The Urge To Merge: Integrating Front- And
BY CHRISTINE J.
Through 2004, SMBs that acquire pre-integrated front-to-back office CRM
applications will spend 40 percent less money while achieving 50 percent
more effective performance than those that fail to integrate or purchase
stand-alone CRM applications.1
Imagine a company's field technician on-site with a customer in the
middle of a repair job. The technician, in need of a part, logs onto his
company's Web site and finds the part is in stock at one of the company's
warehouses across town. The technician also discovers that the part is
available at the company's wholesaler located only three blocks away.
Within five minutes, the technician has given the customer the option of
having the part shipped from the warehouse, or the option of purchasing
the part that day from the wholesaler. The order is placed, an invoice is
generated and inventory records are updated in real-time. If enough parts
are requested, the company's scheduling system can even be automatically
updated to expedite customer orders.
This example shows how integration between front- and back-end systems,
including complete supply chain integration, can enhance customer service,
increase productivity and, ultimately, provide significant returns on
Without this integration, back-end systems like human resource, finance
and ERP applications remain unexploited, and front-end systems like
marketing, sales, CRM and customer service and support applications are
relegated to basic contact, account management and order processing
functions. As the trend toward distributed organizations, e-business and,
in particular, self-service continues, these 'pain points' are
Jerry Harrison, CEO of Atlanta-based integration firm Method IQ,
stated: 'When companies have a widely dispersed organization, they tend
to make critical decisions in a distributed fashion. Integrating front-
and back-end systems empowers employees to make informed decisions that
translate into improved performance. It also enables them to react
quickly, which can result in significant savings.'
Harrison cited a recent integration project involving a utility company
that saw a 400 percent return on investment as a result of field
representatives having access to automated warranty information. 'That
kind of ROI makes the challenges of integration worth taking on,'
In addition to distributed organizations, some vertical industries are
especially in need of integration. Said John Hall, president of
Indianapolis-based TeleVerity: 'As a provider of telephony integration
services, we see external call centers as some of the primary benefactors
of integration projects. Their business relies on the ability to talk to a
variety of back-end mainframe and PC data sources simultaneously. Call
centers that can offer interactive voice response functionality, as well
as agent access to multiple live remote data sources, have a distinct
advantage over their competitors.'
Hall also said that healthcare organizations, because of their many
applications that span multiple data sources and locations, are prime
benefactors of integration. 'With upcoming HIPAA regulations that demand
certification of platforms based, in part, on their ability to integrate,
healthcare organizations will be even more motivated to get started on
front- and back-end integration projects.'
Other verticals that are prime targets for integration include banking,
retail (especially 'click-and-mortar' shops) and even higher education
with the growing popularity of e-learning and portals.
While organizations can benefit from front- and back-end systems
integration, understanding the challenges involved goes a long way toward
maximizing those benefits. The primary challenge is the often proprietary
and disparate technologies developed by multiple vendors that run front-
and back-end systems. The cost of determining the exact points of
interface between systems, then designing custom interfaces for these
points, is often higher than what many organizations are willing to pay.
The good news is that emerging Web services standards are making
integration easier. Said Harrison: 'Web services standards are creating
defined business objects that can be shared between disparate software
platforms. These standards are simplifying integration between front- and
back-end systems, as well as third-party systems. The best news is that as
long as components are based on a Web services standard, a change to
either a front- or back-end system doesn't require a 're-fitting' of
other enterprise applications. This saves huge money down the road.'
A word of caution, however. Although many analysts agree that Web
services standards will help to solve integration issues, most project
that the majority of vendors won't conform to these standards until as
late as 2008. In the meantime, organizations will have to rely on
applications based on standards such as J2EE, .NET, XML and C++ to
describe data between systems.
While Web services standards are further off, thankfully, the trend
toward converged IT and communications systems is further along. The
traditional telecommunications model is giving way to an alternative
architecture that offers an open, unified platform on which organizations
can process multiple interaction types, including phone calls, faxes,
e-mail and even Web interactions.
