Alphabet soup – XML, ASP, EJB, Java, EAI, SOAP, HTML, and J2EE. What the heck do they all mean, and how can I leverage them for my company?
The financial services project landscape has gotten exponentially more complicated. Terms like XML, ASP, EJB, Java, EAI, SOAP, HTML, and J2EE have flooded our world. What do they all mean? How do they apply to financial services? This paper will translate these terms into business terms and provide insight on how to leverage these technologies in your financial services company.
The first section will provide insight to the challenges we face in this new economy and how the new competitive landscape has forced financial service companies to accelerate their adoption of new technology. This acceleration has created a need to create a learning environment within your teams by using a combination of existing and new talent.
The second section will discuss how all these pieces fit together and why the traditional approach to software development is no longer effective. This section will also discuss the two primary approaches to data systems integration. Finally, all the above acronyms have a role to play, and despite the confusion caused by their names, the solutions actually simplify and greatly increase the efficiency of the software development process.
The third section will discuss how the new model impacts the role of a project manager. It is the project manager's responsibility to ensure that the right skill sets are assembled to deliver a project within the triple constraints of time, cost, and quality, but there is a forth constraint driving success in the new economy. This section will focus on how project managers work with these technologies and manage the risks associated with these complex solutions.
The section will provide a conclusion by drawing an analogy to the music world and discuss the opportunity that has been created by these changes for financials service project managers. eBusiness is no longer a luxury, it is a matter of survival, and even though it is a difficult road to travel, it's an exciting time to lead the race to be “First to the Future.”
Lastly, the appendix provides a glossary of terms that were used throughout the paper and provides links to websites that can provide much deeper insight into each of the technologies. Some of the sites are nonprofit organizations that are responsible for the advancement of the particular technologies and others are public or commercial sites that have significant information that can provide detailed information to project teams working with these technologies.
Financial services companies have typically been slow adopters of technology. However, with the increasing competition from nontraditional players like GMAC and pure Internet plays like eTrade and Insurance.com taking market share, even the big boys have started to take notice and respond. At the enterprise level, jointly owned subsidiaries and partnerships are being formed by just about everyone. Many companies attempted to do it on their own, and most have failed due to lack of experience and leadership. Reskilling teams involve very intense mentoring and effective partners at skills transfer. Sending individuals to a week or two of training does not result in skills transfer. That approach to reskilling often results in failed projects, an environment of frustration and high turn over.
Technology “boot camps” (six-week offsite training classes) and XP or “extreme programming” (which puts two developers per computer) approaches are getting more and more common due to the increased cycle times and intense learning that is required to make the transition from mainframe and client/server to Internet and intranet solutions delivery. The companies that do make successful transitions create true learning environments that involve highly skilled resources with proven implementation experience that can lead and mentor the team to reduce execution risk. Paying highly skilled developers to transition from one technology to another is an expensive investment, but making novice mistakes using those new technologies is much more expensive and often leads to missed dates, cost overruns, and lost business.
The growing solution complexities are driving the importance of risk-based project management and highly architected solutions that provide the scalability and agility the successful eBusiness solutions require. More and more companies are completely outsourcing projects to technology partners who have proven their ability to deliver on time, with high quality, and within budget. The decision of which technologies and partners you choose is extremely critical, and it is essential that you determine the risk tolerance for the organization prior to selection of both technology partner and implementation platform.
Bringing the Pieces Together
Customer expectations are changing. It is no longer acceptable to tell a customer that you will get back to them next week with an answer or to continually shuffle them from one department to another. That lack of integration is also extremely expensive and inefficient. Customers demand immediate response and expect that one call, to one person should be able to address all of their needs. A handoff to one specialist is acceptable in most cases, but anything more than that results in frustration and significant decrease in consumer loyalty. In order to compete in today's economy, you have no choice but to provide real-time, integrated business solutions.
The Enterprise Application Integration (EAI) market alone will reach $11.6 billion by 2003, according to market research firm International Data Corp., and the banking, insurance, and securities businesses will represent a large portion of that total. Financial systems will no longer be done on spreadsheets and accounting systems that exist only in the controllers office. Financial, customer, and operational data must be integrated in order to see the complete customer relationship and drill into the metrics that highlight the health of your business. The major decision is not if you will integrate the data, it is how you will integrate the data.
