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Forward Thinking
Investment Value and the Future of Your Business
By John Zipperer

(02/01/03) No one will be surprised to hear that organizations of all sizes focus on obtaining certain value from their technology investments. You know it—you tell us when we meet with you at conferences, in interviews, and when you write letters—the press knows it, and technology vendors know it. In a recent casual conversation with executives from a major operating system company, it took less than five minutes for them to mention the change people have seen companies make from a rapid accumulation of technology to assuming hard-nosed attitudes about what value that technology will actually bring.

The technology producers are definitely responding, too, which can be seen both in their movement toward more modular suites of products, as well as their public statements acknowledging this fact. They are also focusing on value in their marketing campaigns, aggressively reaching out to enterprises with plans designed to meet the needs of the level-headed executive of today. Writer Karen Bannan explores this new climate in our feature this month, showing you how to take advantage of some deals that are on the table.

A large part of that shift from heavy spending to cautious spending has been a reluctance—even an anathema—to accept pie-in-the-sky promises about the benefits of expensive new technologies. That caution is welcome, but, as John Hagel III points out in his new book, Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services (Harvard Business School Press, 2002), there is a technology that is offering great promises with little investment.

Hagel believes Web services is that technology, and he tells me that the breadth of its adoption is not widely recognized. “I think actually there are a lot more early adopters than we are led to believe,” he says. He sees two different, but parallel, tracks within the same enterprises. One track is run by the IT department, “and I’d characterize that as very tentative, very experimental type of prototype activities to understand the technology and its capabilities. The second track is being led by non-technology executives, and that track is actually deploying the technology in a business environment.” The best news of all for the business executive demanding real value for a low-risk investment is that Web services works with existing applications. So, though a lot of the attention Web services has attracted so far has centered on its role in application development, “the real near-term implementation of this technology is much more around connections of existing applications instead of new application development,” says Hagel.

\Hagel is right to point out that organizations will need to adapt their structures in some ways to deal with the various effects of the technology, on everything from security and trust to information flow and control. “Unless they confront and deal with these challenges,” he says, “companies will experience only marginal near-term performance improvement from this new generation of technology.” And, because we’re all interested in getting the most out of our technology investments, we don’t want that to happen, do we?

UpFront: News Analysis
Does a Security Flaw Make You Unpatriotic?
By John Zipperer

(02/01/03) The White House placed corporate America on notice last year. It said that it was potentially part of the national information security problem, and the President’s staff urged corporate America also to be part of the solution. But only recently have these responsibilities become clear, and what was easier to accept when it was just rhetoric at conferences is now becoming legislation. Will the White House bully pulpit be enough to get companies to do what it wants?

While the executive and legislative branches of the federal government wrestled for months over the eventually successful launch of a large homeland security department, the President’s top information security advisor, Richard Clarke, spoke to business groups seeking to enlist their help.

Clarke, who heads up the cybersecurity efforts in the National Security Council, raised more than a few eyebrows this past summer when he spoke to a gathering of computer hackers and asked for their help in finding software vulnerabilities that might be exploited by the nation’s enemies.

Though many government and private organizations use “tiger teams” of computer professionals to search for flaws in their systems, in some people’s eyes, Clarke’s suggestion was uncomfortably close to asking the barbarians to guard the doors of the Roman Senate. But others are eager to keep the relationship between government and business alive because of the belief that the government’s actions, as suggested in a recent Wall Street Journal article, “reflect a growing sense that the government lacks the resources or technical know-how to keep pace with Internet outlaws of all stripes.” The emerging partnership between private business and government is nonetheless taking shape, despite questions about details. In essence, each side is trying to figure out how it can help, and meetings between them can prove valuable for the future, says Chris Prosise, vice president of professional services at information security company Foundstone and an adjunct professor at Carnegie Mellon University.

“I think that’s a good place to start, with a voluntary and cooperative partnership where both sides feel comfortable,” says Prosise. “After you have an incident where it requires cooperation with law enforcement, it’s really too late—if you don’t know what your government can provide for you or how they can help you,” he says.

Prosise, who also coauthored Incident Response: Investigating Computer Crime (McGraw-Hill Osborne Media, 2001), says enterprises are basically in an “arms race” with attackers, and this requires continued vigilance and education. In 2003, he expects an increasing number of vulnerabilities to surface, followed by software vendors working hard to eliminate the vulnerabilities in their products. He believes that companies will pay attention to reducing the time delay between when the vulnerability is known and when a fix is provided. Carey Nachenberg, chief architect at Symantec’s research laboratories, says that the sources of the threats are changing. Whereas the typical creator of viruses and worms has tended to be in the 14- to 24-year-old bracket, the creator of the (possibly near) future will be professional and older. “Organized crime and terrorist organizations will be the ones creating these threats and [they] will be targeting them,” Nachenberg says.

