Enterprise Impact Simulation Alliances - At The Core Of EIS

Alliance-driven IT

The key demand driver for the predictive capabilities of Enterprise Impact Simulation (EIS) is c-commerce and the alliance-based business model that results. Accurate, coherent, comprehensive blueprints of our IT systems form the foundation of EIS; the ability to accurately predict the impact proposed changes to the business will have on the IT infrastructure and vice-versa. This predictive capability is needed to reliably and repeatedly implement changes to IT systems on time, with all required functionality and without negative impacts to the business or the alliance to which it belongs.

Successful participation in the alliance model requires this predictive capability. We must be able to accurately predict the impact of change so that modifications intended only for the alliance don't cause negative impact to the other elements of the business, and vice-versa. We must also be able to accurately predict the schedule for implementing these changes. The alliance as a whole will need to implement changes in lock step to being new functionality to the network. Members who cannot accurately implement change on schedule will hold back the entire alliance. As a result, information about our IT systems becomes more valuable than the systems themselves. That information is our entry fee to the alliance, and admission to the alliance is a prerequisite for survival of the business.

This is a new value proposition for IT organizations. The value of the IT organization is shifting from the delivery of software systems to the delivery of information about those systems that enables the business' successful participation in the alliance model. This shift poses many challenges for today's IT organizations, but the value offered by c-commerce alliances make the shift unavoidable. Successful IT organizations will rise to the challenge and begin developing EIS capabilities now; before their absence becomes a limiting factor on the success of the business.

This article is the second of three in a series. The first introduced EIS, identified the technology breakthrough in software test automation that makes it possible, and identified the c-commerce alliance model as the key demand driver for EIS' predictive capabilities. The intent of this article is to explore the c-commerce alliance model, the challenges it poses for the IT organization, and the value it promises for the consumer and for alliance members in more detail. The last article in the series will develop the operating model that delivers EIS' predictive capabilities to businesses competing for membership in a successful c-commerce alliance.

Alliance-driven Challenges

Achieving the benefits of c-commerce requires system-to-system communication between collaborating businesses. GartnerGroup predicts that "[i]n a collaborative world, enterprises must compete not only on the availability, cost and quality of their products and services, but also on the quality of the information they can publish for consumption by collaborating partners." "ERP is Dead - Long Live ERP II" Oct. 4, 2000. The first information collaborating partners will need to share is their IT blueprints. They contain the information needed to establish the system-to-system communication that forms the basis for the alliance. Companies that already have those IT blueprints in place will be able to implement that communication more quickly than those that do not. This will put them in a preferred position when it's time to pick alliance members.

Processes that guarantee the continued maintenance of those blueprints will also be required. IT systems are going to change for c-commerce and, in most cases, they're going to change repeatedly. In fact, the more proactive a company was in the early days of ERP, the earlier it got in the game, the more change it will likely suffer in the months and years ahead. In the paper cited above, GartnerGroup also predicts that "most users will evolve to [c-commerce] systems via multiple upgrades of existing ERP systems. As vendors provide these upgrades, users will find sustained business process and system stability all but impossible to attain." The early, silo-oriented ERP systems are not just ill suited for service in the new business model. Their monolithic, mainframe-based architecture is irrelevant and obsolete from an architectural perspective. Major modifications are in store.

One of the critical success factors for an alliance will be the ability of its members to make modifications to their IT systems without unintended impacts to their business or to the alliance. This capability will depend on the ability to predict the impacts of change; on EIS capabilities based on the underlying IT blueprints. Information about how the systems work, how they work together and how the business, its customers and trading partners use them will be key to implementing changes for one set of users without negatively impacting others. This capability will be critical under the alliance model. Changes intended for use within a business or business unit must be contained. Impacts must not be allowed to leak into other user communities unintentionally. The same is true of changes targeted for use by the alliance but not intended to impact internal processes or systems.

The ability to make these modifications on a timely basis and to stay in synch with the rest of the alliance will also depend on EIS' predictive capabilities and the underlying IT blueprints. Forty to eighty percent of most IT projects time is spent in analysis/design and testing. Analysis/design time can be greatly improved, reduced by at least half in most cases, by eliminating the need for the programming staff to go into the source code to rediscover or validate the workings of the system at the beginning of a project.

Testing, where failures in the requirements and design are often first discovered, will be the biggest beneficiary of the existence and use of IT blueprints. Testing can become much more focused, eliminating unnecessary regression testing that happens today because of uncertainty about the workings of our systems. Testing time will also be reduced as rework and retest activities required today because of missed requirements or designs that fail to comprehend all requirements are eliminated. Where the introduction of new functionality requires all members of the alliance to make changes, members who have IT blueprints in place will finish much more quickly than those who do not. Tolerance for members who cause the alliance to be delayed in these efforts will diminish quickly. The ability to establish and maintain EIS capabilities and the underlying IT blueprints could easily become the key requirement for ongoing membership in a successful alliance.

The connected, chain-like nature of the c-commerce alliance model means that problems in one member's IT systems, or in their IT delivery process, can easily disrupt the overall network. Temporary outages of existing functionality are one predictable result. Worse, one member's inability to reliably implement change can cause the alliance as a whole to be delayed in introducing improved functionality to the network. Successful Alliances will choose their members carefully. Reliable, repeatable, reusable IT delivery processes that deliver EIS capabilities and maintain the company's IT blueprints could become the deciding factor in who gets a seat on the alliance and who gets left out.

Alliance-driven Value

The value of c-commerce alliances is compelling on three fronts: cost, competitive position and customer satisfaction. "For every on-line buy-and-sell transaction, there are 15 to 20 other transactions associated with it If you can achieve electronic collaboration among these processes, the cost savings go from 20 percent to 80 percent." "Success through Collaboration" SAPInfo Magazine, Sept. 18, 2000. But the value of c-commerce alliances in improving its members' competitive position relative to non-members and in achieving higher levels of customer satisfaction and loyalty could be even more important in the long run.

The alliance model is already firmly established in some industries. The airline industry was one of the first to move to the alliance model. The One World Alliance allows American Airlines to offer AAdvantage vacation packages at lower cost to the consumer than they could possibly achieve buying the individual pieces themselves. Even setting cost aside, the alliance model offers compelling value to the consumer. On the one hand, a customer can arrange the entire trip with one transaction through AAdvantage Vacations. On the other hand, they could arrange air transportation with two or three separate carriers, ground transportation, and hotel or resort reservations separately. One transaction versus four or five. And if, heaven forbid, something goes wrong during the trip? On the one hand, the alliance takes responsibility for the trip and the members work together to deliver end-to-end service. On the other? Each transaction stands on its own and the "ripple effect" of a problem in any segment of the trip is entirely the customer's problem.

