Technology innovation is enabling demand for connectivity and integration of an increasing array of devices such as networked computers, cellular telephones, personal digital assistants (PDAs), global positioning system (GPS) receivers, Radio Frequency Identification (RFID) tags, and sensors. The demand to aggregate and integrate these disparate data sources extends to many different industry sectors.
While it is difficult to assess the precise financial benefits, potential savings due to interoperability fall in the range of 1% to 3% of total costs, derived from:
Lower transaction costs Lower transaction costs are achieved, for example, through the sharing of information when interfaces are standardized. This facilitates application integration and data exchange. Research shows that information system integration substantially reduces transaction costs caused by data errors, mistakes from misinformation, and the manual re-entry of data. Inefficiencies and transaction costs can be significantly reduced by the implementation of interoperability.
Lower operations and maintenance (O&M) services costs Antiquated O&M systems in capital-intensive industries lead to unnecessarily high costs. Implemented Standards can reduce O&M needs and enable more suppliers of support services to provide flexible lower-cost O&M services.
More efficient systems, equipment upgrades and modifications Systems upgrades can be difficult without the benefit of Standards. High switching costs can result from each supplier having different equipment, communications and integration protocols. Plug-and-play capabilities allow for easier and cheaper system upgrades.
Standards-based systems help reduce the number of devices purchased for new systems and upgrades. For example, in building automation, one sensor or monitoring device can be shared among many different systems, thus fewer devices are needed and the overall cost of the system drops. An interoperable motion sensor can share its status with the zone heating system for occupancy sensing, the access control system for request-to-exit purposes, the security system for intrusion detection, and the fire alarm system for occupancy sensing. The motion sensor still performs the same task of detecting motion, but it can share the information with many subsystems that can make use of its status.
Higher quality service levels and more predictable response Interoperability makes it easier for multiple parties to share information on the status of constituents and systems. Advances in wireless networking, monitoring sensors and interoperability software create possibilities for improving the quality of service, and lead to more predictable outcomes.
Data creation and information integration drives innovation With interoperability it becomes easier to create new data and integrate disparate pieces of information to create homogeneous data sets. For example, geospacial interoperability enables the creation of whole new industries based on the integration of heterogeneous data. Businesses increasingly embed geospacial data into their business functions — and interoperability of these functions drives innovation in everything from supply chain logistics to customer relationship management. In the public realm, geospacial interoperability will drive new conclusions to such pressing topics as climate change and the spread of communicable diseases.
Increased competition for customers drives innovation Interoperable equipment helps constituents get the most out of technology, and it also encourages innovation. When different products can be combined without complicated and expensive interfaces, small companies can enter the field and make specialized products. Without interoperability, institutions are typically forced to turn to large vendors that provide suites of compatible devices but do not specialize in any one area. Interoperability promotes competition, and competition encourages innovation and quality. Interoperability opens the path to many new application and service values.
1) Gridwise Architecture Council, Financial Benefits of Interoperability by Harbor Research, Inc., September 2009.
2) Tim Büthe and Walter Mattli. [Büthe and Mattli 2010b] Standards for Global Markets: Domestic and International Institutions for Setting International Product Standards.