How to Win at Integration, Part I

I was recently reading a report on B2B integration, and a major point of the paper was why some companies underperform at integration while others excel.

B2B is an interesting space when it comes to integration, because you’re not just managing legacy systems — you’re managing legacy systems across different companies, different divisions, and sometimes, you’re even dealing with companies that think a fax machine is new-fangled.

The stakes can also be higher, since regulatory compliance, recalls, logistics and returns are all made easier — or harder — depending on how well you’ve integrated your B2B systems.

So, it can truly be a challenge to integrate an entire supply chain, even though it’s not as sexy as some of the other integration challenges that tend to capture our attention.

Freeform Dynamics surveyed 201 medium-to-large-size organizations about B2B integration in August and summarized the results in “Effective B2B Integration: Challenges, Practicalities and Keys to Success.” It’s available for free downloading, thanks to Liaison Software, which specializes in B2B integration.

One of the topics it covers is what makes the difference between a company that excels at B2B integration and a company that doesn’t. Given the unique challenges of B2B integration, I expected some very niche obstacles, but I was a bit surprised when the reasons actually had very little to do with the specifics of B2B integration.

Instead, the report identifies six factors that all track back to some very basic issues. In fact, these six factors strike me as so basic, I think they’re worth reviewing to see if there are takeaways for other integration projects beyond B2B:

Clarity on business value. It’s not unusual for people to understand the value of integration in a very generic way, the report notes, but top performers better understood the value of integration in relation to other areas and how to describe the operational cost reduction benefits as compelling. What’s interesting here is that Freeform Dynamics believes this is because the benefits only become clear in hindsight.

The takeaway: Look beyond the obvious and find tangible ways to measure the operational benefits of an integration project.

“This includes hard cost savings as a result of headcount being freed up or inventory being lowered, for example, but also less quantifiable (though still very compelling) benefits that stem from more informed business decision-making, an ability to act on decisions more quickly and flexibly, and an ability to deal more effectively with risks along the way,” the report notes.

Appropriate funding and commitment. I found it interesting that one of the major barriers to success with B2B integration is ownership. You would think that ownership would be quite clear in a B2B supply chain — at least, more clear than it might be in other, internal BI-driven integration projects. But it’s actually a huge difference between the top-tier integration performers and the bottom-tier performers.

The key issue, though, isn’t just about commitment — it’s about foresight.

Integration is often viewed as a one-off project that’s part of a bigger imperative.

“This is all well and good, but the danger here is of reactive, piecemeal and inefficient investment,” the report notes. By making integration a tactical issue, you miss the opportunity to do something smarter, and you may in fact make things worse. I don’t think I have to tell you that viewing integration as a tactical issue, rather than a strategic issue, is a common problem, regardless of the type of integration project.

Top-tier integration performers minimize these risks through clear ownership, management support and ensuring “an adequate level of internal skills and knowledge so that requirements can be evaluated in an informed manner and acted upon appropriately,” the report notes.

The takeaway: Go, ye, and do likewise. Unless you want to keep making the same mistakes and re-addressing integration, then stop dealing with it as a one-off project and get to work on a strategic, enterprise-wide approach to integration. That’s going to mean an executive sponsor or, at least, a commitment that goes beyond IT. It’s also going to mean funding outside individual projects.

In my next post, I’ll look at the final four B2B integration success factors and what lessons they hold for other integration projects.