Plug and Play Meets ProcessPlug and Play Meets Process
Service-oriented approaches have helped Owens & Minor, TransUnion, Pfizer and MasterBrand Cabinets build processes quickly and affordably
January 20, 2005
Imagine if no two DVD connections were the same, and you had to rewire your sound system and big-screen TV setup every time you wanted to watch a DVD. The process of preparing to watch a movie would be decidedly unpleasant.
This scenario sounds ridiculous, but for years, businesses have put up with similar difficulties when working with the systems that support business processes. They've built custom interfaces to integrate monolithic applications, and more often than not, they've still ended up with human workarounds to bridge process disconnects.
Service-oriented architecture (SOA), based on loosely coupled application components using standardized Web services interfaces, can help simplify application integration and process management. "If you want to have more flexible, adaptive business processes, move your IT applications to SOA," says Meta Group analyst Janelle Hill.
Fast and Agile
The term "Web services" caused a fair amount of confusion when it surfaced in the late 1990s. Many assumed the term meant delivering business services via the Web. Instead, it referred to distributed application components that were built on Web technologies. The grand idea behind Web services was that organizations would be able to compile loosely coupled applications from different sources. Companies could deliver and retrieve service components as needed over the Internet, using WSDL (Web services directory language) to describe them, UDDI (universal description, discovery and integration) to find them and SOAP (simple object access protocol) to message between them, with extensible XML making everything work together.
Early adopters actually found a better use for Web services, developing and deploying them inside the enterprise (as "network services") to serve two valuable roles. First, the relatively lightweight and simple protocols of XML make Web services ideal as a component-based architecture for companies modernizing their IT environments. Second, Web services facilitate application integration, letting companies create new and composite applications more quickly and, therefore, automate and improve processes more easily.
Owens & Minor, a Glen Allen, Va., distributor of medical and surgical supplies, had modernization in mind when it undertook a four-year project to transform its IT infrastructure into an SOA. The project was initiated, says David Guzman, senior vice president and CIO, because legacy applications built on '70s and '80s technologies couldn't be easily customized or recoded as the company tried to add business services such as supply chain management and on-site staffing.
The company considered installing an ERP package, but Guzman and others knew that replicating the custom functionality provided by those legacy applications would be a monstrous effort. Instead, the company used application modernization software from Relativity that analyzes legacy code, identifies underlying business rules and helps rearchitect the software as network services. The project was completed in 2004, and the services now run on BEA application servers.
In the course of the SOA project, Owens & Minor recognized that it was creating not only a modern enterprise architecture, but also a multitiered, component-based environment that would improve processes. The company looked for a tool that would help it orchestrate those components and, in early 2004, deployed Fuego's BPM suite. Fuego was chosen, says Guzman, for its ability to help the company design processes, write code for integration and monitor automated processes.
To gain experience with the new BPM tool, Owens & Minor targeted two noncritical processes and a third process that, according to Guzman, was so broken that the business staff would welcome any improvement.
This third process, called the debit memo process, entailed pulling expiring products from warehouses and, if possible, returning them to manufacturers for credit. Previously, the company's Manugistics supply chain system generated an inventory report that indicated which products were nearing expiration. The report was sent to each of Owens & Minor's 42 national warehouses, where staff would manually locate every item, contact headquarters for the manufacturers' return policies, and determine which products could be returned. These employees would then contact the manufacturers to obtain return authorizations, create return orders in a separate warehouse management system and notify accounts payable to expect a credit.
Tapping legacy services, Owens & Minor was able to compose a new debit memo process in less than a month. The Fuego process engine receives the inventory report and relies on a rules engine coded with each manufacturer's return policy to create a prioritized pick list for warehouse staff. The process engine automatically generates e-mails to manufacturers to obtain return authorizations, create shipping requests, notify accounts payable and track credit notices. Warehouse employees need only pull recommended returns and handle the physical shipments.
The debit memo project was still being rolled out late last year, but Guzman says the new process has already improved management of expiration dates, prioritizing product pulls and enabling the company to return more products within allowed time periods. The company expects annual savings of $650,000, half attributable to better inventory accuracy and half to productivity savings and improved cash flow.
Having an SOA and a BPM system that fit the architecture helped Owens & Minor automate each of the three targeted processes quickly. A similar project four years ago that would have taken nine months now takes three weeks. "Speed is key," Guzman says.
The agility allowed by an SOA was also crucial to a process improvement at TransUnion Settlement Solutions, a unit that performs credit checks, property valuations, title searches, flood zone determinations and other loan closing services for financial institution customers. These customers receive a single, consolidated view of this service information either over the Web or through an XML data feed, but the information comes from a number of distributed applications that have either been developed by TransUnion or obtained through acquisitions of other loan services companies.
TransUnion had a workflow system to manage the different data collection requirements, but the mainframe-based system didn't allow the company to leverage the service-based nature of the underlying applications. "Architecturally, our business has always been built on the notion of a hub and spoke," says Richard E. Carlberg, vice president and CTO at TransUnion. "The problem was, the hub was limited."
Early last year, the company deployed Savvion BusinessManager BPM software, which today serves as the backbone through which nearly all of TransUnion's business is processed. "It gives us plug-and-play ability," Carlberg says. "I can add and subtract [services] without disrupting the whole infrastructure."
The BPM conversion took about six months. TransUnion ran both systems in parallel to stress test the new systems and minimize the risk of disruption before the old workflow engine was retired. The ability to quickly deploy new loan-closing products has been the biggest benefit of the service-based architecture and BPM system.
