Using a small start-up supplier for vital integration projects is almost unheard of for large businesses, but British American Tobacco believes the benefits will outweigh the risks.
Last week, Computer Weekly revealed that BAT expects to save up to 75% on the costs of low-level integration projects by using a specialist hardware device from Cast Iron Systems, instead of middleware from main suppliers.
The decision to go with Cast Iron Systems - which launched in 2001 and does not expect to break even until the middle of next year - would be viewed by many as a high-risk strategy, but BAT believes its investment will be safe.
"We do not often buy products from start-ups, but the upside [with Cast Iron] is significant enough to mitigate any potential risk," said Kevin Poulter, application technology manager at BAT.
The Application Router costs £40,000 per box and has none of the complexity associated with typical enterprise application integration (EAI) projects, so it was easy to justify to the board, Poulter said.
"Because of the way Cast Iron is packaged and priced, we can justify it on a project-by-project basis," he said. "I do not have to go the board demanding a big cheque for the whole architecture."
BAT undertook a thorough risk analysis before opting for Cast Iron, part of which saw Poulter flying to the US to meet Solectron, one of only three other reference customers, in late 2003.
The company concluded that the risks were mitigated for a number of reasons, Poulter said. "The product is based on standards, so we could switch to another platform if we had to; the software is being put into escrow; and the appliance is based on a Dell platform - so even if Cast Iron ceased trading, the integrations we have deployed with it would be sustainable for an indefinite period."
BAT put a proof-of-concept test together, which involved integrating data between internal SAP and Siebel systems to prove the technology could drive savings. A business case was then written by BAT's IT team in South Africa which revealed that Cast Iron was 25% of the cost of rival integration offerings from the mainstream suppliers.
"This is really just an example of how we develop strategy," Poulter said. "My team carries out proof-of-concepts using a number of technologies to validate strategy direction and building the business case is a natural consequence of that work."
The appliance model was a good fit for BAT's overall strategy for two main reasons, Poulter said.
"It fits well with one of our key strategy objectives - to leverage simple, low total cost of ownership, replicable solutions wherever possible," he said.
"The second aspect is that Cast Iron is completely aligned with the service-oriented architecture strategy we have set in terms of supporting web services and business process execution language standards."
In essence, Poulter said, Cast Iron had the ideal blend of meeting immediate cost-cutting objectives while at the same time enabling a longer-term strategic vision.
BAT has yet to decide which technologies will support its long-term plan to link all its distributed markets using web services, but Cast Iron will fill in the gaps, Poulter said.
"Our integration backbone is IBM, but rather than extending that we are adding Cast Iron," he said.
"Our infrastructure is quite federated with disparate datacentres using different software, such as Computer Associates and Tivoli. We are using Cast Iron as an interface for those systems."
This was first published in May 2004