A few years ago, if you drew the center of the universe, you'd have ERP enterprise resource planning with all of thesystems feeding it," said Mark Livingston, head of the implementation value capture practice at consultancy A.T. Kearney in Chicago.
But now, the center has shifted to an Enterprise Application Integration (EAI) middleware layer fed by ERP, front-end business systems, e-procurement and back office systems, said Livingston.
EAI replaces application-to-application translation of data and commands with a common messaging infrastructure. It reduces the development effort required to link applications, while increasing data integrity through the use of advanced message queuing and routing capabilities.
Wintergreen Research estimates that total EAI spending across all industries will reach $900 million this year and $7.3 billion by 2005.
"EAI is a really young technology that is designed to get multiple, disparate systems to work synchronously together," said David Norwood, CEO of Database Consulting Group, Atlanta. "You can have multiple systems all sharing specifics of a single transaction."
At Sumitomo Bank's North American headquarters in New York, EAI software from New Era of Networks, Englewood, Colo. ties together a polyglot of systems-Oracle Financial Services Applications; Loan IQ, a commercial loan processing system from New York-based IQ Financial Systems; and a Demand Deposit Account system from Malvern, Pa.-based Sanchez Computer Associates.
"The basic vision is to use an EAI approach for the timely delivery of applications," said Peter McCormick, CIO of Sumitomo Bank-North America. "Everything's pretty tightly coupled together, both from a real-time and a batch point of view, and even more tightly coupled in the Oracle product line."
Sumitomo Bank has already transferred its accounts payable and general ledger applications to Oracle, and plans to have the human resources and fixed assets modules deployed by the third quarter of next year. By the middle of next year, they also hope to have the feeder systems pumping data into the Oracle applications. "The major foundations are in place. Now it's a question of just layering more in, making it more than an EAI implementation of a couple of pieces in the ERP space," said McCormick.
The implementation has already brought tangible cost savings. For example, the bank's legacy 3270 "green-screen" applications had reported financial results using the Japanese accounting principles of its parent company. "We used to have to translate the Japanese books manually into U.S. GAAP generally accepted accounting principles," said McCormick. "Now we use an Oracle product that automatically supports three books-U.S. GAAP, Japanese GAAP, and a 'delta' GAAP reconciling the differences between the two.
Along with driving cost savings and business process reengineering, enterprise systems can help to drive new revenue opportunities by enhancing employees' decision-making abilities. But getting results requires a significant amount of workforce training and education, which most observers consider to be the greatest challenge in implementing an enterprise system.
"The introduction of OLAP On-Line Analytical Processing with Oracle Discoverer really puts a lot of firepower at the fingertips of a more knowledgeable user," said McCormick. "We had to send a lot to school, but it pays high dividends. They can restate numbers in ways they never thought possible."