There are two major approaches to integrating business systems and solutions. Enterprise Resource Planning (ERP) solutions typically require a company to choose a single vendor such as SAP, Peoplesoft, or Oracle, and the business must change significantly to conform to the capabilities of the software. The second option is to integrate multiple solutions by either leveraging existing interoperability or developing the connectors between the applications. Several factors are driving the integration approach over total ERP solutions:
• Single business applications can be changed without changing the entire suite
• Each business application migration can be planned individually
• Ability to execute “Best of Breed” strategy
• Decrease impact to the organization through controlled change
• Business and operational models do not have to be transformed to fit a single software solution.
Both approaches can be extremely expensive, but many executive teams are not willing to bet the company on a single solution or a single vendor. To address the community that has chosen the integration approach, several technologies and standards have emerged to simplify the process. Open standards such as XML, Active Server Pages (ASP), and HTML provide a common language for interoperability. Rather than each software vendor creating a proprietary communication method and Application Programming Interface (API), the message formats allow less complex adapters to be created. These adapters then translate the proprietary message into a syntax that is understood by the integrated systems. Several other technologies have surfaced to address the Internet opportunities. For example, SOAP allows development of business and functional services that can be deployed and managed over the Internet using well-known protocols such as HTTP, which is the primary communication protocol for the World Wide Web.
Java has emerged as one of the top eBusiness programming languages because it was designed specifically to leverage object technology and the Internet. Initially, the immaturity of the support tools for Java prevented wide-scale use within the financial services community, but as the developer tools matured, Java began to quickly outpace the traditional languages such as Visual Basic, Delphi, C++, and PowerBuilder for Internet solutions. Those languages were forced to change in order to leverage the Internet as well. Some of the languages performed better than others, and as a result, market share shifted significantly. Development environment and supporting tools and techniques are as critical as the capabilities of the language itself.
Enterprise Java Beans (EJB) expands the core language capabilities of Java in order to create component frameworks for eBusiness and accelerate development timelines, and J2EE (Java 2 Enterprise Edition) combines a number of technologies into one architecture with a comprehensive Application Programming Model and Compatibility Test Suite for building enterprise-class applications. In addition to speeding the development process, it also provides a consistent component framework that enables developers to more easily share code and move between projects.
It is extremely challenging to stay current on these rapid changing technologies, and more than ever, application and enterprise architects are participating throughout project life cycles. Talented application architects are critical to major projects to ensure that the application design is efficient, scalable, and maintainable, and enterprise architects are responsible for making sure all of the integrated applications and infrastructure deliver the expected level of data integration, performance, and reliability. Additionally, project managers must delicately orchestrate people, processes, and risks to ensure success of these increasingly complex deliverables.
Project Manager's Role
It is often overlooked that 80% of the costs associated with a software solution are spent in the maintenance phases, and only 20% is spent during initial development (Gartner Group). Most financial services organizations have historically focused energy on the initial development and buried the costs of maintenance in business as usual; but that is no longer works in the eBusiness economy. The ever-changing demand of clients is highlighting the agility (or more often rigidity) of newly developed solutions, and poorly architected solutions are unable to move with the business. In these cases, satisfying the triple constraint is not enough, and the project is still deemed a failure.
There is now a fourth constraint in the new economy, and that constraint is agility. Agility applies in multiple dimensions:
• The software development life cycle
• The management of scope
• The management of priorities
• The end solution itself.
Waterfall approaches to software development fail miserably in eBusiness because by the time a solution is completed, it is already obsolete. Rapid Application Development (RAD) and XP have become commonplace even in larger institutions (such as the Federal Reserve and ABN AMRO) because the target is continually moving. Projects are more complex and have shorter timelines, and the priorities continually shift, as does the finish line. The Palm Pilot is a great example of the new economy. A small team worked through multiple solutions, testing and obtaining feedback through rapid product delivery cycles. During that same time, Apple was working on the Newton with a huge team that was trying to build the perfect solution day one. In the end, the Palm Pilot finally created the solution that the customers demanded and redefined the Personal Data Assistant (PDA) market, and the Newton was a failure.
Some people might mistakenly point to the Palm business case as an example of no project management bureaucracy, and they are 33% right. There was no “bureaucracy,” but there was project management. Too often project management is associated directly with bureaucracy, and the two are mutually exclusive. Talented project managers work with the sponsors and project teams to determine the appropriate level of risk and control for each initiative. Good project management methodologies and highly skilled project managers should be flexible enough to support rapid iterations with high expected rates of failure (such as the new product development cycle of the Palm Pilot) and critical, no fail systems such as life support systems. Those are obvious extremes, but a major part of the planning process for a project is identifying the risks and carefully determining the appropriate level of control based on the project risk profile. It is critical to negotiate these items with the sponsor and project team at the very beginning of a project, and the results should be documented in the project charter.
