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Copyright © 2003 John Zipperer unless indicated otherwise.

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Forward Thinking
Balancing Your Short- and Long-Term Plans for Success

By John Zipperer

(01/01/03) There is no guarantee that you will get the most out of your investments in business technology, but intelligent planning will help a lot. In a recent Web seminar I moderated, Meta Group senior program director John Van Decker stressed the need for companies to be flexible in their forward planning, to be aware that the future contains many uncertainties that a company will have to deal with, and it can not just charge forward with an unchanging plan and hope to be successful.

Despite the impression you may get from some commentators, there is no single road to success; if there were, we would all know about it by now and we’d all follow it. But just take a look at the companies profiled in our cover story this issue. Writer Karen Bannan spoke with several companies that all deal with the same supply chain challenge. Yet each will—properly—follow its own path. We can hope they learn from other companies’ experiences, but naturally everything has to be tailored to their own circumstances. Case studies and best practices are good only in so far as they apply to your organization; none of them apply to every organization in every situation.

But that task of balancing short-term needs with a long-term view (that is also flexible) can be tricky, and it is not surprising that many good organizations hurt themselves in the long run due to inflexibility or poor planning.

I heard about one such company recently during a hike with some friends in the Silicon Valley hills. One of the hikers, a technology veteran with experience in enterprises in several countries, told me about a company that was so busy fixing current problems that it was needlessly creating additional problems for itself in the future.

He had lots of time to tell me his story, because the hike exacerbated a leg injury he had earlier incurred and that would eventually need surgery. So, as he hobbled slowly along the path, he told me about company executives ordering quick-fix approaches to technology problems without worrying about the future problems that were being created by the quick-fix approach.

It was a young health-care company, one that watched its cashflow very carefully—maybe too carefully. He warned the company, of course: “If we do it this way, we’ll have more work for ourselves in the future to undo it.” More work, and thus more expense.

What was perhaps most interesting—and disturbing to any student of corporate operation—was that the quick-fix, short-term approach was not the result of miscommunication in the company; it was the plan. The company did not want to deal with the expenses for long-term fixes at that moment; it did not want to get out ahead of revenue.

Finally, when my friend had finished his story, he limped toward his car and a heavy dose of ibuprofen—his quick fix for the pain, but a reminder of the surgery to come.

Driving Performance: Managed Supply Chain
Catalog Management Links Suppliers With Customers

By John Zipperer

(01/01/03) Placing bets on which segment of an enterprise will evolve with Internet technology has been a losing game for years. For one thing, the Internet—in one of its roles, that of an information distribution channel—was supposed to wipe out things like paper catalogs, newspapers, and magazines like the one you hold in your hands right now. But it has not been that simple. Instead, the new technology alters, but still coexists with much of the old.

For the past decade, all businesses and large organizations have been on a learning curve with networked-business technology. They have investigated and then sorted out the technology needed to understand business needs that have been defined in categories with labels such as customer relationship management, supply chain management, business intelligence, and on and on.

But many of those categories are intimately related to each other and their differentiations are disappearing. That’s one sign that Internet technology does change things after all, and for the better. Some of those category separations were artificial and waiting to be erased, such as the break that has existed for many between supply chain management and customer relationship management; one is really just the beginning and the other the end of the same process.

Catalog management is a topic that can only fit in one of those categories through determined effort to ignore its vital importance to the other. It involves up-to-date display (and maybe even configuration, depending on the company involved) of your wares, with accuracy and timeliness at odds with each other at times. It can involve customer ordering, though that may be intentionally kept a separate process; for example, this is something that pneumatics technology maker SMC Corp. employs, feeding online-catalog users into traditional sales channels due to international pricing complexity. Or it can focus on tying together a company’s many global divisions and markets for selling and analysis purposes.

The key for the company selecting a solution (or upgrading a current one) is to find a quality product that has the flexibility to allow it to conduct the practices it wants to, as well as not restrict it from adding future functionality as the company’s needs and plans change.