The continued expansion of instant messaging and other collaboration technologies, as well as Web services, add to the continued determination by enterprise executives to be aware of ever-growing vulnerabilities, as well as each organization’s role—patriotic or otherwise—to prevent its systems from being the weak link.

Nachenberg says that “all software vendors that make software that communicates over the Internet and may be available to hackers” need to make sure their products are robust enough to be attack-resistant. And enterprises need to consistently patch their software and keep their systems updated—extending to their work-at-home employees, of course. Just two of the latest security vendors to attract enterprises’ attention are T & G2 and Sourcefire Inc. T & G2, which sells its Biometric ID SecureTime system, says it has received an increasing number of requests for help from companies worried about the access security of their domestic and foreign offices. Sourcefire announced its intrusion-management system, which both detects unauthorized intrusion into a company’s systems and manages the data itself.

Best of all, there is reason to believe that the need for cost savings does not have to be at variance with the need for heightened security. A study by Gartner Consulting suggests that by automating the identity and access management (IAM) process, companies can realize large savings, mostly in the form of reduced headcount and productivity gains. The study says that an enterprise with 10,000 employees that puts in an automated provisioning solution could achieve an ROI of nearly 300 percent, along with savings of $3.5 million, over three years. Best of all for large organizations, the savings increase as the size of the organization increases.

Driving Performance: Managed Supply Chain
Adding Flexibility to Planning
By John Zipperer

(02/01/03) It all comes down to flexibility. supply chain planning is analogous to building a moving wall out of blocks—constant adjustments are needed to deal with changes in a number of factors, such as substituting different components for each other, and the shape of the wall itself changing from time to time. It is not something that can be built once and left to stand unchanged. Yes, it’s a weird analogy, but it’s more accurate than the inflexible models of old, in which supply chain information was transferred and handled more slowly, and there weren’t enough tools available to handle the supply chain manager’s need for data, speed, and visibility.

With supply chains, those different elements include details such as how and when to ship, which warehouses to use, how much inventory to keep on hand, and much more. The ability to keep track of the necessary factors, and make changes in an efficient and timely manner, is therefore a critical function of any complete supply chain suite if the wall of blocks is to remain intact.

The tools do exist today. SAP AG has continued to build on the advanced planning and optimization aspect of its mySAP Supply Chain Management solution, targeting industry verticals such as automotive, pharmaceuticals, energy, and high technology. i2 Technologies Inc. teams up with IBM’s services arm to deliver supply chain planning products such as the i2 Enterprise Project Planner (for scheduling projects) or the i2 Factory Planner, which integrates into the Project Planner and synchronizes factory production schedules and plans. Prescient Systems bills itself as the low total-cost-of-ownership planning solution, with its Prescient Xei suite targeting the renewed focus on low entry-cost and early returns on investment. These products replace the world of spreadsheets, and in the process are cutting planning times and inventories to new lows.

Defining a Supply Chain Strategy
Defining a company’s supply chain can be difficult in some cases, but for Camp Hill, Penn.-based Arnold Logistics LLC, its actual role is to be a critical part of the supply chain of its customers. Arnold, whose first customer was IBM Corp. back in 1976, prides itself on never having lost a single customer due to performance issues. Today, it offers the full range of services, including fulfillment, packaging, call center, reverse logistics, direct mail, and transportation. It ships more than 50,000 orders every day from a series of 20 facilities.

Though 2002 started out slow in terms of attracting new customers, in the second half of the year, Arnold received an increased amount of RFQs. That was easier for Arnold to handle, thanks to its October 2002 adoption of a supply chain planning product from INSIGHT Inc., called SAILS 21. According to Arnold Logistics CEO Doug Enck, SAILS 21 has been invaluable in allowing his company to model supply chain solutions for potential customers when answering their RFQs.

At the heart of SAILS 21 is its proprietary engine for optimization, called the X-System, which helps it handle the complex issues of supply chain planning and adaptation. It’s more advanced than Arnold’s previous system, which was Access databases and spreadsheets—a labor-intensive process involving keying in rates and miles.

“We don’t feel it was as perfect of a science as we’re getting with SAILS,” explains Enck of its previous methods. “When you go in with a client, you want to be able to support your presentation. You have to have the support: here are the [inbound] lanes, here are the outbound lanes, and the volumes. The accuracy of these reviews is totally dependent on the accuracy and completeness of the information the client provides, of course.”

Enck says SAILS 21 is user friendly; though engineers use it at his company, he says a technical background is not required. During the implementation of the SAILS product, Arnold sent an engineer for a week’s training at INSIGHT. “It was good timing,” he says, “because we were in the middle of a supply chain review for one of our clients, and the day he came back from training we put him to work on that presentation.”
As an example, he describes a hypothetical client that might come on board, one with manufacturing sites in the midwest, southwest, and northeast, with outbound shipments going to perhaps 90 or 100 destinations and about 40 percent of the volume going via rail.