The value of the alliance model to its members is particularly easy to see in this travel scenario. Imagine a vacation to the islands and the competitive advantage membership in the alliance offers to the resort. The worldwide marketing effort of AAdvantage Vacations extends the audience of the participating resort far beyond what individually competing resorts could realistically afford. At the same time, marketing costs per customer are reduced and volume increased as AA funnels vacationers to the member resort to the exclusion of its competitors.

The appeal of the alliance model extends well beyond the industries traditionally recognized as information intensive. Jonathan W. Ayers, CEO of the air-conditioning manufacturer Carrier Corp., detailed some of that value in a recent article in Fast Company magazine. Carrier reduced costs by $100 million dollars last year utilizing the web. Most of those savings were delivered via simple e-commerce reverse auctions. C-commerce can multiply those savings four to five times.

The possibility of putting an extra half a billion dollars on the bottom line is enough to ensure the initiative will move forward. But Ayers goes on to articulate two other components of the value equation. Talking about their Brazilian operation, he notes that "[t]he time required to get an order entered and confirmed by our channel partners has gone from six days to six minutes. Customer satisfaction is way up."

Perhaps even more compelling, however, is an impact that has the potential to deliver long term strategic advantage to Carrier. Ayers noted that their initial use of the web substantially expanded the number of suppliers who competed to do business with Carrier. An interesting thing happened next. Having identified the world's most competitive suppliers, Carrier's c-commerce initiative then tends to make them unavailable to Carrier's competitors. "We're usually the first company to go to our suppliers and say that we want to put them on a Web-based procurement system. ... When their second biggest customer comes along and says, 'We'd like you to use our Web-based purchasing system,' they say, 'We're already using Carrier's system, and we don't want to juggle two.' So first-mover advantage with suppliers is a big deal..." "How I Saved $100 Million on the Web." Fast Company, February 2000. The lock-in affect of the c-commerce alliance model has the potential to deliver long-term strategic advantage to the businesses that achieve these capabilities first.

The compelling value proposition offered by c-commerce value drives a fundamental and unavoidable change in the nature of business competition. Businesses cease to compete on an individual basis and begin to compete as members of alliance groups. Alliances hold the brand. Access to customers, market share, is a function of alliance membership. Members' costs and margins, their profitability, is a function of the alliance to which they belong. The survival of the business, especially for the small to mid-sized enterprises that participate at the discretion of the alliance leader, depends on membership in a successful alliance. Alliances improve the value equation for the customer, improve the competitive model for Alliance members, and demand a new value proposition from the members' IT organizations.

A new IT Value Proposition

The value proposition for IT organizations is shifting. The change in the value equation will happen very quickly once it begins. IT organizations should begin the development of their blueprints now. Waiting until they're needed as part of a bid for a position in a newly formed alliance puts the business at risk of being left out.

As a result of the compelling value of c-commerce and the alliance-based model it drives, the value companies require from the IT organization is shifting. The delivery of software becomes a given. The delivery of information about that software becomes the new value proposition. Success begins to be defined not as the delivery of change, but as the delivery of change readiness. The completion of the current project must result in an increased readiness for the beginning of the next. That change readiness comes in the form of IT blueprints that allow organizations to move forward with IT change immediately, without reverting to an examination of the systems' source code to rediscover or validate the systems' current workings.

The change in the value equation will happen very quickly for most IT organizations. As alliances begin to form, the readiness of the individual members to begin electronic collaboration will, in many cases, determine which alliance wins the race to be first to market. As Carrier's CEO noted, being first to market could be a very big deal in c-commerce. Whether or not the IT organization already has its IT blueprints in place, and the organizational capability to maintain them, could be the key factor in determining whether or not the company gets a chance to participate in a successful alliance. The expectations the business leaders have of the IT organization will change just as quickly as the value of participating in the alliance model becomes apparent.

IT organizations should move to quickly put these blueprints in place. They are key to improving the company's chances of success at being included in the first alliance to be formed in their industry. The exclusionary nature of the alliance model for late comers, as noted in the Fast Company article about Carrier Corp., is real. On Internet time, being first is an important element of success. Admission to the alliance model is a prerequisite for survival. IT organizations should focus their current efforts on putting the requirements in place that will help ensure their company doesn't get left out.



SOURCE:
http://www.technologyevaluation.com/research/articles/enterprise-impact-simulation-alliances-at-the-core-of-eis-16324/

E-procurement: From Brilliant Innovation to Common Cliché

Introduction

In 1998 researchers at the Haas School of Business of the University of California at Berkeley published an important study called "Procurement in the Internet Age - Current Practices and Emerging Trends." Essentially a survey of 80 technology-oriented companies, the paper proved to be a good guide to subsequent developments in E-procurement. It is a measure of how far we have come in less than two years that in their summary of "interesting findings" the very first one listed is:

* The attitude towards the Internet is overall positive

This was interesting at the beginning of 1998. It would not have been impossible that a majority of purchasing organizations were highly skeptical of the Internet. After all, purchasing agents depend heavily on personal interaction with suppliers. Furthermore, the Internet was far from omnipresent: many of the companies surveyed had no Internet access, or had only a single connection, and so were unable to complete the survey except by paper and pencil. But despite these and other potential roadblocks there was a strong realization that E-procurement had the potential to reduce costs and time, the two most important measures of success in procurement of goods and services. (Customer satisfaction was third and quality of goods was fourth).

So it is hardly surprising that, just two years later, E-procurement is taken for granted in almost every industry and sector, and that business-to-business E-commerce has overtaken consumer commerce as the focus of attention, especially on the part of the stock market and venture capitalists.

What does E-procurement look like today? Roughly speaking there are seven kinds of players, of which four are software and service vendors and three are marketplace operators. The four vendor groups include:

Enterprise Procurement: These are the vendors whose early successes and high market capitalization created E-procurement. They specialize in E-procurement and their products carry large price tags. Players in this segment include Ariba and Commerce One.

