New IT Portfolio for Today’s Supply Chain

Abstract

The 90’s were an era of major systems overhaul and investments. Y2K was upon us as well as significant changes in technology. The word integration took on a business meaning, as in processes that might talk to each other in the enterprise…

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The 90’s were an era of major systems overhaul and investments. Y2K was upon us as well as significant changes in technology. The word integration took on a business meaning, as in processes that might talk to each other in the enterprise. Client server, allowing significant power at the desktop, added to the excitement. These fuels-Y2K, client server, downsizing and internal business process integration fueled a technology race that powered the growth of some of the largest technology firms-both software and hardware.

Firms could now get a taste of “Rolls Royce-type” functionality that they could not have mobilized and justified to buy in the past, with the major ROI driver of conversion of billions of lines of non-compliant Y2K code. A “Rolls-Royce” system portfolio was a bargain price by comparison to converting millions of lines of code. Major enterprise portfolio maps (as in figure 1) were being added to or replaced.

Lurking and smirking in the back of all this, though, was the knowledge, that we would never get it all implemented and integrated before another technology wave of some sort would make us chase the next killer app. Enter the Internet. This added significantly more layers of integrations and participants into the IT mess. Closed architectures like ERP were having trouble talking to the web, so we had to buy more stuff. Or kindly, the VC’s bought it for us-portals and exchanges abounded. But in spite of all the huge spending, and added functionality, many firms IT needs are still unfulfilled. A recent Forrester Research study found that over one third of business executives are unhappy with their IT shops.

A Fresh Look

Through all the tumult the more insightful enterprises faced up to some significant realities. That the major wealth of the enterprise was based on more intangible concepts-patents, research, brand and information. And the ability to see, touch use transform information was the real issue. The enterprises that are most successful today have already pursued data-cleaning it, understanding it-transforming and when they chose to, sharing it with their wealth-creating trading partners. They also exercised more skepticism in buying software. The debate about whose “vault” (ERP system) to store it in, though it looked quite religious to some (and made some people extremely wealthy), was a fairly ho hum event (1). What was really important-and these peak players knew it-was getting the data housed, cleaned and understood. They also understood, that finding a vault that was easy to open-with less latency, an open architecture was what was really important. The express train vs. the local on the information rail line is critical to global success.

We have written extensively about the so-called virtual supply chain. But most businesses today, whether they call it outsourcing or virtual, rely extensively on trading partners-resellers, channel partners, retailers, and agents to performance significant tasks on the behalf of their enterprise. The web has opened a whole world of business and technology has made us capable of reaching it.

The speed by which we are being exposed to new technologies and the facileness that some enterprises are learning to exploit them is fascinating. The latest SmallSmartFast so-called killer apps-RFID (Radio Frequency Identification) in supply chain and EIM (Enterprise Instant Messaging), and web services based Network SCM solutions are such examples that close the loop on the real-time revolutions that we have been engaged in the Supply Chain.

Give up Integration-
The Network Supply Chain Solution

With the advent of pervasive technologies, both web and wireless, we no longer need to ‘buy’ and integrate all the technologies that our enterprise will use. That should be interesting news to those dissatisfied business managers in the Forrester report. But beyond that, it is already an outmoded concept for many applications to be hassling over the decades old debates about integration. I can now be activated into a supply network and gain visibility up and down the chain to demand and supply, or have orders wirelessly transmitted to me at the warehouse for fulfillment (2) .

I can track down the buyer through event driven messaging to alert them to changes in prices, orders etc. I can find that one buyer, who is the expert on that commodity and have an instant messaging dialogue with her and change purchases orders, production, etc.

Source: ChainLink Research
Figure – 3

Microsoft is so bullish on the instant messaging paradigm that they are making statements like, “it is the next Internet.” We are a bit less bullish, but fundamentally, when we look at the prevailing MO (modus operendus) for business communication and interaction, we do see humans reverting from S2S (system to system) to P2P- (peer to peer or person to person) at the first sign of trouble. ChainLink study determined that the closer a transaction get to the order execution date, the rate of human interactions goes up Like 80% of all orders have a significant p2p component. Line56 had some interesting stats on this, as well. Approximately 40% of all transactions generate a phone call-that MO-p2p is with us.

EIM moves beyond the Yahoo and AOL approach and adds relevance, context and presence. These mean, its an information system that goes and gets you-presence-and brings along the relevant data for discussion-orders, items etc. EIM should be a fabulous bargain for the enterprise, considering that most of the wireless devices in use today in business are actually purchased by the individual, who then bring them to work to be used in the work place.

So on-boarding in the networked solution dispenses with layers of complexity-yours and your trading partners and sets you on the path to dealing with making good links in the chain.

Putting it all together

Source: ChainLink Research
Figure – 4

Consistently, in our discussion groups with users, there was significant confusion about the next generation of technologies and how they applied to the problems at hand. Clearly, there is a lot more to say about the subject. So, we will. We have some excellent case studies coming up over the next few months that will demonstrate how various firms deployed and gained significant value from these next generation solutions. But in the mean time, we leave you with the future portfolio picture.

The IT architecture-from the earth to the sky. From the physical layer, real-time data

collection on the plant floor, in the warehouse, on the truck, through the blue sky-wireless world, through routing hubs and onto the system or person of choice.


(1) Interestingly both Dell and Wal-Mart do not use full boat ERP solutions from the major 4 vendors-SAP, Oracle, Peoplesoft and JD Edwards

(2) But, for world-class process capabilities like planning and CRM, it behooves the business executive to confront the IT exec on what is best for the business.

 

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