A new e-business philosophy called collaborative commerce is bringing ERP, CRM, SCM, and e-procurement together to form one intelligible system within and between enterprises. Find out how to prepare for this e-commerce revolution.
For years, enterprise commerce strategists have dreamed of transactions like this: It’s 7 A.M. and Jane logs on to her favorite crafts Web site. She browses for brown clay, which her daughter needs to create a lifelike volcano for a science project. Jane finds several different types of clay on the site but is unsure which will work best. She clicks a Help icon and, via VoIP technology, connects to a customer service rep, who helps her find a page in the site’s Science Fair section that displays a volcano kit, complete with baking soda and vinegar.
Jane disconnects with the rep, adds the kit to her online shopping cart, and proceeds to check out. Since she previously had purchased materials for her daughter’s last science project on the same site, the site pulls up Jane’s billing and shipping address with her credit card information already filled in. She clicks "same-day delivery" (the project is due tomorrow) and then clicks again to confirm the order. The site immediately processes the credit card transaction, and Jane shuts down the computer just in time to rush her daughter to catch the school bus.
Within seconds, a local vendor receives Jane’s electronic order from the crafts company's processing center. At the same time, the site's logistics center is notified that the preset stock quantity for the kit is too low, and an electronic stock order is sent to manufacturers so the company's kit stock can be replenished. Later that day, the ordered volcano kit is delivered to Jane’s house, just as her daughter jumps off the bus.
The above scenario illustrates collaborative commerce (c-commerce) at work. It’s about enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), and e-procurement coming together to create one intelligible system that seamlessly integrates commerce applications, from supplier to customer.
But is this longtime dream of systems integrators really feasible today? Unfortunately, it’s not quite here yet. But that’s not to say that true c-commerce is not on the horizon, and while we await its arrival, enterprises need to get prepared.
The c-commerce dream
C-commerce is a philosophy that hits every internal and external touch point. It stretches from front-end CRM to back-end ERP (internal product movement and accountability) to supplier relationships via e-procurement and SCM. It includes not just the flow of products but also the flow of data and the flow of metadata.
Succeeding at c-commerce will require companies to do more than just include these core processes in their overall c-commerce blueprint; they will need to perfect each process before moving on to c-commerce implementation. It’s a waste of time, effort, and money to even consider a holistic c-commerce philosophy if you’re still struggling with each component of the commerce chain.
Delving into c-commerce
In the early 90s, there was ERP. Then, as Web and Internet technologies matured, CRM came in on the front end, and e-procurement and SCM came in on the back end. Now it’s all about collaborative commerce (c-commerce), where all of these applications are united into one system. We’ll examine the feasibility of c-commerce and investigate c-commerce integration issues during a six-part series. The first part, "ERP: A roadblock en route to collaboration," focuses on the challenges inherent in ERP today and why enterprises must perfect these systems before taking even baby steps toward c-commerce.
Challenges within the enterprise chain
As strategists try to map a course to c-commerce, front-line IT implementers continue to struggle with legacy and data-sharing obstacles that have plagued the first wave of automated commerce.
- ERP’s legacy of problems: ERP “solutions” often employ difficult and expensive enterprise application integration (EAI) tools for linkages. Organizations often chase the shiny EAI star but forget that the EAI app eventually must connect with the tricky legacy system supporting the entire business.
Most legacy systems more than five years old require middleware or bridgeware to link internal applications. (Within the last five years, vendors have begun to build integration points into their software.) Legacy systems built internally may require a programmer to reach into the guts of the code and manually connect applications. Another major difficulty is in trying to connect a real-time solution, such as a warehouse management system (WMS) running on UNIX or AS-400, with a batch-oriented ERP system. This is an area that companies, as well as vendors, tend to brush over when evaluating e-business initiatives.
- Extended ERP functionality issues: ERP also has extended backward, outside of the organization, through e-procurement and SCM. This creates additional challenges. With many e-procurement installations, there is a lack of communication between the buyer’s e-procurement systems and the supplier’s e-fulfillment systems. There’s also a lack of communication between the c-level executives initiating these e-procurement applications.
- Supply chain headaches: Even when an organization masters procurement, chances are that it still struggles with managing its supply chain. Many SCM applications are not appropriately integrated with other applications, which creates problems because applications must link seamlessly with ERP, business intelligence, and EAI applications. Organizations stumble as they increasingly need to identify and eliminate constraints—not only within their organization but within those of suppliers and distributors as well.
- Making the solution work for partners: On their end, distributors are laboring with global shipping issues: managing inventory levels and status and tracking orders using different computer systems across the global supply chain. Systems must be integrated and synchronized if a distributor is to have a complete view of the entire supply chain and deliver on-time fulfillment for customers.
Meeting the challenge
C-commerce is only as strong as the weakest link: Each of these core operations is imperative for a fully integrated enterprise chain. Join us in examining the specific issues and obstacles blocking c-commerce today as we explore the c-commerce dream in our six-part series. We’ll be taking a deeper look into the enterprise and the challenges and solutions that will prepare us for the long-awaited c-commerce initiative.