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The Benefits of eAI

A SeeBeyond White Paper

June 2002

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The Business Problem Integration and Management of Business Applications In todays fast-paced and technology-driven environment, market demand and globalization are driving changes that require companies to be faster and more responsive than ever before. As IT professionals know, todays application infrastructures must improve business processes, implement new functionality, leverage existing system investments, and automate and integrate information seamlessly throughout the entire enterprise. As a result, IT organizations are constantly looking to develop what Gartner Group refers to as zero latency enterprise or successful business integration that enables cross-functional business processes and an adaptive application architecture that maximizes reuse. Additionally, IT executives are constantly looking to implement more cost-effective and efficient integration software to meet evolving business requirements.

A recent Morgan Stanley Enterprise Software report surveyed 225 CIOs, reporting that 77% of respondents indicated that they would begin new application projects in 2002. However, in order for these budgets to be maximized and produce a return on investment (ROI), IT executives must consider the multiple options available for their technical infrastructure that includes monolithic integration software suites, point-to-point interface development or eBusiness and Application Integration (eAI) software.

About eAI eAI technology is the natural evolution of application-to-application technology combined with business-to-business integration with business process modeling, enabling a seamless flow of information through rapid application integration at minimal cost development. eAI uniquely connects disparate applications and data sources into an integrated environment that allows IT organizations to work with diverse applications such as enterprise resource planning (ERP), customer relationships management (CRM) systems, other packaged software applications, legacy systems and Web-based applications.

EAI technology helps enterprises respond quickly to the changing business conditions IT professionals face every day, significantly reducing development and maintenance costs. Additionally, eAI allows IT executives to strategically plan for future integration enabling flexibility and cost-efficiency by maximizing reuse and leveraging existing frameworks.

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Solving the Integration Problem? The continued argument over implementing a single monolithic integration software suite versus point-to-point interface development or eAI software, continues today. Although each solution provides unique benefits, the enterprise decision will derive from the organizations overall budget, the internal IT budget, and overall integration needs and objectives. As organizations proceed forward in the global economy, new business requirements and changing competitive dynamics ultimately lead to the evolution of new integrated application suite vendors. However, which of these vendors will offer a faster ROI? Up until the mid 1980s most software applications were constructed monolithically. Consequently, little, if any, code was reused from one application to the next. Therefore, a monolithic application suite often lacks the ability to meet the demands of todays enterprise, especially when the need to integrate business processes with business partners, suppliers and acquisitions arise. Indeed, custom coding, point-to-point interface development may prove to be another attractive alternative, but often is not the most cost-effective and strategic approach for the long term. IT organizations run the risks of building a clutter of point-to-point interfaces that will prove to be difficult to maintain as developing metrics occur.

Many analysts agree that organizations spend between 40 and 60% of their IT budgets on integration with the majority of this expense on that actual maintenance of the interfaces. eAI can reduce the cost of building new interfaces by as much as 50% and can reduce the cost of maintaining interfaces by as much as 80%. Even if a monolithic application suite appears to be the most efficient method for restructuring an IT infrastructure, it may prove to be too costly; and point-to-point interface development can accelerate maintenance cost significantly. For example, a typical $5 billion company will spend approximately 3% of it annualized revenue on IT, and 40% of that expense on integration. This scenario amounts to a $60 million annual expense on integration, with approximately 70% of that amount being allocated toward the maintenance of existing interfaces. True costs are not realized until the burden of maintaining these point-to-point interfaces start to overwhelm IT budgets and resources. By implementing a strategic framework such as eAI for integration objectives ensures enterprises have the opportunity before them to improve IT budgets and resources while simultaneously maximizing reuse of existing frameworks.

The Hidden Cost of Custom Integration Generally custom, point-to-point interface development is expensive to maintain due to lack of documentation, software support and the culmination of separately developed programs. When problems occur the debugging efforts can be extensive, particularly since custom interfaces do not typically provide efficient recovery capabilities. Moreover, the cost and time to recover these interfaces can be

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significant. Custom interfaces do not come with a solid monitoring capability, thus when a custom coded interface goes down there is no notification mechanism.

Figure 1 demonstrates how the point-to-point integration approach quickly results in many more interfaces. If one of these applications must be updated or altered in any way each interface between that application and all other interfaces must be rewritten, retested and re-implemented an obvious huge costs. According to a Morgan Stanley Equity Research report, a typical financial services customer maintains 6,000 interfaces at a cost of $25M annually, and each year builds 900 new point-to-point interfaces at a cost of an additional $25M to build and another $4M to maintain. This translates to approximately $4,000 per year to maintain an interface and an average of $28,000 to develop one.

