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E-commerce is a powerful force not just within the enterprise, but across enterprises. It's affecting entire supply chains that used to operate by telephone, fax, and next-day mail services. And e-commerce is a powerful force in enterprise resource planning (ERP). Some might even call e-commerce a "paradigm shift" that is driving ERP to be very much a part of supply-chain collaboration and enterprise connectivity.
It is certainly forcing dramatic changes in the set of functionality conventionally contained in ERP. The latest crop of ERP systems is more likely to act and look like the web-browser applications on your desktop - and extend just as far into the web. Here's a peek at what's happening behind that browser interface.
As the amount of business transactions and information sharing increases across supply chains worldwide and trading exchanges proliferate, ERP will have to inherently enable collaboration. It will have to become electronically accessible by all trading partners within a supply chain.
Such ERP collaboration is where eXtensible Markup Language (XML) comes in. XML primarily helps in connecting different information systems together, ERP being just one type of system, versus enabling the transactions within the ERP system itself.
Granted, that's also what electronic data interchange (EDI) is for. EDI has evolved over the last two decades into a very sophisticated business-to-business relationship management and supply-chain management tool. EDI will probably continue for at least another 10 years, predicts Richard Scott, manager of automotive verticals, for Denver-based J.D. Edwards & Co. But he also thinks EDI soon will be supplemented by hosted trading exchanges, as well as technologies like XML. This can potentially make e-business and e-collaboration more complex. But, Scott adds, business in general has always been getting more complex.
One ERP vendor made a big splash about this very issue last year. OneWorld Xe from J.D. Edwards (JDE) is an "extended enterprise" product with some 300 internet-ready applications to bring collaboration into fruition. It has a web-based portal as a doorway to OneWorld, which can be configured to meet the access and collaboration needs of multiple users, whether trading exchanges, individual partners or customers.
XML: The latest iTechnology
XML, the eXtensible Markup Language, is the next-generation web language that defines how data are transmitted and shared across the internet. As such, it is becoming the common language for e-commerce and for systems integration.
The ERP system supports XML-based business-to-business (B2B) interoperability-functionality that comes from one of JDE's development partners. Other partners provide additional enterprise application integration and workflow capabilities. Together, these and other technologies yield "databots," Java-based applets with the smarts to perform XML-based workflow management. So instead of just exchanging data, the system essentially sends self-aware documents to trading partners. (What we're seeing is the reinvention of EDI.)
At the core of OneWorld Xe is JDE's eXtended Process Integration, an integration platform that addresses the business processes that cross both internal enterprise applications and external, internet-based supplier information systems. Using XML and workflow, the ERP system helps deliver information outside the enterprise; that is, across the supply chain. With role- and relationship-based messaging, OneWorld users can manage business processes across the supply chain and across trading exchanges, including handling "versioning" for documents; staying current with forecasting, collaborative planning and design, purchasing information, and fulfillment; monitoring changes in manufacturing and distribution requirements; and managing inventory, even in vendor-managed inventory environments.
OneWorld Xe also automatically generates Windows, HTML, and Java user interfaces from one set of business specifications. The latter two are browser-based and don't require any code on the client computer, except technically the browser itself. The HTML and Java interfaces are well-suited for task-specific workstation work (such as order status checks), streamlined branch office work, or for easy access over the web to a partner's information; the Windows interface offers all the typical functionality and multi-tasking processing found on your desktop computer today.
Many ERP vendors at the very least have been adding a browser interface to their software. This sort of thing is only a first step to web accessibility and ERP's participation in electronic commerce. It is also only a technological step; there are management issues to contend with as well. For instance, web-accessible ERP introduces a new set of users, with different needs and therefore different ERP interactions. These interactions will beget further functionality, as well as a fundamental redesign of existing ERP systems.
In response, ERP vendors are making every line of ERP code web addressable. This way, applications can run directly from the web, e.g., inventory checking or to generate shipping requests, while using the business logic that already exists in ERP. This approach is different than merely integrating a company's web site to its databases, which basically circumvents the checks and balances, as well as much of the business process logic, within ERP.
An alternative redesign approach is to rewrite the entire ERP system for the internet. This is what PeopleSoft, of Pleasanton, Calif., has done in PeopleSoft Version 8. It features no code on the client computer; applications accessible from any web-enabled device; every screen is a web screen; conventional Windows features, such as drop-down menus, are now hyperlinks; and the entire system is based on open XML and component standards.
Another way to make ERP web-accessible is by partnering with trading exchanges and creating interfaces so that users can enter information directly into the ERP system. For example, Made2Manage Systems Inc., Indianapolis, Ind., which provides ERP for small- to mid-sized manufacturing enterprises, wired its ERP system to other web-based services by launching M2MExpert (formerly m2mEport), which is both an internet-based front-end for the Made2Manage ERP system and a portal. The web-based services include a marketplace for new supplies and equipment, education center, and knowledge center. Likewise, M2MVIP provides web sites that Made2Manage ERP users tailor to each of their customers' needs; the customer sees only the services selected for that customer. These web sites are private and secure, and they link to the appropriate information in the Made2Manage database of the web site's sponsor. The services on these sites include checking account and order status; viewing and posting business documents, such as service agreements; viewing and searching product catalogs; requesting and reviewing quotations; placing orders; and working with computer-aided design engineering visualization tools.
