The Inescapable, Unavoidable Role of Money in Defining Integration's Value

Loraine Lawson

IT hates to talk about dollar amounts when it comes to integration projects, but push through your dislike, because it's a fair question for the business to ask, according to David Linthicum, a SOA and integration consultant.

They hate to say, 'Well, we're going to be able to save $2 million out of this,' because they think that is going to pop back and haunt them. And it may indeed at some point, but when I'm working with corporations, they want a dollar amount ... What would that value be? So you have to put a line in the sand as to what kind of money is going to come back based on this program or based on doing the integration.

Defining the value of integration can be tricky, however-which is probably why it's the topic for Linthicum's upcoming keynote address at the 2009 Global Integration Summit. Linthicum gave me a preview of his talk during a recent phone interview.

 

The summit is June 3 and 4 in Las Vegas, and the theme this year is "Economic Payback through Integration." I should disclose that I'm planning to attend, largely because the Integration Consortium, which hosts the event, offered a free pass and two nights hotel stay. However, in the interest of full disclosure, I'd arranged to interview Linthicum about his keynote address before that arrangement.

 

Linthicum explained that the value proposition of integration is pretty straight forward-having systems and information connected is much more efficient and effective than not having them connected. The trick, of course, is in defining the value, particularly in financial terms. Ultimately, there is no single formula, because the value will depend upon your situation, including inefficiencies you're trying to correct, and the organization's business goals.

"You need to understand the value of information flowing between the systems based on information not flowing between the systems, what's the difference, and then understand what your own dynamics are, create a model, and then you can calculate the value of integration at ... just kind of a ball park or even down to some fairly detail-oriented information, such as what it is going to save you per hour based on the operational aspects and operational dynamics of the business."

The cost justification should be a determining factor in whether or not you move ahead with the integration project, but you can't just rely on hard value, Linthicum added. You also have to determine if there's a soft value that won't necessarily cut cost or increase revenue directly, but is still worth pursuing, such as better customer service.

 

The full interview has more great tips for defining the value of integration, but I suspect in the current economy, you'll also want to talk about cost savings. For that, you might want to check out Ted Friedman's recommendations for saving money on data integration.


 

Friedman is a Gartner analyst. For the most part, Gartner's advice targets large enterprises, and that's certainly who he's talking to here-though I would think smaller organizations could follow some of the advice in this article to shave a few dollars off integration.

 

But if you're a large company, with "substantial data integration architectures," then Friedman says you can save more than $500,000 annually by rationalizing data integration tools and adopting a shared-services model.

 

As part of that shared-services model, Friedman recommends companies consolidate data integration roles and skills into one shared services team-a recommendation that reminds me of Forrester's Integration Competency Centers.

 

Gartner estimates that consolidating data integration roles could directly cut staffing costs by 50 percent or more each year. And, to circle back to Linthicum's advice, that's a very nice definite dollar amount you can take to the business.



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Apr 23, 2009 5:50 AM John Schmidt John Schmidt  says:

Excellent article.  Just to add more fuel to your argument, your readers should check out these two articles - one for a 2,000 ROI driven by a Data Quality COE and other with some advice on how to articulate benefits to a CFO.

http://blogs.informatica.com/perspectives/index.php/2009/04/15/integration-payback-making-the-business-case/

http://blogs.informatica.com/perspectives/index.php/2009/04/20/convincing-the-cfo-a-how-to-guide-for-compelling-business-cases/

In both cases there is no way around talking about money.

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Apr 24, 2009 9:28 AM KarlS KarlS  says:

Good article Loraine. I would add that there aren't only proprietary solutions on the data integration market, but also open source.

I think Open source software could be more economical than proprietary tools, just looking, for example, at the licence cost. But there is a lot more to talk about. And these savings are important in these times of IT budget restrictions.

Thanks for the article.

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