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Strategic Data Integration
Economic pressures constantly force businesses to develop better, more profitable products and provide world-class customer service while simultaneously cutting costs. These business drivers, coupled with regulatory pressures like Sarbanes-Oxley, often result in the need to integrate data from a variety of disparate systems, across multiple business units or acquired companies, to establish a single version of the truth.In many organizations, data integration solutions are deployed as one-off, non-reusable, custom-coded, projects. Such ad-hoc solutions can benefit an individual project, but generally lack an enterprise perspective on investments in integration. This article describes how Baltimore-based investment management firm T. Rowe Price developed a strategic approach to data integration that is enterprise-focused, cost-efficient, quality-conscious and measurable.
A Strategic Approach to Data Integration
Over the past year, more and more large companies have recognized the need for an enterprise approach to data integration. A common approach to fulfilling this need is an Integration Competency Center (ICC), a shared services IT organization that enables rapid but high quality, cost-efficient data integration solutions. In December 2002, prior to implementing a major operational data store and data warehousing project, we initiated an ICC at T. Rowe Price.
Components of an ICC
T. Rowe Price's ICC brings together people, processes and technology to realize the strategic goals of cost efficiency, quality and rapid time-to-market. Individuals with enterprise vision, good communication skills and technology expertise make up our ICC.
Standard integration policies assure quality, accommodate different user needs, and provide auditable compliance with internal IT and government regulations. Policy examples include naming standards and peer reviews to facilitate data quality, security procedures for access to the data integration environment and project resources, and change management procedures to control code migration between development, testing, quality assurance and production.
Furthermore, we have standardized on a single data integration platform (Informatica PowerCenter) for all of T. Rowe Price's data integration needs. Pairing a standard platform with architectural and procedural best practices enables cost efficiency because project developers leverage common hardware, software and knowledge. Finally, reusable development objects and interfaces eliminate the need for us to re-invent the wheel with each new project.
How an ICC Offers Strategic Advantage
Our strategic approach to data integration provides benefits to both IT and the business. First, the ICC promotes better understanding of the data and the associated business rules. Second, as data integration needs proliferate to meet new business demands, the ICC positions the enterprise for anticipated growth. Finally, the ICC can leverage the data integration platform to perform rapid impact analysis and reuse assets to promote rapid time to market for business requirements while focusing on data quality.
Measuring the Value of the ICC
The value of the ICC is indeed measurable. Using a cost-benefit model based on research done by Forrester Research and Informatica, we quantified the value of using a standard data integration platform vs. traditional coding of data integration interfaces. In the process, we calculated the impact our ICC has on T. Rowe Price's business.
This cost-benefit model, referred to as a Total Economic Impact (TEI), is a financial analysis designed to determine if expected benefits of a data integration platform are worthy of an investment, or whether an existing investment is yielding anticipated benefits. It answers such questions as:
- What is the cost of deploying and using a data integration platform?
- What are the benefits of using the data integration platform?
- When will we realize a return on our investment with the platform?
- Are there savings from using a data integration platform vs. traditional hand coding?
- How much could multiple data integration projects save collectively by using a standard platform?
The Informatica-Forrester TEI model extends the typical cost-benefit analysis beyond the traditional categories of costs and savings to address the "total impact' of using a data integration platform. "Total impact" incorporates the elusive metrics of risk and flexibility in the cost-benefit equation. Risk accounts for overstatement of benefits or understatement of expenses. Flexibility encompasses three considerations: the platform's extensibility to meet future business demands, savings associated with the high availability of data integration consultants at reasonable rates, and availability of components that enhance the data integration platform's capabilities.
T. Rowe Price's TEI Results
The T. Rowe Price TEI analysis quantified $2.6 million in savings over a five-year period, with net benefits realized at the beginning of year two. Most of our savings were derived from three sources:
New development - Developers can make changes more easily with a platform vs. traditional coding because reusable objects enable rapidly built data integration solutions. Transformations can be built once and deployed on multiple projects without the need to re-edit or re-compile. Furthermore, platform independence enables development teams to focus on business rules and definitions rather than code for the physical environment.
On-going code maintenance - Overall maintenance is easier and requires fewer resources compared to client-server environments.
Impact analysis - When evaluating a potential change, it is much easier to identify impacts to other applications using a data integration platform with reporting capability than it is with custom-coded interfaces.
Figure 1: Components of the TEI
How an ICC improves TEI
The data integration standards, processes and procedures developed and maintained by our ICC facilitate quality, rapid implementation and auditability, thereby enabling development, maintenance and impact analysis savings. The ICC's shared objects result in cost reductions through reuse of existing data integration processes. Further, the ICC's control of enterprise assets provides a consistent data access mechanism and eliminates the cost of developing customized interfaces that require detailed knowledge of the execution environments. The architectural standards developed by our ICC are far more scalable than single point-to-point interfaces.
At T. Rowe Price, our ICC had positive impact on several fronts, accounting for 50 percent of total realized benefits over the five-year TEI analysis period. Furthermore, the cumulative benefits far exceed the cost of the ICC over the same period.
Summary
As this article highlights, most large enterprises can benefit greatly from an ICC approach that meets all of an organization's evolving data integration needs - from data warehousing to legacy migrations, system consolidation or data synchronization. CIOs and CFOs are sure to request financial justification as their IT organizations move away from departmental-focused integration projects towards this enterprise-wide approach to integration. By implementing a TEI analysis before or after adopting an ICC model, enterprises can clearly demonstrate the value that can be gained by centralizing the people, processes and technology required to achieve data integration success.
Melvin M. Jones is Project Lead, Database Services and Architecture at T. Rowe Price.
Gary Reicher is VP, Database Services and Architecture at T. Rowe Price.
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