Carlsberg says the investment is paying off, though he wouldn't disclose the outlay. "In one month, we've added about 10 new products, which would have been virtually impossible in that timeframe in the old environment," he says. "It would have taken months and months."
Reuse and Recycle
The ability to reuse Web services in multiple processes is another benefit of SOA in BPM initiatives, as pharmaceutical maker Pfizer has discovered. Three years ago, Pfizer embarked on a project to update its IT architecture. Much like Owens & Minor, the company later recognized the advantages of orchestrating the resulting services components to manage business processes.
Early last year, Pfizer implemented Lombardi's TeamWorks BPM software. Improving Pfizer's inefficient incentive compensation process was a top priority. The company's 13,000 field sales staff had relied mainly on e-mail to route reports from a legacy incentive compensation system for approval and payment. The process took as long as 30 days, and employees frequently called in to check on the status. There was no way to track where a particular report was in the approval process, however.
Using TeamWorks, Pfizer mapped out the process, identified steps were it could be automated, created a service to handle routing, and established integrations with the underlying incentive compensation system and a document repository. Once the compensation report is generated, the system routes it for approval, tracking the report to its final state, says Rod Echols, senior architect at Pfizer.
• Legacy systems are too old or expensive to adapt. Extract the underlying business logic and use a service-oriented approach to assemble new processes that can be changed without touching underlying code or worrying about platform incompatibility.
The project took less than three months to complete, and the length of the process was cut to one week. "The field force is happier because it gets paid faster, with fewer errors," Echols says. "It's motivation for the people who really drive our revenue."
Pfizer plans to use the same routing service for other processes, such as the company's procedure for approving educational and promotional grants. "We can leverage the same set of Web services over and over as new applications come on board," says Abdi Oday, another senior architect at the company.
Reusing application components isn't a new IT concept, but in the past it was often a poorly documented, cut-and-paste process. "You would have the same piece of code, slightly modified, running in different places," says Guzman of Owens & Minor. "When you made a change, you would have to find all the instances [of that code]." These updates took time and introduced risks.
Reusing services saved time and money at MasterBrand Cabinets because the company didn't have to scrap its legacy systems. Internal growth and acquisitions had left the supplier of stock and custom cabinets with five different ordering systems, and customers often had to deal with multiple sales reps on a single order. Internally, the company lacked visibility into the overall ordering process, so single orders involving multiple products often ended up being sent in multiple shipments.
Although the legacy ordering systems were disconnected, each did what it needed to do, explains David Mewes, MasterBrand's vice president and CIO. "Rather than convert to an ERP system, we wanted to extract that [order] data and get at it in a single process separate from the applications," Mewes says. "We have competitors that implemented ERP systems via rip and replace, and it affected their performance, order fill rates and business in general. We didn't want to take that risk."
MasterBrand's project team used Vitria business process integration software to create an architecture that would ultimately support a host of customer and supply chain initiatives, including ordering. Taking what Mewes calls a "noninvasive" approach, the team used Web services to expose and integrate the five separate ordering systems. Because this approach involved rearchitecting the legacy applications versus just adding BPM to an existing SOA, it took about 10 months to complete the project. By late last year, MasterBrand deployed what it calls the "One Touch" system, based on Vitria's CleanOrder single-point order and fulfillment software. As a result, customers now deal with one customer service rep regardless of the number or types of products ordered. Service reps use a single, Web-based order system that will also serve as the backbone of a customer self-service portal now under development.
The system is paying for itself in consolidating orders, Mewes says, adding that the company expects annual savings of $300,000 on shipping costs alone. Reduced call center costs and improved order accuracy bring additional savings, and the company has avoided the costs and risks associated with installing a new ERP system.
The Hard Part
Building out a complete SOA can't be done quickly — or cheaply.
Owens & Minor, TransUnion, Pfizer and MasterBrand all completed successful BPM projects within a few months, but their ongoing SOA efforts are taking years. Guzman of Owens & Minor says the alternative of ripping out legacy systems and moving to ERP "would have been a lot more expensive," though he declined to detail the company's spending. According to Relativity, Fortune 500 enterprises typically spend $400,000 on a 50-user implementation of its Modernization Workbench software, and big, systems-integrator-led SOA projects typically run $1.5 to $2 million. In contrast, spending on BPM projects average $300,000, according to a 2003 study by Delphi Group.
Companies should anticipate obstacles to building a new architecture. "You have cultural issues — people working in a legacy environment who aren't interested in seeing that upset, as well as business logic captured in those legacy systems," Travers says. Asking IT staff to develop shared, reusable Web services runs counter to the way some companies evaluate and compensate programmers. In addition, staff must be trained in the new architecture.
"The one thing I would've done differently is slated more time for knowledge transfer" from consultants to IT staff, says Mewes of MasterBrand. "We're still depending on external resources to develop our infrastructure."
An SOA pays off not only for BPM, but in data management, commerce and portal initiatives as well (see Listening Post). To justify the investment, identify areas where SOA will have the greatest impact. "If your strategy is to get products to market faster, look at the applications you use for product development, design, launch and marketing," says Hill of Meta Group. "Those are the places you might first adopt SOA."
While application components aren't as interchangeable as DVDs, and no enterprise architecture is as easy to work with as your average home entertainment system, SOA is helping organizations better manage business processes and other integration needs.
Michael Voelker is principal of Equinox Communications. Write to him at [email protected].
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