How to integrate hosted applications

As it becomes more popular to have applications hosted by an external service provider, what implications does this have for integrating those applications with your other systems?
The integration of different applications can be a trial even when all the components are under your control. But what happens when the mix includes hosted applications? When Technology & Business  asked organisations for their war stories, the response was surprisingly positive, indicating that hosted providers are well aware of the need for integration support.
Cyberlynx
Cyberlynx is a procurement service created by the Commonwealth Bank Group (CBA), EDS, Telecom New Zealand (Australia), Woolworths, Lion Nathan, Carter Holt Harvey, and Royal & SunAlliance. More recently, Nestlé Australia and Unilever have become participants.
The objective is to pool purchasing power to obtain lower prices and to reduce procurement costs for both buyers and sellers. A panel of over 160 suppliers offer goods and services in 24 categories, including print, electricity, and travel. The aggregate spend is around AU$350 million per year.
One aspect currently used only by CBA is contingent labour -- contractors. Alan Rousselot, technology enablement general manager at Cyberlynx, says this is the first Australian implementation of PeopleSoft's Services Procurement (sPro) application, though it is already very popular in the US. Rather than run sPro in-house, Cyberlynx chose to have it hosted by Hostworks.

"This whole payment cycle is done in five days, compared with 30-60 days with the manual processes."

sPro "removes all the paperwork involved in dealing with a contract labour force" says Rousselot, including timesheets and invoices, and it automates the administrative processes involved.
Once an internal requisition is raised, it is routed through the bank's approval process and then the specification is transmitted to the panel of suppliers. Suppliers respond, and their candidates are scored (and interviewed for some roles) by CBA before the contract is awarded.
The contractor starts work, and completes his or her timesheet via sPro's Web interface. Once approved by the supervisor, the timesheet is consolidated with others for the same supplier and delivered. The supplier pays the contractors and raises an invoice, which the system automatically checks against the contract (or routes to the bank for checking in the event of exceptions such as substantial amounts of overtime) and then outputs an invoice file in the right format for the CBA accounts payable system.
"This whole payment cycle is done in five days" compared with 30-60 days with the manual processes, says Rousselot.
Data is exchanged between sPro and the CBA's and the suppliers' internal systems each day, but naturally the flows peak at the end of each week. The systems are loosely coupled by transferring appropriately formatted files via the Internet, using a VPN for security. The simplicity of this approach makes it easy and convenient to use, and no significant investment is needed to participate.

Since all the information flows through Cyberlynx, it is captured for a variety of reporting and management analyses using Cognos software. For example, suppliers can be told what share they are getting of CBA's business, and the bank can see the spread of wage rates or which supervisors are slow to approve timesheets.

It took three to four months to develop the business case for the project, then six months for implementation. The work was performed by Cyberlynx' own team.

Cyberlynx is currently working on a major upgrade to PeopleSoft 8.8, and increasing the scope of the system from administrative contract labour (eg, call centre agents and receptionists) to include all independent contractors and IT contract labour. This will double the volume handled by the system, The system is used only by CBA at present, and it already handles tens of millions of dollars and thousands of contractors. Cyberlynx hopes to extend it to other clients, as the financial services, government, telecommunications, and large manufacturing sectors are all substantial users of contract labour. "We're actively talking to a number of other companies" including current and potential participants, says Rousselot.

Sensis
Sensis hosts applications for others (eg, products based on the electronic white pages directory, including Sensis Direct as well as the provision of Web services and API access to the data; and the MacroMatch customer database cleanser), and also integrates its internal applications with those hosted for it by parent company Telstra and others.

Historically, most integration projects involved point solutions, says CIO Len Carver, but in the last two or three years there has been a shift towards the consistent use of an XML layer. The exceptions are when high speed is required, or where there is a particular reason to avoid Web Services (eg, a client's preference).

Sensis uses Siebel CRM in-house to keep track of its 420,000 advertising customers. This system has around 1000 primary users, including the 500-strong print sales force and their 250 colleagues on the online side.