ERP Vendors: ERP vendors have been suffering from their own success. Having conquered the corporate IT world, they have been struggling to show the impressive growth curves of their heyday. As they watched the enterprise procurement vendors sell to their own biggest customers they saw a natural fit and a new niche into which they could expand. Players in this segment include Oracle, PeopleSoft, Oracle, and Baan.

Corporate Portal: These are companies that already have other products but have seen the potentials of E-procurement and have launched products in this space. They are building from their existing strength, and repackaging their existing products with procurement to offer integrated product suites with common user interfaces, common backend systems, and common administrative tools. Players in this segment include Peregrine, Concur, Remedy, and Intelisys.

Application Service Providers: The ASP market in E-procurement is developing at a time when Internet technologies make outsourcing convenient for both client and provider. Players in this segment include almost all of the above. Most of the companies that offer corporate licenses are also looking for ASP arrangements. Some are becoming their own ASP's, some are licensing their software to ASP's or even to ISP's who then resell the license to their own ASP customers, and some are doing both.

As Figure 1 suggests, larger corporations tend to be sought after by the ERP and Enterprise Procurement vendors, while midrange and smaller companies are targets for the corporate portal vendors and the ASP's.

There are other companies that don't fit any of these molds. For example, Clarus Corporation recently unloaded its portfolio of applications (ERP, financials, and human resources), thereby forgoing the strategy of other Corporate Portal types, to create a new E-procurement business from scratch.

The types of marketplaces include:

Singletons: These are companies that create their own marketplaces, which they host themselves. Companies like Staples and Dell fall in this class.

Verticals: Vertical marketplaces concentrate on a specific industry or type of product. Examples include: CHEMDEX.com in the life sciences, E-hospitality.com in the hotel industry, GM TradeXchange in the automotive industry, and buzzsaw.com in construction.

Aggregators: These marketplaces bring together a number of suppliers. The marketplace will provide catalog creation and hosting for the suppliers and some form of unified searching for the buyers. Examples include Concur Commerce Network, the Ariba Network, and Commerce One's Global Trading Web.

At this point in the evolution of the market, software vendors are creating their own marketplaces, although some also sell marketplace-creating tools to others. The larger aggregators may have a number of marketplaces - a combination of verticals and regional markets - that are tied together as a network.

One significant indicator of the direction of the marketplace market is Commerce One's strong push to create a truly global marketplace. Commerce One is partnering with significant corporations in many regions to create regional marketplaces that will also serve as portals to a global marketplace consisting of the collection of all of them.

Another indication is the recent announcement of Concur's Business Advantage, a program offering leveraged buying advantages to small and mid-sized companies. What is especially novel about this is Concur's teaming with insurance and investment giant SAFECO, which will likely result in Concur's products and services being sold - or at least promoted -- by SAFECO's independent agents.

A company looking to bring this technology in-house has to predict not just which vendors will be able to do the job - meeting both immediate and future needs - but which new business models will spin off from emerging technologies.

The growth of business-to-business electronic auctions, for example, is not an evolutionary step from pervasive non-digital auctions, although such were of course not unknown. Rather, it comes from the availability of technology to support such auctions cheaply, meeting a need that was not high on very many lists because there was no expectation that the need could be met. What other needs might be someplace down on the wish list just waiting for the right technology to propel them into the "must have now!" column?

Trend

Independent vertical marketplaces will sprout like mushrooms, but some will dry up and others will become part of higher-order colonies.

Trend Overview: It is clear that vertical marketplaces are a hot item. As they come down the runway, one after another, each is greeted with delight, at least from its own particular industry. The star of the show has been Chemdex, a company that recently renamed itself to Ventro and redefined itself from a builder of vertical markets to an incubator for vertical markets. Vertical markets will proliferate because the more general MRO marketplaces cannot afford to build strength in specialty industries, and will find it easier to offer connections to existing verticals.

Trend Impact: Some of the larger E-procurement companies, such as Ariba, Commerce One, Oracle and SAP are involved in building verticals in high profile areas such as the energy and automotive sectors, but industry specialists will build most verticals. This does not leave the major vendors out of the picture: they will provide the platforms for building the vertical marketplaces that are managed by others.

In the longer run, apparently independent verticals will merge to take advantage of common buyers or suppliers or simply economies of scale. This will be driven by those large industries that first become heavy users of a number of verticals, because of the inefficiencies of working with large numbers of marketplaces.

Trend

Standards will accelerate the drive toward market commoditization; market commoditization will accelerate the drive toward standards

Trend Overview: There's no better indicator of this than a recent announcement that General Motors, Ford and Daimler Chrysler will cooperate to create a single marketplace for the automotive industry. This announcement came only a few months after Ford signed with Oracle and GM signed with Commerce One for independent marketplaces. Many commentators were surprised that Daimler Chrysler did not have its own announcement at that time; some looked to Ariba to make its mark in that arena, while others noted SAP executives becoming frequent fliers to Detroit's Metro Airport.

Announcements of the new global marketplace stressed the difficulty that separate marketplaces would have for suppliers doing business with more than one automaker, but there were two subtexts, both involving standards.

First, it is not at all clear why a supplier working in two or more marketplaces should have any integration trouble at all. Both Oracle and Commerce One stress open standards and XML, which means that entering a second marketplace should be almost trivial for a supplier.

Second, the absence of both Ariba and SAP from this partnership may be news in itself. While the big three automakers might reasonably have decided that two vendors were enough, both Ariba and SAP stand a bit further from standardization than the others. Ariba's proprietary dialect of XML is not blessed by any of the major standards initiatives; while it is theoretically true than XML makes it easy to translate between dialects, the practice is still complex. SAP's E-procurement solutions play only with SAP's own ERP systems, and in fact require a complicated and costly upgrade to version 4. We think it likely that interoperability and standards had a role in the way this giant trading exchange got shaped.

At press time there were rumors circulating that Chrysler-Daimler may be going after its own vendor after all, probably SAP, and that the degree to which this marketplace will be unified will not meet early expectations. This would be a minor setback to the cause of interoperability. It may represent a concern about sharing corporate data or an objective look at the realities of standardization today. However, so long as the marketplace and suppliers can interoperate with each company the basic nature of the venture will not change.

Trend Impact: One lesson is that standards work has to accelerate, and that a viable standard or collection of standards must evolve soon for E-procurement to reach its potential.

