Technology & Innovation
What you need to know about application integration
Application integration facilitates the running of individual applications with other applications. Merging and optimizing data and workflows between multiple software modernizes systems and supports agile business operations. This reduces costs, reveals insights and creates greater efficiencies and capabilities as compared with using independent applications.
Many businesses run core financial and enterprise resource planning software originally developed more than a decade ago for the desktop or data center. While some of these applications are retrofitted for the cloud, most can’t take full advantage of the scalability, adaptability and robustness of cloud-native architectures. QuickBooks is a perfect example of this, and the online version of QuickBooks delivers significantly less functionality than the desktop version.
If you’re running on-premises or retrofitted online software, it’s worth noting that a lot has changed in the business world.
- Most retail organizations and business-to-business suppliers have adopted e-commerce transactions, requiring significant enhancements to their line-of-business systems to capture and process orders, manage inventory, track shipments, handle returns and protect against fraud and cybercrime.
- The “as-a-service” business model is growing faster than the linear business model. Companies that never anticipated renting their products and services are now transitioning to subscription and usage-based pricing. This has massive implications on functions that include accounting, billing, salesforce compensation and financial reporting. Few legacy application developers anticipated such sweeping changes to business models.
- Customers increasingly want to interact with businesses via website or mobile apps with self-service. Older applications weren’t designed for direct use by customers. Intuitive interfaces, lightning-fast response times and hardened security are table stakes for today’s customers.
- Data analytics increasingly govern rapid decision-making, requiring businesses to shift from batch to real-time processing and to make it simple to share data between transactional and analytical applications.
- New privacy protection regulations require more stringent approaches to data governance, protection and reporting. The General Data Protection Regulation and the California Consumer Privacy Act are two examples, as is the pending federal American Data Privacy and Protection Act and another 29 pending pieces of state legislation in the US.
- The internet-of-things presents new opportunities to organizations that can accommodate streaming data in a wide variety of formats from sensors and other smart devices.
With these changes in mind, it’s more important than ever for companies to integrate their core business applications, lest they are surpassed by competitors and abandoned by their markets.
Application integration benefits
Application integration provides important benefits to businesses, including:
- Information sharing: Interdepartmental interoperability is a big challenge for any organization, especially between Finance and Operations. Multiple departments and business components need to communicate freely and instantly with one another, but often this doesn’t happen.
- Application integration ensures that the applications in separate departments can freely share information. Users from different departments can access updated data. That improves collaboration and helps to streamline business processes. As well, it supports a transparent financial flow. Everyone will be aware of how each organization spends its resources and how its activities contribute to the progress of the business.
- Optimized business processes: Using application integration, companies can leverage robotic process automation, machine learning and artificial intelligence to automate workflows.
- Ease of use: Rather than forcing users to jump from one application interface to another, application integration provides a single, consistent interface to multiple applications. The unified experience makes it easier for users to learn and increase productivity.
- Agility and efficiency: Streamlined business processes increase overall efficiency. Communication is easier. Tasks take less time and effort. With this comes improved agility as companies can respond quickly to market changes. This minimizes the impact of unexpected disruptions.
- Reduced IT costs: By connecting processes across all channels and applications, software systems integrate easily and that reduces initial and ongoing software investments.
Application integration relies on a solid core
A cloud-native core application is the focal point for mission-critical data, extensions and inter-application integration. It must be open enough to enable easy access to functionality without modifications to the core code. It needs to enable easy data interchange with decision support tools such as data warehouses and business intelligence applications. Finally, it must support platform-as-a-service development for easy customizations and modifications. Users want to click, not code.
For many companies, the financial system is the best backbone candidate, but the choice depends upon the industry. There are options, such as a supply-chain application or e-commerce engine, but modern financial-management systems are adding new functionality to encompass these applications. Regardless of what you choose, there are features to look for:
- Cloud delivery – While it’s possible for on-premises applications to support the full range of extensions and integrations a business may require, the installation, testing and management process is more involved than it is in the cloud. Today, all commercial software innovation occurs in the cloud. This creates an even more compelling case for standardizing on a cloud-native backbone.
- Open connectivity via application programming interfaces (APIs) – Companies expand their portfolio of software-as-a-service (SaaS) applications as their businesses grow. The backbone application should provide extensive and well-documented APIs that enable access by third-party applications to multiple object types. Look for built-in integrations with the most popular SaaS platforms as well as standard connectors usable with a wide range of specialized and industry-specific applications. Examples of must-haves are API connectors to Salesforce, Avalara and ADP.
- Data delivery services – Organizations that want to conduct cross-system reporting, use third-party analytics tools or share information with other constituents need to easily extract information from operational data stores at scale.
- Object-oriented development platform – Building custom extensions should require as little coding as possible. Actions and workflows should center on objects and related objects so that customizations are easy to create, document and manage.
- Third-party ecosystem – Look for platforms that have a wide and diverse range of third-party partners, as these quickly respond to changes in the business and regulatory landscape.
- Vertical market expertise – Vendors that provide industry-specific versions of their core platforms are in the best position to adapt to regulatory changes, as well as to integrate with other applications that are unique to that industry.
Choosing an application integration backbone
The process of choosing a backbone application should be inclusive, involving all stakeholders in the organization who need mission-critical information. It’s particularly important that those stakeholders agree upon the need to choose a single backbone. Without such agreement, the organization risks adopting multiple data silos, competing metrics and inconsistent key performance indicators (KPIs).
Here are some questions to consider when evaluating backbone applications:
- How critical is the application to the business? The most essential applications are the best candidates to be the single point of protection for the most essential data. A financial-management platform might make the most sense, but your needs might vary.
- Who depends on the data? The more stakeholders who use or have the potential to use the application, the better its value as an integration point.
- How extensible is it? Develop an evaluation checklist that includes the features listed above as well as your own. The integration backbone may need to connect to many other applications, making easy integration essential.
- How easy is it to use? Since many people will access the application, it should require a minimum of training.
- Is it standards-based? This is critical to openness and extensibility.
- Is it cloud native, built in the cloud for the cloud? This is essential for anytime, anywhere access to data and information.
- What is the history of the provider? How responsive has the vendor been to changes in the industry? If you find customers dissatisfied with its service, run the other way.
- Is there a robust third-party ecosystem? This shows the vendor’s ability to swiftly adapt to changing regulations and customer needs.
- How robust are reporting features? The chosen application should provide visibility through strong operational and financial reporting, along with visualization tools that tell a compelling story through KPI and trend graphs, and charts.
- Are there any professional organizations that endorse the application, such as the American Institute of Certified Public Accountants for a financial-management platform?
Don’t be afraid to pose questions to the vendor and ask for references from its customers in your industry. It has much to gain by becoming your integration backbone and should be willing to respond to all reasonable requests.
The selection team should brainstorm as many realistic business scenarios as possible and work with the vendor to determine how both parties would respond to each. Among the possibilities to consider are mergers/acquisitions, new regulations, crises, changing customer preferences and innovative technologies.
Choose a limited set of KPIs that can help in evaluating success. These can include such factors as user satisfaction ratings, training time, speed of extracting data for analytics and compatibility with other applications the organization wants to employ.
Once you’ve decided, evaluate a variety of integration scenarios chosen by members of your selection team. The more inclusive this process, the greater the buy-in for your choice.
Cloud-native SaaS is a sea change that goes far beyond simply moving processing to a service provider; it reveals vast new choices and opportunities. Selecting an integration backbone today simplifies future decision-making, eliminates the peril of information silos and gives organizations the freedom to embrace the richness of options the cloud offers.
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