At Four-Year Anniversary, Adoption of Microsoft BizTalk Server Tops 4,000 Organizations

REDMOND, Wash., March 1, 2005 — On the surface, retailer Virgin Entertainment Group and construction materials distributor Hughes Supply dont have much in common. But both are among more than 4,000 organizations solving real business integration challenges using Microsoft BizTalk Server — Microsofts business process integration server, now in its third generation. This rapid customer adoption has led the technology analyst group AMR to name BizTalk Server the No. 1 integration server worldwide.

Eric Swift, Director of Product Management, Business Process and Integration, Microsoft

“With more than 4,000 customers in four years, BizTalk Server is the fastest-growing integration server on the market,”
says Eric Swift, director of product management for Microsofts Business Process and Integration Division, citing a separate study by analyst firm Gartner Group.
“What differentiates BizTalk Server from competing products is that it can scale up to an enterprise implementation, yet we also have a number of case studies where it has shown positive return on investment (ROI) on very small implementations, because of its rapid setup, flexibility and manageability.”

When it debuted in 2000, Microsoft BizTalk Server introduced many large and mid-size organizations to the concepts of automating, managing and orchestrating
“business processes”
using simple graphical tools. Microsoft BizTalk Server 2004, the version launched in March 2004, delivered new and enhanced functionality — including full integration with Microsoft Visual Studio .NET 2003 and the Microsoft Office System.

BizTalk Server connects information, systems, people and trading partners to streamline and consolidate business functions. Over the last four years, these capabilities have become most commonly used for three primary purposes: business-process management (BPM), enterprise application integration (EAI) and business-to-business transactions.

BizTalk Server for BPM

Many customers are using Microsoft BizTalk Server 2004, part of the Microsoft Windows Server System integrated server software, primarily for the purpose of business process management. A business process can be defined as a set of logically related tasks performed to achieve a defined business outcome. Examples include procurement, product development, production or delivery — each of which comprises multiple steps and, with them, the potential for flaws, bottlenecks and other inefficiencies that create a drag on quality, employee and customer satisfaction, and profits.

Business process management involves automating such processes, and thereby eliminating many of these inefficiencies. To automate a business process, an analyst must first diagram the end-to-end steps of a complex transaction — ordering goods, for example. These diagrams become the model that software developers then use to craft a stage-by-stage pipeline to meet the analysts requirements. Pipelines are then integrated into processes, and processes are integrated into orchestrations, their deployed form. Microsoft BizTalk Server 2004 is specifically designed to help organizations address operational inefficiencies by managing these business processes.

“If a company has a project that requires integration of a business process, that company can immediately use BizTalk Server and get value on their investment,”
Swift says.
“It can also use the product more broadly as a platform or infrastructure in order to automate all of its business processes across multiple systems, which makes the companys interactions with customers, vendors and employees more seamless.”

Virgin Entertainment Group, which operates 23 Virgin Megastores in North America as well as stores throughout the world, wanted to develop a business process to stem losses of hundreds of thousands of dollars per year in employee theft. Managements initial efforts to address the problem were hampered by a business tracking system that offered limited reporting and analysis, created delays in receiving point-of-sale data, and relied heavily on store managers and loss-prevention managers to manually analyze information from various systems.

Virgin Entertainment Group Director of IT Robert Fort says the company instead implemented a loss-prevention solution that included real-time monitoring mechanisms at the point of sale. This mechanism uses BizTalk Server 2004 to connect the point-of-sale system to various back-end systems involved in the process. The solution monitors all transactions across the stores in real time at the point of sale, and alerts loss-prevention managers by e-mail and pager when suspicious patterns occur in the data, thereby increasing managers chances of preventing theft rather than reacting to it after the fact.

“The loss prevention team can focus on what they want to look for, such as credit-card transactions where the number is not swiped but is entered directly, or where a certain transaction dollar amount is exceeded — pretty classic things they look for,”
Fort says.

Historically, we had a third party handle our loss prevention work — wed gather the data, send it to them, and it would be maybe a week before the analysis would be available to us. Now, I go to my stores data stream once every 15 minutes and pull data, which is used for loss prevention and also by store managers to monitor sales, conversion rates, dollar value and so on.

“The loss-prevention team noticed [that] the number of claims they had to pursue went down dramatically. A lot of times that can be a result of cultural influences too — weve established an environment where employees could see we were on the ball, paying attention and acting proactively.”

The BizTalk Server capabilities for business activity monitoring (BAM) also improve analysis of trends, such as a specific sales associate performing multiple suspicious transactions (post voids, refunds, discounts, etc.), or the use of a specific stolen credit-card number. As a result, the company expects this loss-prevention solution will detect at least 50 percent more fraud, resulting in increased profits.

BizTalk Server for EAI

Although later adopters of BizTalk Server have taken advantage of new and enhanced functionality to focus increasingly on business process management, many customers use the product primarily for making and managing connections between systems and trading partners — also known as enterprise application integration.
“Thats where the majority of the market was when we introduced BizTalk Server,”
Swift says.

Enterprise application integration has its roots in the 1990s, when companies bought packaged software solutions that automated specific business tasks — such as ERP (enterprise resource planning) solutions for inventory control, order tracking and the like; and CRM (customer relationship management) solutions for managing call centers, sales activity and other customer interactions.

These systems worked well enough individually, but they created silos of automation that produced redundant information and became problematic when common data changed — changes or additions to data in one solution would not necessarily be reflected in the other. Out of this challenge came the search for ways to integrate these disparate systems so that processes that spanned them could be automated, and enterprise application integration was born. BizTalk Servers success in approaching this business need was reflected in a 2004 Technology of the Year Award from InfoWorld magazine in the Enterprise Applications and Integration category.