SMC’s Complexity Challenge
SMC almost sets itself up for complexity with its motto: “If we don’t have it, we’ll make it.” How can it handle the complexity it thereby makes for itself? With more than 8,900 products and more than 520,000 available variations, the company serves its customers in industries ranging from semiconductors to medical, and from automotive to energy.

SMC Corp. of America, based in Indianapolis, is a subsidiary of SMC Corp., a Japanese firm. The company has so many possible variations of its products because its equipment includes crucial parts such as heat exchangers, high-purity fittings, valves, vacuum technology, and actuators. Its customers use them to control temperature, fluids, motion, and more. It’s a wide range of critical uses for complicated needs, and its customers need to receive the specific equipment they need at the time they need it. That means SMC has to have the equipment available and visible to their customers.

Steve Hoffer, group leader of E-Tech at SMC, recognized the need to improve the process of finding and configuring products for the company’s customers when he worked in SMC’s engineering department. Customers were supplied with a basic CD-ROM that allowed them to search for a product, view a drawing of it, and see various options such as the different cylinders available. “We wanted to make it easy for our customers to use our products,” says Hoffer. “Before customers can use our products, they have to size the product, they have to configure a part number, they have to complete a CAD drawing of a machine they’re building, and incorporate our products and part numbers into that machine, both as a product and as billable material.” They had to navigate through SMC’s 8,900-product catalog and hope they got it right.

After canceling a previous project with a different vendor in February 1999 (Hoffer says his company realized during the process that the other vendor didn’t have the skills SMC needed), SMC turned to SolidWorks for its 3D CAD engine and to TechniCon for a configurable front end.

SolidWorks, a computer-aided design (CAD) product maker, had put out word through its reseller network that it wanted to find companies interested in a three-dimensional approach. Hoffer heard about SolidWorks’ interest, and he was intrigued. SolidWorks at that time didn’t have its 3D product—3DpartStream—“but they were headed in the same direction we were,” says Hoffer.

The eventual solution was an online catalog system known as E-Tech. With customer ease of use being the primary reason to use the SolidWorks system, SMC looked for return on its investment in terms of how many of its customers were actually using the new system. “The main things we’ve been tracking are number of downloads and number of transactions,” says Hoffer, noting that both measurements have been rising at healthy rates. As an added benefit, SMC can mine data from its online catalog visitors, learning information such as which products receive the largest number of downloads, which industry segments are represented among the visitors, and which other sites they came from.

But couldn’t that be called business intelligence of a sort? Yes, just another one of those bins that’s being merged with the others. And Hoffer says his company looks to do more of that in the future, trying to turn those visitors who accessed the site from general search engines into new and returning customers, as well as feeding reporting data to the sales force. “As leads are generated online, the sales force can follow up on those leads effectively,” says Hoffer.

Emerson’s Standardized Catalog
Emerson Process Management, a division of technology and engineering giant Emerson Electric Co., works with industries such as chemicals, energy, food and beverage, pharmaceuticals, and semiconductors to automate their production, processing, and distribution.

The company has more than 600 locations in more than 85 countries, and it wanted to standardize a number of items—tools, page layouts, activity statistics—and enable commerce and marketing campaigns across the entire corporation.

“We also wanted a catalog that we could replicate to Europe, Latin America, and Asia for direct deployment after translating to their local language,” says Mark J. Kraus, director of e-business at Emerson Process Management. To replace its online catalog of static HTML pages, Emerson bought an e-business suite from Click Commerce in June 2000; included in the suite was the catalog product. Click Commerce’s catalog offering includes features such as product selection and side-by-side comparisons, natural-language querying, personalization and segmentation, and the ability to handle complex and family-level item attributes.

The implementation stretched to a year, due to Emerson’s inclusion of process issues during the implementation. Along with the training (and Kraus recommends that companies get training that is specific to their application and product design), Kraus says that the multilingual capabilities his company needed were a challenge. “It sounds good, but isn’t easy,” he says.

Though adding an interface and a system with much more functionality (including the multiple language and product-based permissions) was a complicated matter, Emerson has measured its benefits in terms of an ability to deploy greater amounts of product information faster to more areas around the globe, and improved “time and resources required to implement or maintain product information online,” says Kraus.

