COVER STORY:Profit Magazine
The Name of the Game: Integration
By Patrick Mott
Can integrated software suites help you win the war on complexity?
Have you noticed? The world has become pretty complicated. A letter is a word document, folders now have subfolders, and we've picked up enough passwords and PIN numbers to crash the most sophisticated Cray computers.
For e-business to fulfill its promise, we must simplify our systems, especially our business ones. Fire the first salvo by removing complexity with integrated software suites. Read on to see how the world's leading companies are doing just that.
Electronics salespeople will tell you there are two basic types of stereo buyers.
The first are the audiophiles—the mixers and matchers who spend hours poring over catalogs, sitting in listening rooms, fussing over just the right graphic equalizer to go with just the right receiver and the perfect speaker combination to pair with the proper amplifier and CD player. These people also spend great chunks of time at home perpetually tinkering, adjusting, recalibrating, trying to get everything to work harmoniously.
The second are those who spec out the best integrated system from a single manufacturer. They return home, spend a few minutes plugging all the components together, and settle back to enjoy their music.
Until relatively recently, most companies engaging in e- business bought their enterprise software in the same way audiophiles do: piecemeal, using what's been called (sometimes euphemistically) a best-of-breed approach.
Agilera
Englewood, Colorado
URL: www.agilera.com
Founded: March 2000
Annual Revenue: Privately held
Employees: Approximately 300
Agilera is a full-service application service provider (ASP) that delivers internet-enabled, end-to-end enterprise and e-business solutions to established and emerging companies.
Hardware:
IBM R/S6000 server
Software & Services:
AIX 4.3.3
Oracle8i
Oracle E-Business Suite
In Production: Oracle E-Business Suite Release 11.5.1, including Financials: General Ledger, Payables, Receivables, and iExpenses; Human Resources: Human Resources, Payroll, Advanced Benefits, and Time Management and Projects: Project Billing and Project Costing
In Implementation: Oracle E-Business Suite Release 11.5.1, including Financials: Assets
But the time has come, say industry insiders and other IT professionals, to stop choosing business software applications as if they were stereo components to be dismantled and recalibrated with each upgrade from any of a dozen or so disparate vendors. Instead of proliferating complexity, they argue, remove it. Companies employing Oracle's integrated E-Business Suite of online e-business software, for example, have been able to slash costs and make more-efficient use of labor pools.
"I think the suite approach absolutely helps you," says Lisa Harris, senior vice president and CIO of Staff Leasing, one of the largest human resources outsource service providers in the United States. "And especially so in an economic downturn. I've done best-of-breed implementations where you think you've selected the right solution for your needs. What happens in those circumstances is the customer gets stuck in the middle, and there's a lot of finger-pointing. It takes more time to get a best-of-breed solution cobbled together than it does an integrated solution. I've been there, done that best-of-breed implementation, and would never go back. At this point, I can say that Oracle has the best integrated model."
Staff Leasing began using Oracle Human Resources and Payroll applications in 1996 in its 40 U.S. branches, "And we had great success from a back-office perspective," says Harris. "But we didn't have a front-office solution. Our customer-care representatives literally had no customer-relationship management (CRM) system to help them conduct their business, and consequently, we had some major service issues as we grew.
"Then, in 100 days, on time and on budget, we implemented four Oracle CRM modules, which was incredible," Harris says. "Even better, less than a year later, we had a full return on our investments plus improved customer satisfaction and client retention. Our average talk time on selected calls decreased by 30 seconds. The work time spent on specific transactions declined 27 percent because of the ease of use of the product and the one-call-does-it-all capability of the Oracle CRM software. And, based on our analysis, customers serviced with our E-Business Suite applications have a 2 percent higher satisfaction [rate] than those handled by traditional phone or fax methods."
Other companies employing e-business strategies, says Harris, have been reluctant to abandon more traditional, less integrated applications during tough economic times, because of a combination of inertia and fear. "More people implement integrated suites in good times than in bad," she says, "but I think they're missing out. They're reluctant to retire their legacy or best-of-breed systems, but who says that a year from now those systems are still going to be best-of-breed? If you implement now, you get a return on investment in a year or two, and it allows you to grow. I'll take that."
Thoreau Was Right: Simplify
The concept of a single, simple, integrated, multipurpose suite of e-business software from a single vendor that can be applied to several processes in a single company—or even among companies—is still new enough to be considered novel, says Omar El Sawy, a professor specializing in e-business and information systems at the University of Southern California's Marshall School of Business. Companies are beginning to find, he says, that in the best-of-breed realm, the whole is often many times less than the sum of its parts.
Staff Leasing
Bradenton, Florida
URL: www.staff-leasing.com
Founded: 1984
Annual Revenue: US$3.1 billion
Employees: 1,200
Staff Leasing is a leading provider of HR and payroll outsourcing primarily to small- and medium-sized businesses throughout the U.S. Headquartered in Bradenton, Florida, with 40 branch offices, Staff Leasing currently serves more than 8,500 businesses. On average, Staff Leasing generates almost 100,000 paychecks weekly.