Another is that with standards, there is little benefit to having multiple competing marketplaces. If the technical work of entering marketplaces was nearly nil after the first, then both buyers and suppliers would have easy entry and exit. And, as Adam Smith taught, that leads to increased efficiencies and to low margins. In some cases, as with the automotive industry, the best move will be for independent marketplaces to merge. In others the result will more likely be that marketplaces will compete aggressively on transaction fees and amenities. We think that the technical sophistication of the suppliers in an industry will drive the direction that the industry's verticals take.

A year from now we think it will be very clear that key players in E-procurement will have to have open, public XML access. Ideally a standard would develop as a large vocabulary of tag and schemas that apply across industries, with each industry able to produce its own specialized dialects. This is one of the goals that Microsoft was shooting for in its BizTalk initiative, with the exception that Microsoft was looking for market forces to develop standards based on use.

We think that things will move in the general direction we've outlined, but that it will take closer to three years for something approaching a cross-industry standard to be both defined and generally accepted. And, even then we believe that there will be somewhat less progress at the level of individual industries.

We expect that within three months Ariba will start giving out signals that they are moving away from their proprietary dialect toward a more widely accepted standard. This may come in the nature of increased support for one of the evolving standards that is accepted by their competition, or as the kind of marketing statement that says "we've always been interoperable, but now we'll be even more so." Similarly, SAP will tell us that integration with other ERP vendors was always in their plans, although it will probably be effected through third party tools and integrators rather than as a core feature of the SAP product.




SOURCE:
http://www.technologyevaluation.com/research/articles/e-procurement-from-brilliant-innovation-to-common-clich-15635/

Lessons Learned on the Inca Trail

Introduction

During the course of my career, I have literally traveled to the far corners of the earth. What still continues to surprise me is the fact that beyond the language and other differences, globalization has created a relatively homogenous international society. In search of something new and unique, I was therefore tempted by the promise of Peru. A country that has remained relatively untouched by the blatant commercialism of Western cultures, Peru became my vacation destination in late 2004.

Traveling from the airport to my hotel in Lima, I was greeted by evidence of the difference between Peru and most business destinations—graffiti highlighting that this was still a third world nation. But Lima was just a stopover—I was destined for Cusco, the center of the Inca nation—or as some would have it, the center of the Universe at that time in history. Perched high in the Andes, Cusco was established as a cultural and spiritual center over 500 years ago. When the Spanish discovered Cusco, they were greeted by stone structures, massive boulders flawlessly matched together to create temples to worship the deities of that time. Clad in pure gold, ceilings and walls reflected the power and grandeur of a culture that clearly understood both nature and science. In the harsh mountain terrain, aqueducts had been crafted to create an endless supply of water. Terraces filled with fertile soil transformed inhospitable and rocky ground into gardens that produced an array of corn, potatoes and other crops to feed the Inca nation. Granaries and warehouses carved into mountain sides stored enough food to feed the Incas and the other cultures they had absorbed for many years. An astonishing feat accomplished by sophisticated agronomy and horticultural skills.


ALONG THE INCA TRAIL TO MACHU PICCHU PHOTOGRAPHER: MICHAEL POWERS WILDERNESS TRAVEL, http://c.technologyevaluation.com/?u=/cp/TECSCM_article_20050128_4_al.asp&cl=1&i=743&c=205&l=1

The Spanish conquerors destroyed the "pagan temples", retaining the foundations on which they built lavish cathedrals. European artisans taught the indigenous population how to carve wood into extravagant rococo chapels, to paint pictures of the lives and deaths of saints and festoon these homages to another god with pure gold and silver. The Inca rulers were crushed, and today their descendants have been lost in the despair of many centuries of Conquistadors.

Machu Picchu

Several hours by train from this cultural Mecca, yet another testimony to the skills and talents of the Inca's remains. Machu Picchu—an enigmatic legacy from a nation that harnessed the environment in a way that has sustained until today. The same aqueducts that fed the crops 500 years ago are still evident in this mountain retreat. Farmers graze their Llamas and Alpacas on the terraced mountainside, the grass nourished through the natural processes that have endured through centuries. The passing of time is only apparent in the roofless structures that once housed the elite members of the Inca leadership. It is believed that they came to Machu Picchu as a retreat where the thought leadership of the nation spawned new ideas, studied astrology, archeology and other sciences that they incorporated into their culture and legacy.

In Machu Picchu there is no evidence of Christian icons that are the legacy of the Spanish Conquistadors. Here the wise men and woman of the Inca culture worshipped Pacha Mama and Pacha Papa, celebrating the earth mother and father in a series of simple temples hewn from the massive rock that was already there in this mountain citadel. Hidden from the rest of the world until relatively recently, Machu Picchu remains a mystery in terms of when it was inhabited and what caused the abandonment of this esoteric community.

Perhaps one of the reasons this culture failed to survive was due to the polarization between the intelligentsia and the proletariat. The invasion of the Spanish removed the layer of creativity and innovation—leaving a vacuum that was not filled. Once this leadership was lost, the nation became directionless and has subsisted on the legacy of the past to this day. Peru is one of the poorest countries in Latin America. The culture of the Incas, that predicted the future and recorded events in kiputaques (a series of knotted strings, creating a library for those who know how to decipher them) is not apparent in the populace of Cusco, Lima or any of the major centers. The light has gone out from the eyes of their descendants—the spirit of the nation that created these wonders no longer in evidence.

Torn by dictatorships, guerilla warfare, and economic hard times, Peru is a country with a glorious past and an uncertain future. Tourism, currently one of the major sources of foreign exchange is threatened by an underlying hint of violence, crime and political unrest. Gold, a legacy of their ancestors, continues to provide employment and national income. (However, this is a wealth that is not shared with the populace, who are some of the poorest people in the world.) Agrarian communities still work the land with llamas, crude implements, and tools that have remained unchanged for centuries.

Land lost in time

Traveling through Peru gives one a feeling of a land lost in time. Many homes still have no electricity or running water. Textiles are dyed by traditional means, fabrics woven using skills passed down from generation to generation. Paradoxically, the only evidence of the current millennium is in the ubiquity of the World Wide Web. Even the smallest village boasts an Internet Caf, where locals part with hard earned currency to communicate with other cultures. This thirst for knowledge is heightened by years of exclusion from global information. What are they learning from these cultures beyond the realms of the Incas? More importantly, how will this society—with such deep connections to the past, embrace the future, in order to create a society that can join the 21st century to feed the people and create a middle class.

