Market Leader Discipline E-Business Strategy PDM, Configurators Personalization, E-Commerce Order Status Customer Intimacy Product Differentiation Low-Cost Provider Strategic Procurement
IT EC Group Characteristics Reports to senior IT management/CIO Small (2-3 staff members per functional area) Closely aligned with: EC steering committee LOBs Vendors/service providers EC Steering Committee: Cross-functional (management, IT, LOBs, EC IT group) team tasked with driving EC efforts in support of overall organizational strategic direction.
Requirements for combined content management and commerce: Content Management: Commerce: Product information and presentation - Storefrount and e-catalog creation and management Product information management - Order management Document lifecycle management - Settlement Publishing capabilities - Fulfillment Personalization - Integration mechanisms Search and retrieval - Analytics Administration - Administrations Integration - Security Security Abbreviations: B2E = Business to Employee B2C = Business to Consumer B2B = Business to Business Research Reference: Type Delta/research references here
Sell: First step to Web sales; enable Web storefronts with no direct ties to the back-end ERP system; 80% of Web storefronts today are disconnected from back-end operational systems Integrate: Tie to the back-end system, provide product configuration, check available to promise (ATP), and eventually capable to promise (CTP, goods are not in inventory, but can be manufactured to meet a promise) Externalize: Add channel management, to maximize indirect sales potential Optimize: The ability to collaborate across new product introduction, manufacturing (flexible, outsourced), and delivery processes for maximum resource utilization Abbreviations — ERP: Enterprise Resource Planning
Sell-side architecture requires a variety of technologies, and not all of them will be provided by the ERP vendor Integration is certainly mandatory, and the ongoing tension will be between integrating best-in-class components and technology (the “unseemly” approach) vs. buying components from the ERP vendor (the “seamless” approach) Companies must provide a “differentiable” experience on the sell side
Although individual vendors are today offering “somewhat” unique solutions for procurement: Indirect/operational (e.g., Ariba, Commerce One, Clarus) Indirect/factory floor maintenance (e.g., PSDI, Datastream Grainger) Direct (Aspect Development, IHS) The lines will continue to blur as vendors invade each other’s spaces Maximizing on e-procurement will also require global supplier management policies, clear understanding of strategic suppliers, and alternatives for substitutable parts Abbreviations — LOB: Line of Business
Abbreviations — MRO: Maintenance, Repair, and Operations; SC: Supply Chain
Understand internal bill of materials Ensure that components are named uniformly internally Where possible, identify multiple suppliers for each component. Manage global spending Consider additional vendors (e.g., SupplyBase) for required contract manufacturing
Net Markets mimic the e-business requirements described earlier for e-business excellence. Participate in Net Markets based on the sophistication of services provided, and, of course, ready access to buyers.
Participate in Net Markets that add value to the buying and selling processes; especially as they facilitate a round-trip transaction to complete the sale.
The Michael Porter model identifies the five types of threats facing companies. Developed in the mid-1980s, this framework takes on increased significance in the Internet age. All threats become increasingly possible over the Web.
