1 February 2004

Enterprise application integration projects are being driven forward by the need for IT departments to add value by improving business processes and delivering operational efficiency. But, with 70 per cent of such complex projects failing, John Liddle finds that companies are teaming up to investigate the pitfalls ahead of implementation

When CFOs look to reduce costs and increase value for their organisation it seems that many look no further than the IT department's budget. What follows is the inevitable slashing of available funds, as projects that don't realise immediate returns grind to a halt or simply don't make it past the planning stages. In response to this, IT departments are under increasing pressure to show that technology can add value rather than just drain resources. With the costs versus benefits arguments raging on either side, the relationship between the CFO and the IT department can often become strained. However, both parties agree that one of the best ways to solve this is by improving the efficiency of business processes. Enterprise Application Integration (EAI) is seen by many as a way of achieving this.

The concept of EAI has been around for some time. Essentially it means that business applications can effectively communicate with each other. More recently, however, the idea has evolved into complete business process automation, driven by the move towards e-business and the needs of the IT department to decrease costs and increase value through efficiency gains.

Business analyst Ovum says that integration projects can account for more than 40 per cent of implementing a major application, but a correctly used EAI tool can reduce the cost of implementation by up to one-third and reduce the cost of maintenance by up to two-thirds.

judging failure But in case you think that EAI is just yet another of those 'must have' projects which can be implemented and forgotten about, Steve Craggs, European chair of the EAI consortium, has a shock for you. He says that 70 per cent of EAI projects fail.

"Of course, 'fail' can mean a lot of different things," says Craggs. "I judge failure as either blowing deadlines, budgets, or failing to deliver the quality of service that the business requires. Although it is obvious from a business point of view why it is important to be able to get all these things working together, it's actually very complex and some of these holes that you can fall into are really quite nasty. It's tricky stuff and people very rarely get the planning right."

In effect, EAI is going back into the race against what your competitor may be doing and you can't afford to be left behind. But in the rush to implementation it is easy to fall into the traps that this complex area leaves.

Craggs says: "Everybody knows they need application integration - with almost any analyst survey you care to look at, the two items that come right at the top of CIOs' concerns are security and integration. They are the key issues and integration is seen as so important because it is about something fundamental - how to streamline your business processes."

"But it's quite a challenge, because you are no longer just running an application that is on your area network, you are running an application which is jumping all over the company and perhaps even into partner systems. So operational tools become very important."

EAI really started to gain importance in the 1990s when there was a flurry of mergers and acquisitions and banks had to decide which front- and back-end systems to use and how they would communicate with each other. "But the big driver in the last couple of years has been - with the macro economics looking a bit sour - people want to get more out of what they already have," says Craggs. "That normally means reducing costs, improving efficiency of processes and the productivity of those processes. Automation gives you that, but you can't get automation without integrating the things running on different islands.

Peter Tripp, global practice lead for the Jupiter Programme within the Microsoft Solutions Group at Unisys agrees. "EAI is core and critical in every corporation that you go to today," he says. "Everybody does EAI in one form or another, especially if you're an enterprise-size client. EAI is such a critical piece to integrate disparate lines of systems that exist on different platforms."

The growth of e-business has seen manufacturers at the centre of a chain between customers and suppliers, which has required business processes to become even more streamlined. Raymond Danton, HP's EAI practice manager for EMEA, says: "One way this has been done for years is with EDI [electronic data interchange], which was a way companies could have an electronic relationship with their suppliers using a private network." However, this could not integrate with other common interaction methods, such as e-mail and telephone, and of course EAI.

a long journey Craggs' EAI Consortium was set up as a non-profit making organisation for all parties interested in the EAI market place, including end users, vendors and academic institutions. It provides an independent platform for end users to discuss the potential pitfalls and express individual needs which vendors can take back to their research labs.

"The point is that the agenda has been dictated by the vendors for a very long time, and that is not a very healthy situation, not when you've invested a lot of money in it. The consortium has a number of benefits, even including the opportunity for users to form a lobby group perhaps to develop standards of its own."

Craggs is to chair a benchmarking exercise for the London finance industry which will attempt to benchmark EAI suppliers "On the one hand, all the providers want a good score to help them sell into the City, but on the other they are all very interested in knowing our opinions on what they should be doing better," he says.

Microsoft has been closely following the needs for businesses to realise EAI and last year it set up its Jupiter Programme, which will integrate its e-business servers to help enterprises connect an IT ecosystem of information, people and business processes.

"Jupiter is a codeword from Microsoft that is the journey to consolidate all their e-business products, including BizTalk, Content Management Server, Commerce Server and Host Integration Server," defined Tripp. "XML is a way of defining data in a way that makes it easier for other people to understand it. So if you are using XML the data handling work is a lot less, which is great because it makes it a lot easier and it reduces the work you have to do," says Craggs. ".NET helps you in a number of areas, including advanced connectivity, because with .NET it is much easier to call up an application component and get to it, without needing the same sort of adapter code."