The Peruvian economy is controlled by a privileged few, a model that is not sustainable if this country is to participate in true globalization. The inability to attract significant trade or investment due to the crime and lack of democratic principles in the nation should be addressed as a matter of urgency. The current imbalance of financial power needs to be addressed. The natural resources need to be harnessed by all, creating an economy that is self fuelled, encouraging investment and stability. Peru can learn from countries that share the legacy of lost empires—for example China—and examine the principles of their ancestors to create a sustainable economic environment. The ancient Incas understood these components of success, which include

* Create an economy based on tangible and renewable assets.
* Feed the nation through careful agrarian practices and skillful global trade (Peru has gone from an exporter of food to an importer).
* Ensure political stability—replace the current corrupt public service environment with a democratic model with ethical standards for all.
* Educate the people—develop the skills required to provide a workforce that attracts investment and development. Enhance the infrastructure—this includes the installation of both physical and digital highways to ensure mobility of people, products and information.
* Embrace technology—the skills of the artisans can be harnessed, moving from producers of trinkets for tourists to producers of global consumer goods.
* Open the gateways—the long Peruvian coastline provides access to rich markets in the Asia Pacific region—create incentives for global traders to embrace these shores. Peru stands at the cross road between the past and the future—perhaps the road ahead is a digital highway. The first links to this "yellow brick road" already exist in the Internet cafes, where other cultures and technologies are showcased for the Peruvian populace. The convergence between computing and communication creates opportunities for the descendants of one of the highest cultures of the last millennium. We hope they will rediscover the spirit of the lost nation and create a new Inca trail.



SOURCE:
http://www.technologyevaluation.com/research/articles/lessons-learned-on-the-inca-trail-17754/

Social Networks That Boost Your Business

Most people are familiar with the term “Web 2.0,” which refers to a second generation of Web development and design that focuses on fostering social networking via the Web. Innovative companies are beginning to embrace Web 2.0 technology as a way to enhance communication, information sharing, and collaboration, thereby allowing them to work smarter rather than harder.

The use of Web 2.0 in business represents a new trend called “Business 2.0.” Aside from being the name of a defunct magazine, Business 2.0 is about using new Web-based social networking applications (many of which were originally created for personal use) in a way that fosters teamwork, customer touches, and internal and external collaboration in a low-cost seamless way.

Unfortunately, many businesses feel that Web 2.0 and social networking are for the younger generation and a waste of time when used by employees. However, once you understand the power of these applications and how to use them in your company, you’ll quickly find that they can be invaluable tools to boost your bottom line.

Following is an overview of the best Business 2.0 tools.

Personal Tools with Business Applicability

Facebook
Personal Use: Facebook enables you to connect and share with the people in your life. Users can join networks organized by city, workplace, school, and region to connect and interact with others. People can add friends, send them messages, and update their personal profiles to notify friends about themselves.

Business 2.0 Use: Large organizations can connect all of their employees, or members, with Facebook. Some are finding an added advantage of using an internal, secure version of Facebook. This has helped organizations to dramatically increase their internal networking and collaboration.

Ask Yourself: Could we use Facebook, or our own internal version to get people to collaborate at a higher level?

Twitter
Personal Use: Twitter is a micro-blogging service that allows friends, family, and co-workers to communicate and stay connected through the exchange of short, quick answers using no more than 140 characters per message. Senders can restrict delivery to those in their circle of friends or co-workers. Users can receive updates via the Twitter Web site or other social networking sights such as Facebook. Young people use Twitter for answering the question: What are you doing?

Business 2.0 Use: Business users could change this question to: What problem are you trying to solve? Several companies have used this as a fast way to solve problems. Hotels, airlines, and airports are using Twitter to pitch services, travel updates, and respond to travelers needs.

Ask Yourself: Could we use Twitter to solve problems faster with our organization or our customers?

Wikipedia
Personal Use: Wikipedia is a free online encyclopedia that anyone can use to find information on virtually any topic. Anyone can edit the content as well.

Business 2.0 Use: A large manufacturing company with engineers in locations around the world increased problem solving and collaboration by creating an internal, secure version of Wikipedia for sharing information on parts and service offerings as well as repair and maintenance instructions. Retailers and suppliers could create a version of Wikipedia to foster education and training as well as enhanced information sharing.

Ask Yourself: Could we create an internal version of Wikipedia to foster better information and knowledge sharing?

YouTube
Personal Use: YouTube is a video sharing Web site where users can upload, view, and share video clips. YouTube displays a wide variety of user-generated video content as well as movie clips, product demonstrations, and commercials. Unregistered users can watch the videos, while registered users can upload an unlimited number of videos.

Business 2.0 Use: Businesses are posting humorous commercial videos to generate interest in their products with great success. The more entertaining it is, the more people watch it. Business partners could create a YouTube like channel for the purpose of educating and training.

Ask Yourself: Could we enhance our marketing efforts as well as general communication by using YouTube?

Digg
Personal Use: Digg is a social news Web site made for people to discover and share content from anywhere on the Internet, by submitting and accessing links and stories. Voting stories thumbs up or thumbs down is the site's cornerstone function, respectively called digging and burying.

Business 2.0 Use: Many organizations have found this to be a good way to track the most interesting advances in technology or the most useful business news. Large organizations can create their own internal version for sharing what employees consider to be the most useful information.

Ask Yourself: Could we use Digg, or our own internal version, to get people to share their most interesting and valuable Web-based information with each other?

Delicious
Personal Use: Delicious is a social bookmarking web service for storing, sharing, and discovering web bookmarks. It uses a non-hierarchical classification system in which users can tag each of their bookmarks with freely chosen index terms.

Business 2.0 Use: Business users can share their most useful Web sites with co-workers or business partners. If a customer purchases a product, sellers could share relevant bookmarks that keep the customer coming back for more information and hopefully more products.

Ask Yourself: Could we use Delicious to share important new Web sites faster within our organization or with our customers?

Visual Communications
Personal Use: Visual Communications, unlike traditional video conferencing, uses your desktop, laptop, and soon your smart phone to hold a quick, anytime, anywhere videoconference with one or more other people. Travelers who must be away from home are using their laptops in hotel rooms with broadband access and free software such as Skype and AOL Instant Messenger (AIM) to communicate with family and friends to enhance their personal connection.

