Low-Cost Integration Beats the Application Big Bang

Novelis chose low-cost integration to unify procurement and customer self-service processes.

InformationWeek Staff, Contributor

January 30, 2006

5 Min Read

Working with multiple systems to complete one business process can be frustrating. But it's the inefficiency — and the cost associated with disparate and disjointed systems — that has inspired integration projects. "Three years ago, CRM was the big driver [for integration]. Before that, it was mergers and acquisitions. Today, the driver is a combination of streamlining business processes and making them more efficient," says Steve Craggs, vice-chair of the Integration Consortium.

Greater efficiency was the goal for Novelis, an aluminum recycler and manufacturer of rolled aluminum products, spun off from packaging manufacturer Alcan in January 2005. Novelis was plagued with disconnected plant-level processes, a situation that hampered procurement. Without a standardized, companywide process that could be monitored easily, the company couldn't negotiate best rates from suppliers. "Our objective was to unify the data and come up with one way to perform the process rather than 12," says Bo Foster, corporate IT director of Novelis.

On the sales side, the company couldn't support the various ways customers wanted to do business with them, including using online ordering, portals and other customer self-service and business intelligence applications.

Given the choice between rip-and-replace or leverage-and-integrate, the company chose the latter. Budget was a key consideration. "We weren't in the position to make the investment needed for a single-instance ERP system," Foster says. "You can always spend $2 or $3 million on software, and sometimes you get the benefit, sometimes you don't. We were looking for a low-cost integration strategy we could reuse for a number of different e-business objectives."

Four years ago, when the company was still part of Alcan, Foster's team began building a set of Web apps, called Market Sites, for vendors and customers. The initial goal was to provide a single point of connection with the company's multiple back-end databases, legacy purchasing and maintenance systems, Oracle financials and other logistics systems. The company chose iWay to provide app integration and consulting services.

Procurement, online ordering and vendor management were the first three apps developed. iWay adapters and connectors enabled these apps to pull information from legacy systems through a BizTalk Server integration hub. Novelis also used iWay tools to create a data warehouse that acts as a single source of information and gives vendors and customers business intelligence capabilities.

The biggest technology challenges were and continue to be managing an architecture that relies on individual underlying systems to perform end-to-end processes. "When you start tying all these systems together, it becomes a chain, and there's always the chance you'll have weak links," Foster explains. "What happens, for example, when you rely on an application that feeds the shop floor system the bit of information you're looking for and that application fails?"

Novelis uses data-visualization software from Dundas to monitor processes in real time. It also created KPIs using Microsoft's Business Scorecard Manager. The company's goal is to develop and migrate to an enterprise service bus (ESB) integration methodology. It currently uses hub-based integration or point-to-point connections using XML, Web services or EDI.

"We use BizTalk where there is a type of transaction that's very discrete, such as a payment or purchase order," Foster says. "For others, where we are doing a quick lookup, we use an adapter. It's either a broker or brokerless approach, but we will migrate toward an ESB that will give us better manageability."

Craggs says Novelis' approach to developing an ESB is a popular one. "The reason companies like ESBs is they're comfortable with the incremental deployment," he says. "They can start with a relatively small number of nodes, but it's really part of a larger SOA [service-oriented architecture] strategy. [The goal is to] generate small returns, rather than making a $3 million investment in infrastructure and hopefully seeing a return."

Novelis has realized a number of benefits, particularly in the procurement process. "Before, purchase orders would be initiated, processed and paid through the individual plants. Each plant used its own coding approach, product number system and so on, and that information would sit there in a silo," Foster explains.

Today, order information is extracted, transformed into a common format and replicated to the data warehouse. Through BizTalk and iWay adapters, the transactions are sent from multiple plants to the new Market Site, which initiates the RFP and PO. Information flows back the same way in the receiving process.

Novelis keeps application data at the application level, using the data warehouse as a basis for business intelligence and customer inquiry rather than as the master data source for each application.

Improvements in procurement efficiency saved Novelis $12 million a year, compared with an initial investment of $600,000. On the sell side, Foster attributes increased order activity to the customer portal project. A centralized shipping process lets Novelis prerate freight bills, eliminating the costs of outsourcing bill payment.

Two more integration projects are in the pipeline, including a plan to join a number of different payroll and employee-assessment systems distributed around the globe. Foster says the company will rely on what it has learned thus far while trying new things.

"We'll use some of the business rule-sets more rigorously than we do today," he says, replacing manual routing with rules-based automation. "We'll [also] pull some of the logic that sits inside legacy systems into the middleware technology stack."

Michael P. Voelker is principal of Equinox Communications Inc. Write to him at [email protected].

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