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A survey released today by American Management Systems (AMS), a leading international business and IT consultancy, reveals major problems with current integration efforts in some of Europe’s largest companies. Unaddressed, these problems will inhibit companies from realising the business benefits of integration and a return on often significant investment.

Enterprise Integration: A Priority For Business surveyed 155 companies in the financial services, insurance, telecommunications and utilities sectors. Conducted by PMP Research, the study found that the majority of companies are approaching EI* on an ad hoc, project by project basis, responding to short term priorities rather than working to an enterprise-wide integration strategy.

“We estimate that perhaps 30% of integration budgets are being wasted as a result of inefficient integration practices,” comments Nick Leyland, Director of Enterprise Integration, AMS. “Too many companies are investing in projects for which there is no business case or in multiple projects where just one would do. Companies need to take a more disciplined and holistic approach to justifying their integration initiatives – and develop a co-ordinated integration programme that maps out the links and dependencies between projects.”

The research commissioned by AMS indicates that many companies struggle to demonstrate return on investment from their integration projects. Over one third (34%) of the organisations surveyed embark on projects without quantifiable objectives and 40 per cent cannot specify when their EI projects will pay back.

Perhaps unsurprisingly, economic and competitive pressures, the requirement to cut costs and improve customer service, are driving current integration projects. Yet, fewer than 40% of companies have a corporate team in place to co-ordinate implementation of an EI strategy. “This means that companies are almost certainly duplicating cost and effort,” says Nick Leyland, “and probably creating expensive roadblocks to crucial future initiatives. Our experience suggests that many will fall hostage to a series of projects with disjointed or even conflicting objectives, delivering little long term benefit to the business.”

The AMS research used a four level integration maturity model** to assess the current EI status of European enterprises and found that only 25% of companies have moved beyond level 2 structural integration (using middleware tools to connect applications). Only 5% of respondents are integrating their businesses with partners and suppliers to extend their service offering and enhance customer service. Twenty five per cent of the companies surveyed still have to re-key data due to lack of integration between systems, at a huge cost to the business.

The survey also reveals a significant integration skills gap, recognised by companies as a major challenge for their EI initiatives. Seventy seven per cent of companies in the survey are using external support for EI projects, to provide the systems integration and project/programme management skills they lack in-house. Nick Leyland comments “Effective integration demands experience and expertise that is not necessarily part of the IT department’s everyday skill set. Companies should be looking for a partner with programme management and business consulting skills, as well as technical capabilities and legacy systems expertise. A robust integration methodology is essential since this is the only real antidote to the complexity that bedevils integration programmes.”


Editor’s Notes

* The AMS survey defines enterprise integration as “the effective integration of business processes, applications and organisations and the implementation of technical solutions to support that integration”.

The Four Levels of Enterprise Integration

Level 1: Point-to-point integration

The company has established a basic data interchange infrastructure between applications. Each interface is custom built.


Level 2: Structural integration

The company uses more advanced middleware tools to standardise and control information exchange between applications.


Level 3: Process integration

The company has achieved the transition from sharing information between applications to managing information flow between applications developed around a common business model of processes.


Level 4: External integration

The business is transformed by directly connecting customers and suppliers to the organisation’s operational systems.


Availability

The full report can be accessed via AMS’s web site: www.ams.com/europe.


About AMS

AMS is an international business and information technology consulting firm that helps clients create value by increasing revenues and market share and decreasing costs. The firm combines analytical, business process and technology skills with deep industry expertise to provide leading edge solutions that deliver competitive advantage to clients.

Founded in 1970, AMS is headquartered in Fairfax, Virginia, with 8,000 employees and 51 offices worldwide. European headquarters are in The Hague, The Netherlands, and AMS has staff and offices in 11 European countries.

AMS reported 2000 revenues of .28 billion. The firm is traded on Nasdaq under the symbol AMSY. AMS can be found on the World Wide Web at http://www.ams.com


Contact details:


Felicity O’Brien
AMS
+44 (0) 1962 829722
felicity_o’brien@amsinc.com

Giles Peddy
Weber Group Europe for AMS
+44 (0) 20 7544 3203
gpeddy@webergroup.co.uk

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