“So you are taking rail rates, inbound truck rates, and saying, ‘Where can I get synergy on the inbound? Where do I locate?’” Enck says. Arnold’s users load the data—including elements such as inventory-carrying cost—into the system and model it to come up with a couple solutions. “You can take that to the client or potential client and say, ‘Here’s what we recommend, and here are a couple other scenarios.’”

Though consultants or some other companies might look for revenue from the use of SAILS 21, Enck says his company uses it as a sales and client-retention tool, and he is convinced that it gives his company an edge over competitors. “If the software package allows me to land a $4 million account, it’s paid for itself many times,” Enck says. “We think the cost of the software and the cost to operate it is a no-brainer.”

GAF Coordinates Its Logistics
Just because something is a no-brainer doesn’t mean that it is easy. GAF Materials Corp. is a Wayne, N.J.-based manufacturer of roofing materials for residential and commercial buildings. It has 26 manufacturing facilities across the nation, each one both making and shipping its products. The task of coordinating the forecasting of sales and scheduling of manufacturing falls to the company’s logistics department, which is headed up by Matt Tarczynski. As executive director of logistics at GAF, he oversees the operations that ship about 25,000 trucks of products each month. A two-decade veteran of GAF, Tarczynski says the company simply outgrew its spreadsheet-based way of handling its planning and scheduling.

“I realized we needed to do something different,” he says. “We went off and looked for ERP systems for about six months. I wanted an advance-planning system, because I believed there was money [that could be removed] from the process.” But GAF was only finding partial solutions, such as a system that could produce the sales forecast but could not get it integrated into the production plants. “I had a piece of the puzzle, but I couldn’t complete it,” he says.

Then, in May 2000, GAF chose Manugistics’ Manufacturing Planning and Scheduling solution. GAF met its goal to run the system in 14 of its manufacturing plants within six months. Tarczynski says the implementation was fairly straightforward, particularly setting up the forecasting and capacity-planning features.

“The thing that was tricky, and the thing I felt most reluctant about, was going out to the plants and putting in a piece of software that really scheduled the machine for them,” he recalls. But his fears that the non-technology trained employees might have trouble with the new system were unnecessary. “I thought that would be a challenge, but in fact it was very simple,” he says.

The company says it had single-year savings of $4 million, and it projects to save $16 million over five years. The savings came from a variety of areas, including a one-time reduction in finished-product inventory, transportation-related savings, reduced transfer and shuttle freight, reduction in outside warehouses, and a reduction in raw-material inventories.

All of those savings add up, and they help make the decision to find a planning-and-scheduling solution an easy decision. Perhaps not a no-brainer, but a smart decision nonetheless.

The REAL Real-Time Enterprise
Call It Real Time, Zero Latency, or Just Hyper Efficiency: Enterprises Are Building Their Futures Piece by Piece

By John Zipperer

(03/01/03) When Derek Smith, a partner with Paul, Hastings, Janofsky & Walker LLP, joined the law firm years ago, everyone had standalone personal computers. Eventually there was a network, and later a document management system. “I remember when we used to have to set up a special funky connection to send e-mail directly to a client,” he laughs.

Today, in addition to his legal practice focusing on real estate, he chairs the firm’s technology committee. “It’s now literally a 24-by-7 thing,” Smith says. “Technology has changed and enabled us to serve our clients better. One of the things we try to do at Paul Hastings is equip our attorneys so that wherever or whenever they are, they can access their clients.” Speed is a competitive advantage for Paul Hastings, a global law firm that is proud of its network of 800 attorneys and their ability to share and access information. To reach the goal of giving its attorneys ubiquitous access to information, the firm uses everything from back-end applications powered by Dell servers to Citrix remote-access technology to Blackberry PDAs. “That’s the simplest access immediately available to our attorneys,” says Stova Wong, Paul Hastings’ CIO, about the PDAs. In another important layer, he says, is the company’s unified messaging system, which lets employees easily access faxes, e-mail, or voice-mail.

But Paul Hastings isn’t finished yet. It has plans to tackle knowledge management, a result of the need for storage and rapid access of vast amounts of documents and countless other data. Like any organization, Paul Hastings knows that the real-time enterprise is not something implemented at once; it is built bit by bit, year after year. The benefits are reduced costs, increased efficiency, better service to customers, reduced errors, and more. And in reaching for those benefits, companies are only doing what they can afford today, making sure each of their investments gets them one step closer to the goal.

