Chapter Five

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 www.ebstrategy.com

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 www.ebstrategy.com

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 www.ebstrategy.com

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 www.ebstrategy.com

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 www.ebstrategy.com

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 www.ebstrategy.com

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 www.ebstrategy.com

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 www.ebstrategy.com

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 • 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 • 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 • Internally focused; reactive • Structured around technical • Chief role in providing back • Emphasis on technology skills www.ebstrategy.com

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 www.ebstrategy.com

12. l Business model restructuring l Structural reorganizing l The customer centric company l Many new channels Multiple products l Integrated customer information l Integration of many legacy systems l Process integration 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 System-related barriers Existing Legacy Systems 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 Slows down change and often impossible to change www.ebstrategy.com

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) www.ebstrategy.com

14. 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 CRM Apps: Charles Schwab www.ebstrategy.com

15. CRM Apps: Charles Schwab • 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 Sales Customer Relationship Management Service Marketing www.ebstrategy.com

16. 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 ERP Apps: Nestle’ www.ebstrategy.com

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

18. 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 SCM Apps: Visteon www.ebstrategy.com

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 www.ebstrategy.com

20. 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 Selling Chain Management Apps: Whirlpool www.ebstrategy.com

21. Selling Chain Management Apps: Whirlpool • 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 Product Customization Pricing & Contract Management Selling-Chain Management Quote & Proposal Generation Commission Management Promotion Management www.ebstrategy.com

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 Service Procurement (courier, catering, contract workers) E-Procurement Applications Business Travel Procurement Computer Equipment/Software/Networking MRO Procurement www.ebstrategy.com

23. 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 EAI Apps: Nortel Networks www.ebstrategy.com

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) Data Capture & Datawarehousing Business Intelligence Applications Decision Support Systems Push-Based Delivery Systems Wireless/Mobile Communications www.ebstrategy.com

25. E-Business Architecture = Integrated App Frameworks Partners, Suppliers, Distributors Stakeholders Supply Chain Management EM P L O Y E E S Logistics & Warehousing Distribution Manufacturing Enterprise Resource Planning (ERP) Admin. ControlHRMS / e-Procurement Finance/Accounting/Auditing Management Control Business Intelligence Enterprise Application Integration Customer Service Customer Relationship Management (CRM) Field Sales Marketing Selling Chain Management Customers, Resellers www.ebstrategy.com

26. E-Business Strategies, Inc. www.ebstrategy.com contact@ebstrategy.com 678-339-1236 x201 Fax - 678-339-9793