Effective catalog management brings benefits like these to companies across the global supply chain.

News Analysis
Siebel’s Business-Process Driven Approach
By John Zipperer

(01/01/03) In a buyer’s market, the power in a commercial relationship by definition is weighted in the buyer’s favor. Though the change in results may not be immediately evident, enterprises large and small stand to gain from the continuing evolution of their vendors in ways that address pain points of price, quality, and ease of use. This change even can be seen in a company that is synonymous with the very idea of customer relationship management (CRM). The year 2002 was a big year for news about Siebel Systems—some positive, some negative. Company chairman and CEO Tom Siebel began 2002 being named “CEO of the Year” by IndustryWeek magazine and later collected another award from the Business Executives for National Security.

More significant was the alliance he made in October to support Microsoft’s .NET Web services initiative—a move that was seen by some as a possible attempt to stave off Microsoft’s presence as a CRM competitor.

Siebel’s company also faced the spotlight as a result of criticism of its customer satisfaction results, with a research firm saying it found that a sampling of Siebel’s own reference customers were still largely unable to report positive ROI on their Siebel investments. In its comment on the company in the wake of that report, The Economist wrote that Siebel, “a firm that could do no wrong even in the first year of the tech downturn, now seems increasingly out of tune with the new-found pragmatism of IT buyers.”

But is it? The truth may be that the company that once had a laser focus on CRM, may be in the early stages of becoming more process oriented, which is a huge adaptation to the way businesses are demanding their software fit into strategies—rather than have the strategies fit into available software offerings.

In 2003, customers of the 10-year-old company will watch to see how Siebel adapts to its needs and to the market, in which other companies such as Oracle and SAP are moving in on Siebel’s core CRM area. Near the end of 2002, Siebel began shipping a package product called Universal Application Network (UAN), designed to make integration of disparate IT systems easier. UAN has three components: a best practices business process library, design tools for business processes, and an integration server. A number of companies immediately announced support for UAN, including SeeBeyond, webMethods, and Ascential Software.

“Siebel implementations are pretty extensive and require a lot of resources and they’re looking for a way to simplify the problem, and their customers want that,” says Reed Henry, senior vice president of services, support, and alliances for SeeBeyond. His company recently announced the ability of its SeeBeyond Business Integration Suite to run key UAN business processes.

Siebel’s senior vice president of technology and CTO, Ed Abbo, identifies reducing complexity as the big benefit UAN can bring to enterprises trying to integrate systems. “The fundamental approach is that if you look at the way systems are integrated today, it’s point-to-point; each system is integrated with each other system,” he says. “Our customers have hundreds or thousands of systems, and the math becomes astronomical. What customers are trying to do with customer management is basically support processes across their various divisions.”

Based on results with their early UAN customers, Abbo says Siebel has found “that even if you are integrating a small number of systems, the cost savings can be up to 60 percent compared to a point-to-point approach.” He says companies are able to accelerate the projects and deliver them with fewer people.

So Siebel is an application provider that is joining the shift from application-specific approaches to a business-process driven approach. “Application providers in the past have basically provided companies with screens and features,” says Abbo, “and what Siebel is doing is taking a leadership position and talking in the same language that companies are talking and asking [us], ‘Help us implement best practices in processes that are across applications.’”

For Siebel partner webMethods, UAN was a welcome opportunity to push the Web services technology that it champions. UAN’s role in addressing enterprises’ move to a process-oriented approach in their technology use is also important, notes webMethods senior vice president of business technologies Jim Mackay, and UAN is unlikely to be the last word on the subject. “I think that someday there will be a standard around describing a business process in a neutral language that can then be implemented on a set of tools.”

He’s quick to point out that not everything can be automated in the integration game, but UAN and efforts of its type can handle the majority of the work. “The real benefit that you can get from this is that if you do it on top of a consistent infrastructure, you’re along the road to having a robust integration platform,” he says. And you can build on top of that platform in the future.