Agility Meets Stability: Best Practices for Application Integration

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1 IBM Software Thought Leadership White Paper March 2011 Agility Meets Stability: Best Practices for Application Integration By Dan Moore, SVP Professional Services - IBM, Cast Iron

2 2 Agility Meets Stability: Best Practices for Application Integration Contents 2 Introduction 2 Emerging trends in the application environment 4 A hybrid solution for a hybrid world 6 Best practices in a hybrid world 8 Case studies Introduction Today s IT leaders are well aware of the growing need for an effective application integration solution. It isn t the complexity of the technical challenges that keeps you awake at night; it s the risk of investing time and resources in an integration approach that may or may not deliver the business value you need. To that end, you are exploring your options and studying best practices to keep your organization lean and agile enough to take advantage of the latest best-of-breed solutions, while at the same time maintaining the stability needed for your IT department to continue to meet the needs of line-of-business stakeholders. In this paper, Dan Moore, the senior vice president of professional services at IBM, Cast Iron reviews the current application environment in light of emerging trends, describes an ideal complete integration solution, and discusses commonsense best practices as well as pitfalls. He also presents two IBM WebSphere Cast Iron Cloud integration implementation case studies: Siemens Energy, a sector of the industrial enterprise giant Siemens, and CompWest Insurance, a dynamic mid-market provider of workers compensation, which IT leaders like you may find relevant to resolving your own integration challenges. Emerging trends in the application environment Hype aside, in the world of enterprise applications, cloud computing is arguably the next big thing. It is a major shift in the way applications are purchased, delivered, and implemented. According to cloud-computing surveys of C-level executives in $60B $50B $40B $30B $20B $10B Worldwide Cloud Revenue 27% CAGR $0B Global Public Cloud Market: $55.5B in 2014, Source: IDC

3 IBM Software 3 Australia, Europe, and North America conducted by Kelton Research in January and September 2009, the number of global organizations using both local, or on-premise, and cloud-based applications increased from 33 to 54 percent in just nine months. IDC reports that cloud applications are the fastest growing sector in software with a forecasted compound annual growth rate of 27 percent from 2009 through That said, the majority of enterprise applications, whether packaged or proprietary, are still on premise. Gartner has reported that in 2009, Software as a Service (SaaS), which is cloud-based by definition, represented only 3.4 percent of total enterprise application spending. Existing on-premise applications hold crucial business information that private and public cloud-based applications must be able to access and enhance for organizations to take full advantage of the cloud. Integration between on-premise applications is demanding enough, as evidenced by integration efforts already claiming one out of every three IT dollars; throw cloud-based applications into the mix, and you need a very agile, flexible integration solution. The emerging distribution of computing infrastructure and applications across locations, including on-premise as well as managed and co-located data centers, renders integration even more critical and complex. And the option for hosted sites for Infrastructure, Platform, and Software as a Service (IaaS, PaaS, and SaaS, respectively) can add an order of magnitude to this complexity. Connecting nodes in all of these locations to nodes in any or all of the other locations poses integration challenges in application functionality and interoperability, development productivity, management and maintenance efficiency, and flexibility and scalability. If done right, however, application integration can deliver both strategic and technical value. By automating the sharing of data between applications, it can help to streamline business processes for improved efficiency and performance. Integration can also provide business agility, giving companies the flexibility to easily adapt to changing business needs. It can also reduce IT costs by freeing IT resources from time-consuming, low-level integration tasks for higher value projects. Although the benefits of integration between on-premise and cloud-based applications are clear, previous integration approaches, including cloud-only tools, EAI/ETL/BPM middleware, and custom code, don t provide the agility and flexibility or stability and viability you need.

4 4 Agility Meets Stability: Best Practices for Application Integration Cloud-only integration tools are designed for simple cloud-tocloud scenarios; however, they lack the sophisticated functionality required to integrate cloud-based applications with packaged or proprietary on-premise applications. Many cloud-only integration tool providers are relative start-ups whose viability is yet to be proven. EAI/ETL/BPM middleware platforms provide rich functionality to meet Enterprise Application Integration (EAI); extract, transform, and load (ETL); and business process management (BPM) challenges. These solutions can also equate to a longer, more complex roll-out cycle, as well as require a dedicated skill-set to deploy and maintain. Custom code can be a quick integration solution at an initially lower cost, until labor-intensive and time-consuming maintenance and support reveal its hidden costs. Custom code requires an initial and on-going investment in skilled programmers and isn t easily scaled or leveraged for future integration projects. A hybrid solution for a hybrid world Public Clouds Private Clouds Cloud-only tools often appeal to smaller companies with limited resources and simple integration needs between cloud-based applications. At the opposite end of the scale, EAI/ETL/BPM middleware is the approach many large enterprises take because they have the resources and time to invest in developing platforms for complex integration environments. Custom code is the traditional approach for the majority of organizations, but recent advancements offer a more efficient and effective approach to integrating critical applications. Packaged Apps Integration is critical in a hybrid world H ome-grown App s

