The urge to merge: integrating front- and back- end systems. (Cutomer Relationship Management).

Through 2004, SMBs that acquire pre-integrated front-to-hack 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)

Why Integrate?

Imagine a company's field technician onsite 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 realtime. 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 backend systems, including complete supply chain integration, can enhance customer service, increase productivity and, ultimately, provide significant returns on investment.

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 increasingly felt.

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 raking on," Harrison concluded.

In addition to distributed organizations, some vertical industries are especially in need of integration. Said John Hall, president of Indianapolis-based Tele Verity: "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.

The Challenges

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 reduce 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.

A Plan

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 today?"

"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 organization.

"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 nor 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.

"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.

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(1.) Linking CRM to the Back Office: SMBs Now Have Options," Research Note, GartnerGroup Inc., Aug. 10, 2001.

Christine J. Holley is market communications director for Indiana polls-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. She can be reached at [e-mail] or [phone].