Business 2.0 Use: Businesses are discovering the power of Visual Communications to enhance the connection with their sales force, business partners, and customers.

Ask Yourself: Could we use Visual Communications to enhance communications internally and externally?

Purely Business 2.0 Tools
Wiki
A Wiki is a collaborative Web page or collection of web pages designed to enable anyone to create a quick web page that allows visitors to search the Wiki’s content and edit the content in real time, as well as view updates since their last visit. Wikis are often used to create collaborative Web sites and to power community Web sites. On a moderated Wiki, Wiki owners review comments before additions to the main body of the topic. Additional features include calendar sharing, live AV conferencing, RSS feeds, and more.

Ask Yourself: Could we use Wikis to enhance internal and external collaboration?

LinkedIn
LinkedIn is a business-oriented professional networking website for exchanging information, ideas, and opportunities. There are over 35 million registered users spanning 170 industries actively networking with each other. For example, large insurance companies use LinkedIn to foster networking with their independent sales representatives. Human resources (HR) professionals from all over the world could use LinkedIn to share best practices.

Ask Yourself: Could we use LinkedIn to expand our organizational network for enhanced knowledge sharing?

Cloud Computing and Software-as-a-Service (Saas)
In cloud computing, some or all of the storage, software, IT processes, and data center facilities you use can exist on your provider’s server, which is maintained and cared for by your provider, giving you 24/7 access from any device anywhere. The cost of upgrading hardware and software, maintenance, and associated IT labor costs can be dramatically reduced or eliminated. Currently, the ideal organization would be any size company that’s facing big investments in computing and communications infrastructure. For example, Amazon.com can give you an entire e-commerce back end. SaaS such as SalesForce.com has a customer relationship management (CRM) package, SciQuest has a spend management package, and Google, Microsoft and others have a suite of offerings.

Ask Yourself: Could we use cloud computing and SaaS to streamline our IT needs?

Gain a New Competitive Advantage
By reframing the use of social networking technology, companies can increase communication, collaboration, problem solving, and competitive advantage with little cost. Remember, many of these tools are free or nearly free, making them accessible to even the smallest of businesses. Therefore, the sooner you embrace Business 2.0 and put it to work for you, the faster you can penetrate new markets and win the lion’s share of business.







SOURCE:
http://www.technologyevaluation.com/research/articles/social-networks-that-boost-your-business-20803/

Software Selection for Organizations: Are We Becoming Too Web-biased?

Software is a unique asset in the sense that it does not have any moving parts. Hence, it is not subject to wear and tear, which is the main reason any physical asset with moving parts requires maintenance and, ultimately, replacement. Theoretically, the life of a software application is eternal, with it not needing any maintenance at all so long as the hardware platform on which it is running is maintained and is in working condition.

Software can be upgraded to suit changing business needs, almost without limits. There are many examples of this phenomenon. Take the case of IBM mainframe software written in the 1970s—it is still running well into the new millennium. That is, this software is about 40 years old, and there appears to be every reason that it will run for another 40 years. The technique of “windowing,” used in many a Y2K conversion, indicates so. Windowing is when any two-digit figure greater than 50 in a date (that is, 50 to 99) is interpreted as belonging to the 20th century, and any two-digit figure less than 50 in a date (that is, 00 to 49) is interpreted as belonging to the 21st century. For example, if the data contains “49” in a date (as in the date 12/30/49), then the year of that date is interpreted as 1949 (or 12/30/1949). God willing, there will be another dose of software date conversion in the year 2049 to make it compliant to a four-digit year.

This is not to say that software doesn't need any maintenance at all. Ideally, software maintenance should be based on the changing business environment, and should be performed to handle the changed business needs, not otherwise.

The recent trend of building applications for enterprise in a totally Web-centric manner is, in our opinion, beyond reasonable necessity. There is a place for Web-centric software, and a place for client-server and mainframe software. The software industry seems to be falling head over heels in its embrace of Web-based software, and it is forgetting all other technologies, many of which are robust, secure, and much more economical.

Criteria for Selecting a Platform to Run Software Applications

Following are the criteria for selecting a platform—that is, a combination of hardware, system software, and a development platform—for running a software application to fulfill business needs and transaction processing.

1. Software Stability

So long as the original platform remains in the same condition, it can be expected that the application software will continue to work without any issues. This has been proved in the case of mainframes, where the application software has been running for about 40 years with regular maintenance, and upgraded only to cater to the changing business needs.

But software has been changing, moving from mainframes to smaller computers and to personal computers (PCs). PCs were originally thought of as home computers, and were never expected to play the significant role they are playing in business today.

The Internet added a new dimension to the software scenario by bringing the ability to connect computers all over the world at a very affordable cost. However, in some ways the cost has been quite high: software viruses have been released into the World Wide Web with the purpose of causing some sort of damage to PCs. Now, when PCs are connected to the Internet, they are in constant danger of succumbing to new classes of malware, spyware, and worms. Sadly, their operating systems are not equipped to handle these external and unwelcome threats, and we need to install additional software to protect our computer assets from these virtual predators.

Unlike with mainframes, the performance of PCs is unpredictable in terms of the unknown actions of malware and the software that is supposed to protect the PC from the malware. A new virus or spyware is released, and hence, an upgrade to an anti-virus software or spyware-remover is released. Or, perhaps a security patch is made available. All these fixes are applied to the PC, and the next thing that hits you is that the application software, which was hitherto running flawlessly, turns in an error.

In short, the software reliability is affected, not because the software was developed badly, but because of external incidents of which neither the developer nor the user has any control. Worse still, the error may not be detected until an irate customer complains bitterly about the silly error that caused him or her a loss or an inconvenience.

In the case of Web-based software, you cannot buy a product with just a one-time payment; you must enter into a software maintenance contract, out of necessity, even if your business requirements do not change, to be protected from an external event for which you are not even remotely responsible for. The current trend in Web-based software product pricing is a move toward yearly licensing—no longer is the sale a single, cut-and-dried transaction.

With client-server software, you can maintain the system software in its original condition as long as it is kept isolated from the Internet. With mainframes, you are already protected from malware due to their hardware design and mammoth-sized operating system software.

From this standpoint, it is better to go for a mainframe- or client-server–based software than a Web-based software.