The new economy is even more dependent upon solid project management to deliver these complex solutions, and the same guiding principles we find in the PMBOK® Guide apply in this environment as they did in the older economies. Scope, time, cost, quality, procurement, human resource, risk, communication, and integration management must still be addressed, but they must be addressed and readdressed faster than at any time in history. The most successful project managers in the new economy will be those who can quickly and effectively build focused teams and have the knowledge and agility to set just the right tempo. In 1987, Tom Peters introduced the concept that peak efficiencies are found on the edge of chaos, and over 20 books have been written to further elaborate on that concept. Managing chaos is not a new concept, but it has never been as obvious as it is now in the eBusiness economy.
Old economy project managers are similar to symphony orchestra conductors where enormous planning and practice goes into a given delivery, and the audience is patient and passive, but has very high expectations. The new economy project managers are similar to conductors of modern day musicals like The Lion King on Broadway where the same skills apply, but the patrons are on the edge of their seat, closer to the action, and the music must be conducted not as desired by the conductor but rather in perfect time with a host of extremely talented and sometimes unpredictable performers. Every act of every show is slightly different, and the expectations are just as high, if not higher.
No one ever said being a financials services project manager was going to be an easy job, and there is little doubt that it will change in the near future. The alphabet soup of new technologies is only one element it the massive change that is impacting the industry. The good news is that financial services executives are looking to project managers as never before to help manage the risks and ensure all four constraints (time, cost, quality, and agility) are met, and the profession is flourishing because of it. However, you have to be careful what you wish for because while the industry data indicates that number of project managers and their salaries are rapidly increasing, the expectations and required skill sets are as well. It is an exciting time to be a financial services project manager if you embrace change. Deregulation, privacy concerns, and the global economy are redefining financial services, and project managers will lead their companies in their race to be “First to the Future.”
Appendix A—Glossary of Terms and Online References
ASP (Active Server Pages)—An open, compile-free application environment in which you can combine HTML, scripts, and reusable ActiveX server components to create dynamic and powerful Web-based business solutions. Active Server Pages enables server side scripting for IIS with native support for both VBScript and Jscript.
ASP (Application Service Provider)—A firm that provides a contractual service offering to deploy, host, manage, and enhance what is usually packaged application software from a centrally managed facility. Applications are accessed remotely, for instance, over the Internet or leased lines.
EAI (Enterprise Application Integration)—EAI identifies and links user workflow and application functions through sophisticated message queuing and Web-based technologies. EAI tools identify, capture, integrate, and deliver data and system functionality to users under a series of cross-functional, multi-platform interfaces.
EJB (Enterprise Java Beans)—Is a framework upon which components can be built and managed in a highly modular environment for programs written in Java.M
Reference Sites: See Java
ERP (Enterprise Resource Planning)—Is an integrated suite of software modules that share data in order to achieve seamless integration throughout a company's core business applications.
HTML (HyperText Markup Language)—The standard for adding tags to a text file, so that the file can be interpreted by a Web browser.
HTTP (HyperText Transfer Protocol)—The Internet protocol that the Web uses to send information to the client, so the client browser can view Web pages.
Reference Sites: See HTML
Java—An object-oriented programming language expressly designed for use in the distributed environment of the Internet.
J2EE (Java 2 platform Enterprise Edition)—A platform from Sun for building Web-based enterprise applications.
Reference Sites: See Java
PDA (Personal Data Assistant)—Handheld devices used to store information such as contact information, calendar, notes, and to-do lists. The newer PDA devices include wireless connections to the Internet and complex applications for personal and business use.
RAD (Rapid Application Development)—A development method that includes quick iterations through prototyping solutions and obtaining high levels of user input throughout the process. The goal of this approach is faster time-to-market with greater user acceptance.
SOAP (Simple Object Access Protocol)—A protocol from Microsoft for accessing objects on the Web. It employs the XML syntax to transfer text commands over the Internet using HTTP.
XML (eXtensible Markup Language)—A flexible way to create common information formats and share both the format and the data on the World Wide Web or intranets.
XP (eXtreme Programming)—A practical approach to programming that emphasizes business results first and takes an incremental, prototype approach to building the product, using continual testing and revision.
Proceedings of the Project Management Institute Annual Seminars & Symposium
November 1–10, 2001 • Nashville, Tenn., USA