Importance of System Integration: Part 1

HOST: Hello everyone and welcome to Digital Journeys. Today we are joined by Jim Holman and John Trader, who will discuss the importance of system integration when implementing new software and platforms.

JIM HOLMAN: John, thanks for joining us today. What is meant by system integration, and why is this important?

JOHN TRADER: There has been a shift in the way organizations do business, especially with cloud platforms and Software as a Service models. There are two types of reference architecture that organizations use in the software industry: best of suite or best of breed.

JOHN TRADER: Best of suite was used in years past where everything was on a centralized system, such as a mainframe or a single software platform. That strategy was limiting because every change had to be prioritized across the organization, making it difficult to know when efficiencies would be realized.

JOHN TRADER: Modern architecture favors a best of breed approach. This means the best software is chosen to perform a specific task or role.

JOHN TRADER: This includes product life cycle, sales, marketing, e-commerce, purchasing, forecasting, customer service, accounting, warehouse management, HR, payroll, and business analytics. Because there are so many different aspects to a business, each part may require different software.

JOHN TRADER: In a best of breed world, it is critical to have a software integration strategy. We do not want disparate software systems and platforms to operate as islands.

JOHN TRADER: System integration must be a major focus for any organization. While modern software systems can operate independently, they must function as part of an overall cohesive business process.

JIM HOLMAN: We see that often with our mid-market clients trying to connect systems as they increase their use of cloud-based solutions. Can you talk through some general types of software systems that benefit from integration?

JOHN TRADER: Foundationally, many businesses run on an accounting platform or an Enterprise Resource Planning (ERP) system. Common platforms include QuickBooks, NetSuite, Dynamics 365 Business Central, and Acumatica.

JOHN TRADER: In the sales and marketing area, there are tools like HubSpot and Constant Contact for communicating with customers via email or text. Customer Relationship Management (CRM) systems like Salesforce or Microsoft Dynamics are also essential.

JOHN TRADER: E-commerce platforms such as Shopify, Magento, Amazon Marketplace, eBay, and Walmart benefit from integration. Other examples include Product Life Cycle Management (PLM) and Warehouse Management Systems (WMS) for wholesalers or manufacturers.

JOHN TRADER: We also see HR, payroll, and workforce productivity tools like Microsoft 365. Document management systems like SharePoint, OCR technologies, and messaging tools like Microsoft Teams and Slack are also vital.

JOHN TRADER: Finally, business intelligence and data visualization tools are critical areas for integration. We will discuss those in more detail shortly.

JIM HOLMAN: There are certainly many common platforms involved. Can you discuss the benefits of integrating these business systems together?

JOHN TRADER: Let’s look at a wholesaler or distributor as an example. We have many clients in the Greenville, South Carolina, area who utilize B2B e-commerce portals or Electronic Data Interchange (EDI) to process orders.

JOHN TRADER: If a team manually enters orders from these platforms into their inventory or accounting systems, the process is fraught with errors. This leads to incorrect customer data, wrong items, duplicate orders, and significant delays.

JOHN TRADER: Failing to have an integration strategy leads to a massive waste of time and resources. Automation ensures data moves accurately from one system to another.

JIM HOLMAN: We frequently see clients engaged in "Excel jockeying" or "CSV jockeying" between systems. Without an automated process, clients have no choice but to manually move data.

JIM HOLMAN: This often relies on specific individuals to remember tasks, creating risks of errors and duplication. Furthermore, using flat files often exposes sensitive data in an unencrypted format.

JIM HOLMAN: The risk of having data seen by human eyes as part of a manual integration process is a real concern.

JOHN TRADER: Excel is not a database, even though we often try to use it as one.

JIM HOLMAN: How do an organization's growth strategy and future business plans impact their software systems and posture on integration?

JOHN TRADER: Smaller organizations tend to utilize their accounting system and Excel as their primary architecture. As they grow, they move into ERP platforms to handle inventory and advanced business functions.

JOHN TRADER: In the mid-market, organizations often move from older technologies to modern, cloud-based Software as a Service platforms. Strategic planning for system integration is essential for this growth.

JOHN TRADER: To grow effectively, you must position your technology infrastructure and architecture to be four times your current size. If a company is at $10 million, they need to be prepared for $50 million.

JIM HOLMAN: We see this with private equity or venture capital clients when an acquisition occurs. For example, a $25 million organization may acquire a $5 million company running a different ERP.

JIM HOLMAN: This drives a requirement for integration and introduces time sensitivity. During an acquisition, a company may only have 60 to 90 days to transition off their existing systems.

JOHN TRADER: Data strategy is a key focus area, particularly regarding business intelligence. Many software platforms claim to have advanced analytics, but those reports are often siloed to data within that specific system.

JOHN TRADER: A true data strategy and unified data model are critical for making informed business decisions. This requires integrating information from CRM, ERP, e-commerce, and warehouse management into a single data platform.

JOHN TRADER: We can also bring in industry, competitive, or supplier data alongside customer forecasts. An organization's business intelligence platform relies heavily on integration tools to collect and report on data.

JIM HOLMAN: That makes sense. All data from disparate systems needs to reside in the same data stack so that comprehensive analytics can be performed.

JOHN TRADER: Exactly. Using data from different systems to understand the complete picture is the ultimate goal of a data platform.

JIM HOLMAN: Thank you for your time today, John. In part two, we will look at other important areas of system integration.

HOST: Thank you, Jim and John, for the discussion today. We appreciate your insights on system integration. Feel free to like and share this podcast, and stay tuned for part two of this series.