We have seen firsthand the growing importance of combining different systems to drive efficiency and innovation in businesses. Think about it, the number of connected devices alone is projected to reach $29 billion by 2030 and the global market for systems integration is expected to reach $955 billion by 2030. These stats show the growing importance of system integration. As organizations use more and more devices, technologies and IT services, integration is a key component that helps us to derive the most value from technology.
In this guide, we will define system integration and delve into the key considerations including the different types and methods of integration.
What is system integration?
System integration is the process of combining two or more systems or components into a single, cohesive system that functions as a single unit. The goal is to ensure that the different components of the overall system work together seamlessly.
For an organization, system integration goes beyond the connecting together of internal systems. It also involves connecting external or third party systems that the organization also uses. This could be third party commercial tools, partner systems, as well as industry or government systems depending on the kind of industry you operate in.
There are different methods you can use to integrate your systems, as well as different types of integration. Let’s look at these next.
The top types of system integration
The types of system integration are quite diverse, but there are those that are widespread and these are the ones you will find most organizations using. Here are the top ones:
1. Legacy system integration
This method refers to the integration of older, pre-existing systems with newer systems. It may involve adapting the older systems to work with new hardware or software, or creating interfaces that allow the different systems to communicate and exchange data. The goal of legacy system integration is to continue using existing systems while also taking advantage of newer technologies.
Integrating legacy systems with newer systems can be challenging, as they may not be designed to work with the latest technologies or may have limitations that make them difficult to integrate. However, legacy systems often contain valuable data and business logic that is still needed by the organization, making it important to find a way to integrate them with newer systems.
2. Electronic document interchange (EDI)
EDI is a method of exchanging business documents, such as invoices and purchase orders, between different organizations or departments within the same organization, in a standard format.
In EDI integration, the systems that host and process the business documents are connected such that they work seamlessly as one unit. This allows different systems to communicate and share documents without the need for manual intervention. EDI is often used in industries such as retail, healthcare, and logistics, where there is a need to exchange large amounts of documents.
3. Business-to-Business integration
Just as the name suggests, B2B integration involves the connection of different systems within an organization with the systems of other businesses such as those of its partners and suppliers. This opens the way for seamless collaboration between businesses.
The idea of B2B integration came about due to larger companies pushing their partners, like suppliers, to adopt certain methods for sharing information with them. This approach was mostly unilateral, with the bigger businesses deciding on the integration technique and smaller companies being required to comply.
As technology evolved, B2B Integration became more sophisticated and began to include two-way communication. This allowed for a more collaborative approach, where both parties could share data and make decisions based on real-time information. Additionally, the rise of cloud-based technologies and the use of APIs made it easier for companies of all sizes to integrate their shared systems.
4. Enterprise application integration (EAI)
Enterprise application integration (EAI) is the process of connecting different enterprise applications within an organization.
This type of integration becomes necessary when an organization realizes that it’s using so many applications that are working separately and employees are spending so much time moving from one application to another. EAI came in to save this wasted time by creating a single gateway through which employees can access and use all applications from one point.
5. Data integration
Data integration is the combination of data from different sources into a single, unified view. This allows organizations to gain insights and make better decisions by having a complete view of their entire data.
This type of integration has become prominent in the modern landscape where so many organizations are now accumulating a lot of data from different sources. To make sense of this humongous data, there is a need to integrate it all into one seamless unit.
Top system integration methods
Depending on the intended goal, there are several methods you can use to integrate different systems. The common ones include:
1. Common Data Format integration
This SI method involves standardizing the data format used by different systems, so that when each system shares information, it uses a single format that can also be «understood» by all the other systems. For example, a company may standardize on the XML format for data exchange between its different departments and systems, ensuring that all systems can understand and process the data.
So let’s say for instance that we have system A that uses format X as a default data format, and system B that uses format Y as the default. If an employee working with system A wants to access some data in system B, the data from system B will have to be shared in XML format, which is the common data format in this case. On the other hand, system B must be able to read the data shared in XML format.
2. Hub-and-spoke integration
Here, all systems are connected to a central «hub» system, which then communicates with multiple «spoke» systems. This allows for more efficient management and reduces the need for replication.
An example of this method could be a company using an ERP system as a hub to integrate all their departmental systems like Finance, HR, Sales, Marketing etc.
3. Point-to-Point Integration
This method involves connecting two systems directly, without the use of a central hub. This is typically done using Application Program Interface (API) calls or message queues. An example of this method could be a retail store integrating its point-of-sale system directly with its inventory management system, so that when a sale is made, the inventory system is automatically updated.
