Don't speak
Enterprise commerce has a language problem; will a new technology blueprint help?
By Sidney Hill, Jr., Executive Editor -- Manufacturing Business Technology, 1/1/2002 7:00:00 AM
The term e-Business may have lost some of its luster, but many of its underlying principles—such as the idea of using Internet technology to create better business processes—still hold great value.
Consider this. The Worldwide Services business unit of Lucent Technologies, Sunnyvale, Calif., which installs and maintains corporate telecommunications networks, was able to cut the number of distribution centers it operates around the world from 203 to 33 after moving its logistics operations to an Internet-based software platform. And Panasonic's Consumer Electronics division, Secaucus, N.J., uses an Internet-based supply chain management tool to support new business processes that have cut its product lead times in half and improved its ability to keep the items its best customer want in stock.
Both of these initiatives involve sharing critical information—such as order and inventory data—with key business partners via Internet-based networks, another core e-Business concept. Industry analysts count Lucent and Panasonic among a growing number of companies that are improving their bottom lines through the use of Internet technology. The analysts also say these companies are succeeding because they recognize one important fact that most people, including many technology providers, overlooked in the gold-rush-like frenzy that marked the early stages of the so-called e-Business revolution. The fact is, Internet technology cannot deliver the desired results unless it is connected to the data that resides in a company's back-end business systems.
The truth about exchanges
"The conventional wisdom is that public trading exchanges had trouble attracting members because large companies didn't want to risk executing their mission-critical business processes in full view of their competitors," says Bob Parker, a vice president with Boston-based analyst firm AMR Research. "That's not true. The exchange platforms have enough security to prevent public viewing of any company's data. The real issue was that for public trading exchanges to offer services beyond simple auctions, they had to be integrated into their members' back-end systems, and very few companies were set up for that type of integration."
To address that issue, AMR has developed a blueprint that it says companies can use to organize their systems in a manner that will support successful e-Business strategies. AMR calls its blueprint an enterprise commerce management—or ECM—model. By adopting this model, Parker says, companies will not only be able to create new, innovative business processes; they will be able to do so without ripping out their existing business applications—even those old legacy systems that still perform vital functions despite being woefully out-of-date.
Parker says the ECM model can accomplish that because it is geared toward exploiting those aspects of Internet technology—specifically open computing platforms and standard communications protocols—that have made such things as worldwide e-mail a reality.
An integration platform is the central component of the ECM model. If built properly, this platform should function as a universal translator. It should be able to take data from any application used within an enterprise and convert it to a format that can be read by any other application within the enterprise. This process, called data rationalization or normalization, alleviates the need for building unique interfaces each time a company discovers the need to pass data between two applications that were not previously connected.
Smooth communication
This type of communication is what the public trading exchange operators promised. And Parker says companies that adopt the ECM model are, in effect, building their own private trading exchanges.
In addition to the integration/exchange platform, a private trading exchange requires a portal framework and a Web application server. The portal framework provides an interface to the data and applications that individual users need to do their jobs. The Web application server holds the instructions, also known as the business logic, for performing specific business processes.
Parker says a private trading exchange allows companies to organize all data related to the five major groups of resources within an enterprise—employees, customers, suppliers, products, and equipment. Once you create a platform for unifying these resources, Parker adds, "you are prepared to turn your business processes outward and begin collaborating outside of your four walls." In essence, you are ready to practice enterprise commerce.
Both Lucent and Panasonic use systems that allowed them to follow this approach. Lucent purchased its system from Optum, White Plains, N.Y., while Panasonic's system was developed by Dallas-based i2 Technologies.
Lucent launched what it calls its virtual supply chain project in December 1999 with the ultimate goal of being able to fill orders without having to store parts in warehouses, thus permitting the elimination of most of the 203 distribution centers the company was operating at the time. That required extensive system integration, a task that Jim Schoessling, Lucent's senior manager for global logistics, says proved surprisingly easy once Lucent installed Optum's TradeStream software package.
An information superstructure
TradeStream operates much like a private trading exchange. David Simbari, Optum's CEO, says the application resides within "an information superstructure" that translates data flowing between disparate systems.
In Lucent's case, Optum hosts the TradeStream application in a central data hub that is connected to a series of spokes within Lucent's supply chain. The spokes include Lucent's own manufacturing and distribution facilities, a series of plants operated by Lucent's part suppliers and contract manufacturers, as well as a service center operated by Miami-based Ryder Systems, the third-party logistics provider that delivers the finished telecommunications systems to Lucent's customers.
Each of these locations has what Optum calls a spoke server that constantly pulls data related to Lucent's orders from that location's business systems. The data is converted to eXtensible markup language (XML) and fed to TradeStream. Whenever someone in Lucent's supply chain—a customer, supplier, or other business partner—wants to inquire about a part or an order, they can go to a Web site, which reaches into TradeStream and retrieves the most current information.
Before initiating its virtual supply chain, Schoessling says Lucent had "an army of ants" running around its various facilities tracking down inventory and order information. Now, TradeStream does all of that. In fact, TradeStream now controls Lucent's entire order fulfillment process. Through its connection with the spoke servers, TradeStream monitors both the movements of parts through the supply chain and all messages Lucent receives from its customers.
By analyzing those two sets of information, TradeStream can determine when Ryder has all of the parts it needs to ship a particular system, as well as when the customer's site it is ready to have the system installed. When those two conditions are met, TradeStream informs Ryder that it is time to make a delivery. Once the order is shipped, TradeStream collects a confirmation notice from Ryder's system, and later retrieves a proof-of-delivery notice from Lucent's customer.