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Commerce Chain Management Kip Martin Program Director Electronic Business Strategies
e Business “Marketplace” G2000 Org Sell Side/Demand Distributor Reseller Business Cust. Consumer Cust. Asera, Comergent, Webridge, Allegis, Channelwave Open Market, Intershop, Interworld, Blue Martini, Websphere Commerce, Broadvision, ATG, etc. Net Market Suppliers Buyers electroneconomy, Casbah, Tradex, EC Cubed, Ventro, TradeMatrix, Exterprise, Tradeum, Intelligent Digital, aatlas, etc. Ventro, e-Steel, Altra, Azurix, e-Chemicals, TradeOut, MyAircraft, C1 MarketSite, Fishmonger.com, Zoho, etc. Priceline, eBay, CarPoint, DemandLine, YouDecide Commerce Chain/Collaboration i2, SAP, Oracle, Manugistics, Logility, Nexprise, PTC, MatrixOne, IPNet, EQOS, STC, Viacore, Cyclone, etc. Buy Side/Supplier Commodity MRO Direct PSDI/MRO.com, Remedy, Peregrine, Indus, etc. CommerceOne, Ariba, Baan, SAP, Oracle, Walker Works.com, Intelisys, Elcom, Infobank, etc. Partner
What Are the e business Pressures? What are the critical skillsets required to deliver effective EB solutions? What role should external parties play? How should EB initiatives be managed? EB Team <ul><li>Corp. Mgmt. Demands </li></ul><ul><li>Revenue vs. efficiency </li></ul><ul><li>ROI??? </li></ul><ul><li>Time to market </li></ul><ul><li>Staffing/Personnel Challenges </li></ul><ul><li>Constrained talent pool </li></ul><ul><li>Retraining/re-skilling required </li></ul><ul><li>Technical skills far outweigh sales/marketing skills </li></ul><ul><li>Technology Challenges </li></ul><ul><li>New business/application functionality </li></ul><ul><li>Tools are not mature </li></ul><ul><li>“ Legacy” service levels must be maintained </li></ul><ul><li>LOB/Constituency Demands </li></ul><ul><li>Evolving user requirements </li></ul><ul><li>Greater accountability/scrutiny </li></ul><ul><li>Financial clout </li></ul><ul><li>Partner/Customer Demands </li></ul><ul><li>Collaboration </li></ul><ul><li>Design requirements </li></ul><ul><li>Supply requirements </li></ul>Outsourcing Insourcing Sourcing Options
How Do I Determine e Business Effort Value? <ul><li>Construct potential scenario(s) from identified opportunities & threats </li></ul><ul><li>Derive “value case(s)” for each scenario </li></ul><ul><li>For each value case, develop an associated tactical plan </li></ul><ul><li>Highly iterative process </li></ul>Breadth of potential scenarios is dependent on available digital weapons and IT’s capacity to deliver Derive Scenarios for Every E-Opportunity Environment Intelligence Targets of Value Digital Weapons Threat Assessment Partners REAL-TIME OPPORTUNITY IDENTIFICATION Continuous Reassessment Value Case(s) Scenario(s)
Innovation Portfolio <ul><li>Tactical plans created for each e-opportunity value case </li></ul><ul><li>Each tactical planning exercise includes: </li></ul><ul><ul><li>Course(s) of action </li></ul></ul><ul><ul><li>Limiting-factors analysis </li></ul></ul><ul><ul><li>Time-phased planning </li></ul></ul><ul><li>Goal is speed in decision making amid incomplete information </li></ul>Process is similar to military crisis action planning, but outcome is an innovation portfolio for the enterprise Creation of Innovation Portfolio of E-Opportunities Value Case(s) Scenario(s) Tactical Planning Course(s) of Action Limiting-Factors Analysis Time-Phased Planning Innovation Potfolio
How Do I Organize for e business? CEO/ Board Other LOBs IT Influence Influence CIO, CTO, CFO, CCO, etc. Influence Sales, Service, Marketing Influence Supply Chain Management Influence Influence Partners Customers Influence Product Development EB Chief
E-organization Components The eb-enabled IT organization must be business aligned; leveraged internally and externally Center of Excellence EB Steering Committee IT/LOB Teams IT EB Group(?) LOB Cross-Functional Business Processes Business Partners Customers IT Services (Insourced/Outsourced) Process Teams Vendors/Service Providers EB Chief
