Line of Business Integration
Welcome back! Our focus this week is on Line of Business or LoB integration and the role that this topic plays in contract management. As a provider of contract management software, a question frequently posed to us is: "Can you integrate with our LoB system?" As the leading provider of a contract lifecycle management software powered by the SharePoint and Office 365 platforms, the answer is "yes". However, before removing this item from your checklist, let's review some important considerations.
Line of Business is a general term which refers to a business application that an organization relies upon for critical business information. Generally speaking, it is focused on a specific area of the business and processes transactional data. In the world of contract management, LoB integration is an important issue as many companies are interested in having their contract management application integrate directly into their LoB systems such as CRM, procurement or Enterprise Resource Planning (ERP) systems, and financial or accounting systems.
A CRM system, also known as a Customer Relationship Management system, is used primarily by sales teams to manage new and existing customers and sales processes, and their associated data. A procurement or ERP system as well as financial or accounting systems are electronic platforms generally used to manage invoicing, revenue recognition and overall financial operations. Industry leading examples of these systems include Salesforce.com, Microsoft Dynamics, SAP, PeopleSoft and Oracle.
When integrating into these platforms, there are four common approaches or integration techniques as follows:
- Master Data or Data Validation
- Data Posting or Posting of Content
- Data Comparison, Reporting and Analytics
- Document Enabling or Contract Access
Master Data or Data Validation involves researching certain data from within the LoB system or validating data against that which is contained in the LoB system. In this instance, the LoB system contains the master or authoritative data of record. The contract management application will integrate into this system to validate or complete data which is being used within the contracting process. For example, when a user inputs vendor or customer information into the contract management application, the LoB system may supply corresponding information such as a vendor or customer number, legal name, address or other important information. Common techniques used in this approach include direct validation against the LoB system, indirect validation against an intermediary data warehouse, or validation against a list which is supplied by the LoB system and imported into the contract management application.
Data Posting or Posting of Content is a more complex integration than Master Data or Data Validation as it involves the posting of content from the contract management application to the LoB system. Upon the occurrence of the defined key event or on a pre-defined schedule, data is written from the contract management application to the LoB application. As an example, upon contract execution, certain contract details including contract numbers, counterparty information, contract values and, in some instances, obligations, may be pushed to the LoB system. Typical approaches to this integration include posting via Web Services, through a CSV data file, or polling the contract management application daily for updated data for the LoB system.
Integration for purposes of Data Comparison, Reporting and Analytics involves creating reports and reporting capabilities which compare the data which is housed in the contract management application to that which is contained in the LoB system. For instance, your contract management application may contain information which states that a contract has a value of $1.2M dollars, and a term or duration of 12 months. Assuming consistent monthly spend, an average of $100K will be invoiced each month. Your supplier will send your AP Department monthly invoices with actual spend. Once these invoices have been entered to your ERP system (manually or otherwise), they should be compared to the data in the contract management system to ensure that there is no budget mismanagement or material deviations. Implementation options for this integration type include posting contract data to the LoB system for internal analytics or utilizing the connectivity and reporting tools provided by the contract management application.
Document Enabling or Contract Access integration involves allowing a contract and/or supporting documents to be accessed from within a LoB system. For those familiar with the Salesforce.com platform, a relevant example of this would be to allow end users to access the functionality provided by the contract management application directly from within Salesforce.com. Such functionality would likely include both the creation of new contracts as well as the ability to access contracts associated with an existing opportunity or account. Implementation considerations for this type of integration include supporting dynamic link creation between the LoB system and the contract management application for contract ID or link to a contract dashboard or documents.
As they introduce additional complexities, it's important to understand why these integrations are critical for many organizations. Among the most direct reasons is improved operational efficiencies. Integration of these systems removes the need – and the resource time necessary - to input and maintain data in more than one location. It allows for the automatic creation of certain data elements and processes, and provides immediate access to information and reporting which is necessary for day to day business operations. Closely related, the existence of such integration also positively impacts risk management. Rekeying important data elements is not only counter-productive, but highly error prone. Failure to manage spend or to track the adherence or completion of important contract obligations introduces unnecessary and costly risk elements to an organization. Less direct – but no less strategic - are user adoption and acceptance considerations. While the Executive Management Team may have mandated the use of a certain system or the adoption of certain processes, unless it makes the end user more efficient or his or her job easier, it is likely to be met with a fair amount of resistance. By providing the end user access to this application or information within the system that he or she "lives", acceptance and adoption are greatly improved.
Given the integration options available (note that we've only discussed 4 common options) as well as the vast number of LoB systems in the market, companies who have identified LoB integration as a key requirement in their contract management initiative should pay careful attention to providers who utilize platform technologies to deliver their solution. The popularity of these platforms provides substantial out of the box integration between these LoB systems and the platform provider. Case in point: SharePoint is one of the most highly integrated platforms in the world. Because of its popularity, virtually every major software vendor including SAP, Oracle and Salesforce.com has worked with Microsoft to deliver varying forms of integration. And, for those LoB providers that don't readily integrate, SharePoint provides not only a rich and vast collection of interoperable web services that support integration, but also a large number of third party products that support integration.
The integration capabilities of each and every contract management software vendor will differ; however, our commitment to the SharePoint and Office 365 platforms allows us to more readily respond to such integration inquiries.
Rob writes on contract management and business applications for Contracts 365 Company.