CIO — Application integration has a split personality. By some accounts, it’s the good Dr. Jekyll, ready to cure whatever ails the enterprise: Share data with employees, efficiency soars; share data with customers, loyalty climbs; share data with partners, the supply chain hums. But by other accounts, it’s the murderous Mr. Hyde, an evil IT-led folly that sucks millions from the enterprise while throwing a monkey wrench into operations.
Just look at one of the more recent horror stories in the integrated enterprise archives. Nike reportedly spent $400 million to overhaul its supply chain infrastructure, installing ERP, CRM and SCM?the full complement of analyst-blessed integrated enterprise software. So what happened? In the third quarter of last year, the Beaverton, Ore.-based sneaker maker saw profits drop by $48 million, year over year, thanks in part to a major inventory glitch (it overproduced some shoe models and underproduced others). Nike blamed one piece of its integration puzzle?its demand and supply chain management software?for the mixup. ("This is what I get for our $400 million?" CEO Phil Knight famously asked, referring to the total cost of the integration project.) And what CIO reading the Nike tale didn’t feel an un- comfortable mix of emotions: relief that he wasn’t responsible for such a public and pricey screwup, and worry that his own integration project could fail in just as spectacular a fashion.
Both sides of the integrated enterprise story are true. Integration can make a business more efficient. Integration can break the bank. Indeed, integration work can represent up to 40 percent of total rollout costs for large-scale applications, according to Dan Sholler, an analyst at the Meta Group in Stamford, Conn. (EAI tools can help reduce some of those costs, Sholler says.) The challenge for any CIO who wants to sell his CEO on a major integration investment is to get past the hype and the horror stories, and get down to the payoff.
Sure, CIOs can take a termite’s-eye view of integration’s merits, projecting how an EAI tool will help shave software development times and maintenance costs, or how a data warehouse and decision-support tool will save IS from having to run off reams of reports. But to win support for a major integration initiative, CIOs must also take the elephant’s-eye view of ROI, showing how integration supports a business strategy, such as improving customer service, slashing inventory, speeding a product to market or standardizing business processes. Here are three CIO-100 honorees that understand how to show a return on integration that satisfies the elephants and the termites?and their CEOs.