Doorways Into ERP
The portals that ERP vendors are promoting will become increasingly important as e-commerce matures. "Enterprise portals will integrate operational applications with other functions, such as knowledge management, collaboration, business intelligence solutions, and other transactional systems," says David Folger of Stamford-based META Group. Enterprise portals will "quickly become the centerpiece of every e-business infrastructure," adds Carl Olofson, program director for Information and Data Management Software, International Data Corp. of Framingham, Mass. "E-businesses can communicate effectively with their key constituents and enable interaction between customers, employees and partners by sharing key data and applications personalized for each individual. The success of every e-business will depend to a considerable extent on how well they integrate content and applications drawn from a variety of sources."
The PeopleSoft Customer Portal is an example of providing another level of integration, but at the user interface level. The PeopleSoft portal, for instance, provides real-time access to PeopleSoft eCommerce, customer relationship management (CRM), and supply-chain management (SCM) applications. The portal lets businesses match supply with demand, present a single face to customers through multiple sales channels, and tailor their web sites for specific web users based on business rules, user profiles, and customer roles. For example, products and advertising could be targeted at customers based on their profiles or purchasing histories. Content could also be translated according to a customer's preferred language.
Conversely, the portal lets customers create orders, check and reserve inventory, view order status in real-time, create and track service requests and warrant contracts, and sign up for product and information subscriptions. Customers can view their account balances, recent transactions, and payment history, as well as verify invoices and make payments on invoices and account balances online, in real time. As required, the portal application can e-mail and notify customers about key events or action items, such as due dates for pending invoices.
And lest you think portal technology is limited to the desktop, look at Oracle FastForward Enterprise Wireless Portal from Oracle Corp. of Redwood Shores, Calif. This $50,000 bundle of software and services lets companies develop an information portal that employees, customers, and suppliers can use to access enterprise applications, web sites, and information stores - through such wireless devices as web-enabled phones, two-way pagers and Palm Pilots.
Many market prognosticators and ERP suppliers, and their public relations firms, wonder whether all these technological advances finally toll the end of ERP - or at least the 3-letter acronym. There might be some truth to that.
Oracle does not market ERP as such anymore. Instead, there's Oracle Supply Chain Exchange (OSCE), which "connects trading partners with disparate enterprise systems to enable real-time, inter-enterprise event management, collaboration, performance measurement, and synchronized planning and optimization." Announced in January, OSCE features a common data repository for cross-enterprise planning information and exception-based notifications. It also provides multi-enterprise order tracking and inventory visibility.
That sounds like a transaction management system for resource planning on the internet; in other words, web-based ERP. However, "OSCE manages constraints much more effectively than is possible with traditional ERP systems, which can focus only on internal planning," says Don Klaiss, Oracle's senior vice president. As a result, it "lets companies move beyond simple auction and transaction-based marketplaces and toward truly collaborative internet business models." The result: improved supply-chain velocity and reduced inventory levels across geographies and corporations, while involving more trading partners than ever before.
While ERP is great for transaction processing involving mounds of data, a common complaint is that ERP falters at translating that data into usable information. That's even more an issue in e-commerce. "What's beneath the covers of e-business is a demand and supply balancing act that can become increasingly complex when dealing with new channels of demand," says Mike Frandsen, vice president and general manager of PeopleSoft's SCM division. To resolve that problem, ERP vendors are adding a variety of analytical tools for collaborative forecasting, as well as distribution, capacity, and material planning, for starters.
SAP AG, Walldorf, Germany, for example, has its mySAP Business Intelligence analytical applications. These not only integrate business processes and depict predefined closed-loop business scenarios but also offer predefined metrics to measure the effectiveness of an enterprise. The analytics focus on various business operations. For example, the Enterprise Analytics measure and optimize an organization's performance with respect to financial, human resources, and product life-cycle management. The Supply Chain Analytics include applications such as supplier evaluation, spend optimization, demand aggregation, strategic sourcing, and both inventory and manufacturing analysis. Customer Relationship Analytics focus on such areas as campaign management, market exploration, and customer retention.
"From a competitive standpoint, effective utilization of resources to attract and service customers is key," says Sam Clark, program director with META Group's Application Delivery Strategies. "Analytic applications provide a good way for companies to focus on the key indicators of CRM performance."
Where's It All Going?
E-commerce is not something you want to ignore. And you certainly don't want to throw your ERP out with the bath water. Enterprises need to look beyond ERP, and beyond their "internet strategy" or "e-business strategy." "Enterprises need to think in terms of what their trading exchange strategy and their EDI and their supply-chain strategy are going to be going toward into the future," says JDE's Scott. "The key as a supplier is to leave yourself open to as many options as possible. Adopt a technology that provides you with the flexibility to adapt to pretty much anything."
ERP's Often Turbulent History
Last year, ERP vendors reported moderate license sales -- at least the ones that were left. Yes, 2000 was a brutal year for ERP vendors. Baan NV imploded; the pieces were glued together by Invensys to create Invensys Software and Systems Division of ISS, Herndon, Va. Many of SAP America's executive staff left to pursue stock options. System Software Associates went bankrupt and was purchased by Gores Technology Group of Los Angeles. Tokyo-based Fujitsu bought Glovia International LLC, the joint venture between Fujitsu and McDonnell Douglas. Visibility Inc., which provides ERP for engineer-to-order environments, was bought by an investment group, and Visibility's Aerospace/MRO division will operate as a separate company.
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