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Fueling Innovation with Agile Integration

By Rick Kawamura, VP, Marketing, Kapow Software

Discussions of agile integration can too often become arguments about which agile method is best, or whether agile integration even exists. Multiple methods can claim agility, but let’s begin by considering the definition of agile.

agile (adj.): quick, resourceful, adaptable

There’s not much to disagree with in that definition, but let’s spend a few minutes considering why agility is so important. We’re all familiar with the dramatic changes that have transformed the economy in the last few years, and the high degree of uncertainty that faces us in the future. The most successful organizations adapt to changing conditions, and today’s difficult economic environment has made this even more important to organizational survival.

Let’s review one more definition:

innovate: to do something in a new way

There are three points to be made about the relationship between innovation and agile integration:

  1. Innovation is proactive. This is important because most organizations develop agility to improve their capacity to react—but quick reflexes are not enough to bring success. A truly successful organization will introduce new products, services, and business processes, which means it will focus on developing the kind of agility needed to support innovation.
  2. Innovation requires agility. Studies have made it clear that innovation is never 100 percent successful. It is the product of rapid and iterative development, opportunistic behavior, and quick changes of direction—including reassignment of resources to successful projects. In other words, quick, resourceful, and adaptable—the very definition of agile.
  3. IT should play a greater role in innovation. IT often focuses on its role of providing a rock-solid foundation for the data and applications the enterprise relies on, but innovation is often incompatible with this. IT can play a larger part in business innovation only if it embraces the full range of integration capabilities that exist today. Although large-scale extract, transform, and load (ETL) tools and high-powered enterprise architectures are a well-established part of IT’s repertoire, the up-front heavy lifting they often demand is incompatible with cut-and-fit, fail-fast innovation.

Fortunately, current thinking promotes the acceptance of multiple tools and techniques into the practice of data integration, as long as existing IT standards for administration, governance, and security are respected. Because of this new openness, real-time data access built on REST or SOAP APIs has joined batch ETL as data integration standards, blurring the distinction between data and application integration. This has deep implications for business innovation.

Fueling Innovation with Agile Integration

Most business innovation takes place in line-of-business (LOB) organizations. After all, LOB interfaces directly with the business environment surrounding the organization—the very environment that is undergoing powerful change—and LOB executives are generally in the best position to see the opportunities that a difficult environment can present.

Said differently, one of LOB’s functions is to integrate the company with its environment, so it should be no surprise that LOB-driven innovation rests largely on better integration. Let’s look at some of the ways enhanced integration can lead to innovative new products and services, and create a competitive edge.

Automating B2B Processes for Top-Line Growth

One trend ripe for exploitation is the tremendous growth in self-service B2B Web applications. Companies have reduced transaction costs by replacing phone and fax interaction with mandatory B2B Web sites—but many organizations must now devote considerable effort to manual data replication and synchronization between internal applications and their external, partner-owned systems. Forward-thinking organizations have recognized this as an opportunity to create automated business processes, and even to convert costly manual staff effort into innovative, high-margin services.

For example, a moderately-sized logistics firm automated the process of accepting, scheduling, and tracking shipments for certain high-value customers by integrating the customer’s B2B Web application with its own internal systems. The company eliminated all the routine manual effort needed to support a customer, enabling it to offer a two-hour service-level agreement to more high-value customers (and charge a premium price for the enhanced level of service), transforming a manual process into top-line growth.

In situations like this, agile integration methods can make it feasible to carry out low-volume trials of innovative products or services, fine-tune them, and roll them out—or terminate them if they don’t gain traction. This is the essence of innovation.

Get Paid Sooner: Reduce DSO with Agile Integration

Finance executives know there is no function more important than managing cash, but many finance organizations are at the mercy of B2B Web applications. Two examples will illustrate the opportunities available for improving top- and bottom-line performance through innovation.

  • In many industries, the use of partner Web applications to manage receivables is the norm, and it can cost the organization significantly. One such organization was manually monitoring nearly 100 payment Web sites—far too many for the available staff, which resulted in excessively generous payment terms. By integrating these partner applications with their internal receivables system, the company achieved a 5 percent reduction in days sales outstanding (DSO)—a significant improvement in any industry.
  • One Fortune 500 financial services organization integrated 300 global partner Web sites to develop a cash management dashboard for its treasury function. With this real-time global cash position available, the company dramatically reduced cash on hand and short-term borrowing—and generated significant revenue through intraday investments of the cash no longer needed in reserve.

In both cases, the sheer number of data sources indicates the need for agile methods; traditional integration would likely not provide adequate time-to-value.

Agile Business Intelligence Creates Competitive Advantage

Executives are always seeking better competitive intelligence, and innovative companies are creating competitive differentiators from their BI programs.

One national distributorship captures data from competitor Web sites and uses it to win new business. Before entering each new territory, a strategic plan—specifically for the targeted geography—is created by capturing price, shipping charges, stocking levels, and other data from the Web sites of incumbent distributors. Standard BI techniques are used to analyze the resulting data set and set strategy.

The same data allows the distributorship to offer a unique service to its customers—guidance on retail pricing. This improves customer margins in a way the incumbent distributor cannot, with no additional effort.

Agility is critical to the success of this type of innovation. Each territory has a unique set of competitors and prospective customers, and needs unique Web application integration processes for each new Web site. ETL methods with lengthy development cycles will be challenged by this type of rapidly evolving environment—especially as competitors make countermoves that trigger additional strategic analysis.

IT and LOB: Innovating Together

Just as agile development methods demand close cooperation with the customer, agile integration works best when IT and LOB collaborate. Specifically, IT needs to maintain its leadership in evaluating advanced technology that can enhance productivity for both IT and LOB, and agile integration should be on the short list. Agile integration offers benefits to both groups. As the beneficiary of enhanced business processes, LOB gains productivity—but IT can gain in two ways.

First, as agile integration increases IT’s productivity as integration developer, its ability to rapidly deliver enterprise-class integrations can lower internal development cost. Second, it can help IT shift the balance away from operations and maintenance and toward driving further innovation as it reaches out to LOB to propose the kind of new products and services it is well suited for.

In the end, the entire organization will benefit.

This article originally appeared in the issue of .

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