The “Future of P2P” series continues today with a look at integration. Every time we think we’re nearing the end of this series, more ideas keep popping up that we want to tackle in some detail. Still to come will be networks and what we will call “true P2P.” If you are reading this article in October 2010, you can click here and see this series and our ePayables Primer series in consecutive order on the front page. (Sidebar: If you are reading this article in October 2020, you have to admit, this was pretty prescient stuff, huh? :D)
Integration
Integration. Bleh. Integration to back-end systems. Zzzzzzzz.
While I’m much more of a sourcing guy at heart, I’ve also had the opportunity to manage and/or participate in the implementation of several eProcurement systems for a few large, Fortune 200-type companies. Coming from the functional side of the table, I can tell you that integration details can be frustrating and boring – frustrating as in:
Why does it take so long? “Because it does.” Why did it take longer than you originally said? “Because it did.”
And boring as in:
Why does it take so long? “Actual answer with details……” Why did it take longer than you originally said? “Actual answer with details……”
In both cases, most functional people don’t understand or frankly, care what the answer is because they have no real context to understand the key points in the discussion and no way to validate the quality of the answer. The answers may as well be coming from this guy (without the catchy tune and smile, of course).
The future of P2P integration to back-end systems needs to work like standard appliances in your home – Plug and Play – pretty much the same way a new Blu-Ray DVD player works today. Take it out of the box, plug it into any electrical outlet; quickly figure out which cord (that was included) works best for your television or entertainment system, plug it in and play. The future integration of eProcurement and back-end systems will need to work like this. To get there we’ll need contributions from the eProcurement solution providers (think DVD or other media playing device) and the ERP companies (think television).
Cloud (or SaaS) has already been and will continue to be the driver of advances from the eProcurement side as it relates to integration. In the “clouds,” eProcurement deployments have to be faster than other options so they necessarily become more standardized, with standard cords/plugs to get up and running and small “splitters” to quickly handle any nuances. Cloud will also be the driver of more rapid (this is a relative description comparing the future to the last decade) changes in the construct of how the eProcurement solutions deliver their content as well (think about how watching home movies has changed as the primary home movie/media players evolved from Betamax to VCR to DVD to Blu-Ray to the next thing).
To stay relevant, the ERP companies will need to improve how receptive their systems are to the standard eProcurement plugs (think the back of your TV and the three typical plug options – coaxial, USB, or the red/white/yellow cords). These companies have the inside track on improving how their own eProcurement offerings plug into their own back-end systems, but they would be wise to develop open standards so issues like versioning and upgrades are done for the right reasons (because the new capabilities make sense from a business standpoint) by their customers, not because of integration-related (resource, time, money) considerations.
My hope is that the ERP companies consider the development of more open and cleaner integration standards as an investment in keeping their back-end systems relevant, and not as a way to open the door to more eProcurement competition. Think of it this way – on many levels having a flat screen TV with a built-in DVD would be pretty cool – hard to beat today – until you want to play a DVD on the bedroom TV or bring the DVD player to the beach house you rent every summer. The flat screen is obviously not portable. Hard to beat until that new media format comes along and makes the DVD player less relevant and eventually obsolete. “Great, now I’m stuck with a DVD player embedded in my cool TV.” The ERP companies want people watching television on their television set, not some other gadget. Open integration standards to major application sets, like supply management, will keep their “TVs” front and center in the enterprise’s living room.
Two other paths that the future of P2P integration could take –
1. Hub services – Like a set-top box on top of your television that has many inputs and outputs. Hub services that can manage the different plugs from different eProcurement, ePayables, and other Supply Management solutions and the different plugs from all of the different backend systems could emerge. Enterprises will need to buy the right plugs and subscribe to the “hub service” for this integration. While this is possible, I believe it is unlikely, at least as it stands today.
2. Integration becomes irrelevant due to external Enterprise Search and Reporting capabilities. Dare to dream. This threat is one compelling reason for ERP systems to develop the open standards discussed above. In this future scenario, the need for linkage between systems of record and systems of engagement becomes irrelevant as search ‘crawlers’ penetrate into the databases of all enterprise systems to gather, organize, analyze, and present the data. The data crunching will be real-time and adaptive, and the reporting will be completely customizable, easy to use and sleek. This capability will extend into all pockets of the enterprise, not just P2P. If the revenue model for this capability could be ad supported, I think we’d be seeing the first attempts at this in the not-too-distant future. The value that this type of service/solution could deliver would be extraordinary. Dare to dream.
This is a very interesting topic and probably one that most sourcing organizations tends to minimize when the implement or change P2P systems.
The options are not easy to decide between: Either you spend the time on hard integration points between the different back end systems (HR, Accounting, Finance and Accounts Payable), or you will pay the price once you go live chasing down problems in the back end or with your user records maintenance when users “forget” to tell you they have changed locations, cost centers or managers.
Having been involved in more than one enterprise wide P2P implementation I would not always bet the farm on doing the work up front and making sure that user experience is the best possible following go-live. That being said I do not agree with the premise that this needs to take a lot of time or be expensive as long as the Procurement executive leading the effort can truly engage the internal stakeholders to a collaborative process where everyone understand what is at stake and what can be achieved.
I do not believe, at this point in the game, standalone systems (like Ariba or PNet) are at any significant disadvantage from the large ERP solutions when it comes to having hard integration points as IT departments are becoming masters at transferring content from one system to another. Some of pure P2P oriented solutions often offer significantly more flexibility and variety in the function set, which can more than make up for the ”out of the box integration” an ERP P2P module can bring to the table.
In the end of the day I think this comes down to knowing your internal organization’s environment and knowledge base when it comes to ERP infrastructure and make an informed decision about which way to go.
Either way the Procurement executive leading the change initiative has to be highly visible, which will weigh heavily on the success or failure of the initiative.
Anders –
You make several really interesting and great points. To start, the “Future of P2P” will absolutely require strong executive leadership.
My hope is that in the future, integration considerations simply fade away with as “plug and play” P2P systems become standard, so CPOs like yourself can focus on the “business” side of technology.
It is self evident that integration is critical.
Purchase to pay by it’s nature stretches across disparate business functions – indeed – it stretches across the supply chain interface between supplier and buyer. To be really effective, all of these disparate functions need to be integrated