Business Integration is the practice of integrating information-technology with ongoing business processes. It aligns the technical aspects of an with it's business goals in order to run smooth operations
The Need Business Integration
The foundations of business integration stem from companies needing a way to exchange information quickly and efficiently. The simple fact of the matter is that in the digital world, faxes and emails don’t cut the mustard anymore. But of course, as organizations have moved along their own digital transformation journeys, they each have taken their own approach to exchanging messages and files with trading partners. However, this results in each business in a supply chain using its own distinct blend of applications, cloud resources, and various other systems, all of which rely on differing formats and platforms, and are subject to different security, compliance and governance considerations. These disparate systems don’t necessarily communicate with one another, and it is simply too inefficient and costly to deploy a multitude of solutions to contend with the sheer diversity of communication standards, data formats and security frameworks each business deals with. And so, business integration solutions, strategies and technologies are required to manage the chaos, and enable separate companies to seamlessly communicate and exchange business-critical information between each other quickly and efficiently.
The ultimate goal of business integration, then, is to improve upon the speed and productivity of conducting digital transactions across the supply chain and value chain. In addition, business integration reduces the need for error-prone, costly, and time-consuming manual processes.
For example, most companies now receive purchase orders from other businesses electronically, often via email. In the past, processing these purchase orders was a manual affair – an employee had to conduct a review, and then manually enter the information into an order fulfilment system of some kind. But with a business integration solution, when the company receives a purchase order, it is automatically reviewed and passed along into the order fulfillment system, minimizing delays for orders being fulfilled.
What’s more, for the company that submitted the purchase order, there is no more uncertainty as to whether or not the order was received, as the business integration system allows the submitting company to view this information and confirm that the order is being processed.
Horizontal vs. Vertical Integration
Horizontal integration and vertical integration are competitive strategies that companies use to consolidate their position among competitors. Horizontal integration is the acquisition of a related business. A company that opts for horizontal integration will take over another company that operates at the same level of the value chain in an industry. Vertical integration refers to the process of acquiring business operations within the same production vertical. A company that opts for vertical integration takes complete control over one or more stages in the production or distribution of a product.
While horizontal integration and vertical integration are both ways that companies grow, there are important differences between the two strategies. Vertical integration occurs when a business owns all parts of the industrial process while horizontal integration occurs when a business grows by purchasing its competitors. This article will help explain the most important distinctions between horizontal integration and vertical integration and will help companies decide which strategy is the most advantageous for them by elucidating the pros and cons of each approach.
Benefits of Business Integration
The following are benefits companies can realize when they are committed to a business integration strategy. However, the key to achieving these benefits is choosing the right technology and workflows to integrate with the various platforms across business units.
- A Simplified Environment: The amount of integrations an enterprise needs to manage can easily get out of control in a hurry. This, in turn, leads to an incredibly complex environment that can bog down operations and frustrate IT managers. An ecosystem integration platform simplifies connectivity workflows data flows become less complex. The heavy lifting is taken care of for you, so you have time to focus on the important things, such as driving true business value to your company’s bottom line.
- Comprehensive Visibility: End-to-end data visibility enables enterprises to view the entire life cycle for any type of data. A centralized integration platform gives you the ability to track, monitor, and manage data across EDI systems, cloud services, and SaaS applications. It also provides real-time visibility for business and technical users, enabling persona-based insight and intelligence into your critical data flows. Throughout your digital ecosystem, you will have all the information you need at your fingertips – and advanced reporting and alert notifications if you don’t.
- Automated Workflows: We all know how cumbersome the workarounds and custom code within our legacy technologies can be. That’s why centralized integration platforms are able to reduce errors, processing delays, and potential chargebacks through automation and business orchestration capabilities. No longer do employees need to spend their time on tedious and time-consuming tasks, such as data entry, because the built-right-in data movement and data transformation capabilities enable end-to-end workflows.
- Cost Savings: You know all those costly legacy systems and one-off applications that your teams are currently managing? Say goodbye to those headaches, and hello to a single, easy-to-use platform from which you can manage all your EDI, application, and data integration workflows. Consolidating solutions saves maintenance costs and improves operational efficiency, which enables you to allocate your money and resources toward core business services.
- Security: Besides the cost factor, another drawback to an unintegrated IT environment is that it becomes more difficult to manage all the security requirements. Separately managing the risk and security needs of each system and application is extremely cumbersome. An ecosystem integration platform gives organizations the ability to leverage secure protocols and encryption methods and layer in additional security tools in a more manageable way, which makes the job of protecting your data, and your customers’ data, an easier task.
- ↑ Why Do We Need Business Integration? IT Chronicles
- ↑ Horizontal vs. Vertical Integration: An Overview Investopedia
- ↑ Benefits of Business Integration Cleo