Talking to legacy systems
The central piece of Panasonic's new supply chain management program is an i2 module called Collaboration Planner. Panasonic uses this module to pull data that it shares with customers and suppliers from other i2 planning applications.
Those other i2 modules—Demand Planner, Supply Chain Planner, and Demand Fulfillment Planner—all rely on information from Panasonic's legacy systems to generate their respective plans, and Collaboration Planner makes it easy for the other modules to get that data.
"The big selling point for Collaboration Planner was that it did not have to integrate with our legacy systems to be effective," says Richard Burgstresser, general manager of supply chain management for Panasonic Consumer Electronics.
The system comes with a utility called an automated data warehouse that accepts data from Panasonic's legacy systems and then translates that data for use by the other i2 modules. "We feed files from our legacy systems into the data warehouse, and it manages the flow of information within the rest of the i2 suite," Burgstresser says. "We can choose to update the database with new information from our legacy systems—weekly, daily, or hourly. But once that information goes from our legacy systems into the database, it moves freely from i2 module to i2 module."
With that free flow of information, Burgstresser says, Panasonic can conduct regular on-line collaboration sessions with customers and suppliers. "This gives us the ability to create an electronic meetingplace where customers and suppliers can review forecasts or other plans while they both are looking at the data on-line in the same format. This is much more effective than simply talking over the phone, or even exchanging e-mails."
Settling an old argument
Widespread use of systems like this ultimately could end the classic best-of-breed versus single-vendor debate. This age-old argument pits advocates of selecting the best application for each task against those who believe in settling for some applications with fewer features because those applications are part of an integrated software suite.
In recent years, with corporate mergers becoming commonplace and companies opting to outsource more functions, even executives who would prefer the single-vendor approach find themselves facing integration issues. That is causing more software suppliers to at least voice support for ideas like AMR's ECM model. "We have shown this model to vendors large and small," Parker says, "and they all agree that they need to go in this direction."
Lately, Walldorf, Germany-based enterprise software vendor SAP has been a vocal supporter of the entire open systems concept, although its pronouncements on the subject have kindled skepticism among some industry observers who recall that just a few years ago SAP openly encouraged its customers to run their businesses solely on SAP solutions. SAP CEO Hasso Plattner completely renounced that position last November, however, when he unveiled a new technology platform that contains key elements of AMR's ECM model.
Facing facts
Plattner said this new platform—which contains a Web application server, an exchange platform, and a portal infrastructure—would be the foundation for all new SAP applications. He also said SAP would no longer use its own proprietary programming language to write new applications, and instead would begin using Java, the most widely used language for developing Web-based applications. "We simply had to face the fact that our customers already were operating in heterogeneous environments," Plattner said in explaining SAP's sudden philosophical change.
Oracle, Redwood Shores, Calif., and PeopleSoft, Pleasanton, Calif., are two other enterprise software vendors with histories of championing the single-vendor approach that now profess allegiance to the open systems concept. "There is a difference between having a full set of solutions and not allowing customers to choose solutions from different sources," says Aseem Chandra, a director in Oracle's supply chain management group. "Oracle's product and technology stack fit well with the ECM model."
Oracle's technology stack adheres to the basic principles of the ECM model, offering a portal framework and a Web application server. But it also includes four different exchange platforms. The Oracle Marketplace Exchange facilitates collaboration with parts suppliers, while its Supply Chain Exchange enables collaborative demand planning. The Product Development Exchange is for collaborating on product designs, and the Transportation Exchange can link a company with its logistics providers.
Two ways to integrate
Chandra says any of these exchanges can be used in conjunction with Oracle's recently released 9i AS Web application server to create Internet-based business processes. "Because Oracle built all of these applications, there are clearly defined integration points between," Chandra adds, "but we also recognize that some companies will need to plug other software and services into this system. So, we have a two-part integration strategy."
If an Oracle customer simply wants users to view data from non-Oracle applications, Chandra says, they can place links to those applications inside an Oracle portal. To exchange data with a non-Oracle application requires building a separate application programming interface (API). Chandra says Oracle has simplified that process as well, by publishing documents that explain how to build APIs that are compatible with its applications.
PeopleSoft customers also can use portals as the primary means of sharing data with trading partners who are not also PeopleSoft users, according to Joe Shobe, PeopleSoft's director of strategy for manufacturing and supply chain planning.
"When one of our customer's trading partners enters a portal, they actually are using that company's back-end systems," Shobe says. If the portal is linked to PeopleSoft's Supply Management application, the company typically is letting suppliers participate in the scheduling and execution of procurement processes. A link to the e-Product Management application means the portal is giving a trading partner access to engineering drawings and other product data.
Shobe says customers and suppliers can be put on lists to receive messages via e-mail or cell phone to go to PeopleSoft customers' Web sites to retrieve certain information. "But none of this information sits outside of our customers' business systems," Shobe explains. "The idea is to have all your Web-ready applications registered inside the portal, and to use the portal's security features to send out only the information you want your trading partners to see."
While vendors ponder the merits of various technology architectures, users will continue seeking solutions that best address their individual business needs. With competitive pressures constantly increasing, it is likely that more users will join the ranks of companies like Lucent and Panasonic in choosing solutions that embrace the tenets of ECM.
| FOR MORE INFO: | ||
| i2 Technologies: www.i2.com | Lucent Technologies: www.lucent.com | Optum: www.optum.com |
| Oracle: www.oracle.com | Panasonic: www.panasonic.com | PeopleSoft: www.peoplesoft.com |
| Ryder Systems: www.ryder.com | SAP: www.sap.com | |
