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Can ERP Meet Your eBusiness Needs?

Written By: Cindy M. Jutras
Published On: April 28 2003

Introduction

Can ERP meet your eBusiness needs? This is a deceptively simple question with no singular, simple answer. While businesses today cannot operate effectively in today's economy without it, ERP (Enterprise Resource Planning) alone cannot meet the needs of businesses that are undergoing, or have undergone an eTransformation. Which companies are those? Quite simply, the only companies that need not transform themselves are those that do not intend to be in business a few short years from now.

Not since the Industrial Revolution has the world experienced such intense and fundamental change. We are truly in the midst of a Technological Revolution, which has had more far-reaching effects than we could ever have imagined. Technology has caused the world to shrink, and global competition to become fierce. Businesses that once operated relatively autonomously at an arm's length from their customers and suppliers are now being forced to work more cooperatively and collaboratively within integrated business communities. Businesses, which only a few years ago operated locally, have expanded regionally, then nationally, and finally internationally, to the point where even modest businesses can be profoundly affected by changes in the global economy.

With this turn of events come global opportunities. And what opportunities there are! Yet, as always, with these opportunities come both challenges and risks. During the past two decades traditional business applications have evolved into integrated ERP systems. Many implementations have evolved as well, integrating both functions within a company as well as the business applications that support those functions. So inventory, order entry, and shipping systems are fully integrated with financial accounts payable, accounts receivable, and general ledger systems. Yet most ERP implementations stop there. Except for the occasional foray into EDI (Electronic Data Interchange), they focus primarily inside the business, and do little to connect externally to those integrated business communities. Yet that is what eBusiness is all about breaking down the barriers of communication and interoperability between businesses, potentially on a global basis.

It is the accelerating pace of business and the corresponding quickening of the pace of change itself that forces us to look at ways to maximize the return on existing investments, with the least amount of disruption to business. So if ERP is not enough, what next? For a comprehensive discussion of this question, see the author's book ERP Optimization: Using Your Existing System to Support Profitable eBusiness Initiatives available through www.crcpress.com or www.Amazon.com.

This is Part One of a three-part note.

Part Two will discuss how ERP forms the foundation for today's successful eBusiness.

Part Three cover the effect of eBusiness on your business.

Accelerating Pace of Change

There is no longer a question of "if" a business will be transformed into an eBusiness, but more a question of how and when. The economics of eBusiness are compelling. It can provide new market strategies and fundamentally change the way you attract new customers and retain existing customers. It also provides some of the best opportunities to streamline business processes and reduce costs. Yet there will be companies who resist this transition, just as there have always been companies who lag behind and resist change. However, today the accelerating pace of business, combined with the accelerating pace of change itself can easily turn such resistance into a death sentence.

Like it or not, technology is changing the world in which we live. The old maxim that says, "nothing is constant but change" has never had such relevance as it does today. Impelled by the rapidly changing technology that drives the world, this pace of change is accelerating to the point where what was considered "high tech" less than two decades ago now seems comically primitive. Today scientists predict that by 2020, we will attend video-conferences by slipping on a special pair of eyeglasses, wristwatches will access the Internet, and our clothes will be able to monitor heartbeats, alert ambulances and provide medical histories. What may have appeared far-fetched a few short years ago seems perfectly plausible today.

To put this rapidly accelerating pace of change into perspective, consider the history of modern, communication, beginning with 1775 BC when the Greeks developed the first phonetic alphabet. Consider if we scale the time, from 1775 BC to the recent turn of the century, into the equivalent of a 24-hour period.

1775 BC

Greeks develop 1st phonetic alphabet
midnight
1400 BC
Oldest record of writing (on bones)
2:22AM
1140 AD
Cloth from mummies used to make paper
6:30PM
1453 AD
Gutenberg prints 42 line Bible
8:30PM
1838
Morse exhibits electric telegraph
10:59PM
1876
Bell invents telephone
11:12PM
1901
Marconi sends radio signal across the Atlantic
11:22PM
1949
Network TV introduced in US
11:40PM
1951
Computers sold commercially
11:41PM
1966
Xerox sells the Telecopier a fax machine
11:47PM
1980
CNN 24 hr news channel established
11:52PM
1981
IBM PC introduced
11:53PM
1985
Cell phones in cars
11:54PM
1994
Introduction of WWW
11:58PM


The printing press has been hailed as one of the most important developments in the history of communication. Yet using our time scale, this did not occur until 8:30PM, while we see that the remaining truly significant technology advancements began just before the final hour of that day. And the rise of the World Wide Web, which is changing the way we do business today so dramatically, only occurred in the last 2 minutes. Think how far we have come in the final hour and then consider the possibilities that lie before us as we progress further into the new millennium.

Many have compared the tragic events of September 11, 2001 to the tragedy of Pearl Harbor sixty years earlier. The surprise attack on Pearl Harbor came at 7:50AM, Hawaii time. Fifty minutes later a local radio station released the first news report and at 9:00AM broadcasts spread across Honolulu. It wasn't until three hours after the attack that the mainland learned of the news, and it was nine days later that the New York Times printed the first pictorial images. In contrast, the first hijacked plane hit the World Trade Center at 8:48AM Eastern time. One minute later CNN began live national broadcasts. Four minutes later Associated Press sent out its first bulletin. Within minutes of the attack millions of Americans were watching the events unfold on televisions in homes and at work.

