The Cost Implications of System Integration in 2023

As companies strive to leverage digital transformation strategies, system integration and process automation trends are expected to accelerate in the coming years. Between 2023-2030, it is estimated that the market will grow by around 14% from its current value of $350 billion. 

The market has become  increasingly competitive, with more companies competing for end-to-end solutions to improve operational efficiency and reduce cost.

The cost of system integration and process automation in 2023 will depend on numerous factors such as the complexity of the project, type of technology used, duration of implementation, number of users supported, etc.  In this blog, we will explore the challenges associated with system integration and process automation, as well as what to expect in terms of cost.

What are the cost implications of system integration in 2023?

A. iPaaS: subscription-pricing

Of course, it remains under subscription-model pricing. The system integration game has long shifted to the iPaaS (Integration Platform as a Service) model, with companies like Dell Boomi and Mulesoft. iPaaS has proven to be a more cost-effective solution for companies looking to integrate systems quickly and easily. The subscription-based pricing model allows businesses to pay only for what they use, with no long term contracts or commitments required. This has enabled organizations to rapidly create, deploy, and manage applications on the cloud or private data centers.

iPaaS plans and packages are priced per month/year and typically range from $100/month to around $8,000+/mo. Added costs will depend on the number of users, data sources, integration points, etc. Bear in mind that this only covers the flat license fee paid to keep the iPaaS platform running.

B. The initial setup costs

This covers the cost of implementation, including configuration of the system, development and testing of applications, and any additional training needed. The average setup costs associated with system integration can range from $15,000 to around $200,000 depending on the complexity of the project.

C. Upgrade and customization costs

In addition to upfront setup costs, businesses should be aware of the long-term maintenance costs associated with system integration. The project fees typically include hosting and monitoring services, as well as any upgrades or other essential customizations that may occur over time. The average maintenance costs range from around $20,000 to upwards of $100,000 per year.

D. Project duration and resource requirements

Finally, the duration and resource requirements associated with system integration are important to consider. Projects can take anywhere from a few weeks to several months depending on complexity, type of technology used and the skill level of personnel involved. Companies should also factor in additional costs for hiring external consultants or dedicated IT staff for project management, development, system maintenance, and support.

E. Sandbox or a cloud testing environment

For those companies that need to test out the system integration before going live, a sandbox or testing environment is highly recommended. A sandbox environment enables businesses to see how their systems will interact with each other and make sure all the elements are properly configured. The cost of setting up and maintaining these environments can add additional costs to the overall project.

The typical cost of cloud testing environments can vary depending on the features and complexity of the setup. Generally, it is possible to set up a basic test cloud that starts at $5000 per year. Some charge based on a fraction or fixed percentage of the total license and implementation cost which can be significantly higher.

F. System integration requirements

The requirements for system integration may vary depending on the type of technology being used and the scope of the project. Requirements may range from basic integration of existing systems to complex integration with third-party APIs and cloud services. As such, organizations should make sure that the system architects involved in the project have adequate resources and skills to meet the needs of their particular project.

How are system integration requirements currently defined? 

As a solution, system integration is now done through segments- whether by function or business process, app or ecosystem, or by industry or market. 

By department or function

System integration can be leveraged in different departments of a company in order to create efficiency, reduce costs, and improve communication. In Human Resources (HR) departments, for example, systems integration can be used to streamline the recruitment process and create a better employee experience. From onboarding to payroll management, integration of HR systems can help optimize workflow performance and increase efficiency across the organization. Another example is in customer service, where system integration can be used to integrate all customer-facing systems, such as CRM and Support Desk software, into one platform. This process helps reduce costs associated with managing multiple platforms, while also improving the customer experience.

By application or ecosystem

The integration of applications and ecosystems is becoming increasingly important as businesses look to create digital workflows. This can be done by linking together multiple applications such as CRMs, ERPs, HRMSs, or BI systems in order to gain visibility into data and processes. Integration between these apps can reduce manual efforts and speed up decision-making.

By industry or market

System integration can also be done on a larger scale, such as for entire industries or markets. This could involve connecting vendors and customers, or creating an integrated platform that allows for the sharing of information between different stakeholders. For example, in the healthcare sector, system integration is used to create a single platform for the sharing of medical records and patient data.

By business process

Business process integration is the process of combining two or more business processes into one unified workflow. This can help to streamline processes, reduce manual efforts, and improve decision-making. For example, a company could integrate its sales and procurement systems in order to create a unified purchasing process. This could lead to cost savings by reducing duplication of effort and improving overall efficiency.

Another cost implication is associated with software development costs. Oftentimes custom applications will be needed to bridge the gap between existing systems and new processes. This can become very expensive, as custom applications require dedicated development resources and a longer timeline for implementation.

Overall, system integration is essential for businesses to gain competitive advantage in the digital era. By utilizing this technology, companies can become more efficient, reduce costs, and improve customer experience.

Conclusion

By leveraging system integration, organizations are able to reduce costs, increase efficiency, and improve customer experience. It’s important for companies to understand their unique business needs when it comes to system integration requirements so they can ensure that the project has adequate resources and skills from architects involved. With careful planning and execution of these strategies, businesses will be well-positioned to reap the benefits of integrating systems across departments, applications or ecosystems, industries or markets as well as business processes.