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

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

www.ebstrategy.com- 2 -© e-Business Strategies, Inc.

The PremiseThe 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


The VisionThe 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


The ChallengeThe 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


The ImplicationThe 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


In This Chapter …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


Trends Driving e-Business ArchitectureTrends 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


New Customer-Care ObjectivesNew 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


New Competitive ConditionsNew 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


Fast Moving CompetitorsFast Moving Competitors

Established firms forced to scrutinize existing app architecture

– M&As– Compete with new entrants

Norwest MortgageTraditional 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


Problems Caused by Lack of IntegrationProblems 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


Contd …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’sl Mainframe basedl Developed in Cobol, Assemblerl Not real timel Missing documentationl No integrationl Lacking customer focus

Existing Legacy Systems

l Business model restructuring

l The customer centric company

l Many new channelsMultiple products

l Integrated customer information

l Integration of many legacy systems

l Process integration

l Structural reorganizing

Slows down change and often impossible

to change

System-related barriers


New Era of Cross-Functional Integrated New Era of Cross-Functional Integrated AppsApps

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)


CRM Apps: Charles SchwabCRM 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


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 SchwabCRM Apps: Charles Schwab

Sales

Service

Marketing

Customer Relationship Management


ERP Apps: Nestle’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


ERP Apps: Nestle’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


SCM Apps: VisteonSCM 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


SCM Apps: VisteonSCM 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


Selling Chain Management Apps: WhirlpoolSelling 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


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: WhirlpoolSelling Chain Management Apps: Whirlpool

Product Customization

Quote & Proposal

Generation

Selling-Chain

Management

Commission Management

Promotion Management

Pricing & Contract

Management


e-Procurement Systems Apps: CIBCe-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/Soft

ware/Networking

MRO Procurement

Service Procurement (courier, catering, contract workers)


EAI Apps: Nortel NetworksEAI 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


BI, DSS, and KM Apps: Nortel NetworksBI, 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


E-Business Architecture = Integrated App E-Business Architecture = Integrated App FrameworksFrameworks

Stakeholders

Customers, Resellers

Selling Chain Management

EMPLOYEES

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Supply Chain Management Supply Chain Management

Business IntelligenceBusiness

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Enterprise Application Integration

Enterprise Application Integration

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E-Business E-Business Strategies, Inc.Strategies, Inc.

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[email protected]@ebstrategy.com

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