"Whenever you hold a record more than once, you get 'version of the truth' issues."

The printed directories are created using Amdocs software that is hosted by the vendor, while Sensis' SAP accounting system is hosted by Telstra. This requires some reasonably sophisticated integration, as Sensis does not recognise advertising revenue until the printed directories have been distributed. There is also a reconciliation process in which data flows back from the SAP accounting system to Amdocs.

The various activities draw on a central content management system (developed by Sensis in J2EE) that uses Oracle and Documentum to store structured and unstructured data respectively.

As the business changes, there is an increasing need to integrate product lines onto a single platform. For example, the white and yellow pages directories weren't always produced by the same organisation. A major driver for this integration is data synchronisation across customer records, says Carver. "Whenever you hold a record more than once, you get 'version of the truth' issues."

The primary integration platform is Tibco, although the company also makes use of IBM's MQSeries for asynchronous connections. Various applications also make use of a wide range of Web Services from a variety of sources. These include components that augment the billing system, handle bulk e-mail, and insert banners intelligently.

IBM performed the integration work, using a mix of its own and Sensis' personnel augmented by outside specialists depending on the skill set required. "Gone is the day when you had a single systems integrator," says Carver. Not only does a multi-source arrangement work better, it helps to keep the big-picture expertise in-house.

On the demand side, he believes that future demand for Sensis' online services will grow rapidly in two to three years' time when filters are developed to make sense of the large amount of data that is available. Such hockey-stick growth has a precedent: the Commonwealth Bank's NetBank service grew from 10,000 to 100,000 users over three years, then leaped to one million in the following year. A similar pattern was seen by the CommSec online brokerage business, he says.

Another driver is the emerging demand for wireless services, such as WhereIs for mobile phones. "As the volume comes in, the integration challenge gets much larger," says Carver, pointing to issues such as the difficulty in maintaining service levels.

marketboomer
marketboomer is a business-to-business exchange mainly for the hospitality industry. Buyers select products from online catalogues, and marketboomer disaggregates each order and routes line items to the appropriate supplier.

"Messaging is fairly self-contained, but managing internal infrastructure takes a lot of time."

When marketboomer opened its doors in 1998, more than 95 percent of orders were faxed to suppliers, but that proportion has fallen to between 65 and 70 percent. The rest are delivered by e-mail, EDI, or other methods such as Web pages. However, the transaction volume is growing at such a rate (10 percent per month for the last 18 months) that the number of faxes threatened to exceed marketboomer's in-house fax capability, explains product director and co-founder Nathan Gyaneshwar.
Prompt transmission is particularly important in the hospitality industry, as suppliers specify a cut-off time for next-day delivery and buyers often leave their orders to the last minute. So marketboomer looked for a hosted service that could handle the delivery of fax and other messages, and selected Xpedite for its large infrastructure and because it operates on demand.
According to Gyaneshwar, the change is cost-neutral on the company's current volumes, but it removes the management headaches associated with the previous fax infrastructure. Savings are expected as marketboomer continues to grow.
"Messaging is fairly self-contained," says Xpedite technical director Tim Ward, but "managing internal infrastructure takes a lot of time.
The project took six months from the decision to go with Xpedite to the time that Gyaneshwar was able to ignore it on a day-to-day basis.
The trading software was developed in house using the locally designed Bullant object-oriented language (an earlier implementation was built on Lotus Notes), and much of the elapsed time passed while the company ensured messages would be sent correctly via the Web Services interface. Bullant provides some XML/SOAP support, but a fair amount of work was needed.

The development aspects of the project took about three months "due to our own issues," says Gyaneshwar. Trials with a handful of suppliers proved the system was working and that the status messages being returned by Xpedite were handled correctly. When a fax is submitted, Xpedite responds with a job number that can be used to query the status of that transmission. marketboomer polls this status every minute so the service team can see any outstanding faxes, explains Ward.

