"The degree to which a company can digitise its processes will affect its performance - that's where the heart and soul of productivity is coming from."
This message comes from a recent report by the University of Texas at Austin, funded by Cisco Systems. The report found that companies integrating the Internet into their operations were two and a half times more likely to see productivity gains and more than two and a half times more likely to see market-share growth.
But how can most companies, weighed down by long-standing compartmentalised infrastructures, partitioned processes, redundant data structures and fragmented systems meet this challenge? To fully integrate the power of the Internet into an enterprise, organizations must embrace a multidimensional integration strategy.
Compartmentalised organisational structures were established long before the advent of the Internet and computers themselves. Existing business practices, data structures and computer systems - even those systems developed during the past decade - reflect the compartmentalised business units found in most organisations. Every aspect of today's enterprise, including manual processes and automated systems, is a monument to an era when integration was a nonissue and segregation was the norm. Tackling this challenge requires a multidimensional approach, which examines integration from business and technical perspectives at an enterprise level.
Multidimensional integration goes beyond the current practice of linking Web-based front ends to legacy systems and data structures and tackles the challenge of integrating infrastructures, processes and systems with the new world of the Internet. It requires taking a holistic look at the organisational structures, processes, data, systems and external relationships that define a business. Tackling this issue piecemeal or purely from a user-interface perspective will stall efforts to fully integrate the Internet into the enterprise.
For example, creating an e-commerce site that can access back-end order processing, procurement and inventory systems through message queuing or related technologies provides the first generation of integration. But while delivering some near-term value by providing Web-based users with the illusion of integration, it doesn't address the integration of segregated back-end business processes, data structures or systems. Even more problematic is that first-generation integration projects don't recognise the need to address the line-of-business compartmentalisation that gave rise to these fragmented processes, data structures and systems in the first place.
The productivity numbers cited in the University of Texas report legitimise the momentum the Internet has gained in corporations around the globe. And recognizing the need to integrate the Internet with existing processes, data, systems and supply chains is a step in the right direction.
Yet I rarely see the kind of holistic strategy that looks at the root cause of the fragmentation we're trying to integrate. The rush to integrate has been characterized by quick fixes and the proliferation of Web sites that offer initial productivity gains and market share, but they fall short of the multidimensional integration requirements an enterprise must ultimately embrace.
To move beyond the first-generation integration mind-set, companies must undertake the integration challenge at the most senior levels. Internal and external business processes - including those performed by suppliers, outsourcing vendors and business partners - need to be aligned and integrated to conform to the new information organisation. Existing data structures and information systems are both inputs to - and are impacted by - this process. Integration, by definition, must encompass every aspect of corporate infrastructure, business processes, _external entities, data architectures, legacy systems and the Internet across an enterprise.
Corporate planners and IT leaders should step to the forefront of this initiative because it requires senior-level and cross-functional commitment. Building and deploying a multidimensional integration strategy will take many years. But organisations that delay getting started risk losing out on the continued productivity gains and market share growth potential in the decades ahead.
William M. Ulrich is a management consultant and president of Tactical Strategy Group Inc. Contact him at www.systemtransformation.com.