Why is Interoperability so Important in Today's Networked World

November 27, 2015

 

Data interoperability Effect

When I first stepped into the world of systems integration fifteen years ago, I was challenged with significantly different problems than those I face today. A big challenge, at that time, was to establish connections with the integrated applications.

Applications were often closed. Consequently, there was no simple way to access the business-relevant data residing in these applications. Typically, you had to connect to applications’ underlying internal databases, or create ugly “screen scraping” functionalities (i.e. create “adapters” that pretended to be end users and access the data via application’s user interface). Despite the fact that the concept of public interfaces and API’s existed, it was uncommon that systems provided such interfaces

Fast forward fifteen years, and we live in a completely different world. Today, accessing data in enterprise systems is rather simple. Applications provide public API’s that enable you to read and write such systems business data. Still, the data formats vary. A customer, an invoice, or an order in one system can look completely different than the same entity in another system. However, the ability to access data in a simple manner is a promising start. You can always create the transformations. That just requires a bit of technical integration work.

But what has happened during these fifteen years? Why the sudden openness in the way applications work? I strongly believe the reason is in the business climate change of the 21st century.

Organizations of the last century were executing a large aspect of their overall business processes internally. They were completely in charge of all major business functions, from marketing and sales to manufacturing and after-sales activities. Today, as the agility requirements in the global economy become increasingly strict, these same organizations need to adapt to the constantly changing world... and fast. Companies cannot rely on building and re-building all their business functions internally, but they are buying and outsourcing anything that does not align with their core competency. As TechCrunch stated in this March 2015 article, “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.

This new economy is built on top of shared business processes. A business process begins with one company in the value network, then continues its life in other organizations. It may even end in a completely different organization. All of the involved organizations (as well as end customers) are specialized in one part of the overall process, continuously developing and refactoring the way they operate. Subsequently, this makes the overall business process as efficient as possible. The requirements for coordination of these shared processes, in turn, require effective and cost-efficient data integration between the organizations. Without the up-to-date data, it is not possible to control these complex, distributed processes.

As the requirements for data sharing become more obvious, system providers (whether the system is custom-made or based on packaged or cloud applications) are beginning to understand the importance of open interfaces. Organizations can no longer build monolithic ERPs operated solely within their organization; the data processing is distributed to multiple systems spawning different companies. System providers can no longer leave systems closed, but rather understand that they are building parts of the puzzle. Systems do not live in isolation, but must be able to interoperate in a chain of information systems. Applications need to have open interfaces, built to be interoperable from the very beginning.

The data interoperability challenge in today’s networked world goes far beyond data integration. This includes the way companies create relationships, how they agree on common business processes, and much more. However, data integration, along with the ability to alter your businesses' blueprint, are essential components of creating a successful business in 21st century.

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