Figure 1 A Large Number of Point-to-Point Interfaces

Avoiding Unexpected Risks and Costs of Writing Point-to-Point It is often the case that IT project teams select a point-to-point approach rather than implementing an integration framework. Point-to-point may prove to be faster for a single small project, however will it prove to be the most cost-efficient and strategic approach for the long term? Indeed, an important question to consider. The risk of hand-coded integration involve the following:

Even the best of documentation efforts will not keep an organization from being vulnerable to the individual knowledge-base of the coder

Justifying headcount to maintain homegrown integration solutions is more difficult

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Increased difficulty to maintain hand-coded integration

Non-strategic, long-term investment

When considered from a strategic and financial perspective, eAI can proves to be the most cost-effective and strategic decision an enterprise can make.

Is an eAI Framework a Better Approach? Figure 1 represents an example of n applications with n=5 and illustrates the need to share information with each application. However, in order to accomplish this exchange of information [n x (n-1)] two-way interfaces or 20 connections must be written. Each line in figure 1 represents an interface, yet with a properly designed architecture using an eAI solutions (as seen in figure 2) applications can be integrated with as few as n or 5 interfaces.

Figure 2 Five Applications with Only Five Interfaces

An alteration of any one of these applications will typically result in rewriting the connections to the other four (4) applications. An eAI framework can shield the other applications from these alterations and only requires that the interface between the altered application and the eAI solution be modified. Ultimately, this approach allows for applications to be added, upgraded or removed from the environment with little or no impact on the remaining applications. This strategy simplifies system maintenance and allow for ultimate flexibility for future integration solutions.

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What about Maintenance? The eAI Alternative . . . An eAI interface is a significantly more robust alternative, providing capabilities that includes transformation without low level programming, guaranteed delivery, automatic restart and recovery, and auditing and journaling capabilities that all contribute to the easy to maintain integration framework.

In comparison, custom code is much more expensive to maintain due to a lack of documentation and software support. Essentially, each interface coded is a separate program and typically provides inefficient recovery capabilities. The cost and time to recover interfaces can be significant due to the fact that custom interfaces do not come with solid monitoring capabilities.

Figure 3 demonstrates how the point-to-point integration approach can quickly result in many more interfaces. As the number of systems increases, the number of interfaces that must be written using point-to-point equals [n x (n-1)], which for n=10 systems are required. Furthermore, 45 interfaces are required to enable each application to send and receive messages from any other application. Compare this to an eAI framework that requires only n or 10 interfaces to be written.

Figure 3 Number of Interfaces Grows Rapidly

Looking at figures 4 & 5, one can see how an eAI framework will impact costs over time. The point-to-point development and maintenance costs will outweigh those of the eAI architecture. Forrester Research substantiates the cost savings, stating that by investing up front on integration architecture and planning work, enterprises can reduce the cost of initial eAI projects by $710,000 over five years. Indeed, this type of investment can deliver an ROI that far exceeds any point-to-point or monolithic integration approach.

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Figure 4 Development Cost Comparison

Figure 5 Cost to Develop & Maintain 100 Interfaces Each Year For 10 Years

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eAI Defined How to Evaluate the Solutions Any robust eAI solution must have the following capabilities for internal and business-to-business communications:

Business Process Modeling and Management

Application Connectivity

Transformation and Routing

Management and Monitoring

Communications and Transport

Security

Scalability

Support for Open Standards

Manageability

High Availability

Integrity

Business Process Modeling and Management Business Process Modeling allows business analyst to define a business process that can be linked to the technical integration components that will connect the various applications. Business Process Management enables business analyst to view and understand how a business process is transpiring. Reporting capabilities should be able to show how long a specific instance of a process took to complete or how long it takes on average to complete a billing cycle. Key processes such as order to cash can be modeled, integrated and then monitored to see how they are performing. Reporting analytics can highlight bottlenecks and potential problem areas that can then be resolved quickly by the business analyst. This capability truly enables business process optimization.

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Application Connectivity Packaged, Legacy and Database Adapters Off the shelf adapters provide out of the box connectivity to a variety of packaged, legacy and custom applications. These adapters should be able to perform automatic metadata extraction that enables the user to create data structure descriptions for the integration solution automatically without any custom programming. Sources should include databases, data warehouse metadata, electronic standards, flat file definitions, sample data files and should include the capability to format data for comparison to a message structure. Legacy system connectivity can be achieved using various methods, such as Screen Scraping, Print Capture, ftp or even MQSeries. Data changes in legacy systems can be accomplished with a variety of methods, including polling state tables within a database to determine when rows have changed, as well as more modern techniques available in recent versions of Oracle and other databases.

Transformation and Routing The ability to transform data according to arbitrarily complex rules ensures that information can flow between processes in the format that is required. The enterprise will benefit by avoiding low level programming to transform data. Business rules can be updated dynamically so that fetched parameters can control the rule logic. Dynamic modification of the underlying structure of the validation logic should also be supported. Data can be interpreted and routed based on the content of a message. This allows the enterprise to not only pass through messages, but to build new messages and transactions based on the content of inbound transactions.

Monitoring and Alert Notification The enterprise will gain value from monitoring and alert notification, which ensures that system failures are identified quickly. Because business depends on the uninterrupted flow of mission-critical information across the enterprise, monitoring and alert notification enable staff to quickly respond. Alerting of business events as well as operational events enables quick response to any situation.