Another month or so was spent fine-tuning the rules in the messaging system that control the number of retries, failover, exception handling, and so on, but Xpedite was being used for production work during that time.

marketboomer's requirements were different to those of Xpedite's existing customers in that the worst-case acceptable delivery time for any fax was 20 minutes. Other businesses were using the service for fax broadcasting, and there the concern is that the whole batch is sent within a given period. This required some changes at Xpedite's end, but the outcome was very satisfactory: in July, the slowest delivery time was eight minutes.

"Xpedite gives us fairly extensive reporting," says Gyaneshwar, including a list of fax numbers causing frequent problems. Suppliers vary from the very large to the very small, so "all sorts of different issues arise" from a sole trader talking on the business's single phone line to people failing to keep a busy fax machine replenished with paper.

The system is currently sending around 1000 documents per day, and 95 percent are successfully delivered at the first attempt, which Ward says is pretty good for faxes.

Esker
Enterprise communication software specialist Esker used Siebel CRM software and had "invested thousands and thousands of man-hours" to integrate it with other applications, says James Elkington, managing director of Esker Australia.

A Siebel upgrade became necessary about a year ago, but that would have meant repeating the integration work. Instead, Esker switched to salesforce.com CRM and integrated it with SAP financials and an in-house sales administration system (known as SAS, but don't confuse it with the commercial software of that name) via salesforce.com's weblinks feature and a data warehouse.

All the SAP and SAS data is stored in the warehouse, and a weblink connects a customer record in the CRM system with the information in the warehouse regarding that customer.

For example, the "Assets & Contracts" link sends the customer ID from salesforce.com to the data warehouse, which builds a Web page showing the requested information in the same style as the CRM system. "It looks like salesforce.com data," says Elkington.

Nicolas Bragard, Esker's corporate director of IS, explains that storing all the data within salesforce.com was a more expensive proposition, but salesforce.com's integration and customisation facilities made the job easy.

"salesforce.com provides a really useful integration with Visual Studio .NET" and other platforms, he says. The company initially used the salesforce.com XML-RPC API to upload those portions of the Siebel data that were not accessible by salesforce.com's import tools, but shortly afterwards Web Services support was added ("more friendly, more useful," according to Bragard) and Esker used that for the rest of the project.

Another issue was that the customisation tools provided by salesforce.com do not allow the addition of logic to the standard screens. For example, when a sales opportunity is closed because the business has been lost to a competitor, Esker requires staff to record the reason. Another example is that the values presented in a version number pick list will depend on the product selected in a previous pick list. "Ninety percent of the time we can do what we need with salesforce.com's basic tools," says Bragard, but for the other 10 percent "it's really easy to develop extra screens -- we can use tools we are really familiar with," such as Visual Studio .NET.

The entire salesforce.com implementation took less than three months, including the integration with SAP and SAS.

"Whenever [salesforce.com] upgrade, we get that upgrade simultaneously," he says, "and these Web integration links seem backwards compatible" so Esker doesn't need to rework the integration.

"Salesforce.com is becoming the central view into all our systems," he adds.

Esker has experienced some version-of-the-truth problems, as data from a variety of sources including spreadsheets flows into the data warehouse. "From a user's perspective, that's been a bit of a problem," he says. In most countries, Esker sells through resellers and customer information is captured by SAS when end-users register their software to receive the activation code. Around 90 percent of Australian sales are direct and licence keys are shipped with the product, so "from an Australian perspective, salesforce.com is the cleanest data." In some cases, less accurate data is being pushed from the data warehouse into the CRM system. "It's not so much of a problem for the other subsidiaries, says Elkington, and "in France, I know their best system is SAS."

In future, Web integration will be used to create new SAS records based on customer data from salesforce.com, and then SAS will create the licence key. This will help ensure consistency of data. "salesforce.com is becoming the central view into all our systems," says Elkington.

