E Business Integration. Enabling the Real Time Enterprise

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E-Business Integration
Enabling the Real-Time Enterprise

Johan Blomme

Johan Blomme  ‐  Leenstraat 11  ‐  8340 Damme 

J. Blomme – info@dmreview.be  1 E-Business Integration. Enabling the Real-Time Enterprise

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It is not the strongest species that survive, nor the
most intelligent ones, but the ones that are
most responsive to change.

Darwin

It’s not longer about the big beating the small,
it’s about the fast beating the slow.

Larry Carter, CFO Cisco Systems


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Towards the Real-Time Enterprise

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Marketplace Dynamics 5

. globalization
. new global network information economy
. deregulation
. value nets as the new economic building blocks
. Virtualization
. supply chains are shortening and integrating with
. competition from new/non-traditional players
customer connections
. increased competition for deeper and broader customer relationships

Competition Business

Customer
Technology Evolution

. from sellers to buyers market
. connectivity and interactive technologies pervade all business activity
. anyone, anytime, anywhere access
. the evolving marketplace is a real-time, interconnected architecture
. willing to participate in decisions regarding value they receive


Stability and Dyscontinuity 6

According to GartnerG2, businesses must replace industrial age strategy with information-based, real-time
processes and paradigms. Time and information will drive the information age, and competitiveness will be
based on keener foresight, obtaining real-time information and acting on it promptly and effectively.
The following changes indicate how to compete in the information age :

  more complex business environments due to globalization and
deregulation ;
  greater impact of change from external causes ;
  a power shift from sellers to buyers, rapidly shifting customer
demands and subsequent reduced product life cycles ;
  constant technology change ;
  faster business cycles and temporary competitive advantage ;
  the need to explore collaborative strategies ;
  constant change at ever-increasing speeds and shrinking
strategy time horizons.


The transition from the Industrial Age to the Information Age 7

Industrial Age Information Age

Processes: interwoven, collaborative
linear, sequential

Tempo: continuous, rapid
periodic, slow

Assets : intangibles
tangibles


The transition from the Traditional Economy to the New Economy 8

Changing drivers Traditional Economy New Economy Business Imperative

products and manufacturing customers and relationships
. manufacturer push model . customer pull model
. make and sell . sense and respond integrating the
shift in power
. mass production of goods . mass customization customer
. transactions . relations into the value chain
. customer as receiver . customer as receiver

physical value chain virtual value chain
. tangible : technical and . intangible : inter-enterprise
basis for market engineering processes and coordination business process
integration across the
influence . vertical integration . virtual integration
extended enterprise
. enterprise focused . externally focused
. competition . collaboration

competence knowledge
real-time data
driver of market . static content . dynamic content
dominance integration and
. department/enterprise . business value chain
analysis
. batch processing . real-time processing

The Internet breaks all commerce paradigms. A new business model is emerging.


The Real-Time Enterprise 9

Real-Time
Enterprise

INTEGRATION COLLABORATION
the ability to gather, integrate,
the ability to collaborate
analyze and exchange
flexible with suppliers,
information across the business business partners and
value chain in real-time customers
PERSONALIZATION
the ability to provide tailored
customer services across touchpoints

E-business integration : the transformation of internal and external business processes
toward customer-centricity based upon service delivery opportunities offered by
information and telecommunication technologies to better fulfill the mission of business.


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Value-Creation in the Relationship
Economy

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Virtual Integration 11

The new Internet business model … relies on
information, so instead of things like inventory,
you have information. Instead of physical assets
you have intellectual assets. And instead of
closed business systems, you have collaboration.
And companies are able to connect themselves
with their suppliers and their customers much
more quickly using information.

