Financial incentives play a big role too, according to Gartner's Michael Maoz. They can turn integration into a common good that nobody wants to provide. American consumers often wonder why, if they ring their telephone company and are handed from one call centre to another, they always have to repeat their contact information and describe the problem all over again. This happens mainly for accounting reasons: if the first call centre were to hand over all the information to the second one, it would bear the main cost of the call and make the second look more efficient.
These sorts of organisational problems also help to explain why the first serious effort to merge "data silos" was often painful. The effort in question was to implement enterprise resource planning (ERP) systems—complex software suites of interlinked applications that were pioneered by SAP, a German software giant. The idea was to use a unified database to make sure that different programs, say for financial planning or human resources, worked with the same information. In fact, as Peter Zencke, an SAP board member, points out, the "R" in R/3, the name of his company's ERP system, stands for "real-time".
Yet ERP systems cleaned up only part of the IT mess, and created new problems of their own, mainly because they are inherently inflexible. They have their own way of managing the information in databases which cannot be easily changed or shared with other applications. In effect, explains John Hagel, a noted American e-commerce expert, ERP systems have replaced "fragmented unit silos with more integrated, but nonetheless restrictive enterprise silos". Many companies therefore get the worst of both worlds.
Meanwhile, ever-increasing competition and the recession have been pushing firms to become both more integrated and more flexible. If they want a global organisation to act as one, or to show a single face to their customers, they have to streamline their information flow. And given rapidly changing markets and the endless succession of acquisitions, divestitures and new strategic partnerships, they need to be able to change their business processes swiftly.
The technology provided by Tibco and similar enterprise application integration (EAI) companies such as CrossWorlds (recently bought by IBM), SeeBeyond and Vitria goes a long way towards resolving the tension between integration and flexibility. Conceptually, their products are all similar to Mr Ranadivé's "information bus", except that they do not connect news sources with traders but machines with other machines.
But the programs are not just dumb conduits. They let firms embed business processes into the information flow; for example, how an order is processed or when a supplier is paid. And this integration software now comes with graphical tools, so users do not need to be seasoned hackers to program and change business processes, as they had to be with ERP systems.
Web Services to the Fore
Yet EAI and related software, too, has its drawbacks. It is expensive, and so far it connects only a limited set of applications. But its biggest disadvantage, according to Don Ferguson, an IBM research fellow, is that it does not provide the flexibility of changing business processes in real time. This is where web services come in. This technology, a set of standards based on XML (Extensible Markup Language, used for web pages), allows firms to integrate their systems even if they do not have their own networks and lack the money to buy expensive EAI software. Web services try to standardise integration by turning the Internet into a universal data bus. Programs publish their data feeds following a set of Internet standards so that other programs can easily subscribe to them.
The central piece of code in the real-time enterprise is likely to be a program called an application server—an operating system of sorts for web services, just as Windows is the operating system for PC applications. Unsurprisingly, IBM offers such a product, called WebSphere, of which Mr Ferguson is the architect. But there are other vendors, such as BEA, iPlanet and Oracle. Even Microsoft's .NET framework belongs in this category, although it is based on a different programming language.
The big hope of web services is that they will make the integration of computer systems across firms much easier, says Charles Fitzgerald, a leading software strategist at Microsoft. A favourite example is that it took Southwest Airlines and Dollar Rent A Car only a month to hook up their systems so that visitors to Southwest's website could easily reserve a rented car after they had bought a plane ticket. With traditional EAI technology, the same feat would have taken months and cost millions of dollars.
IBM's Mr Ferguson goes even further. Before too long, he says, web services will be able to team up as required with the help of software agents to solve a one-off problem such as making the necessary arrangements if a flight gets cancelled. A collection of web services would take the place of a travel agent using the phone or the fax: try to get another flight, book new ground transport, perhaps reserve a hotel room.
Yet some software firms doubt that this hyper-flexible world of web services will come to pass any time soon. In fact, they are convinced that companies will always need a helping hand to make their disparate systems work together. To avoid complications, buy everything—or at least the core applications—from us, says Oracle. More interestingly, Asera has positioned itself as a kind of super-integrator. Firms can install its "eBusiness Operating System", a collection of the available integration technologies, and hire its consultants to speed up their transformation into a real-time enterprise.
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