Toyota
Direct debit is a popular way of handling regular payments as it lifts the burden of actually making the payment from the customer. All the customer has to do is ensure there are sufficient funds in the nominated account. Businesses like this method because it is relatively cheap and it reduces the number of late payments.
Some consumers are wary of direct debit, as changes made to the system several years ago mean they now authorise the supplier to withdraw the money from their accounts instead of authorising their bank to allow the withdrawal. This has led to situations where a company runs into trouble and ceases to provide the service, but continues to debit its customers' accounts. It isn't easy to prove to the bank that an authority has been rescinded.

"We're very flexible about the file formats... it's really easy to remap fields. Rather than integration, it's really interfacing."

CommSecure acts as an intermediary in the direct debit process. Suppliers can outsource the task of obtaining customer authorisation and actually processing each transaction, while customers can cancel the authority at any time without having to rely on the supplier to cancel it at their request.
This service is cheaper for suppliers than handling direct debits themselves, and -- without needing to change their back-end systems -- they benefit from online interaction with customers.
Toyota Financial Services (the financing arm of the car manufacturer) uses CommSecure as one method of handling personal and small business lease and loan payments. The motivations included a desire to give customers as many payment options as possible, to drive them to the Toyota Web site -- rather than bank sites for BPay transactions -- where they will see informational and marketing messages, and cost savings, explains Paul Bellantonio, business development manager at Toyota. "We want to get as many people as possible onto an electronic form [of payment]," he says, as it is cheaper for both parties.
Once pages on Toyota's Web site were modified slightly to link to CommSecure's server, customers could fill in a direct debit authority online, then print and sign it, and fax it back to CommSecure.

On receipt, fax images are checked for any alterations (an authority is not valid if there are any alterations to the bank account number, for example) and the signatures examined. After this matching process, Toyota's Onyx CRM-based customer information system (CIS) is notified that the customers have been set up for direct debits.

Each billing period, CommSecure processes the payments on behalf of Toyota and information about them is transferred to Toyota's SAP financials.

The system handles the traditional form of direct debit where the biller automatically draws the appropriate amount on the due date as well as the more flexible customer-initiated payments. Customer initiated payments allow the customer to control the exact timing of the debit (up to the due date), to select the source of funds from any pre-authorised account, and to individually approve each debit. "It gives customers control over their accounts," says Bellantonio, adding that the system is cost-effective for Toyota and its customers.

While the integration work was a joint effort, CommSecure's aim is to require no changes to the biller's system.

"We're very flexible about the file formats," says Alan Priestley, sales and marketing director at CommSecure, explaining that CommSecure can usually match its input and output with whatever the biller's software can produce and accept. "It's really easy to remap fields," he says. "Rather than integration, it's really interfacing."

"The technology part of the integration only takes a matter of days."

The data files are transferred between the two companies via an SSL connection with 128-bit encryption.

The nature of the process means some activities occur in real time while others happen in overnight batches. "We do in real time the things that are in real time," says Priestley. So when a signed authority is received, Toyota's customer information system is immediately notified that a customer has been set up for direct debits. Banks process direct debit transactions overnight, so details of each payment aren't transferred to Toyota's accounts receivables until the following day.

Implementation took about six weeks, athough "most of that was making sure we had the marketing look and feel correct," says Priestley -- the Web pages served by CommSecure had to exactly match Toyota's design. "We wanted the transition from our home page to CommSecure's page to be seamless," says Bellantonio.

"The technology part [of the integration] only takes a matter of days," adds Priestley.

Toyota has around 650,000 customers in Australia and around two million contracts which turn over every three years or so. Around 60 percent of customers use a traditional direct debit authority, but the company is trying to convert as many of the remaining 40 percent to electronic direct debit.

Toyota saves over AU$1 on each direct debit transaction processed through CommSecure, so there is room for substantial savings.

The initial take-up has been slow, but that was expected. Finance managers at car dealerships sell the loans and leases, so the company is working to educate them about the benefits of the system. So far, around 250 customers have begun using the CommSecure system, says Bellantonio, but the upfront costs were "reasonable" and Toyota expects to break even after 18 months of operation as usage rates pick up.

This article was first published in Technology & Business magazine.
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