistently we see people driving down the numbers of the types of systems that they have.”
Consolidation can yield a huge cost difference, added The Hackett Group’s Chief Research Officer Michel Janssen.
“It’s a big difference,” Janssen said. “We’re not talking about 10 percent or 20 percent, we’re talking about less than half.”
That savings includes not only reduced technology and integration costs, but also the savings from rationalizing the business processes to be more efficient. It can also reduce staff costs.
A recent Wall Street Journal post about IT consolidation at Bloomin’ Brands, Inc., offers a great example of a company that’s saving money through system and application consolidation.
Bloomin’ Brands owns several popular chain restaurants, including Outback, Bonefish Grill, Carrabba’s Italian Grill and Fleming’s Prime Steakhouse & Wine Bar. After 20 years of acquisitions, Bloomin’ wound up with a “hodgepodge of computer systems.”
The company decided not just to consolidate those applications, but to move some of those functions to the cloud, according to the article.
While that may reduce overall integration work, it also created a new integration challenge: integrating Bloomin’s approximately 15 cloud-based applications with the on-premise SAP AG software, which is used for payroll, vendor purchases and other business tasks.
While it could have handled the integration in-house, CIO Charlie Weston wanted to ensure IT is focused on adding business value, not handling tactical problems. So the IT department created a hybrid solution using SnapLogic’s integration solution on-premise.
SnapLogic does offer cloud-based integration, but due to secure standards for financial services transactions, Weston opted to run the integration on-premise in Bloomin’ Brands’ own data center.
Weston wouldn’t say how much money using an integration solution is saving over custom code, but he did characterize it as an “enormous” amount.
Bloomin’ Brands isn’t the only company that’s opting out of custom integration code when it comes to cloud to on-premise integration, Gartner analyst Ted Friedman told the WSJ.
If you’d like to read more about other benefits that Bloomin’ Brands anticipates from its approach to integration, check out the full post, “Outback Steakhouse Owner CIO Prefers His Integration Well Done,” which is available for free viewing. If for some reason it won’t let you access it from this piece, do a title search and it will open the article (or, at least I repeatedly could).