E-business solutions are more practical and affordable than many have been lead to believe. E-business success begins with a plan that clearly identifies your near- and long-term objectives. Today and for the foreseeable future, your e-business solution is likely to be a hybrid of available Web-based technologies. If you have already implemented an enterprise solution, chances are good that this infrastructure will serve as the foundation of a more comprehensive e-business solution that can be implemented in cost effective stages. The ultimate goal of e-business is to support collaboration across the virtual supply chain. The good news is that e-business collaborative applications are available today.
This paper looks at e-business through a conceptual framework – the Solution Space approach – that places the large and complex subject of e-business into a useful context for midrange and multinational manufacturing and distribution companies.
E-business is one of the hottest topics in the industry, but there is as yet little consensus on what is means to manufacturing and distribution companies. How does one separate e-business hype from useful insights about new Internet technologies? Is e-business purely Web-based enabling technologies? Are e-business and e-commerce interchangeable terms? What is meant by the emerging e-business environment? How do application hosting and the digital marketplace relate to your company's business goals?
These questions can be answered through a Solution Space approach. This approach assumes that, when it comes to e-business, there is no such thing as a magic bullet. What makes good e-business sense for your competitors may prove to have little practical value for you. And all companies – even established market dominators – must be prepared to rapidly change their e-business models in response to sudden market shifts.
The Solution Space approach delivers these benefits:
- takes the mystery out of e-business
- helps you identify what you need and what you don't
- provides an e-business strategy that can be implemented in affordable stages
- allows you to create a hybrid, best-of-breed e-business solution that positions you for strategic advantage
The Solution Space approach was developed in response to dynamic changes taking place in global business. In the Information Age, all manufacturing and distribution companies are becoming increasingly customer focused. The migration toward customer-driven business models began before the advent of the Internet, but Internet technologies have dramatically accelerated the process. Now the stakes are perilously high.
To become truly customer-driven you must offer personalized products and services to consumers and trading partners. Since a key factor in customer satisfaction is timeliness, customized and personalized solutions must be delivered at top speed. And in e-business you no longer have the luxury of waiting for consumers and trading partners to tell you what they need. Now, a key differentiator is the ability to gain and manage information that allows you to anticipate the needs of the business constituencies you serve. With this information in hand, you can deliver products or services according to prearranged fulfillment agreements.
Meeting such demands requires highly sophisticated IT infrastrucutures and e-business technologies that can take you to the next level of supply chain performance. They enable you to realize the long sought after goal of the virtual, near real-time supply chain. Best of all, they allow you to cost-effectively build on today's e-commerce and enterprise solutions to create end-to-end integrated solutions that span the entire value chain – from end consumer to your enterprise systems, and from your enterprise systems to trading partner systems.
Moreover, the most advanced e-business applications take Relationship Management to new levels, allowing you to dynamically personalize products and services more effectively than ever before.
Survival depends on your ability to quickly change the role you play in your marketplace. Companies have always played multiple roles. Sometimes your company is the seller, sometimes the buyer. And mergers or acquisitions can completely transform the buy/sell relationship. One day you are a supplier of wholesale goods repackaged by retailers, and the next you're the owner of the chain of retail outlets you once sold to.
E-business technologies are accelerating the pace at which roles are changed. Just as importantly, they are also blurring the boundaries between your company and those with whom you do business. The lines between suppliers and manufacturers, between consultant and customer, between products and services, between raw materials suppliers and builders of finished goods, and between distributors of products and end-users are harder and harder to draw, and in fact may be fading away.
At the same time, e-business technologies are shifting power from suppliers to buyers. And many buyers are beginning to flex their e-business muscles. Already, some are demanding and gaining to access trading partner Web sites that allow them to design and configure exactly what they want, then get instant price quotes and delivery dates. This power shift is rewriting the rules of the marketplace. Mass customization and personalization have supplanted mass marketing as the dominant concept.
As a result, customers no longer judge companies in terms of pre-packaged models or brands. Instead, companies are being judged in terms of how quickly they can deliver the right product or service, anytime, anywhere.