How Important is Content to e business? Community Services Collection Approval Content Commerce Collaborate Intranet/ Portals KM Personalization Document Management B2B B2E B2C Product Info Search Integration Catalog Sharing Analytics All forms of e-business require the integration of commerce and content (technologies and processes) to succeed
What Comprises a Corp.com Strategy? Content Cache or Knowledge Container Application Application Application Application Application Application Application Application Security, EAI, Content Mgt., Inter-Enterprise Integration, Personalization Corp.com Interface Firewall Customers Job Seekers Media Investors Suppliers Employees By 2002, organizations will be required to provide a singular view of the corporation across all stakeholders, or risk significant mind/market share loss
What Are Key e business Technologies? <ul><li>Integration </li></ul><ul><li>Collaboration </li></ul><ul><li>Analytics </li></ul><ul><li>Process optimization </li></ul><ul><li>Personalization </li></ul><ul><li>Supply Chain Mgt. </li></ul><ul><li>Content Management </li></ul><ul><li>Security </li></ul><ul><li>Services </li></ul><ul><li>Infrastructure and ops flexibility </li></ul>End-to-end (“straight through,” life cycle, etc.) functionality will differentiate leaders from followers E-Business Evolution Partner Collab Engine Acknowledgment Partner Invoices, ASNs, EFT Phase I: Transaction Automation Shared Data (EDI) Partner Cash Management, Underwriting, Etc. Statement Detail, 401(k) Self-Service, Etc. Phase II: Shared Operating Data Shared Access (Web) Partner Phase III: Collaboration Constraints, Risk, Value Business Plans, Purchase Histories/Analytics, Research Shared Process (XML) Electronic Process Integration (EPI) Collab Engine Partner Partner Partner Collab Engine
What Comprises Sell-Side Commerce? <ul><li>Managing channels </li></ul><ul><li>Understanding demand </li></ul><ul><li>Enabling customers to buy </li></ul><ul><li>Leveraging “in place” infrastructure </li></ul><ul><li>Integrating best-of-breeds </li></ul><ul><li>Product/service lifecycle mgt. </li></ul><ul><li>Appointing service provider(s) </li></ul><ul><li>Time to volume </li></ul><ul><li>Integrated CRM, logistics </li></ul>How Effective Is the Backbone? Sell Maturity Model As sale of goods becomes frictionless, appropriate channel strategies and experiences must be created Phases Relationships Tasks Results Web to Order Management (OM) Web OM integrates with ATP & CTP Integrates OM w/Partner Avail. X-Enterprise Mfg. Floor Value Chain Optimization Opti- mize Exter- nalize Inte- grate Sell Storefront Manufacturing Integration Channel Integration Supplier Integration 1 2 3 4 Intra-Enterprise Integration Inter-Enterprise Integration Electronic Bond with Customers/ Partners
Sell-Side Architecture <ul><li>Leverage in-place infrastructure and applications when possible </li></ul><ul><li>Enable catalogs, configurations, processes, prices — content — to change dynamically </li></ul><ul><li>Integrate applications and data to present a personalized experience </li></ul>Outside In vs. Inside Out App Server Database & Business Logic Traditional C/S Web Browser Web Browser App Server Leveraging the ERP Web Sell-side initiatives must integrate commerce, content, and CRM with existing back-office app operational data
What Comprises Buy-Side Commerce? <ul><li>Understanding types of procurement </li></ul><ul><ul><li>Indirect </li></ul></ul><ul><ul><li>Direct </li></ul></ul><ul><li>Managing suppliers and components </li></ul><ul><li>Participating in marketplaces (suppliers and buyers) </li></ul>Organizations must drive procurement efficiencies, but determine requirements and return prior to investment Procurement Futures Com-modity Integrated Procurement Networks & Markets Global Procurement LOB Procurement Corporate Procurement <1995 1999-2001 2000-02 Home- Grown Multi- Channel Vendors Single- Channel Vendors Multi- Channel/ Multi-Market Vendors Indirect & Direct
