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  • CFO Europe Magazine

Taming the Software Beast

New integration strategies promise to make connecting various bits of software fast, easy and cheap. CFOs, of course, have heard it all before. So what makes this time any different?

In 1998, when the IT department at Shell Expro, Royal Dutch/Shell’s UK oil exploration and production unit, put the finishing touches on a two-year software application-integration project, financial controller Darayus Wadia was overjoyed. The project allowed Shell Expro to replace 15 legacy applications with SAP software for finance, procurement, and logistics, and was a dream come true for Shell Expro’s finance team. After all, fewer applications meant fewer hassles whenever they needed to collect information from various parts of the business.

But by the end of the year, Wadia’s enthusiasm began to wane. “We had overestimated what SAP would enable in terms of reporting,” he recalls. “All the data was there, it had integrity and was robust, but extracting it and presenting it in all the ways we wanted, quickly, was quite difficult.” Nowhere was this more apparent than during monthly reporting, he explains. “We couldn’t, hand on heart, say that we had the financial management information being prepared and used in a consistent manner across all the business areas — even though it was coming from the same source.”

It’s a lament that is all too familiar. Combining and synchronizing data and content between all sorts of applications has been a huge headache for many companies. At best, the consequences of getting it wrong can mean hours of rekeying in data; at worst, poor integration can cause companies to spiral out of control as crucial information — such as purchase orders — fails to travel across a firm. The stakes are indeed high and getting higher as IT budgets shrink and the quest to get more mileage out of existing IT investments grows more urgent.

Getting to the Point

According to Taviz Technology, an integration software provider, each application on average needs to communicate with 30 percent of other applications in a company. That translates into a lot of work for corporate IT departments. Building interfaces for all those applications is a big job, which gets bigger and bigger every time a company decides to tweak an old application, purchase a new one or — even more daunting — bring in a whole different set of software after merging with or buying another company. One way that companies face this challenge is by hiring an army of in-house programmers to build individual, customized interfaces between each pair of applications. But that model, known as point-to-point integration, is slow and tedious at the best of times.

Another way is to buy a suite of tools from enterprise application integration (EAI) vendors. Introduced in the mid-1990s, EAI provides an orderly way for companies to update, co-ordinate and consolidate interfaces from a single hub, or “bus” in EAI jargon. Because all the applications feed into the hub, a lot of the integration work is streamlined and automated, dramatically reducing the number of interfaces.

IT experts are betting that the EAI market is set to heat up soon. Meta Group, for example, predicts that worldwide sales for EAI software will grow 103 percent annually, to nearly $9.4 billion, between 1999 and 2004. Likewise, demand for EAI services will increase 38 percent a year to $20.8 billion over the same period.

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