Even though the Internet is profoundly changing how we conduct business, it is not changing the fundamentals of economics. Buy/sell roles are in flux, but e-commerce is still commerce: buying and selling. What is changing substantially is the move towards more dynamic relationships. While competition remains alive and well, many business relationships have moved away from being purely adversarial toward becoming more actively collaborative. Working collaboratively with customers, suppliers and trading partners provides significant business benefits.
For one thing, the virtual trading environment allows access to mission-critical information from scores of business collaborators. Intelligent agents can help your company pinpoint precisely what you need, and online auctioning will ensure that you get it at the best price. What's more, fulfillment, contract administration, market analysis and customer feedback are vastly improved through e-business technologies.
On a functional level, e-business can be defined as commerce and collaboration facilitated electronically and built on a foundation of enterprise applications. Collaborative applications must provide customers and suppliers access to shareable information, and they must allow customers and suppliers to participate in business processes across companies and across increasingly permeable firewalls.
It is no longer enough to simply optimize supply chains – to minimize nodes and improve basic efficiencies. Today, supply chains have to be highly collaborative and increasingly service focused. To be successful, enterprise and supply chain solution providers must move beyond applications that address predictable functions. In e-business, nothing is predictable, except the need to support closer customer and supplier relationships that may change overnight.
The advent of new Internet-based technologies has shifted the focus from inside the enterprise toward collaboration outside the enterprise.
The potential gains from applications designed for collaboration are exponentially greater than those achieved by automating internal processes. Automating processes within the enterprise was a necessary tactical move that provided Best Practices standardization and contained costs. Automating collaboration outside of the enterprise is a strategic move that will minimize customer churn through relationship management, grow market share, and maximize profits.
Today, a large majority of manufacturing and distribution companies have implemented some enterprise applications. And many are far along the road toward realizing some of the basic goals of transforming themselves into customer-focused organizations by integrating front- and back-office applications. But how can they cost-effectively ramp up to the benefits of e-business collaborative applications?
The Solution Space approach identifies three key areas: the enterprise, e-commerce and collaboration. Only you can decide what e-business solutions will deliver the most value to your company. And everything depends on what systems you have now and what you want to accomplish in terms of collaboration.
SOLUTION SPACE #1
The Enterprise: The Foundation For E-business
E-business technologies excel at integrating, aggregating, and unifying. For some time to come, however, the basic functionality that midrange and multinational manufacturing and distribution companies require will still come from today's Enterprise Resource Planning (ERP), Service/Support Management (S/SM)Advanced Planning and Scheduling (APS), and Customer Relationship Management (CRM) applications. These applications form the foundation upon which to build cost-effective e-business solutions. Often, the value of ERP, APS and CRM applications is directly proportional to the industry-specific functionality they provide.
In recent years, there has been a concerted effort on the part of manufacturing and distribution companies to integrate enterprise systems and to make better use of data stores and information retained by disparate applications. Companies often have a heterogenous mix of packaged applications, custom applications and legacy systems. They can use these systems to run their operations, but rarely can they use them to support strategic decision-making. Even those who have implemented brand-new enterprises often find themselves data rich and knowledge poor. Their systems contain vast stockpiles of raw data about customers and trading partners, but they lack cost effective ways to analyze the data or deliver it to those who need it most.
The first step in solving the problem is to find efficient ways to integrate applications with connectivity tools. Wherever possible, integration should take place on the database level. The next step is to implement Business Intelligence and Knowledge Management applications. These applications can do much to transform simple data collection systems into smart weapons designed to lower operating costs, improve customer care and better manage trading partner activities.
One should not underestimate the ability of today's enterprise applications to optimize supply chain functions. For example, through advanced demand forecasting and collaborative planning, Internet-enabled demand planning applications allow manufacturers to improve product planning, promotional management, channel management, market allocation and customer service. Demand planning software can software models factors driving demand with cross-functional collaboration and advanced OLAP (Online Analytical Processing) analysis. When integrated with APS applications, demand planning applications can provide multiple in-depth views of demand data. And through a thin-client Java UI these applications can also support collaborative planning within your enterprise and with external customers.