Enabling Technologies
How are companies building the road map to take them there? To achieve real-time capability, a lot of systems, applications, and processes are forced to work together, and this is reflected in vendor offerings. Just as you would be hard pressed to find someone hawking an e-mail program today like the non-Internet one Smith and everyone else used a decade ago, “real-time” capability is a key feature promised by many technologies purchased for use throughout enterprises.

For example, Relicore Clarity is a product that allows companies to quickly view their networks, what’s connected to them, what the dependencies are, and track changes in real time. iSpheres offers a solution for getting rid of the latency in searching for information in complex systems—such as a mutual fund company trying to liberate its managers from manually searching financial reports for exceptions. Verano’s Performux and Secure SCADA products connect production applications with ERP systems. Its focuses on bringing real-time enterprise information to floor managers of production plants, as well as the reverse trip from the plant to the business managers.

Another company focusing on data growth is OuterBay and its Application Data Management (ADM) software infrastructure. With a real-time enterprise, “you’ve consolidated data in a single instance to allow global users to get at the data,” says OuterBay CEO Michael Howard. “That’s why people like Scott McNealy and Larry Ellison and others are saying you have to put your data in one place. If it’s all fractured and distributed, it’s much harder to have a real-time enterprise.”

There are many interpretations of real time. For example, not everyone agrees that centralization of data is optimal or even necessary. Data replication can be a solution, if the latency is eliminated. That’s the approach of data-replication company PeerDirect, which delivers data nearer to the users in distributed enterprises, thereby improving performance. Britt Johnston, PeerDirect’s CTO, says high-capacity disk drives allow individuals within an enterprise to operate with much more information stored locally, and PeerDirect’s technology lets companies slice data to send only useful parts to the end user. Johnston says PeerDirect’s approach isn’t for those who need “instantaneous, precisely by-the-minute transaction data to be updated around the world, ... but how many uses is that for?”

“You can talk about the real-time enterprise and everyone agrees from a 50,000-foot level that that sounds like nirvana, right?” says Fred Dillman, vice president of technology and architecture for global industries at Unisys. That may be the goal for companies trying to service customers faster and drive down costs. “But where we really see that customers get excited about doing something with the concept right away is around the whole idea of managing change and the questions they have around the adaptability of their business model.”

Peter Fingar, author of the forthcoming book The Real-Time Enterprise: Powering Profits with Process Automation, agrees that the devil is in the details. He sees the core issue as what the enterprise does to achieve real time and how it affects its very approach to its business structure—for Fingar, the answer is business process management (see “Integrated Value Chains,” Internet World, July 2002, p. 25).

“I have a bit of an ambivalent reaction to the concept of real-time enterprises,” admits John Hagel III, author of Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services. He says that at one level, it’s targeting a real need to have more-timely access to information and an ability to respond to events in the marketplace. “But real time is a very high hurdle to put on the enterprise. In all areas of business activity, do we really need real-time response? The challenge initially is to be very selective about what information really has value on a real-time basis, and focus on those. In many respects, some of the more enthusiastic proponents of real-time enterprises are really talking about transparency of all information on a real-time basis. But in the foreseeable future, I think we need to go for visibility—what actions, what information, do I need visibility on in a real-time basis—and focus on that.

“In that context, Web services has a significant role to play,” Hagel adds. He says that a key challenge to reducing the data-access time “is to create more effective connections between organizations and across enterprises so you can understand what your business partners are experiencing and what you’re experiencing internally.”

Web services is key to that, agrees Rajiv Gupta, CEO of Confluent Software, whose CORE product is a Web services platform for real-time data access. “Web services by themselves are not the answer. Using Web services in an efficient way is the most effective way of getting a real-time enterprise. But it’s not like you can sprinkle some Web services pixie dust and you have a real-time enterprise.”

Speeding up Data Access
Too bad it’s not that simple. Financial services giant ING manages more than 50 million private, corporate, and institutional accounts for clients in 65 countries. It stresses the ability of its various channels—Internet, call centers, intermediaries, and branches—to deliver data to customers. Handling data within the company has long been a priority, but it needed to deal with rapid integration and use of information it didn’t control if it wanted to give its customers a big efficiency boost.

An Informatica user since 1999, ING adopted the real-time capabilities of Informatica’s PowerCenter in 2001 for building new projects that would use information assets from other organizations.

For example, when employees change companies, their retirement plans may move from one financial institution to another. If their 401K plans move to ING, ING needs to get the customers’ data quickly, even if the former institution is slow to share it. The manual process of getting the information and making it usable to ING and accessible to the customer took up 15 valuable days. “If we take 15 days, the customer loses the opportunity to do fund transfers,” says Babu Kuttala, ING’s director of information management. “We used Informatica to create some reformatting rules, so the minute we get the file from these other companies, we use Informatica to load this data in real time. We have reduced 80 percent of the process time.”