Michael Dell adress at The University of Texas, E-business : Strategies in net time, april 2000


Transactional Model vs Relationship Model 12

TRANSACTION RELATIONSHIP
APPROACH DESCRIPTION
MODEL MODEL
In the transaction-oriented enterprise, value is delivered to the
business focus product customer buyer along with the product of service. The role played by the
customer in value creation is minimized. In the relationship
economy, customers have available a wealth of information at
every point in the chain. Customer expectations are extending
beyond front-end ordering systems to back-end execution
processes (the boundaries between SCM and CRM are blurring).
Customers are interacting with different entities at various
value model value delivery value creation
points along the value chain. No separation exists between the
multiple roles, relationships, processes and touchpoints which
define the enterprise ecosystem. This is the e-business
promise : delivering superior customer experiences across the
value chain.
The emphasis shifts from streamlining internal processes and
supply-chain demand-chain supply chain efficiency which is transaction-oriented (ERP, BPR,
efficiency effectiveness
process focus JIT) to demand-chain effectiveness which is more knowledge
(internal ; intra- (external ; inter-
and process-oriented.
company) company)

Enterprises are migrating from vertically-integrated supply chain
organizational focus vertical silos core competencies structures to collaborative trading networks with focus on core
competencies.
Instead of historical data, demand information extracted as
close to the final point of consumption is used to understand
planning model forecast-driven demand-driven the real-time market.
Information from multiple customer touchpoints is used to
create a unified customer view.
The perspective is shifting from a single organization to
partnerships few extensive partnerships.


The Networked Value Chain 13

E-business solutions allow an organization to leverage web technologies
to re-engeneer business processes, enhance communications and lower
organizational boundaries with their customers (across the Internet),
employees (across the corporate Intranet) and its suppliers and
partners (across its Extranet).


The Relationship Economy 14

  In today’s competitive environment, products and services tend to become more and
more alike. Therefore, the basis for competitive advantage becomes relationships
and personalized services.

  To compete, firms must address :
–  empowered customers who have equal access to information, an incredible
choice of products and services and the ability to choose from suppliers
anywhere ;
–  consumers who expect a high degree of personalization ;
–  speed of business change, requiring flexibility and rapid adoption of new
technologies.

  To succeed, companies must focus on the quality of the customer experience.
This requires :
–  customer knowledge : who are my customers ? what do they want ? what is
their value potential ?
–  interaction strategies / conversations which convert customer knowledge into
value propositions (customization : building individual customer solutions
across all channels) ;
–  the delivery of customer value through an integrated business value chain.


The Relationship Economy con’d 15

  It’s not enough to manage customer relationships in a vacuum without looking at
the value chain as a whole.

  As connectivity and interactive technologies pervade all business activity, the
competitiveness of a company is determined by its participation in networks of
suppliers, partners and customers.

  Customers reveal their interests and buying preferences in real-time. The value
chain becomes an interactive process. This challenges companies to integrate
their physical-channel strategy with the Internet.

  The opportunities provided by the Internet lie primarily in developing value-adding
business relationships with suppliers, partners and customers.

  The term “extended enterprise” is used to denote a company that collaborates
with its suppliers, partners and customers to streamline business processes,
transcending traditional boundaries and enhancing mutual benefits in terms of
customer loyalty and retention, reduced procurement and inventory costs, fewer
shortages, improved order management and fulfillment as well as faster time to
market with more accurate offerings (products and services).

  Customers care about their total experience with the manufacturer and the retailer.
The experience is more persistent than the product. Therefore, manufacturers need
to brand the customer experience.


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Real-Time Business Intelligence

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The Evolution of E-Business 17

E-business
Business value

E-commerce
E-commerce dynamic content
displayed to a wide
number of customers
and business partners

buy, sell

Interactivity

email
faq
Web
Presence
‘’brochureware’’
one-directional
information flow

Time


The Evolution of Analysis / Business Intelligence 18

predictive models are built to
understand what will happen

discovery
Predictive Information

real-time
business trends are evaluated by personalization
analyzing data to report what & distribution
happened and why
Business value

verification
Historical Information

Time


The Convergence Between Business Intelligence and E-Business 19

delivering
individualized,
integrated intelligence
to information
consumers throughout
the business value
chain

REAL-TIME PERSONALISATION BUSINESS VALUE E-BUSINESS
& DISTRIBUTION CHAIN

DATA MINING E-COMMERCE

OLAP & STATISTICAL ANALYSIS INTERACTIVITY

QUERY & REPORTING CONTENT WEB PRESENCE


Turning Data into Knowledge 20

The BI/reporting application has become a part of enterprise infrastructure, and more focused on
information creation, management and delivery than heavy-duty analysis. The typical end-user is
someone whose primary interface is a Web browser. And they are as likely to work outside of the
organization as a customer or partner as they are to be an employee.