5 IBM Software 5 The new generation of integration solutions features single robust integration platforms designed to deliver everything needed for cloud and on-premise application integration. The ideal integration platform provides complete deployment flexibility, integration capabilities, connectivity, and reusability: Complete deployment flexibility A multitenant cloud-based integration service A physical appliance that can be installed and managed within a local data center A virtual appliance that can be installed on existing servers by using virtualization technology Complete integration capabilities Cloud data migration Data handling, using the platform s data cleansing and data migration capabilities, enables companies to cleanse, enrich, and migrate data from existing applications to cloud-based applications in real time. Cloud data synchronization Connectivity, workflow, and transformation features enable the coordination of integration processes across multiple applications in real time. Cloud user interface (UI) mashups Information from one or multiple back-end systems can be unified for display in the user interface of a front-office application. Complete connectivity Native application protocols enable connectivity to the endpoints of hundreds of packaged and proprietary on-premise applications and public and private cloud-based applications, including ERP, CRM, databases, web services, and flat files. This progressive approach to integration makes no distinction between local and remote applications because connectivity is established to the endpoints using native application protocols. The advantage is that no additional adapters are required and there is nothing to install or change at the endpoints. Complete reusability Hundreds of reusable Template Integration Processes (TIPs) for all of the most common on-premise and cloud-based integration scenarios are searchable and immediately available in an online library. The ease of using the next-generation integration solutions should match the simplicity of cloud applications. Both eliminate the need to write any code, do not require installation or deployment of software and provide configuration capability, while reducing costs. Ease-of-use. Ideal integration platforms have comprehensive functionality within a simple, familiar browser-based interface that is intuitive and requires minimal training. Integration projects should be able to be completed without requiring specialist resources or writing custom code.

6 6 Agility Meets Stability: Best Practices for Application Integration Low IT impact. The solution should provide completely selfcontained services delivered via either on an on-premise appliance or the cloud with nothing else for IT to add or buy. Ongoing management and maintenance should impose minimal to no requirements on IT. Easy to change. Look for customizations, workflows and preferences that are performed through configuration, not coding. Changes should be easy to make because the integration just needs to be reconfigured whenever business needs or processes change. Significant cost savings. Term licensing pricing options can slash up-front expenditure costs. Integration can also reduce ERP licensing costs by eliminating the need for cloud users to log into back-office applications. Best practices in a hybrid world In the last three years alone, IBM, Cast Iron has worked with hundreds of customers on thousands of integration scenarios. We ve developed our expertise based on real-world experience across industries in businesses of all sizes. In our work with partners and customers, we try to reconcile the stability one often finds in legacy systems and the potential for agility that cloud solutions offer. It definitely does not have to be a one or the other dilemma. Just like their application counterparts, the difference between traditional on-premise integration initiatives and cloud-based application integration couldn t be greater. In the past, business transformation initiatives were massive: they tended to be enterprise-wide deployments of complex integration platforms by large IT teams. These initiatives required extensive development and testing cycles and their time-to-value was measured in years. Today s cloud application deployments are at the other extreme with lean infrastructure and resource requirements, including smaller, more dynamic teams. They offer pre-packaged functionality for rapid configuration and iteration to add or increase business value, and their time-to-value is measured in weeks. We now see companies opting for cloud and virtual deployments as a viable option to reduce costs associated with hardware. They want both the stability of legacy systems and the agility of cloudbased applications, and they need to connect the two to share data to realize the full value of emerging technologies. To that end, they don t want to get stuck with an inflexible architecture that won t evolve with changing business needs, but they are also risk averse they are looking for a viable, future-proof integration solution. In adopting the cloud, our customers also find that with multiple outsourcing options come multiple vendor management challenges. Sound familiar? You have a huge job as an IT leader; our job is to make yours easier.