ING also used PowerCenter to integrate systems from a series of acquisitions. Kuttala says more than 100 systems needed integration, bringing together about three terabytes of data with real-time capability. And the company continues, focusing on about 100 batch-oriented data systems, a project that will result in a central data repository where users access the data and get one view of each customer.

Kuttala says ING considers soberly which projects need real-time capabilities. “Most people would like to see their information in real time,” he says. “You don’t much worry about your address change today or tomorrow, but the asset value in your 401K is important.”

Fingar agrees that “actionable information” is the key to real-time success. “Real time doesn’t just mean fast, because you do that already,” he says. Instead, the challenge is getting actionable information, and as ING found, that data is not necessarily all within your enterprise. “The ability to synchronize information from among multiple companies that are all triggered around the same business process—that’s what the new meaning of the term real-time enterprise is all about,” he says.

Greg Battas, chief architect for Hewlett-Packard’s Zero Latency Enterprise initiative, points to a recent internal project in HP’s supply chain as an example of complexity. “Everyone does supply chain integration, but they typically mean hooking up your suppliers to your inventories and so on. But what we have is multiple instances of SAP [within the same company]. The challenge is that they all have a slice of the information, so when you put in an order, it goes into a number of different systems. We went in and measured all the different messages that go between the different systems.” Using those and some other resources, HP modeled the data process, inventorying the data elements and who needs them.

Similarly, Unisys takes a planning approach to its clients implementing real-time programs. It creates what it calls blueprints, taking one area of a company—such as the life claims process of an insurance company—breaking it apart, looking at how each change and technology affects the business model, and how all the costs affect each other. The question, then, is where to make the effort.

Selling Your Ease of Doing Business
For some companies—perhaps on the smaller size—the “where” question is answered pretty broadly. Ontario-based Davis Controls distributes and performs service and support for the instrumentation and controls market across Canada. It also runs a sister company called Lubrication Engineers of Canada. In both cases, it wanted to make it easier for its customers to interact with it, get information whenever they needed it, and tie together front-end systems with back-end ERP systems.

Its response was a portal approach, in which employees, customers, partners, or those seeking product information can log in. For employees, the system—based on Exact Software’s ERP and E-Synergy technologies—provides a Web-based communications suite for tracking, sharing, and publishing communications. For suppliers and partners, the system is a self-service tool to feed information directly into Davis’ ERP system. Customers can log in to see their payment history, pricing, inventory status, purchases, and credits. “Having the front office and the back office integrated is a really handy sales tool,” says Neil Montgomery, president of Davis Controls.

“The reason we started all of this was because we’re in the high-tech instrumentation business, and it’s pretty impossible to differentiate ourselves based on product anymore,” says Montgomery. “We sell instruments that—give or take the odd subtle difference—are pretty much similar to what everyone else is selling. So we had to differentiate ourselves on how we’re selling. So we compete on the ease of doing business with us, and we’ve found that people are willing to pay more for this ease of business.”

But beating potential competitors is more important than beating existing competitors. People are eager to cut out the middle man—the Davis Controls of the world—and deal directly. “As a distributor, sitting in the middle between the customers and the supplier, our customers will try to go around us if they can cut us and the cost out of it,” says Montgomery. So adding real-time abilities “gives us an opportunity to stay in the middle with something that is perceived as having value for both ends of the supply chain.” In the future, that means he will try to beat suppliers by offering telephony options for delivering engineer support to his customers, so when those suppliers also offer telephony, Davis’ customers will be less likely to jump ship.

Faster Data, More Study, Better Results
Real-time involves more than just accessing data; it involves getting it to the right person, and having that person know what to do with live, hot data. “All of us as consumers understand pretty intuitively what it’s like when we call a company to ask a question or for service and the information we need is not available,” says Kim Weins, vice president of CRM product strategy for PeopleSoft. “It’s not just what is the data, but giving me more information about where I am, helping me interpret the data and synthesize the data, and helping me take action on the data by alerting me or even automating that reaction.”

At Minneapolis-based Ceridian, a human resources services firm, Mike Varecka wanted to speed up financials reporting and reduce spreadsheet use. Varecka, Ceridian’s director of finance, says that when it updated its financial systems to Oracle Financials two years ago, Ceridian looked for a separate budgeting and forecasting solution and chose one from Adaytum (recently acquired by Cognos).

“What we’re trying to do is take the compromises out of our processes that are the result of not having adequate tools and technology in place,” Varecka says. “When we were spreadsheet-reliant, we would take pretty much a full day to load the data into each of those spreadsheets, then we would send it out to people in e-mail, rely on people to fill it out and send it back to us. Once we got it back it would take two to three days to input all of that data and make sure nobody had put in bad data.” He says the setup was too complicated for the company to even do all the forecasts every month when it was using spreadsheets. Now, “the data load is done in a matter of hours, and we still send an e-mail out, but this time it’s just an e-mail saying ‘the system’s ready.’”