SOLUTION SPACE #2
E-commerce: Customer Connections Through B2C, B2B, And EDI Applications
The transformation to e-business is taking many forms and involves a hybrid mix of technologies. Some of the hottest, and easiest to implement Internet technologies are ideal for e-commerce.
E-commerce can be divided into selling and buying activities. In the business-to-consumer (B2C) space, the activity is selling, whereas in the business-to-business (B2B) space (which includes EDI) buying and selling are both present. Today, many companies are seeking and finding solutions for both types of transactions.
Companies that sell products through retailers to consumers are enhancing their sales and distribution channels through the implementation of B2C Web storefronts that accept orders directly from consumers. To improve efficiencies and ensure customer satisfaction, these companies are also likely to need storefront applications that integrate directly with enterprise and customer care systems with relational databases.
Business-to-business (B2B) applications designed to improve connections with customers and suppliers are beneficial to virtually all companies doing business in the global economy. And companies that do not directly serve end customers may in fact have a greater need to conduct business electronically. This has already proven to be the case in the automotive industry where Electronic Data Interchange (EDI) systems have been a way of life for years.
SOLUTION SPACE #3
The sharing of business operations – literally extending the business process outside the enterprise and into the domain of the Internet – is the ultimate shift in focus that will be brought about by e-business. Collaborative applications – Web-based and specifically designed to use the Internet as an architecture – will fulfill the vision of the virtual supply chain. These applications are a significant new weapon in your arsenal of e-business options.
Many business relationships cry out for Internet-enabled collaborative transactions – contract management, complex configurations of products, and sourcing from multiple locations, for example. Volume discounts, up selling, cross selling, and substitutions all come into play here as well. All of these activities require complex, multiple back-end collaborative systems.
Applications that support this kind of commerce must have the ability to be flexibly configured and adapted to the rules of the business. They must be able to accept orders from e-commerce systems and intelligently direct demand to the enterprise applications inside and outside the enterprise that can fulfill that demand. If designed and implemented properly, today's e-business collaborative applications can fit the bill.
Like e-commerce applications, collaborative applications are designed to reside on top of your existing enterprise applications. Since they support high-volume, highly complex transaction environments, they allow you to create, and closely manage, your own Digital Marketplace without having to rely on third parties. And, because they are highly adaptable, you can implement new business rules overnight without having to reconfigure your system.
Providing access to information within your enterprise is only half of collaboration. Allowing trading partners to perform or participate in specific business functions is the other half. Obviously, this will require new levels of security, and the ability to screen information based on a user's role in the business relationship is highly important.
Whether they are performed by personnel or by applications, business operations must be accessible only by authorized and authenticated trading partners. In this regard, the advantage of collaborative applications is that they reside in secure environments based on a central, standards-based architecture and they offer access to certain types of users within and external to your enterprise.
Collaborative initiatives can be deployed for most key business processes in an enterprise.
What do executives need to succeed in e-business? Above all they need the ability to establish clear business strategies and then execute IT infrastructures that directly support those strategies.
Flexibility and adaptability should apply equally to your business and technology philosophies. The key to ongoing success is a customer-driven business model supported by the right enabling technologies. Since your business model may change overnight, your IT infrastructure must be able to adapt with lightning speed.
The ability to change rapidly argues against a big bang approach to e-business. No matter how Internet-enabled they may be, large proprietary infrastructures are hard to change. Which is why a cost-effective e-business migration path – one that looks for option hybrid solutions – may be a far better option.
Right away, a wide array of readily available e-business technologies can add considerable value to your existing enterprise applications. Today's e-commerce applications are reliable and relatively easy to implement, and application hosting and Digital Marketplace services also offer many immediate benefits.
The key concept for the long-term, however, is collaboration. Basic Internet tools can achieve much in the short term and are likely to add value to your enterprise regardless of its size. However, more sophisticated collaborative applications – those capable of handling multiple transactions in real-time across multiple networks including the Internet – will deliver even more value.
