Middleware makes financial services rock solid

It has become a must-have for multi-million-pound e-commerce initiatives and the favoured way to integrate sprawling IT systems....

It has become a must-have for multi-million-pound e-commerce initiatives and the favoured way to integrate sprawling IT systems. For a growing band of financial services companies, middleware software is an integral part of large-scale IT projects.

The steady rise of middleware technology was highlighted last week after Alliance & Leicester revealed how a middleware layer was the backbone of an ambitious overhaul.

The high street bank has joined a growing band of companies, such as online bank Egg, that have used middleware applications as the glue running through complex e-commerce systems. The middleware has also been deployed as a robust safety valve to cope with the wild fluctuations Internet use generates.

Alliance & Leicester is relying on a middleware layer to integrate a raft of IT projects and make financial products more responsive to customers.

The projects, which include a consolidation of call centre technology and a new customer database, are due to be completed by 2003. Alliance & Leicester aims to save about £40m per year after the projects are completed. The savings will mainly come from Web-enabling its business processes.

The middleware technology, from e-business supplier Candle, is being rolled out in partnership with Compaq.

Alliance & Leicester has taken no chances with the middleware and invested £1m in a "proof concept review". This was to establish whether it could write business functionality into the middleware layer.

"We believe we have the ability to rationalise business processes into middleware which can save costs and improve customer service," said Mike How, director of technology for Alliance & Leicester.

The middleware will play a number of roles. The first is to provide a common architecture of Alliance & Leicester's IT infrastructure. The second is to add business functionality to software, allowing a smarter and more personal customer service - a tricky IT process, according to analysts.

Alliance & Leicester will use the middleware to take customer information from hardware and software applications when servicing the customer.

These pre-set business rules could allow customers with accounts at the same bank to arrange for the automatic transfer of money between their savings and current accounts if funds in one account fall below a certain level.

Analysts predict that the market for middleware in financial services will continue to grow over the next few years. The main reason for the growth is the explosion of e-business implementations. IT departments are under pressure to develop e-business systems quickly and middleware can help fast-track e-business projects by bridging existing IT systems.

"Many companies are putting in something that their suppliers term 'middleware' as a quicker route to exploit e-business systems," said Tony Lock, senior analyst at IT analyst Bloor Research.

But companies should not fall into the trap of seeing middleware as an all-encompassing solution, Lock added. It can be difficult to find the IT staff to implement middleware across a company because they need to understand the firm's IT systems and the business processes beneath the technology.

The term "middleware" has become hard to define, said Lock, because so many suppliers now claim to provide different forms of middleware technology.

The software packages and services can vary from black box-type devices to suppliers that can implement middleware to cut across a company's wide-ranging IT infrastructure.

Alliance & Leicester's use of middleware technology is an example of revamping IT systems instead of scrapping the lot and installing new software and hardware. For the IT director this option has one big advantage - it is relatively cheap.

"Alliance & Leicester sounds like it is reusing the old phrase 'enterprise re-integration'," Lock said. "It is building on top of existing business processes and IT systems rather than rip them out and replace them with new e-business systems. A company the size of Alliance & Leicester could not afford to do this."

Other financial services companies have used middleware in different ways. The online bank Egg, for instance, used a common middleware layer to launch its online credit card. Running on Unix and written in C++, it allowed Egg to handle the erratic peaks of consumer demand after its high-profile launch.

Online banks such as Abbey National's Cahoot have had their launches marred when their IT systems were unable to cope with initial demand for the service. Egg's middleware layer, however, was its secret weapon.

"The volume of transactions hit our IT systems," Egg's IT change manager Lawrence Neech told Computer Weekly. "Customers noticed that response times were getting worse. But because of our middleware architecture we could increase the number of application processing functions and add more hardware."

Egg used the middleware to adjust the capacity of its IT systems through load balancing. Its versatile middleware also acted as a kind of glue to hold together diverse operating systems and platforms. This will allow Egg to develop an application on a NT operating system, for instance, and run it on an AS/400 system. The middleware acts as a transportation layer.

In the intensely competitive world of financial services, companies need to launch e-business services quickly and to a tight budget. The latest middleware technology can unify ageing and new IT systems and help Web services cope with peaks in demand.

But middleware applications are still in their infancy. IT departments need to be clear what they are trying to achieve by using middleware. The alternative is to encounter the horror stories that have dogged many lengthy implementations of enterprise software applications.

Top tips for successful implementations

Agree clear business goals you want the middleware to achieve. This may sound obvious but middleware is becoming a vague and all-encompassing term. This makes it vital to agree the reasons for implementing the middleware before signing the contract. Is the main goal to cut costs, kick-start an e-business project or just streamline your IT systems?

Implementations will still need careful planning. Middleware may have a "silver bullet" reputation but it can be tricky to implement. The IT project team will need broad IT and business skills because middleware cuts through so many departments and IT systems.

Is the middleware technology flexible enough to be tweaked in a few years as the business changes? "If you can get away with it you only want to do it [implement the middleware] once," said Tony Lock, senior analyst at Bloor Research. "It is much harder to revisit the same area, politically."

Keep an overview of the business reasons for introducing the middleware - such as improving customer service - and do not get too side-tracked by the technical minutiae of the architecture.

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