There are other concerns. One is security. "By consolidating, the risk is that if someone gets in, they get everything," says Scorgie, for whom the IT changes at Deacons were a delicate balance between improving access to information and safeguarding sensitive legal material. Another is that many large firms have invested so much in existing systems that, no matter what the problems of incompatibility, starting over is too costly.
Rather than standardization, say some, companies should be looking at standards. In particular, at open standards such as XML and SOAP that many claim will transform enterprise computing, enabling technically incompatible applications to share data without the need for expensive reengineering. These protocols form the basis of a new generation of Internet-based offerings called web services that, if taken to extremes, promise to make many aspects of conventional integration redundant.
Yet for all the differing views on the relative merits of IT standardization, there is universal agreement in one area. This is that success depends far more on people than on technology itself. Managing change is the most challenging aspect of any standardization plan. It's not just about training staff to use new software and ensuring project milestones are met. Getting senior management and staff on board and changing entrenched business processes are just as important.
How hard this is depends on what is being changed. According to EDS's Lee, standardizing infrastructure is easiest because disruption to staff and processes is often minor. Changing the "data transport" or enterprise application integration (EAI) layer — how programs interact and share data across an organization — is technically demanding but still a relatively easy sell. Internal politics are most likely to interfere with actual changes to major applications, as business units resist giving up cherished legacy systems in which they've invested time and resources. "That's another reason why many rationalization and merger policies just don't seem to go the way they're meant to," says Lee.
Technology managers and consultants offer a variety of advice for CFOs considering IT standardization. The first is to be careful of trying to standardize too much, or to see standardization as a complete solution. "Any CFO who goes down that path is almost doomed to a large transition cost," says Lee. Another is to recognize that you can't change everything overnight: Standardization is initially disruptive, and incremental improvements may be the best way to introduce new systems. A third is to avoid being a maverick: Go with vendors and technologies that will still be around a few years from now. Finally, take a strategic view. Use standardization not just to cut costs but also to add business value and create opportunity.
Ultimately, standardization is just one path to a common goal: easier and more efficient sharing of information. Whether an all-in-one solution looking to next-generation interconnection protocols to streamline data flows — gluing together a melee of systems through traditional integration — is the right choice depends on individual business circumstances. But while corporate mission statements these days often talk about diversity, CFOs are discovering that when it comes to the computer room, a touch of gray uniformity rarely hurts.
Jake Statham is a freelance writer based in Hong Kong.
The New Standard Bearer?
End-to-end solutions versus best-of-breed? For an increasing number of companies, this perennial IT dilemma may soon fade. The emergence of open-standard web services promises to make sharing data between applications so much easier that both traditional systems integration and end-to-end solutions will become less necessary.
One company that is pinning its hopes on this vision of the future is Hong Kong-based Tai Fook Securities. Tai Fook is overhauling its IT infrastructure to prepare for expansion into new product offerings — including forex, bullion, derivatives, and insurance — and new geographic markets, particularly China.
Refusing to tie itself to one technology, the company instead is following a strategy chief technology officer Nelson Ying labels the "three Os": open source, open architecture, and open platform. At one level, Tai Fook's new system will be conspicuously non-uniform, combining applications from US-based Sun Microsystems, Oracle, and BEA Systems. But, says Ying, every component will be replaceable and the system will make extensive use of J2EE, Sun's answer to Microsoft's .NET web services platform. This will provide the adaptability to roll out new products quickly as business dictates. It will also make it easier to integrate different trading channels, previously isolated "dynasties" that had little interconnection, says Ying.
As part of the plan, Tai Fook is also streamlining IT infrastructure. The company plans to consolidate some 100 servers onto fewer than 50 more powerful Sun machines that switch dynamically between tasks, a move expected to reduce substantially annual IT operating costs and capital expenditure.
Improved capacity and flexibility without increasing one of the company's key cost drivers — headcount — are among the reasons for the change, according to CFO Peter YH Wong. The plan makes financial sense, he explains. Using a single vendor enables Tai Fook to obtain attractive terms. Also, the company is acquiring the new servers on a three-year operating lease. This allows it to pay only for the capacity it uses, "switch on" extra processing power as traffic dictates, and improve return on capital investment by booking the cost as revenue expenditure instead of a capital item. —J.S.
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