The document discusses the need for integrated enterprise applications to support modern e-business architectures. It describes how isolated, standalone applications are no longer sufficient and companies need application frameworks that combine applications like ERP, CRM, SCM, and others. It provides examples of companies that have implemented various integrated application strategies to improve areas like customer service, supply chain management, and sales.

1. Chapter Five Constructing the e-Business Architecture: Enterprise Apps

2. The Premise CEOs want next gen enterprise apps that make their businesses more competitive and deliver quicker benefits CIOs challenge: develop e-business architecture Bridge chasm between customers, back-office operations and supply chain Cost of the chasm: several million dollars in higher service costs and longer order-fulfillment cycles Application design and business design irrevocably linked How you manage information determines whether you win or lose Companies manage information through business apps Central theme of e-business execution: Linking isolated business apps into a cohesive architecture

3. The Vision Enterprise apps (ERP, CRM , SCM): well-integrated, modular building blocks for modern business designs Common platform for apps in a given functionality Backbone of modern enterprise Emphasis on enterprise apps grew in mid 1990s To root out old legacy apps incapable of meeting stresses of the global economy Today, as companies race towards information economy, their structures are made up of interlocking business apps Isolated, standalone apps are history Vision of e-business How to integrate an intricate set of apps to manage, organize, route and transform information, like a well-oiled machine

4. The Challenge Not an easy to achieve vision Failures more frequent that successes TCI, Hershey Foods Reason: many solutions dead-on-arrival Complexity of problems implies long lead times for solutions But rapid morphing of problems demands short lifetime solutions App investment decisions rising to the top of mgmt agenda Actual cost of enterprise apps greater than what firms anticipate

5. The Implication When businesses apply technology to address new opportunities, bond between business design and application architecture grows closer Steering this relationship urgent Senior managers must become corporate architects to shape the app infrastructure Meet customers demands Build lasting value by connecting business strategy with operational reality Cannot afford to leave the task to developers and lower-level managers who don’t see big picture

6. In This Chapter … Take a multiyear planning perspective to Identify important business and technology megatrends driving app architecture Identify key areas of investment necessary to harness and exploit business apps

7. Trends Driving e-Business Architecture Velocity of business increasing Enterprise boundaries disappearing Expectations for technology solutions rising Other internal IT events also happening Integrating apps from mergers and acquisitions Moving apps to the Internet Moving apps from legacy systems to new platforms Upgrading network infrastructure to handle high-bandwidth traffic Building an integrated data model

8. New Customer-Care Objectives Integrated application architecture key to serving the customer seamlessly Amazon.com Seamless buying and order fulfillment Can potentially enable frequent inventory turnover For richer customer experience, firms need to integrate Web sites with their back-office systems Inventory mgmt, order processing, financials, and customer service Companies must practice fundamentals of fast, error-free service As customer become Internet savvy, their tolerance for wasted time and lack of integrated processes diminishes Companies must refine business processes

9. New Competitive Conditions The changing competitive environment is driving the need for integrated apps New Brunswick Power Deregulation and demand for better customer service began to strain existing apps Forced to reevaluate business processes, esp. customer service functions

10. Fast Moving Competitors Established firms forced to scrutinize existing app architecture M&As Compete with new entrants Norwest Mortgage Traditional Norwest Systems Required For Future Success Norwest’s Challenge Design the Future Business and customer focused proactive Structured in line with business support objectives Shift in emphasis to front office support Emphasis on business skills Customer knowledge Business knowledge Strategic planning Customer service philosophy E-business must become a partner to the Business Units E-business must be the engine for sales and growth E-business must develop a customer focus and embed business knowledge E-business must be the operational enabler of efficiency Internally focused; reactive Structured around technical Chief role in providing back Emphasis on technology skills

11. Problems Caused by Lack of Integration Careful design of app architecture essential for business survival Oxford Health Plans, praised for use of the Web, lost more than 80% in stock value because of a computer problem in accounting and billing system in 1997 W.L.Gore & Associates sued PeopleSoft for failing to properly install its HRMS, resulting in damage to its business Getting integration right even more important But there are minefields: system related and organization related

12. Contd … Organizational barriers Too much focus on cost cutting and efficiency Getting business units to understand why they need to use s/w Rehashing competitors’ ideas Frequently reorganizing Placing too much emphasis on outside consultants Business Trends l Proprietary l Developed in the 60’s or 70’s l Mainframe based l Developed in Cobol, Assembler l Not real time l Missing documentation l No integration l Lacking customer focus Existing Legacy Systems Slows down change and often impossible to change System-related barriers l Business model restructuring l The customer centric company l Many new channels Multiple products l Integrated customer information l Integration of many legacy systems l Process integration l Structural reorganizing

