Enterprise resource planning (ERP) is the colloquial "albatross around the neck" of organizations considering collaborative commerce (c-commerce) initiatives.
Private marketplaces exist, c-commerce tools exist, and connectivity via the Internet exists. But despite all that, most ERP applications are not c-commerce ready, and yet, if these applications are to maintain their central role in business, they will need to become part of any c-commerce solution.
While ERP remains the information backbone for contemporary manufacturing enterprises, the advent of c-commerce trickling through the supply chain means that these systems will have to address more than the processes taking place. ERP applications will be required to address the players, as well as the processes, involved in the extended enterprise. Such an effort is providing enterprises with a number of challenges.
Where the data fits in
The largest and most crucial challenge for organizations is sharing data. Most enterprises spent the 90s installing suboptimal ERP applications that could collect a significant amount of information but could not verify or analyze that data. If these organizations now decide to participate in any degree of c-commerce, they run the risk of providing erroneous information to partners. They also risk becoming "the little company that cried wolf" to the supply chain within which they do business.
“We’re calling 2002 ‘the year of in-house cleaning,’” said Brian Zrimsek, research director at Gartner, Inc., a Stamford, CT-based consulting and research firm. “Enterprises must adjust their internal systems so that they are more accurate and more timely.”
Zrimsek's directive shouldn't be difficult to achieve with today’s current ERP systems, which provide strong accounting functionality, including financial reporting and analysis capabilities, as well as budgeting functions. Niche players in the ERP market also provide project management, management consolidation, and treasury management capabilities. In addition, leading ERP systems are beginning to include OLAP and other analytical processing technologies, which enable multiple views and multidimensional analyses of consolidated enterprise data.
But organizations still need to know how they want to view the data: calculation and modeling, trend analysis, or slicing subsets for on-screen viewing. Users can also use drilldown functions for viewing deeper levels of consolidation, reach-through functions for viewing underlying data, or rotation functions for comparing different sets of data. Analytical technologies can also combine historical and projected data for "what-if" scenarios. By sharing accurate, timely, and projected data with partners, organizations will ultimately have better forecasting and demand-planning abilities.
Delving into c-commerce
We begin this six-part series on collaborative commerce with a focused look at enterprise resource planning—the primary obstacle for organizations considering c-commerce initiatives. In the next series installment, we’ll examine many of the CRM challenges facing organizations when moving toward c-commerce.
J.D. Edwards, for example, recently announced the release of its Demand Consensus product—a Web-based application based on linear programming, statistical modeling, and operations research that brings planners, sales, executives, operations, customers, and suppliers together in a collaborative conference-room environment to get better forecasting results.
“A number of our customers are already in beta with this,” explained Travis White, VP of strategic planning at J.D. Edwards. “It provides collaborative forecasting capabilities, whether it is used alone or in conjunction with ERP information.”
Demand Consensus adds forward-looking information to the traditional historical forecasting process, making it valuable in industries that face fluid demand environments and so must frequently adjust their production schedules. Demand Consensus weighs constituent inputs to provide the most accurate forecasts.
“Sure, the technology exists today for these processes,” said Zrimsek. “But it’s important for the inputs and the outputs to be managed also.”
Automation: By process or department?
As Zrimsek noted, the technology does exist. So why is managing processes still the second most crucial challenge for organizations considering c-commerce?
The typical company is organized into departments, and, oftentimes, executives view a department as a logical unit to automate. For example, an enterprise may implement software in the manufacturing department, procurement department, or financials department. But in doing this, the organization simply reinforces existing silos instead of organizing project teams and implementation teams around processes.
A good example of this is the order-to-cash process. Almost every department in the organization is connected by this process, so automating only one department will barely scratch the surface of the kind of automation needed for true c-commerce.
"We're strongly encouraging our customers, and providing them with tools, to make this a process implementation rather than a department implementation,” said White.
Successful c-commerce requires open, collaborative technologies that allow communication among vendors, suppliers, and customers across the supply chain. A good example of this is J.D. Edwards’ interoperability technology, called OneWorld XPI (Extended Process Integration). OneWorld XPI lets disparate technologies work together, using functionality acquired through the company's agreement with e-business infrastructure software provider Active Software, Inc. It also allows multienterprise collaboration among vendors, partners, and suppliers, using functionality from Netfish Technologies, Inc. (acquired by IONA), a provider of XML-based business-to-business e-commerce solutions.
Is c-commerce feasible with legacy apps?
Process integration technologies such as OneWorld XPI can also help organizations deal with yet another challenge: legacy systems.
The traditional legacy application systems treat each transaction separately. They are built around distinct enterprise functions catered by a specific application. ERP treats these transactions separately as stand-alone activities and considers them part of the interlinked processes that make up the entire business. For companies that simply want to make the most of what they’ve got (and what they’ve got is legacy software and data files), process integration is imperative. Without it, c-commerce is not feasible.
Almost all typical legacy application systems store data, process it, and present it in the appropriate form requested by a user. The only problem is that there is no link between the application systems being used by different departments. (This begs the question: If you can’t connect the systems in your own organization, how will you ever connect with an outside partner?) Process integration tools such as OneWorld XPI bridge the gaps by using data-mapping techniques to reach into different datasets.
J.D. Edwards overcomes the link hurdle by using OneWorld XPI.
“There are customer records in a least 17 different databases at J.D. Edwards,” explained White. “Different departments within the organization touch the customer in different ways, and those departments collect data about that interaction.” With OneWorld XPI, J.D. Edwards has no need for a separate data model—there is no need to centralize, reorganize, or throw out any customer data files.
“It’s a very generic process so that customers can use it with preexisting legacy applications. Or they can use it to integrate ERP, CRM, and ASP applications, like we’ve done internally,” explained White.
And this now leads us to the next c-commerce challenge facing today’s enterprises: CRM applications and integration. Stayed tuned to learn how enterprises are attempting to clear that hurdle.