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6/20/2002
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Integration Efforts Yield Compelling Gains

In many industries, reducing the time it takes to bring a product to market is considered a key to gaining a competitive advantage, or at least keeping up with the competition. In consumer electronics, buying patterns and market studies can show that buyers are interested in a particular type of product--still, the first company to market generally wins when products become outdated quickly. In the automotive field, slashing new-car development time is critical, because buying decisions are based as much on fashion as on performance or reliability.

Connection EdgeA survey of 162 senior business and IT executives conducted by management consulting and systems-integration firm NerveWire in the first quarter shows that companies with a moderate to very high level of integration with trading partners are making significant gains in reducing cycle times. A large percentage of respondents report that they've also improved their products by collaborating with their trading partners.

Among companies that have achieved a high or very high level of integration with their trading partners, about a third have slashed their cycle times. About a quarter of companies with a moderate degree of partner integration have shaved product cycle times. More than one in five companies are seeing improvements in their products as the result of partner integration, with the largest gains among companies that have achieved a high degree of integration.

Companies with a very high level of trading-partner integration have a significant edge when it comes to generating new revenue and lowering costs. The survey shows costs are lower for 30% of companies with a very high level of integration with their trading partners--those with most interactions involving tightly integrated or shared business processes, applications, and databases. Less than 15% of companies with a moderate or high level of integration have reduced costs. About 40% of companies with a very high level of integration with trading partners report revenue increases, while less than 15% of companies reporting a moderate or high level of trading-partner integration achieve revenue increases.

What gains has your company seen from its integration efforts? Let us know at the address below.

Steve Konicki
Senior Writer
skonicki@cmp.com


Principal FocusSweeping Deployment
Companies that have achieved a high degree of integration with their trading partners also place a high priority on security, design-collaboration software, and Internet portals and extranets. Surprisingly, these companies, which range in size from $100 million to more than $1 billion in revenue, place a much lower priority on XML, designed to let companies communicate over the Internet, than they do on E-mail and chat software as well as EDI. As a means of communication, XML barely ranks above the telephone and fax in the survey.

The fact that companies with a high degree of trading-partner integration rank security tools as most important indicates a strong focus on doing business safely over the Internet. Design-collaboration tools and Internet portals and extranets, key technologies for partner collaboration, are next, with supply-chain management trailing.


Product PlanConventional Methods
Companies with minimal trading-partner integration also place security at the top of their list of what's important to their operational plans. E-mail and chat are second, with design-collaboration software and Internet portals about equal to the telephone and fax--an indication that companies with minimal trading-partner integration are moving toward electronic collaboration but still rely just as much on more conventional means of communication.

Supply-chain management software, Internet content management, and E-learning rank about the same among companies with minimal trading-partner integration. EDI and XML, an old and a new way to communicate with partners electronically, are in a dead heat for last in importance.


Not Yet SeamlessLess Instead Of More
Companies that are highly integrated with external trading partners such as suppliers and customers across a broad range of business processes most often derive the greatest benefits from partner integration. The business process of customer retention and acquisition is where integration with trading partners can yield large returns and cost savings.

More than three in five survey respondents say they're integrated with trading partners at least to a moderate degree in ways that are important to retaining or acquiring customers. Slightly less than half say they have a moderate degree of integration important to customer activity; 13% say they're integrated to a high degree, and only 4% say they have a very high degree of integration.


Spotty OperationsKeep The Customer Satisfied
A large number of companies are integrated with their external trading partners in ways that contribute to their order fulfillment and service activities. In all, 68% report at least moderate integration that contributes to getting products to customers on time and keeping customers happy once those products arrive.

About 45% say they have a moderate degree of integration important to fulfillment and service. Slightly less than a fifth say they have a high degree of integration that relates to such activity; only about 5% say they have a very high degree of integration that helps with product fulfillment and service issues.

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