Bruce Meyers, vice president at Cap Gemini Ernst & Young and leader of its Enterprise Resource Planning Service Line for the Americas, says companies today are reaping the benefits of Internet and other technologies to achieve their long-standing goals. “It’s interesting when I think back on 20 years ago, and companies’ end goals haven’t changed [nor] the business benefits they’re trying to drive—reduce inventories, reduce accounts receivable, have faster order-cycle time, and be closer to the customer,” he says. “What’s really changed is the enabling technology. It was initially the introduction of the computer, then it was PCs and distributed computing and more powerful computers and then software packages came along. Then you had companies like SAP and PeopleSoft—the enterprise-wide packages—come along and add more and more functionality. And then the Internet has come along.” Each development has helped companies be more efficient and approach those goals. “In my mind, the real-time enterprise has always been the goal; it’s maybe a new term that’s floating around now, but 20 years ago, they wanted to do the same thing.”

Forward Thinking
Good Leadership: It Depends Where You Lead
By John Zipperer

(03/01/03) If you could redesign your entire corporate structure from scratch, would you include a CEO in the new organization? If you’re in any large organization, it’s a pretty ridiculous question, right? But would you substantially change the CEO’s duties and responsibilities if you could start over from square one? That’s not such a ridiculous question.

Implicit in the description of corporate leaders is the stress on their ability to lead, rather than their specific abilities in, say, mathematics or engineering or appearing on CNNfn. But where they are leading would seem to be of ultimate importance, and I suggest that the general direction in which they can lead is not really open to debate; it’s where business has been heading for decades, if not forever: to increasing transparency and efficiency, or, in the terms of this issue’s cover story, to the real-time enterprise.

In a recent global survey from Accenture and the Economist Intelligence Unit of business executives’ views of the CEO’s role, the respondents confronted the issue of whether the organization’s brand or the reputation of the CEO carries more weight in the market. By a huge majority of 70 percent, they said the corporate brand was more important. (I admit, I do worry a bit about those companies that are relying on their CEOs’ smiles and reputations to sell products or services that apparently don’t have a strong enough reputation of their own.)

What should those CEOs be doing? The respondents expected their CEOs’ attention to be dominated in 2003 by such perennial needs as “providing strong corporate governance” (70 percent), “retaining the best people” (67 percent), or “sustaining innovation” (61 percent) and “reducing costs” (60 percent). Same old, same old, in terms of what they should be doing. But fully half of the respondents said the CEO’s role is less attractive today than it was in the past. That number may be inflated because of more than a year of bad press about boardroom shenanigans, and American CEOs can feel happy knowing that many more of the American than European respondents said they believed their CEO had strong moral values. I’ll leave it to you to decide if that reflects European skepticism of business leaders or American worship of the strong CEO. But whether or not it is a less attractive position to attain and the power more uncomfortable to wield than in previous eras, the CEO is a role that is necessary from the organizational perspective (after all, we can’t abandon the position) and is even more important in achieving those goals of high efficiency and growth.

If I had to make a list of qualities for a good CEO candidate to possess, I’d include the following: integrity, understanding of economic and business history, broad (but not necessarily detailed) knowledge of the Internet technologies driving us today, an understanding of people, leadership ability, and—this is a must—executive experience at other enterprises, ideally even some in other industries altogether. What’s your list? Let us know at letters@iw.com.

News Analysis
Is There Room In the Enterprise for Apple?
By John Zipperer

(03/01/03) When Apple Computer CEO Steve Jobs spoke at the San Francisco Macworld trade show earlier this year, his audience in the Moscone Convention Center was filled with thousands of his fans—er, customers. But amid the usual new product announcements that appealed to Apple’s traditional customer base in the education, visual design, and production fields, there was at least one product that seemed sure to attract the attention of the enterprise market at the show.

Keynote is a new presentation program that quickly won accolades for its professional-quality graphics results. Clearly targeted at the PowerPoint user, Keynote also imports and exports in that popular Microsoft program format. However, Keynote is made to run only on Apple’s new Jaguar operating system, which is likely to lock it out of many enterprise offices, outside of the marketing, publishing, and graphics departments.

“It’s pitched exactly to the types of users who are already loyal to Apple,” says Jed Kolko, senior analyst based in Forrester Research’s San Francisco office. “It builds on Apple’s traditional strengths in design and visuals, and it appeals to the markets that have always been their core audience—people who are in the visual industries.

