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Cost of Ownership in Information Integration: A New Perspective

What is cost of ownership as it relates to integration between multiple data sources? This is uncharted territory for most end-user organizations, even those who may already have a handle on the cost on ownership of server applications. One thing is certain: the cost of integrating disparate stovepipes of data and applications has been prohibitive, due to the requirement for months of integration and development work. But it doesn’t have to be that way.

Over the long run, standardization achieved through Web services – and in the future, Service-Oriented Architectures (SOAs) – promise to dramatically increase the opportunities for data integration while reducing costs. Rather than recoding applications to change interfaces to data sources, or building connectors and links to bring together disparate data, integration of data from various data sources is made possible through simple, standardized APIs. A project to integrate data from two separate data sources that may have taken four months to complete can now be accomplished within days, or sometimes hours, through Web services.

Ironically, many organizations have found that many of the leading integration toolsets – no matter how extensive their support for industry standards – still require armies of IT staff and resources to configure and build. In addition, some integration toolsets still carry prohibitive up-front licensing costs. The direct costs around data integration projects stem from licenses, additional hardware, and IT staff time associated with the effort. Then, there are implementation and ongoing maintenance costs, which primarily consist of IT staff time, consulting assistance, and upgrade fees. Indirect costs include the impact of lost productivity and lost business, which are difficult to measure, but are readily apparent to organizations in the midst of a long integration effort.

Long-term costs involve maintaining an application over time, along with hardware upgrades, security patches, administrative issues, and ongoing licensing agreements. If it’s necessary to hire a team of experts to build the application, these individuals will be required on a long-term basis to maintain the application.

INTEGRATION TRENDS

Integration is a hot topic. Organizations are attempting to both internally to link stovepiped systems as well as extend data to business partners. For external integration, the challenge is clear, as surveys show. For example, a Gartner survey finds that only six percent of data managers strongly agree with the statement “Our company has a satisfactory and effective approach to standards-based integration – enabling electronic workflows between partners.” About 31% “moderately” agree with this statement, and 52% disagree.

For internal implementations, data managers also grappling with a number of concerns, according to the most recent data management survey out of Evans Data. For example, total cost of ownership (TCO) vaulted into first place as an overriding concern. There is considerable demand for return on investment and cost savings before data management projects are funded and initiated. With increasing self-management capabilities being built into databases and networks, companies are also opting to keep database administrative staffing as lean as possible as well. The Evans Data survey also finds that ability to integrate has vaulted from third to second place as a corporate priority. Database development shops are being tasked with binding data sources into enterprise views to support service-oriented architectures or data warehouses.

A recent survey of 1,000 organizations conducted by Webservices.Org finds integration to be a primary driver – and benefit – of information standardization efforts. Systems and application integration are the key focus of most efforts to standardize through mechanisms such as Web services, as cited by 56% of the respondents. This is not surprising, since the biggest problem facing just about any company is integration, due to the heterogeneity of most IT infrastructures.

Information integration is a compelling value proposition for companies managing disparate systems that need to provide better accessibility to end-users and partners. However, the costs incurred in back-end integration work can quickly wipe out savings for organizations if they aren’t prudent in their selection of an integration toolset.

How are organizations addressing this requirement for more seamless integration, without washing away any cost savings on the integration effort? FusionWare Corporation (www.fusionware.net), a leading vendor in the data and application integration space, has been addressing this issue. Many of the vendor’s long-term customers tend to have a large installed base of legacy systems and databases, yet consider technology to be the key enabler to their business success going forward.

FusionWare connects to any data source, including structured (databases) and unstructured (MS Office documents) data, and EDI. It also connects to existing applications through COM and Java interfaces, and even connects securely to other Web services that already exist on internal or partners’ systems. Such rapid integration provides dividends for end users and solution providers seeking simple solutions to formerly complex issues. “FusionWare enables us to expose data from multidimensional cubes and publish it onto a Web page for customers,” says Richman of Guided Intelligence. “We are able to expose that as a Web service, and eliminate the whole back-end process.”

Any company dealing with a history of developing and supporting legacy databases and systems knows how to stay focused on business needs, knowing that clients have no stomach for getting mired in the technical details. The key is to enable companies with complex application and data integration requirements to quickly establish integration between these disparate systems at a low cost.

In the following sections, we will look at how two companies have been able to address these challenges.

PASSING ON THE SAVINGS

Guided Intelligence, a new breed of Application Service Provider (ASP), is seeing its own return on investment using FusionWare, but the big savings are for its online customers. Customers have access to the same analytical functions, on an as-needed basis, that once required a multi-million-dollar data warehouse installation, or expensive outside auditors.

At Guided Intelligence (www.bi3.net), the need for low-cost implementation methods within a stormy e-business environment led to the selection of the FusionWare Integration Server as the foundation for its Guided Intelligence Analytical Server (GIAS). Guided Intelligence offers affordable business intelligence solutions, over the Web, to VARs and their customers. Guided Intelligence delivers pre-defined analytical business applications as templates or "cubes" for a number of general business functions such as finance, sales, human resources, marketing, purchasing, production, distribution, and customer service. Guided Intelligence’s products and services are built using Web-centric Online Analytical Processing (OLAP) technology. Small and mid-sized businesses are often unfamiliar with OLAP because of the customary high cost of business analysis software and its complicated implementation. “We target the small-medium sized business that need capabilities available in data warehousing projects, but could not afford the high cost associated with their implementation, development and maintenance,” says Warren Richman, President of Guided Intelligence.