13. New Era of Cross-Functional Integrated Apps Successful e-business companies overcome chaos in their e-product development by embracing app frameworks Various companies can independently design and develop app modules, as ERP and CRM, but those modules will be molded to fit into a complex, smoothly functioning product Business apps have evolved to app frameworks Complex, cross-functional integrated apps Core is application modularity Stage 1: Task Oriented Applications (Order Entry) Stage 2: Functional Applications (Logistics) Stage 3: Integrated Cross-Functional Applications (Customer Care)

14. CRM Apps: Charles Schwab Realization Execution of stock market trades fast becoming commodity Strategy Become customer centric Offer sales and service reps enough information to best serve customers Execution Challenge Existing systems fragmented, expensive to integrate Solution Buy Siebel’s Sales Enterprise System, which has a wide array of CRM functionality

15. Benefits Real-time access to cust profiles and histories Improved responsiveness Cross selling Lesson: Customer service no longer an isolated function Link sales and cust service organizations with one another and with all customer-facing parts of the company CRM Apps: Charles Schwab Sales Service Marketing Customer Relationship Management

16. ERP Apps: Nestle’ Realization Worldwide operations costly and inefficient Strategy Standardize business processes to closely link international locations Execution Challenge Integrate systems and business activities to gain high quality, consistent and efficient management of information Solution Buy ERP app suite from SAP for order entry, purchasing, invoicing, and inventory control

17. ERP Apps: Nestle’ Benefits Integration of worldwide logistics Shorter turnaround time from inquiries to delivery Shift towards demand-driven production Forecasting & Planning Warehousing & Inventory Management Enterprise Resource Planning Finished Product Distribution Accounting/ Finance Purchasing & Material Management

18. SCM Apps: Visteon Realization Streamline business to power recent entry into competitive auto parts market Strategy Cut production development times Reduce manufacturing time for parts Gain more business from non-Ford sources Execution Challenge: Current Excel sheets for production scheduling difficult to manage and time consuming Efficiency and throughput not optimal Inventory higher than needed Solution Integrated SCM application

19. SCM Apps: Visteon Benefits Perform scheduling independently over 10 sequential prodn depts Integrate scheduling with suppliers functions Multi-company SCM becoming a way of life Market Demand Resource & Capacity Constraints Supply Chain Management Real-Time Scheduling

20. Selling Chain Management Apps: Whirlpool Realization Pricing process is stifling profits and frustrating customers Strategy Streamline sales process Sell products more quickly and profitably at reduced overall costs Execution Challenge Existing Excel spreadsheet system too cumbersome to maintain Solution Enterprise software suite to integrate each function in sales and marketing Pricing mgmt Product mgmt Sales Commissions Promotions Contract mgmt Channel mgmt

21. Mass customization requires configuring custom solutions from enormous range of changing products and pricing them accordingly Traditional sales and pricing processes not prepared for this challenge New cross-functional app cluster called selling chain mgmt necessary Selling Chain Management Apps: Whirlpool Product Customization Quote & Proposal Generation Selling-Chain Management Commission Management Promotion Management Pricing & Contract Management

22. e-Procurement Systems Apps: CIBC Realization Empowering employees by automating purchasing processes can cut purchasing overhead costs and help negotiate better deals with suppliers Strategy Implement e-procurement system Office Supplies Procurement Business Travel Procurement E-Procurement Applications Computer Equipment/Software/Networking MRO Procurement Service Procurement (courier, catering, contract workers)

23. EAI Apps: Nortel Networks Realization Need better support for global customer service operations, to support multiple sales channels and reseller partners Strategy Link CRM and ERP apps to ensure product deliverables to customers recorded in ERP get recorded in CRM for contract and warranty validation Solution Custom interface Nortel’s interface an example of new breed of apps called connectors or EAI apps EAI apps essential in multivendor setting When there are different vendors for front- and back-office apps

24. BI, DSS, and KM Apps: Nortel Networks Enable both active and passive delivery of information from large scale databases Providing enterprises and managers with timely answers to mission-critical questions Growth driven by demand for more competitive intelligence and increases in electronic data capture and storage Emergence of Internet enabled cost-effective access to and delivery of information to remote users throughout world Business Analytics (Filtering, Reporting) Decision Support Systems Business Intelligence Applications Push-Based Delivery Systems Wireless/Mobile Communications Data Capture & Datawarehousing

25. E-Business Architecture = Integrated App Frameworks S t a k e h o l d e r s Customers, Resellers Selling Chain Management E M P L O Y E E S Enterprise Resource Planning (ERP) Logistics & Warehousing Manufacturing Distribution Customer Relationship Management (CRM) Marketing Field Sales Customer Service Partners, Suppliers, Distributors Supply Chain Management Business Intelligence Enterprise Application Integration Admin. Control HRMS / e-Procurement Finance/Accounting/Auditing Management Control

26. E-Business Strategies, Inc. www.ebstrategy.com [email_address] 678-339-1236 x201 Fax - 678-339-9793