Signing a merger agreement is the easy part. The real challenge is piecing together the disparate IT systems.
Plenty of companies merge to get bigger and stronger, but many businesses wind up being less than the sum of their parts.
One reason: Many companies simply dont know how to integrate dozens of disparate IT systems after an acquisition takes place.
Still, plenty of companies survive the integration process. Just ask DMC Stratex Networks (more commonly known as DMC), which had a hodgepodge of ERP and CRM systems after the company made two acquisitionsMAS Technology and Innova Corp.in 1998.
DMCs San Jose manufacturing plant relied on Computer Associates MANMAN ERP suite. MAS Technology, the New Zealand acquisition, used Job Tracker from Australias Chameleon Software. Innovata, DMCs Seattle acquisition, was running Oracle manufacturing software.
To streamline its business processes and lay a flexible IT foundation for future acquisitions, the wireless communications equipment maker turned to applications-integration specialist Sierra Atlantic.
"We wanted to have a totally integrated system for our enterprise applications," says B. Lee Jones, CIO for DMC. "We also needed systems that would support a company of $500 million to $1 billion revenues," accommodate integration of future acquisitions easily, and automate DMCs business processes.
Jones and consultants from KPMG began designing DMCs integration strategy early in 1999. They had to select new software that would be the enterprisewide platform for DMCs consolidated companies, and middleware that would tie the legacy systems together in the new infrastructure.
Ultimately, DMCs corporate controller chose Oracle for financial and order-management applications. Baans iBaan solution also was considered, but rejected. "It was good for a single manufacturing facility and repair depot. But with our acquisitions, we needed a multiorganizational system," Jones explains.
But DMC did not swallow the entire Oracle line, hook and sinker. Instead, it pursued a mix-and-match strategy to incorporate best-of-breed software in highly specific functional categories.
Siebel Sales was tapped for order configuration and sales-force automation. Clarify Inc.s Service Solution was chosen for contract management, customer support and quality control. (Nortel Networks, which owns Clarify, has put the software company up for sale, according to Clarify partners). And Agile Softwares Product Definition Server was embraced to manage the thousands of production data sheets, parts specifications, change orders, bills of materials, and other documents that go into DMCs complex orders.
That multiple-vendor approach created integration challenges, but those challenges would have occurred inevitably in the course of DMCs open-ended enterprise-applications strategy. "We wanted a platform that would allow us to integrate new acquisitions as we grow," says Jones.
Vitria Steps In
DMC chose Vitria Tech- nologys BusinessWare server as its integration platform. BusinessWare combines high-level business-process automation and management; low-level enterprise application integration (EAI); real-time analysis of process information; and external integration with the B2B systems of trading partners.
DMCs main concern was getting all of its internal applications to work together. "Vitrias middleware had the most robust set of [application] connectors, all we needed and had planned," says Jones.
BusinessWares EAI module includes three components: the Communicator, which transports information between systems; a large library of Connectors, which translate data formats between applications (e. g., Oracle to Siebel); and the Transformer, a graphical tool that enables transformation and mapping of data structures from one data source to another.
Connections between applications can be created and modified through graphical models. A Connector performs two translations, converting one applications data format to BusinessWares and then converting data to the target applications format.
The Transformer manages traffic between applications. It ensures that data translated by Connectors gets to the appropriate destinations in target applications and in useable formats. Its drag-and-drop user interface supports construction of complex expressions, and it has the ability to modify and test transformations on the fly.
The Communicator uses publish-and-subscribe messaging technology to deliver up to 2,000 messages per second among all applications. For example, a customer help-desk application can "publish" a request for service; the service dispatch system "subscribes" to receive all such requests.
Vitria also offers a software developers kit which enables creation of custom connectors across multiple CRM and ERP platforms. Connectors and transformations can be mixed, matched and reused as needed.
Still, even a powerful tool like BusinessWare is only as good as the craftsperson who wields it. Sierra Atlantic provided the talent to match the tools.
The Application Networks Company
Founded in 1993, Sierra Atlantic has completed more than 100 enterprise integration projects. In addition to its Silicon Valley headquarters, the firm has offices in Dallas, Chicago, New York, the United Kingdom and Singapore. Its global development center in Hyderabad, India, employs more than 250 programmers and support staff.