7 IBM Software 7 Many of the best practices for hybrid integration will sound familiar to you, but a few are counterintuitive although proven effective over time: Confirm business value before each phase of your integration project. In other words, diagnose each pain point in your business processes and prescribe the cure each integration will deliver. In the legacy world, you always confirm up front the strategic objective of a large application deployment and a long integration and business process reengineering initiative. In the hybrid world of on-premise and especially cloud-based applications, you deploy and realize value very quickly, but then iterate with additional phases and further business process reengineering efforts. It is important to identify the business value of each phase, not just at the beginning of the project. Note: With phased implementation, it is important to balance the goals of delivering a reengineered business process quickly and delivering enough improvement to the business process that it has a meaningful impact on the bottom line. If you do too much, your delivery dates will be pushed and efficiency will be questioned. If you do too little, the rest of the company won t recognize the business value. In summary, implement in phases for incremental success, but make sure each phase isn t so granular that it fails to address any significant process pain point. Re-use, economize, and optimize with templates and the user community. Working with hundreds of customers has shown us that there is considerable similarity in many of the integration patterns between applications such as SAP and Salesforce.com and Oracle EBS 11i or 12i and Salesforce.com. You start by synchronizing accounts and associating contacts, for example. Basic system components and key data elements are almost always involved. You have to work through the customizations that are specific to your business to get the full value of the integration; however, many of the basics have already been built, packaged, and tested as working software that is available for download. In addition to providing data elements, objects, and structures, these templates also offer best practices such as error handling, exception notification, and documentation. You don t have to start from scratch when working with an experienced integration platform provider. Build the framework for the future from the start and phase the implementation over time. You may want to connect several systems and applications, exchange information, and integrate or aggregate around a particular solution. Take a macro view of the integration issues and you won t miss any opportunities to add business value in the future. Again, don t try to do everything in the initial phases, but as you consider how the business process transformation will unfold, also consider end states and build the basic object hooks and infrastructure for connecting to other critical applications in the future. Preconfigured Template Integration Processes (TIPs)

8 8 Agility Meets Stability: Best Practices for Application Integration Ensure data quality and consistency for on-going success. Never compromise data quality. Enough said. Build your team early. Evangelize management for buy in and support. Often, particularly with cloud application integrations, project teams today are smaller and members are part-time or ad hoc, which is a big change from having a manager or expert who becomes part of the team for the duration of a business process transformation project. Now you ll have various experts from across the organization that you ll rely upon depending on where you are in the development and testing cycle. This places a premium on setting expectations and aligning leadership to provide real-time access to these experts. You will plan and schedule their time, but your team will need access to their expertise as issues arise. Management has to be on board to make that happen, and you as the project s champion have to evangelize to upper management and across the line of business. It may seem intuitive that a smaller team working together for a shorter period of time would require less communication, but experience has proven the opposite to be true. Due to the nature of today s project teams, it is far more productive to over-communicate. Work with outside experts, rather than hiring, while your team learns. Cloud computing focuses on speed to market as one of its primary values, and this emphasis on speed compresses the time you have to become acquainted with a new technology. There are many specialists now who have deep expertise in these technologies; take full advantage of their knowledge and experience while your team gets up to speed. There s no need to add any additional stress when you are trying to deliver business value quickly under tight deadlines with limited resources. Case studies Both of the following companies have done an admirable job of hybrid integration projects using WebSphere Cast Iron Cloud integration. For more information on our solution, please visit Siemens Energy In the United States, the industrial giant Siemens consists of three sectors Energy, Healthcare, and Industry with three to six divisions in each. Six of the six divisions of Siemens Energy Fossil Power Generation, Renewable Energy, Oil and Gas, Service Rotating Equipment, Power Transmission, and Power

9 IBM Software 9 Distribution are using IBM WebSphere Cast Iron Cloud integration to connect their public cloud-based Salesforce.com customer relationship management (CRM) application and on-premise SAP enterprise resource planning (ERP) system. Salesforce.com is distributed across 640 seats in six divisions and is used by Siemens Energy s North American sales force. SAP is Siemens Energy s worldwide back-office standard for order management, financials, and purchasing and the sector s system of record for testing and diagnostics in the U.S. The divisions goal was to integrate SAP and Salesforce.com, making the data in the ERP system available in the CRM application without writing code. Specifically, they wanted complete visibility of the forecast pipeline, including orders, shipments, and invoices, in one place within Salesforce.com with dynamic reporting. Four major challenges and one critical goal 1. Siemens Energy had made significant progress in standardizing its business processes between SAP and Salesforce.com, but the platform consolidation was incomplete partially due to the unique reporting needs of individual businesses. Custom Code 2. Although a business warehouse is part of Siemens Energy s IT roadmap, it was not yet in place. It would allow for some aggregate reporting but initially not enough customization to meet the needs of the various divisions. salesforce.com 3. The need and demand for reporting key business performance data from SAP was very high. Internal customers wanted to be able to display and view business results in customized dashboards. 4. In-house developer support was limited to SAP, and two of the divisions have no development staff for IT projects. SAP salesforce.com Siemens Energy, INC: Sales order and invoice visibility