Since this method connects only two systems, sometimes this approach is not considered to be true integration. And if you have so many of such integrations, you'll soon be overwhelmed and will need to upgrade to real integration. So this method is normally suitable for small business functions, or for small companies with just two critical systems to integrate.
4. Star Integration
The star approach is similar to the hub-and-spoke method, but instead of a single hub system, there are multiple hub systems that are interconnected point to point. In other words you are connecting one hub to another hub, or a subsystem to a subsystem. An example of this method could be a retail chain integrating their different store systems with the marketing systems.
Just like the challenge in the point to point method, star integrations can quickly grow to too many integrations and get complex. At this point, the “stars” will be like mini single systems, meaning you’ll need to upgrade the integration to a much more smooth method.
5. Vertical Integration
In vertical integration, subsystems are integrated through what we refer to as functional silos. This basically means connecting together systems that have closely related systems to form one unit, the silo. This unit is then connected to another unit of systems that perform another set of closely related functions. In the end you will have one big silo that is composed of mini-silos sitting on top of each other. The bottom silo is made up of the most basic functions and the top most silo is made of the most complex functions.
When a new set of functions is added to the infrastructure, you'll need to add another silo. The more silos you build, the more the integration becomes much more complex.
An example of where this method can be used is when an organization wants to interlink its internal systems with different third party systems such as those of suppliers. You can create a silo for raw materials suppliers, another silo for service suppliers etc. The most basic supply silo will be at the bottom whereas the most complex supply systems will be at the very top of the silo.
6. Horizontal Integration
A common service bus is used as the common user interface layer through which all other systems are connected. An example of this method could be a company integrating its finance, HR, and marketing system through a common layer.
Benefits of system integration
The great benefit of system integration is that it «merges» your IT infrastructure into a single, cohesive unit. As an example, picture having 20 systems and applications distributed both internally and externally. Somehow, these systems must coordinate during work. Just think of how hard it would be for your teams to manually coordinate between all these systems. How much time would they lose? Not to mention the strain of trying to log in separately to each system, remembering where to find it, etc. Now just imagine being able to access all these systems from one unified dashboard — so much easier!
This is the magic of integration and there are so many advantages to this. Here are the top ones
1. Improved efficiency and productivity
Through system integration, organizations can automate processes, eliminate data duplication, and streamline workflows. This can result in improved efficiency and productivity, as well as cost savings.
For example, a retail company that integrates its point-of-sale system with its inventory management system can reduce the time and effort required to manually update inventory levels..
2. Increased visibility and control
Integration allows organizations to have a more comprehensive view of their operations, and to gain better control over their data and processes.
For example, a company that integrates its financial systems with its customer relationship management (CRM) system can better track customer interactions and gain insight that can help them to drive up sales.
3. Enhanced collaboration
Integration enables better collaboration between different departments and teams within an organization.
For example, a healthcare organization that integrates its electronic medical records (EMR) system with its scheduling will ensure that all relevant information is available to the right people at the right time.
4. Improved security posture
Companies can use system integration to improve their security posture. For example, an internal IT team can integrate their firewall, intrusion detection system, security information and event management (SIEM) tools to improve their visibility and response time to security incidents.
Internal IT teams can also use system integrations to improve their disaster recovery and business continuity plans. A good example is the integration of backup solutions with DR solutions to improve RTO and RPO.
System integration challenges
As you can expect, system integration also comes with its own set of challenges. These challenges can vary depending on the organization's specific needs, the type and level of integration implemented. The following are some of the key challenges of system integration:
Integrating different systems can be a complex process, especially when the systems are using different technologies, platforms, or data formats. This can make it difficult to ensure that the systems can communicate and share information seamlessly.
2. Data issues
Ensuring data quality and security during the integration process can be a challenge. Data may need to be cleaned, transformed, or enriched before it can be shared between systems. Additionally, security risks such as data breaches or unauthorized access must be taken into consideration.
3. Change management
Some system integrations may require changes to existing processes, workflows, and roles within the organization. Managing these changes and ensuring that all stakeholders are aware of and supportive of the integration can be a challenge.
Also Read: A guide to change management
4. Ongoing maintenance and support
Once systems are integrated, ongoing maintenance and support is required to ensure that they continue to function properly and meet the organization's needs.
This can be a significant challenge, as it requires resources and expertise to monitor, update, and troubleshoot all the integrated systems.
When does it become necessary to integrate systems?
Of course the main purpose of integration is to enjoy the benefits we’ve discussed here. But it’s not always the case that you want to integrate. But there are certain situations that may force you to integrate even when you do not want to. These include:
- Mergers and acquisitions: When two companies merge or one company acquires another, they may need to integrate their systems.