E-Business savvy may well be the most important success factor. Whether you are a small to mid-sized company or a leading multinational enterprise, the ability to define your short and long-term business goals and to identify a solution provider with a real stake in furthering those goals can be critical. Because operational requirements are the heart and soul of manufacturing-based companies, QAD is uniquely positioned to successfully take you securely into the realm of e-business. Within our chosen vertical markets, we have an unrivalled understanding of precisely what is required to win in your marketplace.
Web-based Business Model
In many ways, e-business boils down to a battle between your business model and those of your competitors. Since your IT solution is a primary expression of your business model, it is also a primary differentiator. To succeed in e-business, you need a solutions provider that understands your industry and your marketplace. Just as importantly, you need an adaptable e-business solution, one that not only supports your current business strategy, but is also flexible enough to meet tomorrow's requirements.
Digital Marketplace Models
E-business has taken the concept of hybrid, best-of-breed solutions to a new level. Today, you have a wide range of practical choices and affordable choices. You can own your own Digital Marketplace by building an infrastructure of collaborative applications. You can rent the same capabilities from infomediaries. You can even rent individual applications or entire integrated suites of applications from Applications Service Providers. Perhaps best of all, you are never locked into one monolithic solution, or one monolithic solution provider.
Solution Spaces Model
The Solutions Spaces Model allows you to quickly identify the e-business solutions that make most sense to you. You can easily define user requirements and technology options. You can also map a cost-effective migration path toward more advanced collaborative capabilities that allow you to effectively leverage existing investments. The result is an e-business solution that supports your current business model and quickly adapts to new market conditions.
Collaboration is becoming an e-business imperative. To effectively collaborate with other businesses, e-business applications must be able to recognize the needs of both individuals and groups within trading partner companies. A new class of collaborative applications is available to support advanced business-to-business buy/sell relationships with highly sophisticated levels of personalization. Collaborative applications transform your entire organization into a customer facing organization.
Customer-driven E-business Environment
E-business is shifting power from sellers to buyers at a time when manufacturing and distribution companies are looking downstream to improve efficiencies. When they are e-business enabled, sourcing-driven supply chains tend to put the operations level of your enterprise in the driver's seat. Operations is empowered to squeeze costs out of the supply chain while demanding greater levels of service. At the same time, the e-business enabled delivery-driven supply chain is expanding markets by creating new channels and new product opportunities.
Collaboration - Buyers and sellers working together for their mutual benefit. Today it is my enterprise vs. your enterprise. Tomorrow it is collaboration across the supply chain.
Digital Market Place - An online gathering place that enables buyers and sellers to engage in e-business.
E-business - furthering business strategies through E-commerce and collaborative solutions. Requires a foundation of enterprise applications.
E-Commerce - Buying and selling electronically, especially over the Internet. This includes EDI and VPN-based electronic communications.
Enterprise Solutions - Applications that manage business processes within the enterprise. A company's firewall is the practical boundary of the enterprise. Enterprise applications are the foundation for e-business.
HTML (Hypertext Markup Language) is the set of "markup" symbols or codes that allow a file intended to be displayed on a Web browser. HTML provides a human-to-machine interface.
Portal - In general, an Internet access point to a collection of related services and information. Variations include enterprise/corporate portals, web portals, and so called "vortals".
Web Portal - Web super-sites such as Yahoo, Excite, AOL, etc., intended to provide a one stop, personalized access point to the Internet.
Enterprise/Corporate Portal - The enterprise-specific equivalent to a web portal, giving an employee a one stop, personalized access point to corporate systems and to the Internet.
Vortal - A vertical-specific equivalent to the more generalized Web portal.
Shared Data - Collection of data used to rationalize and synchronize business processes.
XML (eXtensible Mark-up Language) is a language that enables one program to communicate with another simply and easily. XML is the lingua franca of computer systems.
The Digital Marketplace
Cyberspace is an ideal medium to link potential buyers and sellers, which is why the Internet has given rise to Digital Marketplaces such as Ariba or mySAP.com. Digital Marketplace providers (also known as infomediaries) act as brokers, allowing you to conduct low-cost transactions for products and services. The Digital Marketplace provides access to new suppliers and it can also create new distribution channels.