After December 7, 1941 it took days and even weeks for relatives of survivors to find out their loved ones were safe. While long distance calls were disrupted immediately after the September 11th tragedy, dial-up and networked Internet connections brought instant relief to many. My own friends, family and associates know how often I fly out of Boston's Logan airport, and that I typically spend two to three days in New York each week. E-mails started pouring in to me, all with the same questions, "Where are you?" and "Are you OK?". Fortunately nobody had to worry about me for very long, as I sat in my office and replied. But sadly enough, instant connections played an even more important role as cell phones connected victims to their families for last good-byes.

However, let's bring this down to more commonplace day-to-day events for the moment. When you communicate a question today, either personally or professionally, how quickly do you anticipate a response? Look at how the process of communication has accelerated. In the 19th century a Bostonian could write a letter to Hawaii and expect a reply in about a year. When sailing ships were replaced by a government postal service, it still took weeks to get a letter delivered across the Pacific. Even thirty years ago first class U.S. Mail had a one-week lead-time when operating coast to coast, and that was considered good. When Federal Express first guaranteed overnight delivery across the country it was a premium service and used only for the most valuable or perishable shipments certainly not for anything as mundane as a letter. Then there was the fax machine and now the Internet.

Could a sailing captain in 1830 delivering a letter to Hawaii have imagined overnight service? E-mail and Internet chat rooms? Today "Overnight" is the slow way of communicating. I know people who turn their e-mail "Out of Office Assistant" on when they will be off-line for several hours because some of us have come to expect almost instantaneous response. We carry cell phones, laptops, pagers and PDA's (personal digital assistants). New area codes are popping up everywhere in order to handle increased demand for telephone numbers. Whether you view this as good news or bad, we are literally never out of touch.

Why? Because things can't wait. We are impatient. We demand instantaneous response. Society demands instantaneous response. Business demands instantaneous response. Entire industries demand instantaneous response. It's hard to imagine how the world can get any faster. But it will. And those companies not able to respond will be left in the dust.

Time The Most Precious Commodity

Time is quickly becoming one of the most precious commodities in today's intensely competitive markets. Technology advances and planned obsolescence make lead time to market a critical success factor. Dominant players in selected markets today continue to push risk downstream, demanding faster delivery and more responsive service. These industry giants don't pad their inventory in the event of exceptional demand. Instead they expect their suppliers to respond instantly.

These demands call for successful companies to be exceptionally agile, able to respond quickly and efficiently, both to changing markets and economic conditions in a global environment, and also to exceptions and disruptions in day-to-day operations. The net result is that businesses cannot afford simply to respond to the next technological innovation, but they must learn to respond to change as a constant state. As difficult as it may appear, it is not enough to react to the eBusiness challenges the World Wide Web is presenting today. Companies must position themselves to be able to respond to and take advantage of the next technological advance, whatever that opportunity may be.

How have companies to date responded to the demands created by this accelerating pace, and still maintained the necessary profit margins which allow them to function and grow? Interestingly enough, many of the challenges faced today by businesses are both caused by and enabled by technology. It is technology that enables the automation of once manual processes. It is also through technology advances that products are caused to be obsolete at an unprecedented pace.

Technology causes the world to shrink, and global competition to become fierce. As a result of this competition, many companies have been forced to down-size, leaving leaner, flatter organizations. Fortunately the reduction in human resources can often be off-set with additional technological resources. Both plant automation and information systems technology allow companies to do more with less. While this has interesting implications for the social fabric of our culture, without these changes, many companies today would not survive.

Another response to the challenges facing enterprises today is to re-engineer business processes. Most business re-engineering efforts target functions which add no value to actually getting product or services out the door. Some of these functions can be eliminated entirely, while some are necessary support activities that add indirect value. Invoicing may be eliminated entirely with customer self-billing procedures. Small purchases may be handled by way of credit cards instead of purchase orders. Common functions such as sales order entry, while adding no direct value to the product being delivered, are necessary steps in the business process. Some companies would benefit from having someone else's employees (e.g. their customers'), or the consumer himself, perform this function. These types of initiatives are changing the way companies do business, and in turn, changing the relationships forged between trading partners.

While ERP today supports each of these business processes, does it provide the necessary flexibility when the control and the very nature of the process shifts?

This concludes Part One of a three-part note.

Part Two will discuss how ERP forms the foundation for today's successful eBusiness.

Part Three cover the effect of eBusiness on your business.

About the Author

Cindy Jutras is a seasoned software and business professional with over 28 years of experience in applying software solutions to business problems. Experienced in a wide range of functions related to the software industry, including sales, marketing, product development, customer support and product management, she is also an industry observer and trend-setter in business and business applications. Having worked with manufacturing companies for the full extent of that time, she is both a visionary and a pragmatist.

She is currently the Director of Solutions Management for SSA Global Technologies, since their recent acquisition of interBiz, previously a division of Computer Associates. At Computer Associates she was the divisional Vice President of Product Strategy and was instrumental in defining and guiding the product direction of ERP systems as well as advanced technology products.

Ms Jutras' work has been published and she is frequently quoted in industry publications on a variety of topics including manufacturing, ERP, eCommerce and eBusiness management, and CRM. She is the original author of the concept of "Virtually Vertical Manufacturing" and speaks at industry events on this and other topics.

Ms Jutras can be reached at cjutras@ssax.com.

 
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