'In today's integration-heavy environment, it's essential to seek
solutions that decrease the number of disparate systems that must
communicate with each other,' Hall said. 'Centralized communications
and integration servers that follow open standards can dramatically reduce
integration headaches while still allowing for tight integration between
telephony, Web, wireless and data sources.'
It shouldn't come as a surprise that, in an effort to re-duce
integration problems and capture greater market share, the major CRM and
ERP players are beginning to bundle their solutions to include 'complete,'
integrated front-to-back office suites. CRM and ERP vendors such as Siebel,
Oracle, PeopleSoft, SAP, J.D. Edwards, Great Plains and others are either
developing their own applications or partnering to give organizations a
more complete package.
SMBs can especially benefit from these packages where custom
CRM-to-back-office integrations would be too pricey. In fact, some studies
indicate that customization can account for as much as 40 percent of total
project costs for midsize enterprises, which can max out total project
expenditures at nearly $1 million.
While these packages clearly offer benefits, organizations should be
aware that a vendor's definition of 'complete' hinges entirely on
the requirements of the customer. In addition, even the most objective
analysis has revealed that no single vendor does it all ' or at least
does it all well.
According to a CRM study conducted by GartnerGroup, no single vendor
provided more than 51 percent of the CRM horizontal suite functionality
required to exceed its expectations (Large Enterprise CRM Suites ' No
Vendor Does It All, Research Note, GartnerGroup, Nov. 9, 2000). Another
Gartner study projected that none of the top ERP vendors would emerge as
leaders in the business-to-consumer CRM market through the second half of
2002 (CRM Application Suites for Large Enterprises Hobble to the Starting
Line, Strategic Analysis Report, GartnerGroup, Sept. 26, 2001).
A new breed of vendor known as CRM application service providers also
promise fully integrated services. Most experts agree, however, that
unless an organization is only seeking to integrate one or two back-office
functions, these providers will fail to produce any strategic advantage.
Whatever approach to integration an organization takes, a thorough
up-front analysis must be conducted. Hall advised that the first question
an organization should ask prior to integration is, 'What's in place
'If they haven't already, organizations should create a list of all
applications, systems and vendors, as well as which departments depend
upon which applications,' Hall said. 'Prior to integrating any new
application, the various methods of communication ' like whether or not
it communicates via COM or XML ' should be reviewed with each vender.
Documentation should be updated whenever system changes are made. I even
recommend getting into writing the specific integrator specialists that
will be involved in the project so that, should one quit, the burden of
bringing a new resource up to speed is absorbed by the vendor and not the
'This process sounds tedious but after helping numerous organizations
pick up the pieces after integrating systems without this kind of up-front
planning, I can attest to how much money and time it saves.'
Modeling expected integration savings prior to an organization's
integration efforts is also critical. Organizations should consider
initial-phase integration requirements, as well as requirements three
years down the road. By doing this, organizations can help determine if a
suite vendor will provide sufficient integration to support its most
immediate needs. Costs of integration that organizations should account
for include customization to data schemas, specialized runtime integration
layers between CRM and ERP suites, training and workflow integration.
Of course, no planning is complete without the involvement of the right
people. Said Harrison: 'Technologists cannot create things they do not
understand. Successful front- and back-end integration requires that
business people across the organization precisely define each business
function and what that function does. These people must then estimate the
business benefits and costs of having or not having the associated
'Integration projects should be geared toward meeting the most
important functional needs of users, not just minimizing IT efforts
required to integrate and maintain the applications.'
When planned properly, integrating front- and back-end systems
successfully interweaves various levels of process, applications, systems
and data to better support the informational needs of decision makers.
That's a benefit that, in today's business climate of rapid growth,
distributed environments and an increasingly customer-centric attitude,
organizations simply can't afford to ignore.
Christine J. Holley is market communications director for
Indianapolis-based Interactive Intelligence Inc. (www.inin.com),
a developer of multichannel interaction management software. Holley has
worked in the IT industry since 1994 and began freelance writing in 1992,
covering topics ranging from IT recruitment and management, to high-tech
and customer care.
CRM to the Back Office: SMBs Now Have Options,' Research Note,
GartnerGroup Inc., Aug. 10, 2001.
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