Currently, Digital Marketplaces come in three flavors: aggregators of pricing and product information; online auctioneers, and exchanges that act as neutral third parties in exchanges. Industry analysts predict that these distinct business models will soon blend together into Digital Marketplaces that aggregate, auction and exchange. They further predict that the most successful Digital Marketplaces will be those that verticalize.
The Digital Marketplace makes it possible for companies to access business-critical information databases 24 hours a day, it also allows you to do business with trading partners located anywhere that you may have known nothing about before you began doing business over the Internet. The Digital Marketplace allows you to create new business channels and realign buyer-seller relationships overnight. Indeed, in the Digital Marketplace trading partners may begin beating a path to your door, each promising to outdo its rivals.
At the same time, Digital Marketplaces also improve the reliability of the information you receive. Because they act as disinterested brokers and reduce the overall cost of doing business, Digital Marketplaces can significantly improve the quality of your environments. Supplier reliability is strengthened as costs are lowered.
Just Another Option?
While the promise of the Digital Marketplace providers can be considerable, they are scarcely the answer to everything, and they have certain built-in limitations.
Their most obvious limitation is that they are middlemen. The Internet has the potential to render middlemen obsolete. Why, some will ask, rely on a third party for business-critical relationships that might be better managed with e-business collaborative applications resident on your own IT infrastructure?
The important thing to remember about Digital Marketplace providers is that they add to your current list of e-business options. In this sense, they are much like Application Services Providers (ASPs), companies that make enterprise applications available to clients over the Internet for certain fees. You can rent these services, or you can own applications that provide the same benefits.
And the choice of renting or owning depends on the extent to which your business relies on the applications. If you are a heavy-weight user, your goal should probably be own the applications. If you are a lightweight user, renting may be the better option.
Taking CRM To The Next Level
E-business technologies are transforming our concept of Customer Relationship Management (CRM) by breaking down the gap between the front- and back-office. They also take customer care and personalization to new levels. With e-business collaborative applications, your entire IT infrastructure becomes customer facing.
Today's CRM applications are designed to integrate with, and augment, back-office enterprise and engineering applications. Basically, they improve customer care in two ways. They allow your customer service and sales personnel to create detailed profiles of individual customers and businesses, and they allow your sales personnel to configure products (within certain fixed parameters) to meet the specifications of individual customers.
Internet technologies are making many CRM activities automatic. Virtual retailers personalize their services with "cookies" – compact, self-activating personalization files sent by the retailer's Web server and stored in the user's browser cache. Many maintain Internet-linked customer databases that automatically capture the buying preferences and patterns of every customer.
While the same technologies can be used to augment business-to-business buy/sell relationships, business-to-business personalization is a more complicated matter that requires a new class of e-business collaborative applications. In order to effectively collaborate with other businesses, e-business applications must be able to recognize the needs of individual groups or departments of trading partners. In this realm, individual preference is less important than rules of engagement. And the many-to-many relationships between two enterprises need to be maintained at a high level.
New e-business collaborative applications are capable of providing all the functionality of traditional CRM applications, plus a lot more. E-business Sales Order Management applications, for example, contain full relationship management capabilities. Your entire enterprise becomes customer facing – in sync with personal preferences and departmental rules of engagement.
The Battle Of The Business Models
An Information Age business model empowers front-line managers who function as entrepreneurs, strategists and decision-makers constantly creating and responding to new opportunities for the business. Middle managers become horizontal integrators who build competencies across the organization and with external partners. Top managers provide vision and long-term direction.
Information Age companies are market-driven, lean and responsive. They concentrate on maximizing value rather than minimizing costs. The focus within the enterprise is on integration, strategic performance, and knowledge management. The focus outside the enterprise is on suppliers, consumers, and trading partners.
E-business product differentiation is a direct extension of the way you do business. The real e-business battle is not between your IT systems and the other guys' IT systems. Instead, it's a battle between your business model and those of your competitors.
IT systems have to be designed as extensions of your business model. This means that your solutions provider has to understand your business model and your marketplace. Just as importantly, your solutions provider has to build an adaptable e-business solution, one that not only supports your current business strategy, but is flexible enough to meet tomorrow's requirements.