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The Elephant Has Left The Building

The long reign of lumbering enterprise applications is coming to an end. Frustrated with vendor lock-in, high licensing and consulting fees and inflexibility, companies are turning to composite app development, which promises faster deployment for relative peanuts. The new approach starts with a portfolio of services, but enterprise architects and developers must follow principles that promote modular assembly. Try these best practices for designing reusable services.

For more than a decade, packaged enterprise applications have ruled. Business reengineering dogma of the early 1990s merged with paranoia about possible Year 2000 system catastrophes to push many large organizations to embrace ERP and other packaged applications at the expense of "legacy" systems and in-house application development. But with the maturation of Web services, could ERP's reign be coming to an end? Like Elvis, has the "king" left the building?

Executive Summary

Consolidation has been the buzz in packaged enterprise application software as customers look for ways to avoid escalating application integration difficulties and cost. The downsides of consolidation, however, include vendor lock-in and continuing integration headaches (with high licensing and consulting fees). Worse, business flexibility can be compromised by depending on massive applications that are hard to synchronize with dynamically changing business objectives.

Technology momentum is building toward an alternative: service-oriented architecture (SOA) that supports composite applications. SOA links services, which expose specific application functions on middleware networks so they can communicate and become part of larger "composite" applications. The services shouldn't expose more than what's required by the SOA framework. Otherwise, the interdependencies among applications will grow to where organizations risk re-creating the "spaghetti" integration code they were trying to avoid.

Much of the SOA focus has been on middleware, including the enterprise service bus (ESB), which supplies something similar to message-oriented middleware but handles XML and Web services. However, middleware is only part of the story. Enterprise architects and developers must focus on reusability and abstraction to deliver on the promise of plug-and-play flexibility and reduced development and maintenance costs.

IT governance should play a huge role in recalibrating developer incentives and setting out the goals and principles to guide SOA and composite application implementation. IT management must be proactive; lagging behind is an invitation to failure.

Frustrated by the cost and difficulty of integrating packaged applications, consolidation has become the big story. SAP and Oracle (with PeopleSoft) are today's consolidated applications royalty. Through acquisition and internal development, they have amassed soup-to-nuts portfolios that cover manufacturing, supply chain management, human resources, financials and CRM. Microsoft is angling for similar hegemony among small and midsized business customers.

But the relief from heterogeneous-application integration didn't come without a price: vendor lock-in, high license and consulting fees and a larger degree of inflexibility. For a while, it appeared that the future held little choice. No longer: Web service-oriented architecture (SOA) and "composite" application development are beginning to push the elephantine packaged applications out of the limelight. Top vendors are scrambling; it's now the turn of Oracle, SAP and lesser enterprise application vendors to reengineer or lose their relevance.

Whether you plan to buy or build, the advent of SOA is having a huge impact on your choices for enterprise applications. In this article, we'll look first at some of the problems created by consolidated, monolithic applications, and why a new approach is necessary. Then, we'll focus on how you should address the key enterprise architecture issues that differentiate the old regime from the revolutionary upstart: composite applications.

Consolidation Blues

Application integration horror stories have driven the consolidation trend. Beginning in 1997, Hershey Food Corp. tried to integrate Manugistics, SAP and Siebel applications to improve order processing. About 30 months and $112 million later, Hershey had to admit failure. With its order fulfillment process broken, the company found itself having to call its customers to find out how much candy they had received in shipments. Hershey chose to consolidate more than 95 percent of its revenue and business transaction processes within SAP systems. The company has since reduced costs and boosted quality and efficiency on its integrated platform for enterprise decision-making.

SAP calls Hershey's experience a consolidation success story, saying it's instructive about what most companies face when they attempt to integrate their applications, packaged or otherwise. However, while app consolidation relieves some of the pain, it creates other difficulties.

First, upgrades and modifications to massive applications normally take years of planning and millions of dollars. Experienced SAP integrators would tell you that Hershey dramatically underestimated the effort required to install and customize six SAP modules (finance, purchasing, materials management, warehousing, order processing and billing) and integrate them with two Manugistics modules (planning and scheduling) and one Siebel module (pricing promotions).

Second, what happens if the way in which the consolidated application implements business tasks doesn't match the organization's existing procedures? The company must either spend big money to customize the application's modules or change business functions to what the application specifies.

Third, a company's business processes don't end at organizational boundaries. Businesses are increasingly focused on modeling and implementing end-to-end processes that interoperate with those established by customers and partners. The monolithic nature of the consolidated application portfolio may inhibit such external process integration.

And fourth, companies define their success on their ability to respond to market changes quickly and flexibly, as they grapple with changing economics, new regulations and shifting competition. Monolithic applications bog down already difficult efforts to adapt to new circumstances.

Oracle, SAP and other packaged application providers are no dummies. They're racing to incorporate standards-based integration and SOA into their platforms. Application development and integration vendors such as BEA, IBM, SeeBeyond, Sonic and Tibco sense an opportunity to gain from the growing desire to usher the "elephant" out the door and replace its hulk with a new vision of applications that promises lower cost through standards, reusability and incremental, plug-and-play growth.

Composite Applications

By the mid-20th century, manufacturers knew how to reduce costs and improve time-to-market by building products from reusable parts rather than custom designing all parts for each and every product. The composite application approach applies this lesson to software systems. Supported by SOA, software's reusable parts are services; organizations "compose" application functionality out of a set of shared, reusable services. The goal is to let companies assemble, modify and reassemble these services quickly and easily.

In contrast to big, all-at once application implementations, composite application portfolios come together incrementally based on business need. Analysts define executable business processes, which enterprise architects and developers then turn into composite applications. With SOA, process flows that typically run into trouble when they must touch multiple applications have an easier time working with standards-based architectures. There will also be less need to duplicate tasks of individual applications that may be supplied by reusable services.

Sarbanes-Oxley Act (SOX) compliance is one such need that will drive service-oriented, composite approaches in some organizations. CFOs might find that they have multiple departments or divisions implementing nearly identical systems to address SOX requirements. Shared services used by multiple groups could save millions of dollars in development and consulting costs, and improve the quality and control of governance efforts.

SOA should be of great interest if you have sizable IT investments. Can you use the services approach to more easily integrate legacy systems, thereby bringing them into the incremental, composite fold? Merrill Lynch needed to build a new set of Web-based financial applications to support its much-expanded worldwide force of financial analysts. SOA and composite application development allowed the company to deploy Web applications that can tap into its portfolio of more than 40,000 mainframe-based systems running with IBM's CICS Transaction Server software.

Ultimately, the composite approach encourages IT to align itself better with business objectives. In the highly volatile mobile telecommunications industry, for example, vendors compete by offering new and intriguing services and content. Most of these come from third-party providers. Vodafone and T-Mobile rely on SOA to manage provisioning, accounting and billing of consumer usage of the third-party services and content deployed on their wireless networks. In this way, IT meets business objectives by enabling — and being directly responsible for — customer — and partner-facing services.

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