2. User Interface Stability

Web-based software is essentially browser-based. A variety of browsers exist: IE Netscape, Mozilla, and Opera, to name a few, each having its own set of die-hard adherents. The browser in a Web-based software dictates the user interface (UI), and different browsers may handle the UI differently. Sometimes, the UI may work on some browsers and not others. One feature common to all browsers is their vulnerability to attack from malware. Therefore, the browsers listed above are continuously being upgraded and patched. These actions have an impact on Web-based software: every time a browser is patched or upgraded, the software needs change.

Client-server software, on the other hand, is not dependent on such external applications as browsers. If a virus attacks it, you simply need to clean the virus away or re-install the client software. Mainfames, of course, are immune to malware, as no viruses have been written so far that can attack them.

3. Software Maintenance

A working software should not need maintenance, as it does not experience the effects of physical wear and tear. If, and only if, there is a change in business requirements, then yes, software enhancement or correction may be needed, not otherwise.

Web-based software needs maintenance irrespective of its platform's stability. You need to maintain and upgrade your software whenever a) your browser is patched, b) your browser is upgraded, c) the third party middle tier is upgraded, d) your operating system is patched, or e) some new and powerful virus is released. This is especially true when the application is multitiered; it is impossible to know which tier is causing the issue, so the application software is what is upgraded.

In addition to application software maintenance costs, Web-based software needs maintenance for the additional protection software components that it requires. Thus, Web-based software not only costs you more initially, but it also costs you extra in maintenance during operation. Nowadays, anti-virus organizations are releasing weekly upgrades to their virus definitions, which goes to show that new viruses are being released through the Internet on a daily basis.

Mainframe and client-server software continue to work as long as the platform remains the same. External events do not influence their software maintenance needs, and upgrade of a browser does not impact them. No third party middleware is needed; they do not need a third tier of software to run their applications or if a new virus is released.

4. Initial Setup

The true cost of the initial setup of Web-based software only becomes apparent once it is discovered that the software cannot be implemented straight out of the box. Commercial off-the-shelf (COTS) software can almost never be used as is, and it almost always needs customization while implementing Web-based systems. On-site customization is the norm rather than the exception in the case of Web-based systems, and this often jacks up the cost.

The vulnerability of Web-based software makes it imperative that you add components to tackle external—and most likely threatening—events. Examples of such components include anti-virus software, firewalls, intruder detection systems, data encryption tools, security systems, and so on. Furthermore, these protective software need yearly maintenance contracts, and sometimes the upgrades to counter external threats come at additional cost.

The software replacement cost of Web-based software must also be factored in, as one never knows when the current standards of the software will be overhauled; this only happens in the case of Web-based software.

Suffice it to say that it is cheaper to have multiple instances of client-server software with synchronized databases than one instance of Web-based software. What's more, the protective components listed above are not needed with client-server or mainframe platforms.

5. Security

In a client-server or a mainframe environment, threats to security originate from internal sources, not from external sources. In other words, threats emanate from known and controllable causes. In a Web-based system, it is unknown where a potential hacker is from; for all we know, he may be in a country far away, where we do not have any influence or recourse for justice. As we strengthen security tools, so are the hackers improving their trade. Thus, it is a constant race between software developers and hackers.

Caught in between are businesses—paying the price, both literally and figuratively.

6. Uninterrupted Operations

A Web-based system can be interrupted for a variety of reasons: a) an interruption to the Internet service, b) a virus attack, c) a failure in the networking hardware or software, d) a newly released software patch that has affected some portion of the software, e) a malfunction in one of the tiers, or f) a hacker has infiltrated the system. In other words, the system can be brought down by external events that are outside the purview of our control.

Mainframe and client-server systems cannot be brought down by external events.

Some Final Words

To be fair, we need to acknowledge some of the more positive facts about today's Internet. The Internet's speed has increased significantly, so much so that any waiting time has all but disappeared. The cost of Internet access has come down substantially. The robustness of middle tiers has improved remarkably. Furthermore, most countries have enacted rules and regulations on Internet access, and are cooperating with each other in the matter of hacking.

The Internet facilitates corporate operations, and has become a very convenient way for carrying on business—no argument about it. Web-based software is a must for interaction with the public. Some of the applications that cannot run without (or that we cannot live without) a Web-based system include hotel reservations, travel, information, the selling of consumer goods, form-filling, public interface—the list goes on. Web-based systems have arrived, and they are indeed here to stay.

However, we must carefully evaluate the business scenario and consider whether Internet connectivity is really needed for enterprise software. No business should blindly conclude it must have a Web-based system. Where one is not needed, a client-server or mainframe system is the better, safer choice.




SOURCE:
http://www.technologyevaluation.com/research/articles/software-selection-for-organizations-are-we-becoming-too-web-biased-19141/

Is SSA GT Betting Infini(um)tely On Acquisitions? Part Two: Market Impac

Event Summary

Seemingly strange and things once considered unlikely can happen in the enterprise applications market. It might even be quite ironic that, during these days of general lethargy of the market, the rare upbeat pieces of news have been coming from some reformed traditional enterprise resource planning (ERP) vendors. These very vendors not that long ago exemplified failed business models, thus giving ammunition to some pundits to announce the obsolescence of ERP. A vendor that many have long considered gone south' seems not only to be shyly coming back onto radar screens, but has rather noisily been re-creating a sort of an IBM eServer iSeries (formerly AS/400) platform-based ERP empire, which was also once considered vanishing like Atlantis.

On October 28, SSA Global Technologies, Inc. (SSA GT), www.ssagt.com, a worldwide enterprise solutions and services provider, announced it has entered into an agreement to acquire 100% of the common stock of Infinium Software (NASDAQ: INFM), www.infinium.com, another like provider, although mainly within different industry segments. In the agreement, each outstanding share of common stock will be converted into the right to receive $7.00 per share in cash. The agreement specifies that the transaction is subject to approval of Infinium's shareholders as well as regulatory and certain other customary conditions. The transaction is expected to close before January 1, 2003 at which time Infinium should become wholly owned by SSA GT.

This is Part Two of a four-part note on recent developments at SSA GT.

Part One covered recent announcements. Part Three will continue to discuss the Market Impact.

Part Four will discuss Challenges and make User Recommendations.

