NIST Industrial Impact

Company: Vitria Technology, Inc. Mountain View, Calif.
Business: Software
Number of Employees: 120

To most of the world, software is great if it works really well, regardless of how or why. As was once said about fashion, software design is not for philosophy—it’s for life.

That’s how users judge Vitria Technology Inc.’s “middleware,” which has been commercially available for less than two years but already is changing the way major U.S. corporations do business. True, the technology is based on innovative concepts developed and demonstrated with co-funding from NIST’s Advanced Technology Program (ATP), which enabled Vitria to overcome barriers to integrating factory operations that had defeated many others before. But the most important thing is, it works really well, according to its customers.

The new software appears good enough to satisfy even the ambitious goals of JoMei Chang, Vitria’s chief executive officer. The five-year-old California company was founded “for the challenge of making a thousandfold impact on business,” Chang told Red Herring magazine, which named her one of 1998’s top 10 entrepreneurs. The impact on American business could be huge, indeed:

• The software has improved real-time knowledge of business operations for clients such as Federal Express, which currently uses it at one hub and plans to extend its use to all seven hubs worldwide.
  
• The technology is expected to cut the costs of integrating and maintaining “manufacturing execution systems” (MES) by 50 percent, and potential nationwide savings are projected at $2 billion.
  
• Vitria already has 25 clients and more than $10 million in revenues, according to Forbes.

The company’s ability to satisfy customers was recognized recently when Vitria won an industry award—the Crossroads 99 A-List—that is based on strong references from customers who have solved significant problems using an innovative new technology.

Success has come quickly but not unexpectedly to Vitria, which was founded in 1994 by Chang and Chief Technology Officer Dale Skeen, who together had helped establish another successful startup that created trader workstations to manage Wall Street accounts. The ATP award was the initial outside funding for Vitria, which has said ATP was the only potential source of funds back in the mid-1990s.

According to Chang, the ATP support was crucial because Vitria’s approach was so novel, the MES market so fragmented, and the target problem so hard to solve. The problem was this: Although many single-purpose applications were available for managing specific tasks, linking them together to achieve a smooth overall business operation was difficult. The typical solution was to integrate them through complex, expensive custom coding or “hard-coded,” inflexible commercial systems that translate formats, protocols, and data. MES systems tended to be expensive, monolithic, and based on proprietary data models.

In contrast, Vitria’s approach was to develop a “model-driven” integration architecture in which the models are flexible, “soft-coded” sets of business rules that can be edited as necessary. The models drive a small set of general, highly configurable software “engines” that execute major tasks, while integration engines analyze disparate applications to identify similarities, translate and integrate data, and pass the results to the next decision stage. Users tailor the middleware to meet their own needs, much as the user of a generic spreadsheet program configures it for specialized purposes. The overall effect is to raise the level of integration from the data level to the business process level.

To realize this concept, Vitria came up with numerous innovations during the two-year ATP project, which ended in 1997.

The company developed flexible new languages for writing business rules that can be used and modified directly by users (without programmers or customized computer code), and new algorithms and protocols for processing the rules very efficiently.

“The way we know it was challenging is, there has been a real need to solve these problems,” says Selden Stewart, the ATP project manager. “It’s been tried a number of times and there have been a lot of failures. The genius of this is in what their [software] code does, not how they produced it.”

The new technology—which has been equated with relational databases in terms of its importance to computing—was commercialized with non-ATP funding. Vitria sees its software as especially useful for the distribution services, telecommunications, financial services, and transportation sectors.

“With our technology we allow our customers to analyze their business information as that information is being produced, so that they no longer have to store it in databases,” says Skeen. “They can look at the information in real time and act in real time.”

The company expects that it not only will reduce the costs of MES integration and maintenance by 50 percent or more but also will provide indirect benefits such as reduced product cycle times. A potential total savings of $2 billion or more nationally has been projected assuming a 10 percent market share in manufacturing, telecommunications, insurance, transportation, retail, and construction. Such savings seem plausible given that, according to market research cited by Vitria, companies spent $40 billion on outside help with systems integration in 1997 and were allocating up to 40 percent of information technology budgets to achieve it.

Among satisfied users, KPMG LLP, the management consulting firm, says the software provides a “significant competitive advantage in a constantly changing marketplace.” Federal Express uses Vitria’s software to track, for the first time, the types and volumes of approximately 2 million packages flowing nightly through its largest hub in Memphis. “It gives us some real-time visibility of what’s happening while it’s happening,” says Dick Davis, manager of infrastructure design. The company plans to extend the use of the software to all seven of its hubs worldwide.

“Speed is the core of Federal Express business, and it’s imperative that our technology can keep up—if not accelerate—the pace,” Davis says. “Vitria automates our key processes so we can deliver information across our global enterprise as events occur. Faster business execution and response mean more efficient and timely service. Our customers expect nothing less.”

August 1999