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January 19, 2023
6 Min Read
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For business and IT leaders, it’s the best of times and the worst of times. On one hand, today’s mix of technologies makes it possible to unleash innovation at scale -- and even disrupt markets and industries. On the other hand, the complexity of today's systems -- and figuring out how all the pieces fit together -- can push even the most tech-savvy organization to the breaking point.
Taming the chaos is essential. A recent report from Accenture, Value Untangled: Accelerating Radical Growth through Interoperability, found that organizations with a strong digital core and the ability to connect a wide range of technology components grow revenue streams 6x faster than peers. In addition, they navigate business and IT transformations 11% faster.
At the center of everything: IT interoperability. “Historically, monolithic implementations have been the norm. But as digital transformation accelerates, companies that integrate IT systems effectively outperform their peers,” states Brian McKillips, chief strategy officer for Enterprise and Industry Technologies at Accenture.
Adds Gordon Barnett, a principal analyst at Forrester Research: “The need for interoperability has been around since IT systems were invented. But there’s now a need to look at things in a broader way -- beyond the lens of technology -- in order to unlock maximum business value.”
Getting to this higher plane isn’t easy. It’s critical to rethink workflows, business processes and even cultural components. Says Corey Kirkendoll, CEO of 5K Technical Services, a Plano, Texas managed services provider: “A business must break down all the silos. Data must flow freely across the organization.”
Paying Down Technical Debt
Chaotic and unpredictable business conditions are the new normal. A pandemic, inflation, regulatory issues, supply chain disruptions, changing employee expectations and geopolitical events -- along with rapid and radical technology change -- have made highly networked and highly automated business ecosystems essential.
Interoperability can be elusive because many organizations embark on tactical changes or fail to see the complete picture, Barnett says. “In many cases, they focus only on a part of the organization without fully understanding the impact on technology investments, process reengineering, and human capital assets,” he explains.
The intersection of operational technology (OT) and information technology (IT) can prove particularly nettlesome. Historically, these two entities have operated separately, with attempts to connect systems and data an afterthought. “This often leads to the creation of data silos … that hinder agility, reduce productivity, impede customer experience improvements, and hamper scalability,” Barnett says.
Business and IT leaders who ignore these problems do so at their own peril. Accenture found that 66% of organizations struggle with the sheer number of applications. This results in technical debt and a loss of agility, McKillips says. In addition, 60% are unable to align their application strategy with overall business goals and 44% struggle to identity the right business case or ROI. Remarkably, 34% believe interoperability is simply too expensive.
The real-world repercussions are palpable. “People working in various departments continue to rely on different and often repetitive sets of tools. There is a lot of wasted effort,” Kirkendoll points out. This approach boosts technology costs and IT overhead, but it also interferes with automation and more advanced AI frameworks that wring out inefficiencies, particularly as businesses look to build digital marketplaces and enhance traceability within supply chains.
On the other hand, Accenture notes, digital leaders are likely to unlock deeper transparency and faster decision-making; provide increased operational agility; experience higher levels of productivity; offer better customer and employee experiences; and have the ability to scale and innovate faster and better.
Building a Better IT Model
Getting past all the roadblocks isn’t easy. Organizations must “have the ability to dynamically reconfigure their business and their operating models at the speed dictated by the market, Barnett explains. This includes melding operations technology and information technology far more seamlessly, and incorporating IoT, ML, AI and other tools that comprise the so-called Fourth Industrial Revolution (IR4).
“APIs widen the gap between digital innovators and their digital laggard competitors,” Barnett explains. The reasons are fairly straightforward: Digital innovators deliver better consumer experiences while digital laggards focus on mechanics and compliance rather than digital transformation. In other words, “Digital laggards maintain the status quo. They cultivate inaction…and leave important optimization planning for later,” he says.
Forrester’s Barnett also says best practice interoperability revolves around four strategic areas: establishing operating and architecture principles that guide future design and investment decisions; architecting with change in mind; putting customers at the center of all strategic decisions; and empowering employees through digital skills, trusted collaboration and a set of shared goals and objectives.
From a tactical perspective, Accenture points out that three factors are crucial for unlocking value from systems: ubiquitous clouds, improved application design, and low-cost applications. This framework -- particularly when built atop a cloud platform that supports multiple functional domains and consistent technical standards -- makes it possible to configure and reconfigure applications as needed without overhauling a digital core.
Accenture refers to this modular IT model as composability. For example, “You might use a big ERP system to manage your supply chain, but you connect it with SaaS-based demand planning or supply planning systems that accelerate your supply chain visibility and capabilities,” McKillips explains. With a digital core and proven, repeatable solutions in place, an organization can configure and reconfigure IT rapidly -- and achieve extreme business agility and flexibility. There’s also no need to constantly update areas such as authentication and security.
Putting Interoperability at the Center of Everything
Interoperability is a moving target -- and it requires a focus on technology but also business processes. As a result, Kirkendoll suggests that organizations engage in a thorough review of applications, data ingestion tools, APIs, and workflows every six months to a year. The goal is to constantly adjust and adapt to changing conditions -- and new opportunities.
Not surprisingly, IT leaders will have to make tough decisions about technology standardization and data governance -- and ensure that various groups abide by decisions. The right digital core can make things simpler, but it cannot solve every issue. “People must work with the same set of data. They can’t get tripped up by incompatible systems and manual tasks, like trying to export CSV files,” Kirkendoll says.
Establishing data evangelists and embedding them in IT teams for various departments -- such as finance, operations, marketing, sales, legal and human resources -- can also pay dividends. These advocates can make suggestions, offer ideas and share best practices as well as success stories. “People have tools, technologies and methods they are accustomed to using,” Kirkendoll says. “A data champion can demonstrate how a change will deliver positive results.”
Make no mistake, best practice organizations recognize that interoperability isn’t a final destination, it’s an ongoing process that requires a constant examination of OT, IT and business needs. It’s all about building a powerful digital core and ensuring that the right elements orbit it. Concludes Accenture’s McKillips: “When organizations reduce the need to manually stitch together technology components, resources, and data sources, they’re positioned to excel. Interoperability unlocks business value.”
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