Application Integration - Simplifying Enterprise Complexity

Gartner expects more than 25 per cent of large enterprises to forge central integration competency centres during the next three years, in addition to the 25 per cent that have already done so1.

Successful businesses never remain static, nor do their infrastructures. In any large organisation, there are various applications using different technologies and architectures.

Applications such as dynamic supply chains and customer relationship management constantly emerge and evolve, in line with shifting economies, industry trends and standards and customer demand.

Although most of these changes are subtle, they can be complex enough to complicate implementation and maintenance of any solution.

Research shows that the use of a common integrated information infrastructure can reduce the number of hours by between 25% and 43% (to build interfaces between applications), depending on the complexity of the interface that is being built.
Source: 'Cutting Implementation Costs by Application Integration', Gartner, February 2002

If the process is implemented correctly, integration generally provides around 50 to 80 per cent reduction in application maintenance costs by reducing the number of interfaces that need to be maintained2, offloading most of the costs of interface maintenance to the integration solution provider.

The automotive industry is an ideal example for the benefits of application integration. A car manufacturer deploys numerous applications such as a CRM system and dealer support systems, supply chain applications, custom vehicle order management systems, logistics applications, and inventory and finance management.

The sheer amount of data generated by the manufacturer's applications makes it all too easy for resources to be wasted by duplicating data in each application. Without integration, partner and supplier organisations with similar infrastructures will eventually develop huge pools of duplicate information, which are redundant - with the management of this information wasting more IT resources

About 35% of an enterprise's software maintenance budget is spent on maintaining the multitude of point-to-point application links already in place.
Source: 'Cutting Implementation Costs by Application Integration', Gartner, February 2000

However, despite the promising opportunities for integration application vendors, many companies are approaching integration plans with caution. Although Gartner predicts that more than 50 per cent of all large enterprises with $1billion or more in revenue will have an integration competency centre by the end of 20053, the failure of previous integration technologies and unpredictable costs have made organisations justifiably wary about the mysterious art of integration.

Poorly integrated applications not only inevitably lead to the decline in an organisation's ability to exploit new opportunities and in its delivery of on-going optimum customer service, but can also cost a company millions of dollars in revenue.

Many of the integration solutions available today involve cobbling together other application integration functionality from various other middleware tools.

This piecemeal approach of offering different integration application solutions causes confusion for organisations, and provides the perfect opportunity for integration application providers to use smoke and mirror tactics when selling their integration solutions. Like the ultimate magician, what you see is not what you get.

Many companies are still hoodwinked into purchasing integration solutions that involve a lot more than they bargained for. The majority of integration application solutions come with many different components, leaving customers faced with the difficulty in selecting the appropriate product for their project, because many of these solutions provide the same features.

In addition these types of solutions operate as separate components, and are not designed as an open architecture on a single platform, which means organisations will find themselves having to acquire additional services such as specialist consultants to make it all work.

In a recent IBM customer assessment report by Primary Intelligence, results show that around one quarter4 of respondents had to add extra resources within the company to complete the implementation of the WebSphere Application Sever platform, IBM's application integration solution. Although the majority of respondents found that WebSphere was complex or very complex to integrate, the other main feedback was that unexpected factors such as budget and schedules overrun were a common feature.

To further highlight how complex integration solutions can inflate budgets, Gartner developed a Measurement TCO Manager tool to assess operational expense scenarios for two hypothetical companies. The survey studied a mid-size enterprise with $700 million in annual revenue and a $22 million IT budget, and a large enterprise with $5 billion in annual revenue and a $100 million IT budget.

In both scenarios the companies began with a simple environment controlled by a specific architecture. This framework was gradually modified to relax architectural compliance allowing the business units to adopt their own systems, which increased the level of complexity and the number of architectural components. The survey measured the degree of change between the costs for the different environments and people costs involved.

The mid-size enterprise had a base IT operational cost of $2 million for operations and $7 million for end users. Gradually increasing mixed IT components and architectural choices and adding complexity resulted in a 100 per cent increase in operation costs and a 30 per cent increase in end-user costs. These figures correspond to an increase of more than $4 million for the business to absorb in its annual budget, in higher charges for IT operational services and additional employees in business units. When these results are compared to the $22 million IT budget, this represents an 18 per cent penalty for ignoring the value of architecture, just in operation costs alone.

The same method was applied to a large enterprise, which had a budget of $6.6 million for operations and $22 million for end users. Similar results showed a 100 per cent increase in operation costs, and 25 per cent increase in end-user costs.

Oracle believes that integration should and can be a straightforward process, minus the 'surprises'. Oracle9i Application Server addresses the challenges of integration, and provides the necessary infrastructure to enable organisations to effectively integrate a myriad of disparate technologies into a streamlined and efficient process.

Unlike other solutions available, Oracle9iAS is a single integrated product that is unique in a number of different ways. Users install and configure all of its elements as a single product. Security privileges are in a single place, management of all the systems are done from a single management console and globalising applications can be done from one central point. By utilising open standards, making applications and services transparently accessible from browsers and wireless devices, Oracle9iAS lowers the cost associated with developing, deploying and operating applications.

Oracle9iAS is a powerful business process-driven solution that allows businesses to easily implement a systematic and scalable infrastructure for integrating virtually any packaged or legacy applications, components, trading partners and people.

One key element of Oracle 9iAS which takes the pain out of implementation is that it comes complete with pre-built adapters. Adapters, or connectors, provide connectivity to external applications and technologies, and are the ultimate weapon in making applications communicate with each other. Oracle's adapters provide access to third-party applications from vendors including Ariba, Baan, CommerceONE, IBM, PeopleSoft, SAP, Siebel and TIBCO.

About 30% of the cost of an ERP project arises from the need to build integration links with existing applications.
Source: 'Cutting Implementation Costs by Application Integration', Gartner, February 2002

Ultimately, the integration of applications in the enterprise environment will remain a number one priority for in-house IT teams, because ensuring streamlined communication between software applications will offer dramatic productivity gains and cost efficiencies. However, it is far from simple to achieve, as the more complex the enterprise environment, the greater the difficulty to integrate applications.

IT managers should pay careful attention to the integration process and ask their vendors a lot of questions, because it is clear that closer inspection reveals a lot of hidden challenges. Like the electrician staring at a maze of wires, trying to decide which wire belongs to which system, application integrators spend too much time today identifying where and how integration should take place - and time means money