"Integrating applications requires a different set of skills than implementing them," says Joga Ryali, Sierras CTO for global development. "While Oracle has APIs, one also needs intimate knowledge of Oracles several thousand data tables" and the data structures of other complex back-office applications.
"Business-process integration, not just data transfer, is also required," he notes. "Connecting two applications is often as simple as transferring files through an intermediate table," as BusinessWare doesbut defining the business processes, the events, and how they interact with each other becomes complex.
Sierra has built an extensive library of business process components based upon Vitrias BusinessWare and TIBCOs ActiveEnterprise middleware.
Those components are combined in what Sierra calls "applications networks." The software used in each "node" of an Applications Network may come from any of several Sierra partners, e. g., order configuration from Siebel, service dispatch from Clarify, and so on.
With a versatile EAI platform and a virtuoso applications integrator, DMC got down to business in January 2000.
Piecing It Together
Sierras first task was to integrate Clarify Service with Oracle financial and order-management systems, which were installed at DMCs headquarters in January 2000. That job took approximately four months.
In April, Sierra tackled the integration of the Seattle acquisitions Oracle manufacturing system with Computer Associates MANMAN, the manufacturing system at DMCs headquarters. Both manufacturing systems had to be integrated with Oracle Financials.
"That [MANMAN-to-Oracle integration] had never been done before," notes Jones. "We needed that interface so that Manufacturing could get into and update Oracle Financials."
Sierra developed most of the MANMAN-to-Oracle connection using Vitrias BusinessWare. "DMCs IT people wrote some low-level file transfer routines that would have been overkill for Vitria," says Jones.
Next, Sierra worked on integrating Agiles production-document-management system with Oracle ERP. That process took five months (May 2000 to October 2000), primarily because it required consolidation of the parts catalogs of three companies.
"We needed a mechanism to control access to documents, track updates and approvals, and we got it," says Jones. "For the first time, we had complete electronic versions of all documents, which had been scattered on paper or disks before. We finally had consistent document management."
In October, DMC installed Siebel Sales 2000 to handle sales-force automation and order configuration.
"Integrating Oracle with Siebel Sales was the most complex step," says Ryali.
"We had to get all of the apps to work together," adds Jones. "We had to take orders via Siebel, submit them to Oracle Financials to schedule in the MRP system, assign it to manufacturing, build it, ship it, and get paid for it. Siebels Configurator for Oracle integration was pretty half-baked at the time," he recalls.
But by the end of May 2001, DMC was ready to roll out its integrated order-fulfillment and CRM system to its North American, European and African operations.
Integrating MANMAN with Oracle produced dramatic results immediately. Order-processing time was cut from about two weeks to two days by eliminating manual uploads of manufacturing data and change orders to MANMAN, notes Jones.
A dozen days saved on filling a $10 million order "is pretty significant" to DMCs cash flow. Recently, DMC replaced MANMAN in San Jose and the Chameleon Job Tracking software in New Zealand with Oracle.
Human error was dramatically reduced, too. Thanks to the fully integrated order-fulfillment system, particularly Agiles document-management system, "We no longer do things like shipping a $50,000 piece of equipment without a power cord," Jones says.
Additionally, DMC has saved operating costs, he adds. "Weve had four record sales quarters in a row ... but we havent had to hire more people to process more orders because weve become more productive."
In the future, the company hopes to tap Business- Wares B2B capabilities to link DMC with the internal systems of its partners and customers worldwide.
The integration project has consumed about $10 million so far, says Jones, with about half spent on software and the rest on integration services. "Oracle and Siebel took most of the integration money," he notes.
To be sure, application integration is a lucrative and growing field. Companies like Siebel Systems, PeopleSoft, Great Plains Software and SAP continue to report record demand for their best-of-breed applications, while Oracles one-size-fits-all application strategy has largely stalled.
Meanwhile, startup companies like Asera are designing software platforms that pull together data from various back-office systems.
Lump all those trends together and its safe to say that customers will continue to mix and match vendor applications as they see fit.
Still, mastering application integration requires exceptional partnerships with software vendors (start with Oracle and Siebel on the high end, or Great Plains in small businesses), deep technical knowledge of databases, and sophisticated business-process expertise.