10 10 Agility Meets Stability: Best Practices for Application Integration Options Siemens Energy initially considered developing the integration in house, but writing custom code, although quick, was too programming intensive and they lacked programming resources. It was also too difficult to modify as their business needs changed. Second project Phase 1: synchronizing customer and product master data from Salesforce.com for accounts in SAP Phase 2: creating opportunities for the Service Division s spare parts quotes and order creation. The divisions also considered traditional EAI middleware, but concluded that it was too costly, posed too steep a learning curve, and offered no native Salesforce.com connectivity. When the company brought IBM, Cast Iron in to do a live demo, they were impressed by the simplicity of its configurationbased approach to real-time, bidirectional integration and builtin Salesforce.com and SAP connectivity. Not wanting to maintain code or servers, Siemens Energy leases a WebSphere Cast Iron Cloud integration appliance on a monthly basis, which includes full 24/7 support. WebSphere Cast Iron Cloud Integration Project strategy Siemens Energy s IT has a phased approach to success. They start small to build integration expertise and confidence, and then expand to other projects and business units. First project Phase 1: extracting invoice and order status from SAP and bringing it into Salesforce.com Phase 2: entering line item data from orders into product opportunities SAP salesforce.com Siemens Energy, INC: Real-time integration in days salesforce.com

11 IBM Software 11 Results In less than three weeks, IT completed Phase 1 of the first project, providing greater visibility into Salesforce.com, which resulted in faster adoption by the sales team. The simplified user interface and reusability of WebSphere Cast Iron Cloud integration provided Siemens with a platform for all future integration projects, and was subsequently used to enable the use of Salesforce.com s newest offering, Chatter, to provide real-time updates from SAP. Future plans Siemens Energy plans to expand its integration capabilities across departments to enhance supply chain visibility so that customers can see where their order is at any point. This includes going mobile for reps and agents and by driving customers to a portal to access their order status. Lessons Siemens Energy learned that its integration strategy was very similar to its CRM platform strategy: Make simplicity a must-have: no software and no development, just rapid deployment, low maintenance and the flexibility to easily make changes. Choose simple solutions, not build-it-yourself tools: WebSphere Cast Iron Cloud integration provided simplicity and complete functionality. Clearly define and agree to the business and technical requirements up front. This is the key to rapid deployment. Start simple to deliver quick results. Build on your initial experience and success. CompWest Insurance Company Founded in 2004, CompWest is a dynamic mid-market provider of workers compensation insurance in the western United States. With distribution through a partner broker network, CompWest provides employers with long-term cost savings by caring for injured workers. With rapid growth, CompWest had multiple business processes that needed to be integrated, including a mishmash of applications and file types as well as FTP and for external and internal document routing. The company also had outgrown its manual processes for the management, transmission, and delivery of data. Michael Knibbs, Vice President and CIO of CompWest immediately identified the need for application and data integration and consolidated management. Their first project was to implement connectivity between the company s Stone River policy management system and proprietary cloud-based CompWeb quoting system: Phase 1 - New business processing Phase 2 - Renewal policies Phase 3 - Agency upload of submissions Currently under development is integration between the Stone River policy management system and the Guidewire claims system.

12 12 Agility Meets Stability: Best Practices for Application Integration No contingency for workflow if user was unavailable Time consuming, inconsistent routing and error-prone data entry Latency in claims reporting increased risk for all parties Manual Data Entry FTP/Flat files CompWest also had challenges specific to integration of its policy and quote systems that resulted in data accuracy problems, time-to-service delays, and increased labor costs: Insurance applications were made through a web-based quoting system. Upon sale, data was re-entered into the policy management system. StoneRiver Guidewire SQL Server FTP (Flat Files) CompWest Insurance: Policy quote and claims processing integration Challenges CompWest faced two major systems integration challenges: Multiple electronic data interchange (EDI) vendors were using FTP to deliver various file types, ranging from claims documentation to transactional data. Workflow was manual: User logged in to see what was routed into the queue User manually copied files to production endpoints Options CompWest tried spaghetti wiring and custom code, but multiple point-to-point hard-coded integrations on different platforms and in different languages didn t provide process management or scheduling across vendors, and maintenance became unmanageable. They considered the Microsoft BizTalk Server, but this solution seemed more focused on database and messaging instead of speed and agility. The traditional architecture simply didn t fit their overall IT strategy.

