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In a conference room at a large brokerage, a dozen IT professionals and business managers are in intense discussions. The issue: an impending government mandate for financial institutions to settle trades in one day rather than three. The firm, initially slow to formulate its strategy, now must implement highly complex system integrations under a tight deadline to fulfill the mandate. With no time to build the system in the traditional way--with brute-force programming--the firm opts to use a new breed of prebuilt system for global straight-through processing, a product that addresses the problem directly with minimal customization.
Similar problems are faced by businesses in a variety of industries, including health care, insurance, and manufacturing. The volatile nature of business and the changing regulatory environment mean companies must frequently and quickly address process-change issues. In health care, for example, the Health Insurance Portability and Accountability Act of 1996 mandates stricter regulations and control around the privacy and secure transfer of patient records. To avoid stiff fines, health-care companies must be HIPAA-compliant by October 2003, which leaves them a little more than a year to implement the system and process changes to support the new rules.
One of the biggest roadblocks to addressing changing requirements is enterprise application integration. The inability to quickly tie together disparate systems can limit a company's responsiveness. The brokerage, for example, may be required to automate some of its existing processes to shorten settlement times. Chances are this will involve creating new integrations between the various systems involved in trade settlement, such as a general-ledger system, Swift network (used for transactions among financial institutions), and homegrown settlement system. Building these integrations can be costly, complex, and time-consuming.
Though many businesses have tried to implement homegrown applications or custom integration to meet new business requirements, the time and effort has led them to consider off-the-shelf development tools and integration software. But even these alternatives are complex.
What businesses really need are vertically targeted, out-of-the-box EAI systems designed to address rapid deployment of applications specific to their industries. These systems provide features such as prebuilt process models and data-exchange formats specific to the industry, which makes development faster and offloads much of the effort required to build such models from scratch. EAI software, also known as integration-server software, is designed to speed the process of tying together disparate back-end systems to provide rapid access to company data.
The capabilities of vertically focused integration systems can facilitate application-to-application integration for internal systems and apps; business-to-business integration, which involves systems commonly used among partners and customers and is achieved via loosely coupled, XML-based communications; and business-process management, which provides methods to automate processes using vertically focused process templates and workflows to help simplify manual and automated activities.
Off-the-shelf vertical-integration systems range from those that allow simple integration and information access among systems to those that are comprehensive process models that define the business processes used in a particular industry across a number of applications. For vertical solutions to succeed, they must target industrywide processes that have already been consolidated into well-documented, publicly available processes. Among vertical-industry specifications that are implemented in some EAI systems are global straight-through processing in financial services, HIPAA in health care, and the Chemical Industry Data Exchange. Because different organizations can implement these processes in similar ways, there's considerable value in adopting an integration platform that already offers the necessary process models and data-exchange formats in a standard way.
In contrast, many business processes, such as insurance-claims processing, involve closely guarded trade secrets that provide a competitive edge to companies that excel in those areas. Though prebuilt systems for these types of applications are likely to be shunned by larger customers that have already invested in designing their own customized processes, they may appeal to small and midsize companies that want to get up and running quickly.
Companies should answer several key questions before choosing a vertical integration product. For instance, how well does the product integrate with a company's key back-end systems? Does it provide connectors for the common business systems used in the company's industry? Can these business processes be modified to work with the company's existing procedures? Does the product provide complete support for all industry-standard data formats? How extensive is the support for commonly accepted transport protocols within the company's industry? How easy is it to customize the product to meet specific company needs? What mechanism does the product provide to ensure security, especially when dealing with partners or customers? Each vendor takes its own approach to addressing these questions, and most have made strides in the quality and completeness of their offerings in the past year.
Microsoft is a prime example. In the past, it regularly took a "build it and they will buy" approach with its products, such as with the prebuilt database schemas in Microsoft Site Server Commerce Edition, released several years ago. The product's adoption was relatively slow, as most users found the schemas limiting and not suited to their needs. But the current version, Microsoft Commerce Server, lacks that drawback.
Today, Microsoft collaborates closely with vertical-industry standards groups to define requirements and build useful products. The company's vertical-integration strategy relies on its Application Accelerators, which are vertical application extensions of the company's core BizTalk Server integration platform. Microsoft provides accelerators for HIPAA, supplier trading exchanges, and RosettaNet (the consortium to create supply-chain standards for the computer and electronics parts industries), and more accelerators are on the way. These products include prebuilt process maps and provide data schemas.
Other integration vendors offer complete, end-to-end products for vertical industries. For example, webMethods Inc. provides suites for applications in manufacturing, raw-materials processing, banking and financial services, communications, public sector, consumer goods, utilities, transportation, and logistics. Likewise, Vitria Technology Inc. offers products specifically for energy, finance, government, manufacturing, health care, and telecommunications. Vitria Collaborative Applications include everything from data schemas to full business-process maps that make implementation truly turnkey. Different Vitria Collaborative Applications include application adapters, data schemas, supported exchange formats, and business processes, all of which are based on the core Vitria BusinessWare integration product.
Tibco Software Inc. takes a slightly different approach. For some vertical applications, such as global straight-through processing in finance and customer service for utilities, it provides packaged systems. For other vertical applications, such as for the communications and media industries, Tibco partners with system integrators such as KPMG and Deloitte Consulting, which build turnkey vertical systems on top of Tibco's EAI software.
SeeBeyond Technology Corp.'s Business Integration Suite differs by providing not just out-of-the-box data schemas and process maps for vertical industries, but also software that facilitates partner integration. For example, SeeBeyond's e*Xchange Partner Manager includes a graphical interface that lets companies maintain and administer profiles of trading partners, including profiles of users and their security levels, and audit transactions with partners. The partners can even manage their own profiles within the system. SeeBeyond also provides technology to package integration software and deliver it to external partners, who can install it and connect with the sending organization's infrastructure.
One welcome trend: Vendors are lowering software prices to speed adoption in key vertical industries. For example, vendors such as Vitria are providing fully functional, out-of-the-box vertical offerings at lower prices than their base integration servers. The result can benefit everyone: The customer mitigates some risk by implementing the vertical solution at a reduced cost, while the vendor can demonstrate the value of the technology to the customer and look for opportunities to extend the technology's use beyond the initial vertical application.
Another factor to consider is the recent entry of application-server vendors into the vertical-integration market. For example, Sybase Inc.'s growing product portfolio includes prebuilt applications in a variety of industries, including health care and financial services, that use Sybase's application-server and integration-server products.
Because many customers already have application servers in place, they may find the low initial cost for an application server-based system appealing. But while these options may meet the needs of some businesses, they don't provide the same out-of-the-box integration capabilities that EAI technologies offer. Application-server approaches often focus on app development and core infrastructure services needed to accomplish programming tasks across a broad range of apps, rather than on factors such as integration and data exchange.
The challenges many businesses face in quickly changing vertical industries are increasing rapidly. The good news is that technology is keeping up with those changes. Companies short on time can purchase prebuilt systems to address these challenges that almost eliminate the need for customization.
A number of critical variables, such as vertical-standards support and integration capabilities, need to be evaluated up front. This will save time in the long run and ensure that needed features are available if the system needs to be extended to other platforms and apps.