Cleo has published its fourth annual State of Ecosystem Integration Report. It highlights that organisations are challenged by supply chain risks that do not seem to stop emerging. For 2023, the report highlights four key risks, cyber security threats (49%), supply chain disruption (49%), inflationary economy (40%) and the economic downturn (40%).
In this landscape, organisations know that weak supply chains are costing them more. 26% believe they lose between $500,000 and $1 million annually. To address this, organisations are investing more in supply chain technology. 80% are saying they will invest at least an additional 10%. Cleo argues that investment into integration technologies may help those organisations gain control and, at worst, help identify the leakage.
Tushar Patel, CMO of Cleo, commented, “More organizations are becoming aware of their integration operations, and this year marks the third consecutive year where the survey showed a growth in the number of companies reporting revenue losses. Business leaders desperately want a sense of control over supply chain operations and they’re budgeting significant IT investment dollars to get it.”
“What they’re finding is that a strategic investment in integration technology and automation has a positive ripple effect across their entire ecosystem – improving relationships with partners, suppliers, and customers, as well as streamlining end-to-end business processes. The result is an efficient business positioned for revenue growth.”
What is in the report
The 2023 State of Ecosystem Integration Report consists of 27 pages with an executive summary, three sections of detailed findings, and a short conclusion. The three sections are:
- What’s Spinning Out of Control
- What Taking Control Looks Like
- The Route to Control: Ecosystem Integration
The report’s findings are based on a quantitative survey by Dimensional Research of 307 IT execs and professionals responsible for application and infrastructure integration. 59% of respondents were from North America and the rest of Europe, though it isn’t clear which countries. 50% of respondents were from manufacturing companies, 28% from retail and 13% from logistics.
The sample is relatively small and is technology rather than business focused. This means that though it talks about supply chain risks, procurement teams and business leaders might have differing views.
Each section consists of visualizations of the data surfaced from different questions asked, and analysis in the form of a key takeaway. What is missing are some immediate actions that IT leaders might wish to consider or questions they should ask themselves. There is also a lack of qualitative input, either in the form of respondent quotes or the ability to dive deeper into the findings.
What’s Spinning out of Control
Not only is security seen as the top external risk, but it is also seen as the top challenge when deploying EDI solutions (43%). This section looks at the issues facing organisations as they get to grips with integration within their supply chain. Integration issues and the number of integrations organisations require are increasing. On average, 14 need B2B integration support.
The report indicates that organisations are shifting from traditional IPaaS solutions (down 24% to 46%) and open source (down 14% to 52%) solutions. While the authors cite that “the best approach is a purpose-built and flexible integration platform that adapts to the changing needs of businesses”, they don’t say what percentage of respondents are using one.
Certainly, legacy technology is an impediment to growth and efficiency alongside manual processes. While the report says that this is because they are difficult to operate and maintain, it does not say why or indicate whether this was feedback from a question. The report also looks at other challenges organisations face and the eye-watering costs these issues can create.
What Taking Control Looks Like
Marketplaces rule. One of the most interesting insights in the paper is that organisations continue to open the marketplace. In 2022 39% opened a new marketplace, up from 29% in 2029. The report does not state how many organisations now have marketplaces, though. Did these new marketplaces replace old ones?
Organisations have increasingly added new lines of business (35% – up 14% from 2021). However, the number that has invested in new technology has fallen by 5%. While budgets have fallen, the good news for Cloe is that supply chain-related technology budgets have increased. The report looks at how organisations have managed to recruit experts by increasing the use of integration consultants.
Organisations are also migrating to the cloud in greater numbers, which backs other surveys, especially around manufacturing firms. There are challenges, notably integration, not just to legacy applications but also to SaaS applications. The authors argue that cloud migration improves the quality and control of integrations but do not seem to evidence the view.
The Route to Control: Ecosystem Integration
Organisations need to look beyond integration and consider what they call ecosystem integrations. They define this as “Using a single platform for file-based, EDI, and application integration to optimize end-to-end integration processes within a dynamic network of trading partners, applications, suppliers, customers and marketplaces.”
This goes beyond a point-to-point integration, and those adopting it will reap the more commonly perceived benefits of integration initiatives
- Modernize partner & internal system Integrations (31%)
- Improve overall governance & control (30%
- Automate end-to-end integration processes (30%)
The authors claim ecosystem integration also increases revenue, decreases costs and improves SLA metrics.
Enterprise Times: What does this mean?
There are some interesting findings in this report from Cleo. However, it is very much aligned with its marketing messaging. It focuses on the end goal of promoting the Cleo platform as the solution to all ills. The report does have some interesting findings, but these are lost a little within that focus on reaching the required conclusion.
While Cleo shares the demographic breakdown, there is no breakdown of the responses within the research, either by industry or region. The lack of breakdown for European countries is also rare, as many surveys find significant differences between them.
Supply Chains are critical to organisations, and the authors seem to conflate Supply Chains with integration. It is correct that EDI is the glue that can bind supply chains together. Still, it isn’t clear whether the questions asked are about integration in relation to EDI, supply chains or internal applications.
In summary, is the report worth reading? Probably yes, but only as much as the findings shed some light on what peers may be doing. There is little to take away from the report of value other than the end of the integration application is ending, and the age of hyperautomation and ecosystem integration is upon us. There is also an infographic supporting the full report, which presents the key findings.