“It is quite impressive,” he says of Keynote. “The difficulty is that in corporate settings, presentations are often shared with others outside the company. The clients you are giving a presentation to, want a copy of the file. Because Keynote is only usable with the Mac operating system, almost anyone using Keynote will have to export it to PowerPoint. In the corporate setting, it’s often important to have the person delivering the presentation to have exactly the same visual setup as the persons viewing it.” As a strategy to get the corporate market, this may not work. But Apple isn’t trying to raise any expectations in that area. Peter Lowe, director of product marketing for applications at Apple, says the target user of Keynote isn’t specifically enterprises or any other size of customer.

“I think we see enterprises as a target in that we’ve not chosen to focus specifically on small or medium businesses or enterprises or any market targeted in those terms,” says Lowe. “We’re targeting people who need to communicate in a professional manner.

Regardless of whether they’re in enterprises or they’re a small-business person pitching ideas to clients—those are the people we’re targeting this product at.” Another example that shows Apple is treading where others have failed to tread is its simultaneous release with Keynote of its new Safari Web browser. Microsoft’s Internet Explorer is by far the leading Web browser in use today, but Apple is promoting Safari as being the best browser optimized for its Jaguar Unix-based operating system.

“We wanted to innovate,” Jobs told the Macworld audience. “We thought there was a lot of innovation left in browsers.” But it will be Keynote, not Safari, that is most likely to make non-users wish they had a computer running Jaguar. “I think the difference between Internet Explorer and Safari is not as dramatic as the difference between Keynote and PowerPoint,” says Kolko of the two browsers.

But this is not a war for operating system dominance. That war—like the browser war between Netscape Navigator and Microsoft Internet Explorer—has already been fought and won. It is an attempt by Apple to get incremental increases in its user base, something that can happen not by the unlikely possibility of an enterprise switching 30,000 users from Windows to Jaguar, but from departments within large organizations utilizing it.

At the same time, Apple executives seem to go out of their way to say nice things about Microsoft. Jobs publicly praised its work on the Microsoft Office program for Apple’s newish operating system, and Lowe stresses that “the relationship between Apple and Microsoft is very strong these days.”

Staying in the good graces of Microsoft also means being vague about future plans for other office-productivity software. However, Apple’s senior vice president for software engineering told The New York Times that the company was obviously moving in the direction of offering software competition to Microsoft, saying, “It’s not explicit, but the evidence is there.”

For now, Apple is sticking to its core role of satisfying its traditional audience and trying to tempt others to adopt Jaguar. “There’s no question that Keynote takes full advantage of Jaguar’s capabilities,” says Apple’s Lowe. So for those people to whom the high-end presentation software capabilities will appeal, “that’s going to encourage them to move to Jaguar.”

In his unveiling of Keynote, Jobs said that it had been developed internally at Apple for his own use, and he had made use of it for all of his Macworld keynote addresses for the previous year. Judging from the quality of his presentation, it met its quality goals. But Apple obviously needs to target more CEOs than just its own.

Driving Performance: Managed Supply Chain
Accelerating Inventory Collaboration
By John Zipperer

(03/01/03) When the Japanese method of just-in-time delivery became popularized in the 1980s, time took on a new importance in the management of inventory. When the Internet became popularized in the 1990s, it opened up the possibility of real-time information being shared up and down the supply chain. And when the Net began to be connected to back-end systems and companies began to outsource more of their production, then the possibilities for inventory automation became both more real and more urgent.

Outsourcing of production and warehousing has helped accelerate the need for a collaborative relationship between customers and their suppliers. “The key issue with inventory management is ‘what’s the demand,’ and the only way you’re going to get demand is to do it collaboratively,” says Sid Sitkin, vice president of supply chain management at the ARC Advisory Group. He says collaboration without intelligent future planning can be useless, but it is nonetheless the way many companies are going—opting for real-time supply chain collaboration in the absence of careful planning about its future spend and materials use. “I think it’s stupid to collaborate with someone who can’t plan,” he says. “All that can do is [allow someone to] tell you wrong stuff more often.”
“In the industry in general, you’ve seen a number of things go on in the supplier relationship management space, where people have focused on automating the source or products, and that’s reduced direct piece parts,” says Mark Angelo, vice president of marketing at Apexon, maker of the Apexon 3 supply chain product. “But now what we see driving manufacturing companies today is reducing the total cost of doing business with their suppliers, and that includes inventory and operational costs.”

As a result of the corporate outsourcing and downsizing trends, “the supplier is being stuck with holding a lot of the inventory,” says Sitkin. They take care of it and they assume the risk, and then the suppliers are asking for more information so they can conduct more efficient planning on their side. He says industry initiatives have existed to bring retailers and suppliers together to manage inventories more carefully, such as giving advance knowledge of sales promotions and sharing of forecasts. And there have also been more-sophisticated optimization algorithms developed to simulate inventory maintenance in complex supply chains.

