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| Thought Paper |
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Measuring Returns on Enterprise Integration Implementation |
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| Abstract |
Today, CIOs and CFOs are demanding immediate returns on project costs with every
project being required to add to the bottom-line. Gone are the days when the management
used to identify the company's continued investment in information technology (IT) as a
necessary business element to stay competitive. Today, companies follow a rigorous
process requiring a financial justification for all large IT initiatives.
As a part of the total IT spending, Enterprise Integration costs are typically very high.
Moreover, most organizations deploying Enterprise Integration (EI) infrastructure, consider
multiple vendors in their selection process and spend considerable time on exploring
Integration options before making a decision. The overall EI expense can therefore result
in project implementation costs of as much as three to five times the system's software
license cost, and annual operating costs as high as the software license costs. Industry
studies have demonstrated that more than 60% of EI initiatives fail to meet the business
requirement and don't yield positive returns. On top of this, organizations sometimes find it
more difficult to develop a business case for an EI initiative than other IT investments.
CIOs considering an EI initiative are faced with the following challenges:
- How do we leverage recent investments made in ERPs, CRMs, SCMs, during the
exercise of integration?
- Will integration lead to positive ROI in a reasonable timeframe? How do we
quantify the integration-induced benefits?
- How do we anticipate and quantify implementation and business risks in the early
stage of assessment?
- How do we re-allocate budgets for implementing EI?
This Paper aims to address these difficulties and provides guidelines for developing a solid
cost benefit analysis model to support the identification, communication and ongoing
monitoring of the value of an EI initiative. The Paper focuses on the methodology involved
in defining an appropriate EI strategy with a list of parameters that needs to be evaluated
to arrive at an ROI for the recommended integration strategy.
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