Integration vs Interoperability

Financial markets, tax regulation, environmental policies, and blazing new technological changes have firmly pushed the ready mixed concrete (RMC) industry into one of the most competitive eras of the last century. Simply adhering to business practices of the past is no longer enough to prevent vast swaths of the industry from being acquired, phased out, or deemed obsolete. So what is the true North Star to prosperity in our real-time, high-pressure, high-liability world?

Let’s start with Franklin D. Roosevelt’s first inaugural address on March 4, 1933, when he famously declared, “The only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” Roosevelt recognized the reality of the nation’s risks faced and that it was misguided to double down on existing economic policy. Yet, he was mindful that traumatic change in the intricate workings of a world-leading, highly integrated nation-state could bring even worse harm to its 125 million citizens. His solution was to segment the economy, changing only those areas that would benefit from a little revolution and staying the course in other areas to preserve stability.

Now let’s apply this concept to batching technology, which is one of the highest-liability functions we manage in the RMC industry. Investing in technology tweaks that result in only small financial gains can expose the producer to outsized liability or even financial failure. As a result, risk mitigation (staying the course) is a competitive necessity for survival. Hence, the Alkon-Spectrum V6 batcher, now operating under different ownership yet essentially unchanged, remains the most prolific batcher after more than 40 years in service.

On the other hand, product pricing has been undergoing a frantic evolution. Modern solutions now rely on machine learning to consider every aspect of the customer, market, competition, material supply, logistics, traffic, and even weather. The rapid technological change has euthanized zone logistics pricing with a fixed margin on material (MOM), forcing producers to pursue innovation aggressively for competitive advantage. In this area, the revolution is not just an option, it’s a necessity.

Competitive necessity = risk mitigation; stability

Competitive advantage = innovation; revolution

Competitive necessity drives the evolution of stable, highly integrated systems that bubble-wrap the company from risk, including rapid technological change. At the same time, competitive advantage thrives on constant, sometimes chaotic revolutions that demand established patterns be broken so they can re-emerge stronger. While co-dependent on success, necessity and advantage are often at odds, much like the finance department and sales staff.

The interoperability of new technology will not replace the integrated workings of homogenous systems like enterprise resource planning (ERP), including horizontal systems—like SAP, Dynamics 365, etc.—and the vertical ERP for our industry: dispatch. These systems are inherently counterrevolutionary. However, in a consumer-driven market, we must demand that ERPs be open to interoperability and embrace working with dynamic third-party technologies where it makes sense.

Indulge me in a personal vignette to make the point. When Steve Jobs stood up in front of the world and introduced the iPhone in 2007, many realized it would revolutionize the world. At the time, I was a technology leader at Hanson PLC. Soon after Jobs’ announcement, I met with a CEO of an integrated technology provider for our industry to explain our urgent need for dispatch via service-oriented architecture (SOA) and software as a service (SaaS). SOA and SaaS are cornerstones of “the cloud” and, subsequently, iPhone’s success.

INTEGRATION VS INTEROPERABILITY DEFINED
Integration and interoperability are both processes that allow systems to share data, but they differ in their approach to connecting systems. Integration refers to connecting the components of systems like ERP platforms, which ensures operational stability and risk reduction. The interconnected tools typically come from the same provider. Interoperability allows independent, third-party systems to share data in real-time without middleware to foster innovation and competitive advantage.

The CEO’s response was steeped in classical integrated (aka nation-state) thinking. “Why would we expend the time, energy, and money for interoperability such that soon-to-be competitors could steal profitable parts of our market share with better products?” Who could fault him? From a financial perspective, his reluctance made sense. The cloud revolution offered no immediate reward and only downsides for the integrated incumbent provider, even though it promised significant competitive advantages to the end user—the RMC producer.

Integration favors the end user’s risk reduction and the financial success of those few incumbent providers. Interoperability favors the end user’s competitive advantage and the emergence of many insurgent providers. As the end user, you are the judge of balancing your needs and choosing the right mix. However, as a condition of patronage, ensure both the integrated and insurgent providers are genuinely committed to collaboration and playing nice with each other through interoperability.

To close, I’ll borrow the words of another former president, Thomas Jefferson. In 1787, he wrote to his friend James Madison in Latin: “Malo periculosam, libertatem quam quietam servitutem” (I prefer dangerous freedom over peaceful slavery). He followed up in English, “I hold it that a little rebellion now and then is a good thing.”

The RMC industry, much like the broader economy, must carefully manage revolutionary change alongside steadfast stability. By balancing interoperability and integration, producers can ensure they are not only surviving but thriving.

Producers must strike a balance between the stability (risk mitigation) of integrated systems and the innovative potential of interoperability to thrive in today’s competitive landscape.

Craig Yeack has held leadership positions with both construction materials producers and software providers. He is co-founder of BCMI Corp. (the Bulk Construction Materials Initiative), which is dedicated to reinventing the construction materials business with modern mobile and cloud-based tools. His Tech Talk column—named best column by the Construction Media Alliance in 2018—focuses on concise, actionable ideas to improve financial performance for ready-mix producers. He can be reached at [email protected].

CRAIG YEACK, PEERS HOLD COURT AT WOC TECH INNOVATION BREAKFAST
Technology Trends readers attending World of Concrete 2025 have a chance to meet Craig Yeack in person at the Tech Innovation Breakfast, to take place January 23 at the Las Vegas Country Club (behind the Las Vegas Convention Center). Leading technology experts will share insights and success stories of integrated tech solutions making an impact in the concrete industry. Attendees are encouraged to bring their toughest tech challenges for discussion with panelists and peers. Space is limited. Contact [email protected] to register.

Tech Innovation Breakfast
Thursday, January 23
8:30–10:00 am
Las Vegas Country Club
3000 Joe W. Brown Dr.

Scheduled Panelists
BCMI – Craig Yeack, Co-founder & President
CiDRA – Dave Newton, VP of Technology
EROAD – Akshaya Kumar, Construction Product Manager
Giatec – Sarah McGuire, AVP Business Development
(Additional panelists to be announced.)

The Tech Breakfast premiered at World of Concrete 2024.