Communication and Transport Support for standard queuing technologies such as JMS, IBM MQSeries, Oracle AQ, Sybase and Microsoft MSMQ allows the enterprise to implement an integration architecture across different organizations or business entities with different standards and preferences. Guaranteed message delivery assures the enterprise that a message will never be overwritten or lost, even if the receiving application is down. Messages will persist until the receiving application acknowledges a receipt. Make sure the vendors you are evaluating can persist a message in the event that the receiving application is down.

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Security Critical business data exchanged with customers, suppliers and partners over insecure networks such as the Internet can be as vulnerable to unauthorized access as delivering sensitive information on a postcard. An eAI solution must provide robust encryption, secure transport, digital certificates and a transaction audit trail to ensure data privacy, data integrity, trading partner authorization and transaction non-repudiation.

Scalability An eAI solution is a significant investment that delivers returns the enterprise is counting for this quarter and fiscal years to come. Yet, business is not standing still. Its not enough for an eAI infrastructure to simply meet current needs. Only an infinitely scalable eAI platform can continue to grow with the business in integrating the surging number of partners/customers/suppliers while supporting the volume of transactions and messages that will flood through the extended enterprise as more manual processes are automated and growth rates double or triple.

Support for Open Standards Standards and technology continue to innovate and evolve, presenting constant change to eBusiness. At the same time, in today's economic climate, enterprises seek to maximize return on existing IT investment often resulting in a disparate and heterogeneous technology environment. These environments consist of old, new and emerging technologies that can range from mainframes to wireless. Only an open eAI architecture can be a long-term enterprise platform that will be certain to support the widest variety of current and future technologies and standards, such as Sun's J2EE and Microsoft's .NET standards.

Manageability Due to the distributed and dynamic nature of an eAI environment, central management and control is essential for reliable and maintainable deployments often consisting of hundreds of systems and applications. Manageability refers to the ability to treat the physically distributed infrastructure as a single logical system in order to centrally monitor and manage an eAI solution while simultaneously being able to dynamically deploy integration components and configuration updates across the network.

High Availability Availability is critical as companies become increasingly reliant upon online technologies to seamlessly conduct business. Individual system outages alone can be very costly, but when the entire integration platform that supports the extended enterprise is down, the result could be financially catastrophic. Only eAI architecture can eliminate all single points of failure and provide automatic fail-over, dynamic load balancing and guaranteed delivery ensuring that transactions and messages are processed in a timely and consistent manner 24 hours a day, 7 days a week.

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Integrity Integrity is an overarching requirement encompassing eBusiness protocols, data, financial transactions and business processes. Business critical processes should only be trusted to an eAI solution that assures their integrity at every step, from activity to activity, system-to-system and partner-to-partner, regardless of whether they're long or short-lived processes. Integrity provisions must include event-based processing, guaranteed once-only data delivery, exception handling with notification and escalation, and built-in recovery through compensating transactions or data rollback.

In Summary There is no disputing the fact that IT executives are heavily involved in the development of their companys e-business strategies and application integration needs. The more e-business continues to be an integral part of a companys overall success, and the more CFOs and IT executives actively seek cost-effective and long term application integration solutions, the more apparent the eAI alternative becomes. As discussed and illustrated in this paper, monolithic integration software suites or point-to-point interface development is expensive, particularly in terms of maintaining interfaces between business systems. Which is why implementing a technical integration architecture using an eAI solution enables the reuse of interfaces and components, therefore reducing the overall effort required to write new interfaces while simultaneously reducing the cost of maintenance.

Indeed, the benefits of implementing an eAI technology today will continue to increase a companys future savings by eliminating interface maintenance that naturally accumulates as more interfaces are written. Moreover, it is essential to emphasize that an eAI solution enables the ability, and security, to strategically move an enterprise forward in a cost-effective manner by avoiding anchoring IT budgets and resources. This is a possible ROI that no IT executive can dismiss.

About SeeBeyond As the leading global provider of eBusiness and Application Integration (eAI) solutions, SeeBeyond (Nasdaq: SBYN) provides a unified, comprehensive platform for business integration, enabling a Real-Time Information Network to facilitate the seamless flow of information. Delivering Visibility, Velocity and Value across global operations, the SeeBeyond Business Integration Suite helps organizations dramatically improve business operations resulting in reduced costs, increased market share and improved customer service. SeeBeyond has more than 1,625 customers worldwide, including ABB, ABN Amro, Barnes & Noble.com, Bausch & Lomb, BHP Billiton, DuPont, Florida Power & Light, Fluor Daniel, General Motors, Hewlett-Packard, Pfizer and Sprint. For more information, please visit www.seebeyond.com.

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SeeBeyond has global headquarters in Monrovia, Calif. and sales and marketing headquarters in Redwood Shores, Calif. For more information, please visit www.seebeyond.com.

SeeBeyond and e*Gate are trademarks of SeeBeyond Technology Corporation. All other trade names are trademarks of their respective owners.