- Compliance: Certain industries may require businesses to integrate their systems in order to comply with security, privacy, and data management standards.
- Growth: As a business grows, it may need to integrate new systems and applications in order to manage the increased amount of data and meet the needs of a larger customer base.
- Supply chain management: In order to have a seamless coordination with their suppliers and partners, companies are forced to integrate their systems.
- Cloud adoption: As companies move to the cloud, they may need to integrate their on-premises systems with their cloud-based systems.
The rise of iPaaS
iPaaS stands for «Integration Platform as a Service». It is a type of cloud-based service that provides companies with a platform for integrating their different systems.
iPaaS has seen significant growth in recent years as a convenient approach to system integration. The global iPaaS market is expected to reach $ 11.1 billion by 2030. This growth can be attributed to the increasing adoption of cloud-based technologies, the rise of big data and IoT.
One of the key advantages of iPaaS is its ability to connect, manage, and automate the flow of data in a cloud-based environment. This allows companies to easily integrate their on-premise systems with cloud-based systems.
Also Read: On-premise vs. Cloud
Some examples of iPaaS solutions include:
- Dell Boomi, which provides a cloud-based iPaaS solution for data integration, application integration, and process automation
- MuleSoft, which offers a platform for API-led integration, allowing companies to connect their applications, data, and devices
- Informatica, which provides a platform for data integration, data quality, data governance and API monetization
- Jitterbit, which offers a cloud-based integration platform for connecting systems, applications, and data
- SnapLogic, which provides a cloud-based platform for data integration and automation.
When is it recommended to use iPaaS?
- When integrating cloud-based systems: iPaaS is a cloud-based platform, so it is particularly well-suited for integrating cloud-based systems. It allows organizations to easily connect and integrate different cloud-based systems, such as SaaS applications, and can help to reduce the complexity and cost of integration.
- When integrating with on-premises systems: iPaaS also allows integration with on-premises systems, so it's a good option when an organization wants to connect and integrate on-premises systems with cloud-based systems.
- When integrating systems across different locations and platforms: iPaaS allows for integration of systems across different locations and platforms, which can be challenging to achieve with traditional integration methods.
- When there is a need for intense ongoing maintenance and support: iPaaS providers typically offer ongoing maintenance and support, which can be beneficial for organizations that do not have the resources or expertise to maintain the integration themselves.
When is it not recommended to use iPaaS?
While iPaaS can be a convenient option for many organizations, there are certain situations where it may not be the best solution. It is not advisable to use iPaaS in the following situations:
- When dealing with highly sensitive data: iPaaS providers typically store data in the cloud, and while they may have robust security measures in place, they may not meet the level of security required for highly sensitive data. In such cases, you may prefer to use an on-premises integration solution or a hybrid integration platform.
- When dealing with strict regulatory compliance: Some organizations are subject to strict regulatory compliance, such as HIPAA, SOC2, and PCI-DSS. In these cases, you may need to ensure that the integration solution you use meets these compliance requirements. Some iPaaS providers may not be able to meet these requirements, so it's important to check beforehand.
- When dealing with a limited number of systems: If your organization only needs to integrate a small number of systems, using iPaaS may not be cost-effective. A simpler integration solution may be more appropriate in such a case.
- When dealing with rigid legacy systems: If an organization has legacy systems that cannot be integrated with a cloud-based platform, using iPaaS may not be an option. Such cases may call for an on-premise integration solution or a hybrid integration platform.
The value of system integration for MSPs
- Managed Service Providers can leverage system integrations to provide value-added services to their clients. For example, an MSP can integrate a client's CRM, ERP, and accounting systems to create a seamless workflow and improve data accuracy.
- MSPs can also use system integrations to improve their own internal processes, such as integrating their monitoring and alerting tools.
- MSPs can use system integrations to offer new services to their clients, such as integrating security solutions, or integrating cloud-based services like AWS or Azure.
- MSPs can also leverage system integrations to increase their revenue streams, For example, by creating custom integrations for specific clients and charging them for it.
System integration is not just about connecting different tools, and so it's important to go beyond the surface-level benefits. While this is certainly a critical aspect of system integration, it's also important that you think in terms of extracting the kind of value that you may not have been able to otherwise. This means looking at the bigger picture and identifying areas where the integration can bring the magic.
For example, integrating a new CRM system with an existing accounting software can provide valuable insights into sales and financial data, enabling revolutionary decision-making.
In a nutshell, system integration offers organizations the potential to discover insights and capabilities they may not have otherwise had access to. Take a broader perspective in terms of gaining additional value, and this will ultimately open up exciting new possibilities.