Consolidating data flows to optimise IT investment

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The first article in this series analysed the extent to which companies of all sizes are being held back by legacy IT systems which have grown organically over time. It is apparent that, for many organisations, such uncoordinated deployment of poorly-integrated systems has resulted in widespread data and system fragmentation.

The February 2011 Computing survey, Positioning your Business for Growth, noted that the practice of piecemeal implementation of IT systems in companies growing organically is not an uncommon pattern: “The fact that 32 per cent of respondents stated that budget constraints were part of the reason for continued separation underlines the finding that running multiple software systems across different operational areas has not been a deliberate and considered decision for the larger number of respondents, but a situation that has built up over time.”

Historically this situation has evolved because many companies have not implemented strategic IT procurement processes. Another contributory factor is the fact that vendors have been selling silos of “solutions” while targeting line-of-business managers in order to get executive sponsorship for the technology purchases, according to Clive Longbottom, service director at independent analyst group Quocirca.

“Therefore, why would the sales enterprise vice president be interested in what the marketing senior vice president was up to? Why would warehousing be interested in sales? It became self-fulfilling, and the vendors were happy to let it happen – where possible, it would drive revenues for integration software and services,” Longbottom said.

“That the business and IT allowed this to happen was mainly due to a worrying 1990s trend, where IT divorced itself from the business, and so was seen less and less as a group that needed to be involved in decision making – the decision was made at the business level and passed down to IT, who hadn’t a clue as to what was really needed.”

This lack of coherency across systems such as CRM and ERP can have severe consequences for business effectiveness, according to the Computing research. Nearly three-quarters of respondents to the Positioning your Business for Growth report agreed that having multiple software systems in place instead of a consolidated system increases cost and/or management overhead. When asked to name some of the areas that had incurred extra cost, respondents listed physical network resource, disaster recovery and backup, security and hosting costs. Duplication of effort and processing, and the difficulty in managing complex and sometimes poorly integrated systems were other bugbears mentioned by respondents. Asked whether they believe they have incurred inefficiencies as a result of running multiple systems, over 76 per cent of respondents answered in the affirmative.

“Cross-departmental communication can clearly be troublesome when departments have their data residing in disparate software systems. These problems are many. The issue cited by the largest number of respondents (62 per cent) was poor communication between sales and finance teams over issues such as account status and age of debt. Sixty-one per cent complained of poor forecasting and information flows,” the Computing report noted.

The same research points out that this decentralised approach to systems does not significantly improve redundancy or data security. This point was echoed by Quocirca’s Longbottom. “There is no linkage between the data. Master data management takes the key referential data and creates a single database that points to all the other data sets and ensures commonality and a single source of reality – this is where businesses should be looking at as a means of dealing with such major silo issues,” he said.
 
Lindsay Boullin, commercial development manager at global business software and services specialist Sage, went on to warn that inefficiency caused by incoherent information about each customer leads to customers receiving different messages from different departments within the same company.

“For example, a customer might receive a promotion from marketing to use a service they are already familiar with, while the sales team tries to cross-sell a related service, just as the finance team puts the account on hold because the credit terms have been exceeded. This leads to time wasted by each department,” according to Sage’s Boullin.

“The worrying impact of this is on customers whose experience of the company is very disjointed. This may lead to a reduced propensity for Mr. Customer to re-use the service, make him more willing to consider competitive propositions and possibly (eventually?) reduce the retention rates of the business. Clearly this will impact the top line performance of a business, and in the not-for-profit sectors reduce fund-raising ability and reduce satisfaction in service provided.”

Boullin advised that, by using systems that are integrated by design, or which use open integration standards, data can be shared and exchanged between departments. However, he cautioned that there are many issues that can arise in implementing a central system. But the key issues are often not technological, but related to adversity to organisational change. This can be overcome by managing stakeholders’ reaction to change, in just the same way as project managers will manage the move to the new technology.

“The main benefit an organisation will get from consolidation will be by aligning its ERP/CRM project to its business strategy, to ensure that the return from the investment in the systems is aligned to the organisation’s drivers,” Boullin explained.