Unisys is working with Microsoft on the Jupiter Programme and has been given responsibility for a certification programme where independent service vendors will need to adhere to build components that fit into Jupiter. Although the programme was set up a couple of years ago, Jupiter will really take off early next year with the launch of Microsoft BizTalk Server 2004. Unisys has already been working with the new server for six months. "BizTalk 2004 is significantly different to BizTalk 2002," says Tripp. "BizTalk 2004 helps with integrating disparate systems because it connects all those devices and then brings it up to automate or drive business process automation around that integration."

Avanade is also heavily involved in using BizTalk/Jupiter in the EAI arena and has already worked closely with Microsoft and Accenture in complex routing and integration hubs to SAP, mainframes and disparate back-end systems and to develop the Avanade Connected Architecture for Integration (ACA Integration). This is a solution planning aid based on BizTalk Server 2002 and is designed to assist customers in defining and delivering EAI solutions by providing a number of deliverables through education, illustrative examples of project visioning, planning, and configuration.

subtle shift in the relationship The integration of applications between enterprises and business process automation has given further momentum to the drive towards a model-driven architecture. "Web services are a big thing because that takes disparate data stores and exposes them in a familiar format that other systems can communicate with," says Tripp.

"They're a very flexible standards-based way of doing application integration and integrating with your trading partners," adds Danton. "It doesn't matter if they are from different vendors because they are all standards-based and they have common protocols, so that is making integration simpler."

But Danton warns that, just because the integration itself is simpler, significant work still needs to be done to get the preparatory work right. "If you are building a house you can't just start building bricks. The bricklayer needs an architect to design plans for him to follow and there has to be a plan so that the electrician can come before the walls are plastered," he explains. "With an IT architecture, you can have the best tools and products in the world but you also need to decide how you are going to implement them. And if you do that right, not only will you reduce your implementation costs but - more importantly - you will reduce the complexity of the solution and improve the usability and manageability, so the ongoing support costs will be less."

Kirk Downey, global head of services architecture at CGEY, sees this development as being more of a subtle shift where "EAI will develop into just EI", as companies focus on integrating not just the applications but expanding it to other technology layers.

This means that there will be more of a focus on process management and process orchestration. "Traditionally, EAI has been on the functional integration of data integration of applications, but now we are finding that an architecture-led approach to integration, whereby we sort of pull together all the different tools required for integration frameworks," he says.

"Over the next 18 months there will be a significant shift towards service-oriented architecture in general. In order to achieve this loosely coupled architecture-led approach, organisations are going to have to think about how they employ integration solutions to their business. It is very easy to implement an EAI solution today, but the complexity of interfaces is just one example of how very quickly you can use leading-edge EAI tools and create a whole mess and additional complexity that you were trying to get away from in the first place. So this more service-oriented approach will allow organisations to move towards a more standards-based approach with things like Web services and even non-technology standards.

"What we're seeing is that we're very much pushing ahead with the early adoption of this new approach to integration because in 12 months time this is going to be mainstream. The new Microsoft BizTalk Server 2004 is a substantial shift in the technology available for integration in terms of what it has to offer."

An efficient IT system is as vital to the running of a modern business as access to an electricity supply or telephone lines. But it is important not to rush into an EAI project just because you know your fiercest competitor is implementing a solution that will ensure they see massive efficiency gains. That isn't really the point of EAI. Rather, it is because your suppliers and partners could be using it to improve the level of service and communication you enjoy between each other. And maybe, just maybe, the communication between CFOs and the IT department will be made easier as a result.

Akzo Nobel Microsoft and HP built an electronic Supply Chain Link solution for the coatings arm of Dutch-based chemicals group Akzo Nobel.

The company wanted to cut costs for buying from their suppliers across 29 global business units and decided on a joint approach that would connect their business to their suppliers.

The solution - which was based on Microsoft BizTalk and Microsoft .NET Enterprise Servers - meant that suppliers could see Akzo Nobel's current stock levels and upcoming projects so that they could make send a timely supply.

Raymond Danton, HP's EAI practice manager for EMEA, believes that by implementing a vendor-managed inventory solution Akzo Nobel will be able to cut out unnecessary delays caused by sudden changes in forecasts or other business demands, thus avoiding the need to turn round trucks delivering supplies while en route. "They're effectively pushing responsibility for their stock levels onto their suppliers," he said, "which will allow significant cost savings in inventory and logistics while improving raw material availability."

All suppliers are connected to a supply chain Web site or central messaging hub based on the BizTalk server through which all b2b connections flow. The hub connects each site to its suppliers and does all format conversions before routing the documents to the relevant recipient.

The company calculated time savings of up to 50 per cent on supply with ongoing annual transport cost savings of five per cent and 20 per cent on document handling. Each new site realises a return on initial investment within three months.

The solution is providing additional benefits to the suppliers. Integrated suppliers can take advantage of an effective partner relationship because integration of ERP systems means that Akzo Nobel is less likely to switch suppliers.

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