Base Case

By Mel Duvall  |  Posted 2006-02-07 Print this article Print

The firm reinvigorated 420 financial programs stored on mainframe computers. How? By building—from scratch—Web services that can handle millions of interactions a day.

: Merrill Lynch By the Numbers">

Merrill Lynch & Co. Base Case Headquarters: 4 World Financial Center, New York, NY 10080
Phone: (212) 449-1000
Business: Provides an array of investment banking, financing, wealth management, insurance and related services on a global basis.
Chief Technology Architect: Andrew Brown
Financials in 2005: $47.8 billion in revenue, $5.2 billion in profits.
Challenge: Leverage the company's heavy investment in mainframe applications and hardware by making functions in legacy applications available as Web services to other applications.

  • Increase profit margin from 17% in 2001 to 28.5% in 2005.
  • Use Web services technology to cut the cost of developing new applications by as much as 90%.
  • Invest $1 billion over five years to develop and implement a new wealth management platform for financial advisers, supporting about 14,000 desktops.

    How It Works: Modernizing Merrill Lynch
    Merrill Lynch created a service oriented architecture platform that it named X4ML (XML for Modernizing Legacy) to leverage its heavy investment in mainframe applications and hardware. X4ML enables mainframe legacy programs and the functions contained within them to be exposed as Web services. Here is the process that Merrill Lynch uses:
    A mainframe programmer identifies a function in a legacy application that could perform an operation for a new application under development or that could be leveraged by other applications as a Web service. Such functions might include name or account searches, credit checks or commission calculations. Once a function(s) within an existing legacy program is identified, it can quickly be exposed using the X4ML environment, without the programmer having specialized knowledge of Web services, Java or eXtensible Markup Language (XML).
    The next step is to import the program into the X4ML development environment. The programmer goes to an internal Web site used by Merrill Lynch programmers, and assigns the program a service name. This name is how the program will be known to the distributed environments. Once the program is imported, X4ML learns the program's "signature"—that is, it knows what variables constitute the program's application program interface (API) and how those variables are used.
    In the case of programs running on IBM's z/OS operating system and displayed on 3270 terminals, this process involves running the 3270 application within the X4ML tool to teach the tool how to navigate the application's screens. X4ML learns how the various fields on the screens are used—which fields are input, which are output, which ones are used for displaying error messages, etc.
    Next up is creating one or more operations based on the functions contained within the program. There are many options for tailoring a Web service, such as exposing the program's variables by using different names than those originally chosen by the programmer. For example, WS-P-CLI, the legacy name of a field, could be exposed as "PrimaryClient" to make the Web service for searching client names more intuitive to use. Additionally, program outputs can be excluded if desired, defaults assigned to inputs, etc. If the program has only one function to expose and the program's variable names are acceptable, the entire process can be completed with a single click of a button.
    All Web services created through this process are automatically registered in X4ML's Universal Description, Discovery and Integration (UDDI) directory, a Web-based directory that enables software to automatically discover Web services and interact with them.
    X4ML's run-time environment is contained completely within the mainframe environment. Simple Object Access Protocol (SOAP) requests, a means for a program running in one kind of operating systems such as Windows 2000 to communicate with mainframe or other programs, arrive at the mainframe via HyperText Transfer Protocol (HTTP) or IBM's MQSeries messaging middleware. These requests are received by X4ML, which parses them and invokes the appropriate legacy program on their behalf. Once the legacy program is completed, X4ML will format the output as a SOAP response and deliver it back to the requestor.
    X4ML incorporates Web services security standards, including Web Services Security (WS-Security), Secure Sockets Layer (SSL) and custom security rules managed via the Web Services Policy Framework (WS-Policy).

    It's unusual for a large mainframe-centric company to go it alone, as Merrill Lynch did, and build its own Web services development platform, says Michael Kuhbock, chairman of the Integration Consortium, a non-profit industry group based in Calgary, Alberta, that is coordinating Web services development efforts.
    It is usually a safer bet to outsource the project to a partner with experience in integrating mainframes with modern applications and to work with an established Web services platform software vendor. Developing the software in-house could be expensive and possibly delay the implementation of new applications based on Web services.
    But for companies that can't find what they're looking for out on the market and don't want to take the risk of developing Web services on their own, there's another option—a hybrid approach.
    With a hybrid approach, a company works with an established vendor but still utilizes its in-house expertise, particularly on the mainframe. Bank of America, for one, is involved in a massive Web services development project using this strategy. The bank has teamed its in-house staff with several outsourcing firms and vendors, including IBM and webMethods, to implement a service oriented architecture.
    But no matter what approach a mainframe-centric company takes, the key challenge remains the same—getting the mainframe side of the organization onboard with the distributed side, or with programmers developing applications in newer technologies like Java and .NET. "Web services can be viewed as friend or foe," Kuhbock says. "The challenge for the [technology executive] is in getting all of the stakeholders onboard and helping them understand how they can both benefit." —M.D.

    QUESTION: What's the biggest headache your tech team can expect to get from deploying Web services? Let us know at Baseline@ziffdavis.com

    Story Guide:

    Merrill Lynch & Co.: Web Services, Millions of Transactions;, All Good

  • Unlocking Access to Customer-Service Functions
  • Despite Complexity, Merrill Skipped Middleware
  • Mainframe Remains Strategic
  • Base Case: Merrill Lynch By the Numbers

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    Contributing Editor
    Mel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.


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