A company recently in need of EAI was Hughes Supply, a distributor of construction materials based in Orlando, Fla. After some years of both organic growth and acquisition, Hughes found itself with a variety of front-end and back-end financial systems, complicating conversion of its corporate accounting to Oracle Financials. While some of those disparate systems were targeted to migrate into the Oracle system, it was critical to integrate the others, which Hughes felt would be less painful and time-consuming than enduring a system-wide migration.

Justin Orton, electronic commerce manager at Hughes, says the company considered Java-based open-source solutions for its EAI issues. But ultimately the company found the Microsoft .NET framework, on which BizTalk Server is built, to be a clearer, better-structured approach.

“We also looked at our internal resources, what skill sets we have available today, and we have a lot of experience already in the Microsoft arena,”
Orton says.
“Plus, scalability was a big factor. Were currently a US$4 billion company, looking to be a $20 billion company, so we dont want to have to throw a system away as we grow, we want it to grow with us. BizTalk has so many ways you can scale it, both scaling up and scaling out.”

Hughes completed a proof-of-concept deployment of BizTalk Server 2004 in January 2005 and completed the first deployment phase just a month later, putting more than 50 users into real-time interfaces across Oracle, UNIX and many legacy systems. Orton says installation was simple, helping satisfy the aggressive deployment deadlines.

“The biggest challenge we had was we didnt have all the training we would have liked, due to the aggressive timing,”
he says.
“That aside, its very simple to install — just download a few patches, put in the CD and off you go. Once its installed and configured, it does its thing. Were currently live, with all general-ledger information coming from 16 different legacy systems, all coming through BizTalk. There it gets standardized and posted into Oracle financials, like clockwork. The savings in duplicate data alone is significant.”

Business-to-Business Transactions

A third common use of BizTalk Server is in automated business-to-business transactions. These are often hindered by interoperability issues among trading partners disparate applications. But BizTalk Server makes business-to-business solutions easy to develop and maintain, in part because it accepts Extensible Markup Language (XML) documents — such as orders or invoices — from external sources, and makes them available to internal applications. XML, a common data format, allows the interpretation of data between applications and between organizations.

Automated business-to-business transactions are often seen in healthcare and financial services scenarios such as insurance claims submissions and claims status reporting.
“You can automate those transactions and that business process that spans multiple organizations,”
Swift says. Indeed, the transaction automation capabilities of BizTalk Server 2004 impressed the readers of Intelligent Enterprise Magazine, who voted it their 2004 Readers Choice Award winner in the B-to-B Integration category.

BizTalk Server Opens New Markets for Customers

Microsoft customers and industry partners, including systems integrators (SIs) and independent software vendors (ISVs), cite numerous reasons for the rapid adoption of BizTalk Server. Some organizations, drawn by the favorable price point and ease of use, first implement a small-scale solution as a pilot project, then implement on a much larger scale — broader, deeper or both — when they see the successes of that project.

“We see that happening quite frequently,”
says Swift, adding that Microsoft often recommends such purchasing behavior so that customers can validate the capabilities of the product, then determine where they can be applied for optimal business value in the organization.
“Its very accessible, very easy to implement and do a proof of concept with, and then apply on a broader scale, including mission-critical applications.”

The fact that BizTalk Server 2004 is integrated with tools that customers and partners are already familiar with is another big plus. BizTalk Server 2004 is fully integrated with Visual Studio .NET, a set of powerful developer tools for rapidly building and integrating XML Web services and applications.
“That means developers who are comfortable in that development environment are able to utilize the tool, understand its concepts and learn it at much greater speed, which greatly increases developer productivity,”
says Swift.

For added business value, solutions built with BizTalk Server 2004 work easily with familiar tools in the Microsoft Office System to give information workers effective control over business process design and monitoring. For example, integration with Microsoft Office InfoPath 2003 (included with BizTalk Server 2004) enables information workers to input rich, dynamic, XML-based form data into business processes. Similarly, information workers can monitor and analyze running business processes from within a Microsoft Office Excel 2003 spreadsheet, then make decisions about those processes.

The larger effect of these combined features in BizTalk Server 2004 has been to open up the EAI and BPM markets to companies that want to take advantage of these capabilities but have found no easy way to do so.
“A lot of companies are forced to do custom code to connect systems, because the other solutions on the market are so expensive and difficult to acquire skills for,”
says Swift.
“BizTalk Server really changed the EAI market by making integration faster, easier, cheaper and more accessible.”

The Future of BizTalk Server

Some industry watchers posit that the future of business process management will depend less on software that is built to last, and more on software that is built to adapt. With that in mind, they say, companies should design processes that can be changed on the fly and software that’s flexible enough to support those changes, rather than reengineering processes in one fell swoop and then cementing the new models in code. From that perspective, BizTalk Server appears headed in an auspicious direction.

The fact that it builds on top of the open XML standards and the published Web-services standards allows Microsoft to take advantage of innovations in the industry, connect to more systems natively and provide that value right out of the box, Swift says. The next version of the product, BizTalk Server 2006, will build on the core architecture of BizTalk Server 2004, enhancing and expanding its capabilities in delivering top-drawer business process automation, enterprise application integration and business-to-business transaction automation.

“Were going to really concentrate on the business process management side,”
Swift says.
“Were going to ensure accessibility of the business process to the business user, even more rapid development and integration into existing capabilities and skills that people have, and the ability to manage those interfaces and those business processes. Were making it so our customers can get more out of the functionality in BizTalk Server that they have found most useful and important. Customer input has driven development of BizTalk Server from the beginning, and it will continue to evolve to meet our customers’ evolving needs.”

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