As a result, companies are leveraging information access and system integration to give them the visibility and speed they need. For example, companies like ThyssenKrupp Budd of Germany, one of the world’s biggest automotive suppliers, uses mySAP to process 25,000 just-in-time delivery calls from its customers each month. Other companies use solutions such as Fullscope’s WiseXE suite to provide real-time information exchange between all parties, or they use the Web-based applications from Datastream, Provia Software, or other providers.

Integrated Supply Chains
Take a large, global supply chain, with all of the internal connections and supplier connections and integrations that entails, and then outsource it to a supply chain service provider that handles many such customers. What you get is a mammoth three-dimensional spider web of integrations, schedules, and potential headaches. What you get is Exel, a global supply chain outsourced service provider based in the United Kingdom with operations in 126 countries, 1,300 facilities, 60,000 employees, and annual revenues around $6 billion. Exel handles everything from design and consulting to warehousing, information management, and e-commerce support. “The challenge is to be able to provide visibility across the whole supply chain, from our clients’ suppliers through to the outbound distribution sources,” says Andrew Bryan, Exel’s program director for information and integration. “The value we’re trying to add to this is to provide the visibility across many different companies and in-transit goods, to provide our clients with a picture at any point in time of what is happening in their supply chains.”

With customers giving up hands-on control of vendor-managed inventory, they need technology that lets them monitor their inventory activity. Eoin O’Neill, e-commerce project manager for Exel, echoes ARC’s Sitkin by stressing the collaborative relationship that results. Customers want to reduce the amount of goods in their supply chains, and Exel is successful if it can help them.

Exel brought in Mercator to tie together its infrastructure, rationalizing the multiple point-to-point connections, applications, and integrations that must exist. A 2002 audit of its systems had identified thousands of point-to-point solutions that had been built in-house or with disparate packages of software. “We always had a need for integration,” explains O’Neill. “For every requirement we came up with a solution, and it may not have been the same solution every time, so we had thousands of point solutions in years past.” The supply chain integrator the company had been using was built in-house, and the company knew it needed to update it to stay ahead of the competition. Instead of investing heavily in the in-house solution, it went with Mercator’s integration platform.

Mercator plays multiple roles at Exel, within the Exel company itself as well as serving as the core of an ongoing integration hub approach, in which the company is constructing hubs in three geographic regions around the world to serve customers and carriers. The ability of Mercator to handle any necessary technology standards and therefore its ability to integrate with SAP or any other system is a strong point for Exel. The company thus has flexibility in the systems with which it is able to integrate, though to keep the multiplication of formats to a manageable number, Exel offers a specific range of formats for integration and lets its customers choose from the list. The success of the project will depend on customer satisfaction—how quickly is information received or exchanged with customers. “This of course is done on a case by case basis, according to the expectations of the customer,” says Bryan.

Keeping Investors Informed
Tracking orders and inventory manually can be too slow and can leave too many opportunities for errors to be introduced and flourish before they’re caught. Edgewood, N.Y.-based Investor Communications Services (a division of ADP), which processes communications to shareholders for 14,000 publicly traded companies, had just such a manual process from beginning to end. It also lacked real-time information for its customer service representatives to provide accurate status updates.

The company ships more than 800 million pieces of shareholder mail each year, with hundreds of pallets worth of annual reports, statements, or other investor publications shipping each day. The company wanted to move from its mainframe-driven manual process to a Web-enabled system that would give it “visibility into the process from start to finish and remote real-time information for customer service representatives,” says Cliff Heney, ADP’s senior director of material and logistics communications services. It went with HighJump’s warehouse management software, known as the Warehouse Advantage Suite.

Heney says the implementation occurred in steps, while the only potential challenge was handling the heavy increases in ADP’s work during the proxy season, which he says HighJump was able to handle.

The Web browser interface gives onsite and offsite users real-time visibility into warehouse information. When ADP receives a product, it is scanned into the Warehouse Advantage Suite’s WebWise module (since renamed the Advantage Dashboard), which places it in a specific location. Warehouse workers use handheld bar-code scanners to capture product and placement information, and they follow a set of very specific rules on picking and placing products. After a successful experience with the HighJump product, ADP’s future plans call for the Warehouse Advantage Suite to be implemented in additional warehouses (with the ability to track projects and products between the sites). “Investor Communications Services’ warehouse saved $150,000 in labor while increasing throughput by 30 percent in the first quarter of installation,” he says. “This was accomplished without adding cost or personnel.” On top of that, the average number of pallets processed each week increased by 43 percent and wait time by delivery trucks was more than cut in half.

Companies like ADP and Exel will continue to focus on the integration and efficiency of their suppliers. As long as their customers care about speed and costs, they’ll be driven to watch inventories carefully.