Enterprise Application Integration (EAI)

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ENTERPRISE APPLICATION INTEGRATION (EAI)

Enterprise application integration (EAI) is the process of allowing two or more enterprise systems to operate as one. Most EAI offerings include software, hardware, and services. Typically, EAI systems are used to integrate incompatible systems—such as an older system in which a major investment has already been made, commonly referred to as a legacy system, and a newer application, such as a customer resource management (CRM) system—within a single business. However, EAI systems are also used with increasing frequency to integrate the enterprise systems of various companies to allow business transactions between enterprises to take place electronically.

A highly complex process, EAI can take place at many levels within an enterprise system. For example, disparate databases can be linked to allow for information sharing between the databases. In addition, two or more applications can be integrated to allow for either data or business processes to be shared among the applications. In this case, an EAI package could link a World Wide Web site to a company's existing inventory management system to allow for real-time inventory updating. The most comprehensive form of EAI, a common virtual system, integrates all elements of an enterprise so that they operate as a single application.

The need for EAI arose in the 1980s as many companies that had already used information technology (IT) to automate various business processes began to recognize that the integration of these applications could, among other things, increase efficiency and improve accuracy within business processes. According to Internet portal ITtoolbox.com, "many corporate IT staff members attempted to redesign already implemented applications to make them appear as if they were integrated. Examples include trying to perform operational transaction processing (associated with enterprise resource planning (ERP) system functionality) on systems designed for informational data processing." ERP systems, which integrated accounting, human resources, distribution, manufacturing, and other back-end processes—those business procedures that do not directly involve customers—grew in popularity throughout the early 1990s as most major corporations began upgrading their mainframe systems with the new client/server-based ERP systems developed by industry leaders like SAP AG, People-Soft Inc., and J.D. Edwards & Co. To make these systems compatible with their legacy systems, businesses turned to EAI vendors for integration solutions.

Another factor fueling the growth of the EAI industry was the growing popularity of e-commerce, which required the integration of front-end business processes—those which involve interaction with clients, such as CRM and online sales—with back-end functions like inventory management. Although many leading ERP vendors began working to incorporate these front-end processes into their systems, several new companies focused specifically on EAI emerged as well. For example, Vitria Technology, Inc. was founded in Sunnyvale, California, in 1994. Four years later, the firm shipped its blockbuster BusinessWare integration server, which linked the existing IT systems and applications of enterprises like Sprint Corp. and Deutsche Bank with the Internet. Firms could also use BusinessWare to link all sorts of disparate systems within their enterprise. For example, wireless receivers maker DMC Stratex Networks Inc. used Vitria's EAI solution to integrate its Oracle order management, financial, and manufacturing systems with its Siebel sales force automation system and its Nortel CRM system. In April of 2001, WinterGreen Research Inc. named Vitria the fastest growing application integration vendor.

Another growing EAI vendor, Fairfax, Virginia-based webMethods, Inc., was founded in 1996 to create a business-to-business (B2B) integration tool based on the Internet's extensible mark-up language (XML). The firm conducted its initial public offering (IPO) in early 2000; by then, its client base included the likes of SAP, Eastman Chemical, Lucent Technologies, and Dell Computer Corp. In November of 2001, electronics retailer Best Buy selected webMethod's integration platform to centralize communications with its top suppliers. Also founded in 1996 was CrossWorlds Software Inc., an integration tools and services provider based in Burlingame, California whose clients included Nortel Networks and Caterpillar. IBM Corp. paid $129 million for CrossWorlds in October of 2001 in an effort to add EAI functionality to its WebSphere application server suite.

The EAI leader, San Jose, California-based BEA Systems, Inc., was founded in 1995 by Bill Coleman, Ed Scott, and Alfred Chuang. In early 1996, the partners decided to acquire Tuxedo, a transaction processing application, from Novell, Inc. It was this purchase that formed the core of BEA's online transaction processing (OLTP) software, which would later fuel its rise to dominance in the EAI industry. ERP giant PeopleSoft agreed to bundle BEA Tuxedo with its major product releases later that year. BEA also released Jolt, its first Java-based program, which allowed users to move business applications to the Internet. The firm listed its shares publicly for the first time in April of 1997, in what turned out to be the third most lucrative IPO that year.

To gain access to an application server, BEA acquired WebLogic in 1998. In February of 1999, BEA eLink, which formed the EAI component of future releases of WebLogic, was shipped. The new EAI program included adapters for integration with SAP and PeopleSoft ERP systems, as well as older legacy systems. According to a June 2000 article in Computer Reseller News, what differentiated BEA "from the pack of fierce competitors in this fragmented and evolving market—such as New Era of Networks, Active Software, Vitria, Mercator, and others—is it supplies the application development platform and integration platform, as well as a formidable services organization." Essentially, the firm was able to support its EAI solution with the well known Tuxedo system.

Because EAI solutions can help companies integrate their existing systems, such as ERP and CRM, as well as allow businesses to integrate their systems with Web-based operations, the need for EAI solutions will likely continue to grow. In fact, International Data Corp. predicts that EAI industry sales will grow from $5 billion in 2000 to more than $20 billion by the year 2005.