Major Trends in Business Intelligence 21

CURRENT STATE FUTURE STATE

REACTIVE PROACTIVE
historical orientation : what happened ? predictive, future orientation in addition to reactive

TIME DELAYED REAL-TIME
analysis happens after the fact using aggregated and analysis of detailed data while event is occurring in
detailed data addition to time-delayed

INTERNALLY FOCUSED INTERNAL + EXTERNAL FOCUS
small number of power users analysis aimed at covering the extended enterprise

STAND-ALONE & DISPARATE IN LINE, UNIFIED
little integration with operational systems analysis systems closely coupled with operational systems


Major Trends in Business Intelligence con’d 22



It’s becoming more and more practical to connect CRM activities and customer insight information with upstream operations in the
supply chain. That is, to seamlessly link the supply chain’s ‘generate demand’ activities with its ‘fulfill demand’ activities. This means
sharing transaction data among partners to help keep inventories low. But at another level, it typically entails connecting frontline
employees – those in the call centre, the sales force, etc. – with the right data in the supply chain. A frontline employee taking an
order from a customer must have visibility to updated inventory and production data in order to provide accurate delivery information
to customers asking about their orders. At the same time, network-enabled information sharing between supply chain partners, such
as a retailer and a manufacturer, can provide partners with insights into the customer that can help guide product development and
manufacturing. By combining the rich information, insights and relationship-building capabilities of CRM at the front end, and the
ability to create real-time electronic links between ‘generate demand’ and ‘fulfill demand’ activities, the supply chain can become
increasingly responsive.



Source : SPSS Rapid ROI Online Seminar, february 2003



1. Segmentation / Profiling
-  Descriptive analysis, e.g. decision trees
-  Predictive analysis, e.g. logistic regression
Operational
Systems
2. model creation

3. evaluation
Data
Warehouse

4. offer optimization

5. deployment, e.g.
call-center
recommandations



WEB presentation
real-time personalization and distribution :
. embedded predictive modeling : real-time recommandations
Enterprise
. performance measures (dashboards, scorecards) guide decision-making
Information
Portal

analysis & modeling
predictive modeling techniques enable value-added business analysis
data mining

data integration
a common data model
data warehousing
operational data store

transactions
SCM CRM transaction-level data is gathered from multiple sources
ERP



REQUIREMENTS FOR THE REAL-TIME ENTERPRISE

INTEGRATE ANALYZE ACT

  integrate enterprise   identify and   implement results into
and extra-enterprise evaluate operational systems
siloed applications opportunities and   build competitive
  data warehousing, risks advantage through
challenge
operational data   real-data data using real-time
store analysis, data analytics
mining

enabling enterprise application predictive business process
technology integration data analysis automation



A data warehouse is typically maintained by batch jobs that take periodic snapshots of operational
data and clean, transform and load the data into a warehouse solution. The latency gap inherent
to extracted data sources disconnects users from the operational sources.

Until real-time data is combined with historical information in the data warehouse, it lacks analytic
context. Historical data is static-frozen in time. The value of integrating real-time data with
historical data is that you can leverage the real-time ODS to achieve a consolidated up-to-the-
second view of a customer. And only by processing the consolidated data against relevant historical
data and business rules you gain the basis for meaningful and timely action. The synergy between
real-time and historical data, coupled with real-time delivery of personalized knowledge is the crux
of real-time analytics and the source of its business value.


Closed-Loop Analysis 31

achieve single view of customer
across all touchpoints and systems

personalize every customer
interaction in real-time

use analysis of customer information
to drive interactions


E Business Integration. Enabling the Real Time Enterprise

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