Measuring the Value of Your iPaaS
The year 2018 is drawing to a close, marking the end of a year when it was impossible to talk about integration without discussing integration platform as a service (iPaaS). As such, we’ve of course had many great conversations around iPaaS – an incredibly useful category of technology capable of addressing a multitude of integration use cases.
If you’re keeping up, the four main integration use cases that make up the majority of integration projects are:
As you can imagine, it’s that last use case I really want to focus on.
What’s the Right Way to Measure Value in Technology Investments?
Part of the difficulty of attaching any credible ROI or TCO studies to integration projects is that there’s no stable, consistent, or agreeable way to measure integration. Most integration is too individualistic with too many variables to be entirely predictable.
The Problem with the Promise of Productivity and Efficiency
Allow me to illustrate the point. Take the productivity and efficiency issue. It’s really hard to sell technology that costs hundreds of thousands of dollars on the fuzziness of a claim that it makes you “more productive” or it makes your operations “more efficient.”
Actual productivity and efficiency gains can only be measured comparatively, and realistically, only following implementation to production-level instance.
Recently, I had the CEO and owner of a $500 million company explain to me that he didn’t want to hear the concepts of “efficiency” or “productivity” uttered. To him those are coded words, justification to eventually fire people or the basis of an opportunity to start slacking off.
I took it as a tongue-in-cheek comment (I hope it was a tongue-in-cheek comment). That said, he is absolutely correct. True impact must be measured in ways that can be repeatable, instantly understandable, and harmonious in their measurement and effects.
Time is Money
Time is a perfect example of that concept. It took me X amount of time to synchronize these data tables with my new technology versus 6X amount of time with my old technology.
The concrete measurement of time can be easily translated into hard and soft monetary savings.
The Slippery Slope of Savings
However, I could make a further argument that whenever you’re talking about savings you are on an equally slippery slope. I’ve never seen a CEO tell a CIO, “Brad you’ve saved the company $10 million this year with your IT investments.
Doing the math, that lets me knock $10 million off your budget for next year.”
Satisfaction is More Important Than Savings
On the other hand, satisfaction – specifically customer satisfaction – can be considered a very impactful measurement especially when NPS scores are applied. With technology starting to land in the hands of casual IT users, end-user satisfaction is a determining factor in procurement.
This brings us back to looking at the four essential use cases for integration. Which one of these use cases can be proven with impactful metrics that are easily measurable, universally agreeable, and consistent?
Measure What Really Matters
This is where I make the case for B2B, and it’s fairly straightforward. My partners can now connect to me and are willing to push 10,000 more orders to me every day.
Because of the concrete uptick in trading partner interactions, I have concrete and measurable gains – the kind that influence growth and inform the bottom line. In this case, B2B integration has made me more money.
The ongoing centrality of B2B integration in the success or failure of pretty much every company out there is why most of technology evangelists and analysts cannot just forget about this EDI or MFT stuff.
Instead, they’ve augmented the B2B story with API economies and marketplaces. But, the fundamentals remain fundamentally unchanged: My partners can now connect to my business however they like and are willing to push 10,000 more orders to me every day.
Despite the shifting perspective in B2B, the one thing that’s constant is the partner story. How, when, and where I connect to my partners is the real differentiation when considering B2B integration. It’s a multitude of connectivity options, protocol options, and transformations.
Add to that more and more robust customized governance options, and you can truly have a set of dials that will allow you to connect and conduct e-commerce with anyone.
But we should not stop there. We should not allow terminology like “partner management as a service” or “next-generation B2B” or even “marketplaces” deter us from what we really need integration technology to accomplish.
Simply put, the current and future generations of iPaaS must let companies create, manage, and enhance all the interactions with members of their ecosystems, even the interactions that don’t include themselves.
This is a hefty statement.
In some cases, it’s a B2B connection, and in others, it’s an outsourced brokerage-type model. The point I’m trying to make is it needs to be both. And not only does it need to be both, the governance mechanisms need to allow you to govern as much or as little of the process as you see fit.
Those of you with 40,000-plus partners (I’m looking at you, retail) may not want to manage every single aspect of an ecosystem interaction. Conversely, those of you with 10 partners accounting for $1 billion of business may want to control every aspect of an ecosystem interaction.
Most of us fall somewhere in the middle of these two poles.
In my next entry, I’ll present ecosystem-driven integration and why it’s the differentiating capability and functionality you need to consider in your next iPaaS decision.