E-Business Puts ERP Under The Microscope

Enhancing your customer service channels can feel a bit like going to the dentist. While (hopefully) there isn't the same degree of pain, there can be the sensation that your customers want you to "open wide" so they can poke around inside your enterprise. And, you may be conducting similar examinations with your suppliers. Everyone in the supply chain wants to see more deeply into their business partners' operations, especially as they place and wait for orders. Once it was enough to flash a toothy smile and call that "customer service." Now the pressure is on to reveal whether or not the shelves are still stocked with wisdom teeth.

Pressure comes from the increasingly interwoven relationship between CRM (customer relationship management) and ERP (enterprise resource planning). (See "Beware The ERP/CRM Split" in the December 2001 issue of Integrated Solutions) As ERP vendors continue to integrate CRM modules into their products, companies making use of those modules find it increasingly possible to open their operations for customer review. As a result, customers increasingly expect to penetrate their suppliers' information systems. "Today's customers are extremely demanding when it comes to how you handle their orders," admits VP Joey Benadretti of ERP software developer Syspro Group (Costa Mesa, CA). "They want to place smaller orders; they want to receive goods faster; they want zero rejects. They expect all of those things, and they aren't willing to pay more to get them. If you can't show that you are responding, they will go to someone else."

A seemingly obvious way to demonstrate responsiveness is to open Web-based procurement and fulfillment channels. These facilitate real-time supply chain data exchanges between suppliers and customers. Ideally, such channels would create links across the partnering companies' various supply chain applications, including their ERP systems. However, as companies have learned in working on e-business initiatives, interoperability issues stemming from differing platforms and differing application source codes have led to implementation slowdowns. "E-business hasn't yet taken off at the speed the analysts originally predicted," explains Scott Rich, VP of marketing for Lilly Software Associates, Inc. (Hampton, NH). "Even though there has been a lot of hype about e-business, people are finding that it's challenging to put into practice."

Despite the challenges, Rich and others in the industry agree that one key driver in the eventual explosion of Web-based services is XML (extensible markup language). By providing a method for describing any kind of content for Web delivery, XML hurdles interoperability barriers. Using XML-based platforms and applications, suppliers and customers can share functionality and data across their supply chain systems. As James Norwood, senior director, product marketing, for ERP vendor Epicor Software Corp. (Irvine, CA), puts it, "XML has ushered in the programmability of the Internet. The question is how to make the most of that capability in leveraging your ERP or CRM system."

XML Keeps Integration At Bay
As a testament to XML's central role in future application development, both Norwood's and Rich's companies are retooling their ERP products within Microsoft's XML-reliant .NET framework. Using XML for content interchange, .NET enables companies to use or build applications that pull in other companies' Web services. For example, a customer could pull e-procurement functionality from its suppliers into its own inventory management processes. ".NET provides the ability to break down applications into smaller, loosely connected Web services," Norwood explains. "It allows us not only to pass documents and data from one system to another but also to invoke capabilities of a system, whether it's internal or external to the company that invokes them. It doesn't matter where the original system was written or where it lives. As long as each system in the relationship can read XML via standard Internet endpoints, that's all that matters." Rich concurs, "The .NET framework makes it a lot easier to deploy our application to a variety of platforms, whether the platform is totally Web-based or is in a thin client-to-wireless device configuration."

Because it overrides differences in platforms, source codes, and operating systems, XML secures one of the fundamental goals of an ERP implementation - enabling users across various devices, facilities, and organizations to share enterprise data. That should be good news to users of products, like mobile handheld computers, that interact with ERP systems. Barry Petenbrink, ERP manager for LXE Inc. (Norcross, GA), a provider of wireless data collection solutions, notes that ERP systems "do an extremely good job of taking data and translating it to systems running in different languages." XML-based applications and frameworks should help them to do that even better.

Another benefit of XML is the reduction of integration burdens on existing IT staffs. Companies still struggle to integrate legacy systems with new technologies or to integrate ERP systems with departmental point solutions. According to Norwood, "XML allows you to keep integration at arm's length. It helps you to avoid the common problem of accommodating two or three different integration frameworks when you're trying to make applications work together." Petenbrink underscores the importance of ease-of-integration, saying, "You need to be able to move data to your ERP system without taxing the programming skills of your in-house IT staff." Benadretti echoes the observation, noting that companies tend to abandon multi-facility and multi-organization information sharing if the system can't easily accommodate IT staff turnover. "When the smart kid - the one who brought in the system and made it work with everything else - leaves, companies all too often go back to the old ways," Benadretti says. Rich agrees that built-in functionality, including any e-business module, is a key ERP requirement, particularly for smaller, mid-market companies. "Most companies are upgrading from a legacy system and want technology that will take them into the next eight or ten years. They also want short implementation time and ease-of-use," Rich says.

Add Web Services In Stages
As companies add e-business functionality to their supply chain operations, they should consider how quickly and how comprehensively the rollout should occur. Petenbrink offers the reminder that, because e-business is driven by customer orders, companies tend to focus almost exclusively on the financial side - accounts payable and accounts receivable. But, they need to consider how an e-business initiative will affect their overall supply chain operations. As with any fulfillment situation, companies need to consider, in particular, how well their current warehouse operations will serve this new channel. "They need to ask the basic questions," Petenbrink insists. "Does the system affect their ability to get the right product to the right people at the right time?"

Because e-business functionality can force modifications in a company's traditional business practices, Norwood suggests starting with one or two Web services that leverage existing investments. For example, if a company already builds vouchers into its pricing and ordering model, it might begin by offering voucher entry as a Web service. "We advise getting familiar with how to structure a Web service to address one business need before you try to bring in all of the Web services you are planning," Norwood says.

Because the driving goal of an e-business initiative is enhanced customer service, Rich suggests starting with order entry or order management. But, even with a limited initial rollout, additional caution is advised. Web-based order management raises the issue of how much visibility customers should have. "You have to think about how far into the plant you want your customers to be able to see," Rich says. "Do you want to stop with merely showing the release status and the current shipping date, or do you want to allow them to see where the order is in the production cycle? A lot of your decision will be based on whether your production scheduling is disciplined and predictable or whether you allow too much variability and frequent order changes."

As Rich's comments suggest, thoughtful preparation for an initial Web service offering, followed by staged rollouts, can help to prevent the enterprise from opening too wide too soon. Otherwise, it might suffer an unpleasant dentist's office experience - the gag reflex.