Business integration costs – including IT integration – are now the fastest growing spend for all types of businesses, IDC Australia boss Chris Fell told attendees at IDC's inaugural forum on the topic today.
Fell said at the forum – dubbed 'Nightmare on Integration Street' -- that IDC research completed late last year revealed Australian businesses have already spent some $3 billion trying to integrate all aspects of their organisations.
While that integration need was about processes and people as much as about IT, IT was a big part of the answer to those issues, Fell added.
'It's not as if integration hasn't been an issue before. It's always been an issue. But ... new IDC research suggests that integration is now the number one issue for them, not in terms of priority but it is the fastest growing issue, the one that's causing the most headaches,' he said.
Changes to corporate governance over the last couple of years, a continuing focus on core competencies, ROI and a drive to keep doing more with the same or less were main drivers of the need for business integration, Fell said.
'Although IT budgets have started to ease somewhat, there's a relentless focus on every IT dollar spent,' he said.
Companies wanted both to expand and to outsource their risks. This meant increasingly complex internal and external ties between different parts of their own businesses, customers, partners and suppliers, Fell suggested.
The ongoing development and adoption of service-oriented architectures and web services would help find answers to those business needs but there was still a lot of confusion in the market about how best to apply those technologies, he said.
Merv Langby, chief services analyst at IDC Australia, said IDC's recent global research suggested that many CEOs sought to integrate their processes – and thus the information about those processes stored in their IT – around customer service, supply chain needs, procurement and logistics.
IT professionals and service providers should be focusing more strongly on providing an integrated view of all those aspects together, rather than providing software, hardware and services that meant companies retained incompatible silos of information.
The 'holy grail' of business integration was to provide a single view of the customer and the business, Langby noted.
However, service providers would likely also have to fight an uphill battle against continuing cynicism about the value of IT to business, he suggested.
'In the past, there was a lot of presumed opportunity that really didn't eventuate, because the underlying basics weren't there,' Langby said. 'Today, the hatches have been battened down by corporations ... It's not going to get any easier.'
But IT companies could take heart. Some 80 percent of respondents to a global IDC survey of CEOs claimed that enterprise integration would be either be 'mission-critical' or a crucial 'business-enabler' two years from now, he said
Automating collaborative tools, developing end-to-end management capability, reducing hardware inflexibility through virtualisation and adopting flexible servicing and payment options would be important tasks for businesses, Langby said.
IDC's forum was sponsored by four of the world's biggest promoters of IT as a business integration tool – vendors IBM, BEA, HP and Computer Associates.
Luke Glen, systems engineer and product marketing manager at BEA, said BEA was focusing on trying to build an integrated stack of applications. The vendor had also created an integrated development tool for customers, he said.
'And I discovered last week that application integration has finally hit consumer electronics. I've had all these cables going in and out of my TV and I've just bought this new LCD TV to hang on my wall,' he said.
The new TV didn't need all the extra cabling to knit all the hardware and functionality together, Glen said.
Fred Balboni, an application innovation manager from IBM Business Consulting Services in the Asia-Pacific, said that IBM believed that business integration was key to giving customers what they wanted.
'We are coming out of very tight economic times,' Balboni said. 'Businesses ask [for example] how can I extend the life of my existing assets?'
IBM's own survey of CEOs globally had revealed four main goals. Companies all wanted to grow, to respond more quickly to changes in the market, to innovate and to achieve transformation very quickly, he said.
'They have a very short attention span for being able to transform or reinvent their organisations,' Balboni said.
However, there was no one-size-fits-all answer for service providers. Different integration offerings needed to be developed for different verticals, and be customisable to individual businesses, he said.
'For example, the automotive industry [is concerned about] ... quality issues, warranty costs and there are growing requirements for in-vehicle [IT-based] systems,' Balboni said.
Yet the pace of technological innovation was much slower today, compared with four or five years ago. Instead, IT was focusing on standards, which would be key to providing IT that helped businesses become more integrated, he said.
'[They] need to simplify [their] businesses without denying [their] complexity,' Balboni said.
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