Optimize What Youve Already
Got"> Optimize What Youve Already Got Cable & Wirelesss experience reflects a growing trend in corporate America of application integrationgetting independently designed applications to work togetheras a strategic goal. Even in the midst of a declining economy, companies are increasing their budgets for Internet projects, albeit at a slower rate than last year.Hefty portions of technology budgets are earmarked for connecting existing systems for electronic resource planning, customer relationship management, inventory, and other e-business components. "Integration is a large part of the IT job," says Roy Schulte, an analyst at research firm Gartner. Schulte estimates that 35 percent of IT activity in a typical enterprise is dedicated to application integration (thats 35 percent of development, 35 percent of maintenance, and 35 percent of operations). Overall, 80 percent of IT budgets are spent on operations and maintenance, with the remaining 20 percent on new applications. In fact, CIOs surveyed by Morgan Stanley last year expected that application integration and security would see the largest increases in IT spending in the second half of 2001. "It used to be that people had just an ERP application. Now they have ERP and supply chain and CRM," says Kimberly Knickle, research director at AMR Research. The care and feeding of this expanding family of applications is driving businesses of all kinds to reallocate their e-business budgets from sales, customer, and supplier management initiatives to internal improvements, according to AMR Research. Application integration falls into two buckets: data synchronization, which ensures that all the bits and pieces of customer records in multiple locations are consistent across the company, and business process automation, which automates existing systems for everything from processing customer orders and approving credit to checking inventory and sending bills. On the front lines of this movement is Scott Optiz, vice president of strategic planning at webMethods, an application integration company with a client list including Citibank, Hewlett-Packard, and Verizon. Over the last 12 months, hes seen a major shift in how companies view application integration. "Its become much more strategic than tactical," he says. He also refers to the $7.2 trillion that research firm IDC says businesses worldwide spent on IT in the 1990s. "The worlds economy would be a little different if you got a really good rate of return on that investment," he says. "It probably wouldnt be where it is today." Well, maybe. But application integration is certainly unlocking the efficiencies of Internet-based applications. A business may be able to take orders over the Web, but the rest of the process may surprise you: After an order is placed, someone prints the order, marches over to a terminal, and reenters the data into another system. Its time-consuming, costly, and prone to errors. "Thats still a big problem that companies are trying to solve," says Optiz. At Chevron Corp., redundant data entry was a mounting, labor-intensive problem for its crude oil and petroleum-trading business, which runs around the clock in every time zone. The company brought in Tibco Software, a leading application integration provider, to coax the independent systems of its e-business infrastructure and the back-office finance and accounting systems into sharing live information. Employees at Chevrons San Francisco headquarters and at the Houston, London, and Singapore offices now have access to the same live information. Saturn Corp. is also using Tibcos software to glue together its e-business applications and extend them to its 15,000 Saturn retail employees nationwide. The new system will help Saturn customers select purchase options and better enable retailers to know each customers needs after a sale.
In a recent large-scale study of global IT trends, META Group executive vice president and research fellow Howard Rubin found that chief Internet officers were cautious in their spending but still had aggressive plans for Web-based technologies and e-commerce projects. "IT professionals continue to feel the excitement and promise of the Internet, despite the economic conditions. Things had to become unbalanced for a time to find an ultimate equilibrium," he says.