Customers want smooth fast purchase transactions. They want to connect to vendors' sell-side systems transparently - accessing online catalogs and issuing purchase orders without leaving their native procurement environments. Companies that offer this capability differentiate themselves from competitors.

Integrating suppliers into the supply chain is nothing new. Many global enterprises have increased operating efficiency by requiring key players to adopt their integration technologies. Batch-oriented EDI messaging has typically been used to link organizations and, despite some limitations, has been adequate to the task.

Customer integration is altogether different. First, customers expect sellers to conform to their integration methodologies. Second, e-procurement application providers promote access through their particular pathways. Finally, real-time communication is critical because shoppers create purchase requisitions by searching for items online. Connecting to this ever-changing environment presents technical challenges and tremendous business opportunities - including significant gains in top-line revenue, improved operating efficiency, and stronger competitive differentiation.

SOA Enters the Picture
A Service Oriented Architecture, or SOA, has everything to do with this scenario because SOA's goal is to facilitate connectivity between systems. In fact, Gartner says that most Fortune 500 companies will implement some form of SOA-based solution in 2007. Its analysts predict that companies will build Enterprise Service Buses (ESBs) that expose key information to certain business processes, and their first efforts will be to facilitate intra-company communication.

We believe, though, that the more significant opportunity for process-level integration lies beyond the enterprise walls. Consider, for example, that thousands of customers need pricing and product availability information, yet most organizations focus initially on making relatively obscure data elements available that only a few internal systems can consume. It's hardly surprising that many SOA initiatives have delivered less-than-hoped-for results.

Today, however, an emerging on-demand integration solution, Integration-as-a-Service (IaaS), is awakening interest in customer integration. Just as Software-as-a-Service eliminates the upfront costs, implementation, and maintenance associated with the licensed software model, IaaS shifts the burden to a single expert vendor, freeing players from dealing with the nuts and bolts of the actual integration. Essentially IaaS applies SOA capabilities to a company's enterprise architecture (EA) layer, dramatically reducing the complexity and long-time horizon involved in connecting each individual trading partner.

Enabling SOA
IaaS mediates the differences between a company and its customers, allowing all participants to exchange information via their customary formats without requiring changes to business processes.

For companies that have established an SOA or made significant progress in that direction, IaaS exposes selected services to the service provider's cross-enterprise ESB. The provider maintains strict governance over services, delivers real-time connectivity with trading partners, and provides secure communication - enabling in-the-moment information transfer.

IaaS virtualizes inter-company connections. For example, IaaS enabled an appliance manufacturer to build closer relationships with chain retailers through up-to-the-second pricing and availability information. This allowed the retailers to maintain low inventory levels while enjoying the benefits of large on-hand quantities. The results? Increased velocity through the channel, big efficiency gains for the retailers, and substantially increased revenues for the manufacturer.

For companies that have deferred an SOA initiative, IaaS can provide Web Services and a stable secure cross-enterprise ESB that supports information exchange across heterogeneous systems. IaaS is a low-risk, cost-effective way to jump-start an SOA implementation.

Implementing Customer Integration
When integrating suppliers, an enterprise should consider its goals and how it wants suppliers to meet its standards. Customer integration, on the other hand, forces enterprises to evaluate their plans from the customer's perspective, making agility paramount. An IaaS-delivered SOA enables a rapid connection to customer business processes - in their native environment - and the ability to respond to varying business and technical demands.

This brings us to scalability, another critical consideration. Demand for cross-enterprise integration surges in response to new business opportunities. This situation strains most IT organizations because it's difficult to adjust integration staffing levels to fluctuating business needs. IaaS solves this problem by leveraging an already built-out infrastructure solely dedicated to integration and management by trusted integration experts.

Finally, IaaS accommodates even legacy integration technologies - such as EDI and secure file transfer - while supporting newer high-performance protocols and Web Services.

Best Practices
Enabling SOA through IaaS is very different from a typical enterprise software implementation, where companies must embark on a lengthy planning, deployment, and customization cycle.

Avoid Long Buy-in Cycles
IaaS doesn't require extended executive sponsorship, endless meetings, facilitated workshops, or any of the other components typically associated with enterprise-level application implementations. Rather, a knowledgeable service provider works with key company resources, and integration proceeds rapidly and unobtrusively.

Identify Customer Partners
Above all, it's a numbers game. When deciding which customers to onboard first, choose those that produce the highest transaction volume - Pareto's law applies here. That is, 20% of customers usually account for 80% of transactions, so they should be targeted first. The next group - and there may be overlap here - are those whose transactions contain a high level of exceptions. The system kicks these transactions out, perhaps because business processes don't mesh comfortably, and it takes significant manual intervention to complete them.

For example, one customer's requisition contains three line items for the same product, probably because different purchasers were involved. The seller can't process the requisition in that form. The IaaS provider's system seamlessly consolidates the three line items into one when transmitting the information to the seller's procurement system and deconstructs the line item when acknowledging the order. Both companies get the exact information they need in the "right" format, and transactions proceed smoothly.

Measure Success
Integrating customers through IaaS-based Web Services offers powerful benefits. This is demonstrated by key metrics and the solid business improvements experienced by early adopters. Companies adopting IaaS will want to track:

• Top-line revenue growth - Companies are reporting a 25% revenue premium from integrated customers. Because costly manual steps are removed from the purchasing process, both accuracy and timeliness improve. This sets an organization apart from the competition.
• Greater profitability - Companies are experiencing as much as 10% margin growth from integrated accounts. Sales teams can focus on value-add activities such as understanding customer needs and selling to them, rather than chasing lost orders or other non-selling activities.
• Improved customer relations - Better customer integration leads to greater accuracy. Pre-validated requisitions, for example, move orders through order management systems quickly. This efficiency contributes to a better customer experience and increased customer loyalty.
• Reduced integration costs - Deploying IaaS can decrease integration costs as much as 50% and free IT resources to concentrate on the core business.
• Increased integration speed - A well-designed and managed IaaS solution can reduce the time required to integrate customers as much as 10 fold, because it leverages a proven SOA-based platform.