For Guided Intelligence, a solution such as Microsoft’s BizTalk would result in devoting a lot of IT staff time in developing the tools and interfaces, Richman relates. “My feeling was that 75% of the cost of BizTalk would be in the maintenance process. It’s a sophisticated and complex software environment. And the ‘gotcha’ doesn’t show up until you’ve invested so much in BizTalk that it is difficult to replace it.” This is money that is better spent somewhere else, Richman emphasizes. “It’s just amazing, all that money that is spent on maintenance, but how much is available for new development? About seven times the cost of the software is the cost of all of the other things that go around the software lifecycle.”

Such expenses just wouldn’t cut it for Guided Intelligence, which was reeling – along with the entire ASP industry – from the impact of the dot-com crash and 9/11 in the early part of the decade. “We determined that if we could find a methodology for getting the data moved from point A to point B in an automated way with standards on both ends of the spectrum, it would allow us to evolve from the costly project-by-project approach,” Richman points out. “Clearly, Web services and the whole on-demand framework is essential to what we need to do.” The challenge, he says, was building and delivering the capability to integrate financial data from various sources and provide it in a single balance sheet or an income statement for its clients, which are mainly CPA firms. “From that balance sheet and income statement, you can derive all of the other information needed to analyze financials. The cash flow statements are calculated from that,” he explains. “The FusionWare Integration Server brings all these parts together into a single environment.”

The company’s lead offering is a financial statement analysis service called Audit Intelligence. “We’re building a framework for BI On-demand,” says Richman. This is especially useful because of various regulatory compliance demands now on financial executives and auditors, he says. “There’s pressure on CPA and internal auditors and audit committees to really check and double check what the numbers are saying.” Richman says that Guided Intelligence offers its service for $250 a transaction. “The average audit is $20,000. For $250, we’re giving them an important component of that audit, which takes the client numbers, calculates all the ratios, and helps interpret them, so the CPA can do a fraud analysis. And what normally would take several days, will now take minutes, for less than the cost of one billing hour.”

INTERNAL INTEGRATION

Saint-Gobain Calmar found that most integration platforms were not up to the task of capturing data from a wide variety of legacy sources. Even with the leading and expensive integration products, the company still would have needed to engage IT staff in building interfaces for the variety of homegrown systems in their factories across the world. For an operation that closely watches its bottom line, such integration projects were out of reach, until they discovered FusionWare.

At Saint-Gobain Calmar, rapid growth resulted in a hodge-podge of IT systems and data sources that needed to be brought together to provide decision-makers with a better view of their operations. Saint-Gobain, of which Calmar is a division, is a French conglomerate with 1,200 businesses worldwide with a wide range of consumer and industrial products. Calmar is a global manufacturer of pump dispensing systems for household cleaning products, health and beauty aids, and even pharmaceutical products. The company maintains plants across Europe, North America, and South America, manufacturing more than a million dispensers a year in total.

Calmar’s challenge was to cost-effectively bring together data from a wide range of systems from around the globe. Calmar had grown so rapidly in recent years that it had a number of legacy systems within its IT infrastructure – including IBM iSeries running SAP ERP software and a Bull system running Multivalue databases. “In the U.S., we are running a Pick database and operating system as MRP and ERP systems,” says Earl Trout, globale-Business manager for Saint-Gobain Calmar . “In Europe, we have Pick-based ERP systems in Germany, and an AS/400 system running in Spain. In Brazil, we are on SAP with our parent company. Our China factory has a different system altogether. These are the applications and databases that help support our business and the lack of interoperability between them has been a challenge.”

Building connectivity between all these disparate systems could have consumed a major chunk of the company’s IT budget, especially since many solutions on the market did not provide promised integration, Trout says. “We are a manufacturing company that is very financially driven,” he explains. “We look at the ROI over all of our investments. We’re a manufacturing operation that typically has high investments in capital machinery and so investing in other areas that are sometimes considered non-critical to delivering the product to the customer, can be difficult if the cost is not matched to the value.”

Recognizing that a lot of IT staff time could potentially get wrapped up in integration work, Calmar sought a solution that could be rapidly deployed by as few staff members as possible. However, this was not feasible with many leading integration tools they evaluated. “Mainly it was the integration of our variety of Pick systems that was very problematic for other vendors,” he remarks.

In mid 2004, Calmar implemented their its FusionWare Integration Server application – a Web based order status information system for its customers and partners.. Currently, Calmar has one developer handling e-business interfaces to FusionWare on a part-time basis, a second that handles infrastructure issues, and a third examining integration of the ERP systems in Germany. Utilizing the FusionWare Integration Server's ability to easily connect to their Microsoft SQL Server database and their legacy ERP systems, Calmar is now able to quickly and efficiently provide their customers with real time order information. A process that used to take hours, if not days, to complete, is now being executed in seconds.