13 IBM Software 13 WebSphere Cast Iron Cloud Integration FTP/Flat files Solution WebSphere Cast Iron Cloud integration offered CompWest many benefits: The no-coding approach delivered real-time, bi-directional integration in weeks. The availability of tested and proven templated integration processes (TIPs) for common scenarios saves time and resources. Professional services were available for the first phase. The IT team could be quickly trained to be self-sufficient. The easy-to-use interface provided a centralized management console. WebSphere Cast Iron Cloud integration was agile and flexible enough to serve as the platform for all future integration projects. StoneRiver Guidewire SQL Server FTP (Flat Files) CompWest Insurance: Real-Time Integration in Days Results Using WebSphere Cast Iron Cloud integration, CompWest has eliminated manual data entry between systems to reduce claims adjustment costs by eliminating erroneous and duplicate payouts. By integrating systems, CompWest also has eliminated gaps in its workflow for a significant improvement in employee efficiency and productivity.

14 14 Agility Meets Stability: Best Practices for Application Integration Key IT resources are now available for higher value projects such as re-engineering and automating processes instead of correcting manual data processing errors. Real-time integration has reduced claims processing times and risk, resulting in incremental revenue from increased customer satisfaction and retention. Future plans CompWest plans to continue to enhance its legacy policy system by connecting it with web-based services using WebSphere Cast Iron Cloud integration. The company will enable policy renewals with its CompWeb application. CompWest is also exploring the possibility of delivering outbound documents using Adobe XML and WebSphere Cast Iron Cloud integration to populate Adobe XML forms. Lessons Understand your business processes re-engineer for optimal performance instead of automating existing processes: Analyze requirements. Identify current and potential business partners. Enable your environment for external services. Follow the 80/20 rule. Understand the total cost of ownership of processes to ascertain their value, e.g. the hidden cost of data correction due to manual entry errors. Partner with IBM, Cast Iron to leverage best practices: Re-use design patterns when applicable leverage TIPs! Identify industry trends and future-proof solutions such as standards-based messaging ACORD XML. Think beyond integration to business process outsourcing for non-core processes. About the author Dan Moore manages worldwide professional services for IBM, Cast Iron. He has more than 17 years of senior management experience leading global professional services organizations at both start-ups and top-tier consulting organizations. Prior to joining IBM, Cast Iron, Dan led the development and implementation of a SaaS solution to track worldwide maritime cargo as the Director of Operations and Advanced programs for SaviNetworks. As Vice President of Professional Services for Saqqara Systems, he oversaw all customer implementations and operations for a SaaS catalog management solution to support over 25,000 production users in Asia, Europe, and the U.S. Dan has also served as Director of Alliances for Avaya s $700 million software portfolio and was responsible for double-digit growth in the group s OEM and partner channels. As an entrepreneur, Dan was the co-founder and CTO of OpenShelf, where he oversaw all development and customer services until the start-up s acquisition. Earlier in his career, he spent nine years at Accenture, contributing to the growth of the firm s CRM practice into one of its largest revenue drivers. He holds a BS in Finance and an M.B.A. with a concentration in Computer Science from the University of Florida.

15 Notes

16 For more information To learn more about the WebSphere Cast Iron Cloud integration, please contact your IBM marketing representative or IBM Business Partner, or visit the following website: ibm.com/software/integration/cast-iron-cloud-integration/ Additionally, financing solutions from IBM Global Financing can enable effective cash management, protection from technology obsolescence, improved total cost of ownership and return on investment. Also, our Global Asset Recovery Services help address environmental concerns with new, more energy-efficient solutions. For more information on IBM Global Financing, visit: ibm.com/financing Copyright IBM Corporation 2011 IBM Corporation Software Group Route 100 Somers, NY U.S.A. Produced in the United States of America March 2011 All Rights Reserved IBM, the IBM logo, ibm.com and WebSphere are trademarks of International Business Machines Corporation in the United States, other countries or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol ( or ), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the web at Copyright and trademark information at ibm.com/legal/copytrade.shtml Cast Iron Systems is a trademark or registered trademark of Cast Iron Systems, Inc. (or its affiliates), an IBM Company. Other company, product or service names may be trademarks or service marks of others. Please Recycle WSW14150-USEN-01

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