Procurement Politics <ul><li>Focus on internal costs and processes for commodity procurement </li></ul><ul><li>Focus on asset management/ maintenance for MRO procurement </li></ul><ul><li>Focus on SC efficiency and product management for direct procurement </li></ul><ul><li>Tactics first, then strategy </li></ul><ul><li>Integrated procurement by 2001 </li></ul>No Wonder It’s So Difficult . . . New Product Development Manufacturing Logistics Customer Management Asset Management Financial Maintenance Repair Operations Sourcing Design Production Maintenance Execution Quality Accounts Payable Accounts Receivable General Ledger Customer Self-Service Customer Service Field Service Product Config Purchasing Distribution Inventory Supply Chain Planning E-procurement success in 2000 means focusing on one/more processes and applying solutions
Direct Procurement: More Bang for the Buck? <ul><li>Focus direct procurement efforts on: </li></ul><ul><ul><li>Supplier management </li></ul></ul><ul><ul><li>Component rationalization </li></ul></ul><ul><ul><li>Integration with product life cycle </li></ul></ul><ul><ul><li>Supply chain visibility </li></ul></ul>Integrate product development/life cycle and procurement solutions; increase quality/decrease time to market Direct Procurement Excellence Solves . . . Part/supplier proliferation Manual processes/ spreadsheets Little reuse of standard parts Long design cycle times Rampant ECOs Cost overruns
What Are Characteristics of Net Markets? <ul><li>Equity investment </li></ul><ul><li>Regulation </li></ul><ul><li>Finance </li></ul><ul><li>Staffing </li></ul><ul><li>Globalization </li></ul><ul><li>Channel “mastery” </li></ul><ul><li>Channel/customer relationship management </li></ul><ul><li>Co-opetition </li></ul>Trusted Intermediary Components/Services A robust net market replicates an organization’s entire business model…only much faster and more often Vetting Services Import/ Export / ForX Reporting Non- repudiation Order Aggregation / Dissemination Trans. Automation Clearing House Taxation Audit T I
Why Net Markets Are Critical <ul><li>Matchmaking </li></ul><ul><li>Reduce friction between suppliers and buyers </li></ul><ul><li>Add value to complex processes </li></ul><ul><li>Decrease cost of commodity products/services </li></ul><ul><li>Extend reach to unserved markets </li></ul><ul><li>But don’t expect huge revenues all the time </li></ul>All Net Markets Are Not Created Equal Net Market Maturity Model Phases Relationships Tasks Results Product categories, text, e-mail communications Better links to suppliers, fulfillment; transactions Buyer-market-supplier integration, mostly comms/trans EPI for market/industry Commerce Chain Optimization E- Hub E- Market E-Mail E- Classifieds Advertisment/Listing Catalogs, price history, in-depth product info, links to fulfillment, offline transactions Online transactions, integrated fulfillment Buyer-to-supplier integration via hub services Intra-Enterprise Integration Inter-Enterprise Integration End-to-end electronic bond/ process integration Consolidator Model Change 4 3 2 1 Significant investment must go only to Net Markets that optimize industry processes and focus on buyers
Net Market-tecture <ul><li>ERP vs. best-of-breed backbones </li></ul><ul><li>Application integration/middleware </li></ul><ul><li>Inter-enterprise integration </li></ul><ul><li>Websourcing providers </li></ul><ul><li>Operations sourcing </li></ul><ul><li>Collaboration </li></ul><ul><li>Transaction/order management </li></ul><ul><li>Billing </li></ul><ul><li>Catalog content management </li></ul><ul><li>Content management and personalization </li></ul>3-Month vs. 2-Year Deployment Transport, Security/SSO, Availability, Uptime, Application Mgt., etc. Operations Rapid deployment and flexibility win; sourcing and operations are critical components
Commerce Chain Management: Bottom Line <ul><li>Integrate partners, customers, content, and commerce to drive sell-side success </li></ul><ul><li>Pursue buy-side commerce tactically, but evolve toward integrated strategy </li></ul><ul><li>Sell side commerce equals integration, CRM, and the “other CRM.” </li></ul><ul><li>Participate in Net markets to drive revenue, create efficiencies, and/or maintain relationships </li></ul><ul><li>Understand that the e-business end game is a sum of all the parts </li></ul>Summary