Hardware:
HP 9000 Series—multiple V2500s and A-, L-, N-, and R-Class servers
HP XP512, and XP256 Surestore Disk Arrays
Software & Services:
Oracle E-Business Suite Release 11i, including Financials: General Ledger, Payables, Receivables, Assets, and iExpenses; Human Resources: Payroll, Self-Service Human Resources, and Time Management; Service: Customer Care; and Oracle Interaction Center: Interaction Center Intelligence
"The whole notion of e-business software targeted to one enterprise rather than a group of enterprises seems to be changing," says El Sawy. "People are saying they need to implement something in their supply chain that cuts across various partners. It seems as though software is being targeted to groups of companies rather than one company. Everything seems to be pushing in that direction. Integration is a big problem for some companies, whether it's application integration, process integration, or just bare-bones technology integration. And companies are thinking, Wouldn't it be nice if the software were designed to plug in to that without all this adaptation stuff we spend tons of money and time on?"
In a slowing or slow economy, quick response times can be everything. Even e-businesses, which traditionally think of themselves as agile in the best of times, must develop the reactions of a boxer to compete in the current marketplace, says John Czapko, director of strategic alliances for Agilera, an application service provider based in Englewood, Colorado.
"Some of the things we focus on as a company are the economies of skills, scale, and speed," says Czapko. "You think about being nimble and quick. That was one of the reasons we selected our Oracle software suite. Looking at our growth, it was critical for Agilera to have a suite of applications that allowed us to integrate not only the applications and data but also the human-capital aspect of an acquisition.
"Our customers and clients look at this too. Especially with an economic downturn, they're saying, 'How do we minimize risk from a technical and a financial perspective?' The whole concept of integration plays right into that. Companies that invest in strategic solutions, be they technology or other pieces of their business, will come out of a downturn in a better position than many of their competitors. Many of our new clients who are investing in strategic solutions realize the value an integrated suite can bring to the table. It is even more critical in this economy today to focus on being agile and quick in the market, and that's why we are deploying the Oracle suite for many clients."
It's a matter of everyone being on the same technological page, says Henrik Wulff-Riedel, chief financial officer of Telia Net, the rapidly expanding Danish subsidiary of the leading Swedish telecommunications company Telia Group. Telia Net was the first European company to upgrade to Oracle's entirely Web-based suite of business applications.
"It's much simpler," says Wulff-Riedel, "to have an integrated system that relies on the same database and the same user interface. That means a lot. With Oracle's E-Business Suite, you have an instant view of what's going on across the whole company. You don't waste time integrating various applications, and you can roll the system out to users very quickly. Using the internet, you can distribute the information as easily as you can find it."
A Suite is Swift
Due to Oracle's rapid implementation, Agilera even benefited during the deployment of its Oracle integrated software suite. "It allowed us to get our first phase of applications, the financial phase, up in 30 days," Agilera's Czapko says. "And we've got clients who have gone live in less than nine days, because of Oracle's whole integrated approach."
And when it's time to upgrade? Staff Leasing's Harris says, "We have to upgrade within 48 hours. For other companies, it's not a big deal, but if we can't process payroll, if we can't take phone calls, we're out of business. Small business clients call us every day, they do payroll every day, so we have to be live all the time. With our Oracle applications, we can do that."
Savings occur not only in the form of time invested in implementation and increased reliability but also in the more efficient use of a company's labor pool, say e-business proponents.
"We've saved as much as 20 percent in labor costs because we have a single entrance, a single storage environment," says Telia Net's Wulff-Riedel. "It's single connectivity of multidimensional data. I can see how my financial information relates to the production information and how these are related to my sales staff information. That's brought about a big labor-cost reduction."
Labor savings also show up in the reduced need for support personnel. Integration, Czapko says, "allows us to look at each deployment with each customer as a separate project. We can scrutinize detail. For instance, do we hire more DBAs or application specialists? It helps us make management decisions from a hiring and a growth perspective: Here's the data. Here's who we need to hire in this market or functional position within the company."
Integrated applications also remove the need for on-site support technicians, Harris says. "Some applications out there are heavily programmer-dependent," she says. "In today's IT labor market, it's difficult to find talent. But our CRM products, used by 675 people in 40 branches across the organization, are supported by one business analyst who came up from our call center."
You are Free to Move about the Global Economy
When you have integration, Czapko says, "you mitigate the amount of time you spend doing double work. For example, without integration you may have two applications, one for human resources, one for projects. At a basic level, when you're trying to reduce costs, staffing is the biggest piece to reduce.
"What we're all trying to do," Czapko says, "is redeploy our labor resources strategically. With application integration, people are freed up to put value back into the organization. It allows you to redeploy people based on what they were trained to do when they came into the organization."
The true benefit of e-business application integration, however, has to do with a more global concept: freedom. By removing several layers of complexity, cost, and labor allocation from its way of doing business, a company is free to compete rather than simply survive.
Patrick Mott is a freelance writer whose work has appeared in the Los Angeles Times and the Orange County Register |