Market Impact

With hindsight from two previous like-acquisitions, we tend to be more favorable and less skeptical about this acquisition of Infinium. While, at the time of interBiz acquisition, CA was in quite a quandary with its eroding finances and impending SEC investigation, and had for long not known what exactly to do with its bunch of aging ERP products and with confused and disconcerted customers and stuff members, Infinium has, contrarily, lately been praised for its successful comeback and for its crystal-clear focused strategy and energized organization (see Infinium Returns To Its Core Competencies To Succeed).

At about the same time as its new adopted parent, in late 2001, Infinium seems to have successfully bitten the bullet and began reversing its slew of preceding bad fortunes (see Figures 1 & 2). Consequently, the fast tracked return to profitability during the last four quarters. A several million positive cash flow and revenue growth in the last few quarters have renewed customers' and investors' confidence. The companys recent stock performance and a hefty cash price of over $100 million SSA GT is willing to fork out at the time of less than $1 million software bargains like PowerCerv or Clarus, speak volumes in that regard.

Figure 1.

Figure 2.

Like the previous two acquisitions, this one too seems aimed at enlarging SSA GT's customer base, market share, and, more importantly, its predictably recurring support revenue and consequently larger R&D pool. The acquisition nears SSA GT closer to the landmark number of 10,000 active installed customers, although at a price stretching its R&D and service & support resources. Yet, after close scrutiny and assessment of Infinium's strengths and weaknesses, the SSA GT management will have concluded that Infinium's over two decades long operating history, its functional and scalable solutions, over $50 million of recurring service & maintenance revenue stream (out of $67 million total revenues in 2002), and loyal customer base (with over 90% customer retention) due to traditionally exceptional customer care should help its comeback cause provided the merged company can curb certain challenges.

Adding New Market Opportunities

Another favorable difference from the interBiz' acquisition would be a much lesser functional overlap and a possible adversarial competition between SSA GT and Infinium products and target industries. Having not been entirely manufacturing-centric, Infinium should add diversity in terms of new market opportunities (competing rather with the likes of PeopleSoft, Lawson Software or Geac in certain service-based industries), while also expanding functionality and customer base, which has become important possibly more than ever nowadays for all software vendors in a shrinking economy.

SSA GT's current staff members have known as much about gaming and healthcare industries as mere hotel/casino/hospital visitors in the past. This is Infinium's forte. And, vice versa when it comes to Infinium's staff expertise in the automotive industry, it rests with SSA GT's current staff. Furthermore, when the inevitable products' redundancy rationalization soul-searching exercise is done, there should be a good potential for SSA GT to gain even more of a traction in some process industries, like batch-process chemicals, food & beverage etc., and to also up- and cross-sell some of its applications, including certain warehouse management systems (WMS) and BPCS role-based portal developments, to Infinium customers.

Conversely, SSA GT can expect to further sell to its own customers Infinium's CRM, HR/payroll and financials add-ons. In fact, a great number of SSA GT customers will have already deployed Infinium for astute HR/payroll and financials administrative back-office functions interfaced to SSA GT's superior BPCS product on the manufacturing shop floor, which should bode well for any tighter products' integration moves in the future.

Current Technology

Further contrary to the former interBiz' products, Infinium, while not at the cutting edge of product technology, is also a cry far from being outdated. One of the Infinium's crucial recent decisions was also the sole focus on iSeries platform and on IBM WebSphere technology and infrastructure, which was a prudent decision against the backdrop of the company's recent business circumstances and its resources. While not a platform with a high growth potential, iSeries remains a proven technology that is highly regarded for its reliability, stability, and robustness, which all typically result with a low TCO. The fact that IBM continues to invest in the platform's rejuvenating development and its Web-integrated infrastructure was yet another reason for Infinium to stick to its long partner's recognized technology.

Having decided on its platform support, Infinium energetically embarked on the mission to modernize its products architecturally while preserving its customers' manageable migration and their investment in its older product releases. Furthermore, a brand new browser-based user interface (UI) should have an appeal to current users and prospects, and should alleviate Infinium's proverbial problem of bland UI and unexciting metaphor that has often plagued its sales in the past and prevented its more widespread recognition.

Also, to alleviate anxiety of many of its users, which have heavily customized its older, green-screen' product versions, the company released recently a redevelopment tool designed to extend the business logic and interfaces of these product instances to the Internet. The tool uses XML to communicate with the IBM's WebSphere Application Server. Additionally, while Infinium's product is not based on object oriented programming (OOP) code per se, it has nevertheless long provided a great number of application programming interfaces (APIs) for interconnectivity among its own and third-party applications, all providing for flexibility and incremental deployment.

Cultural Synergy

Consequently, the similarity of the companies' recent cultures as well as their very similar product rejuvenation and functional expansion roadmaps should indicate many synergies that could exist between the two product lines/organizations, including the cited closeness of product codes at the base level and both camps' heavy reliance on proven IBM iSeries platform. These sorts of economies of scale are blessings in disguise could still allow SSA GT to build on its core ERP transactional capabilities while being able to offer viable extensions to the core products. Also the companies have similar philosophies illustrated in pragmatic product development approach and unrelenting focus on profits and cash generation lately.

The companies indeed belong to a group of vendors recently benefiting from the market sobering up from its recent 1990s infatuation with cool' (and often unproven and immature) technologies at any cost and from its subsequent reversal to a show me' attitude illustrated in a pragmatic home improvement' approach to utilize and/or rationalize already implemented software to excess ("shelfware") and to deploy new technology incrementally with a proven quick return on investment (ROI).

To their favor, mid-market enterprises have increasingly adopted the concept of a single-vendor application suites (ensuring thereby a single throat to choke) and tend to buy extended functionality from their ERP backbone vendor rather than to risk intricacies of a multi-vendor concocted solution. For vendors targeting mid-market manufacturers, current loyal customers have become pivotal to their success in selling upgrades and extended applications such as supply chain management (SCM), CRM, BI, portals, and SSA GT should have secured a fertile ground thus far.

This concludes Part Two of a four-part article on recent developments at SSA GT.

Part One covered the announcements. Part Three will continue to discuss the Market Impact.

Part Four will cover Challenges and make User Recommendations.



SOURCE:
http://www.technologyevaluation.com/research/articles/is-ssa-gt-betting-infini-um-tely-on-acquisitions-part-two-market-impact-16826/

PurchasePro Acquires Stratton Warren

Event Summary

PurchasePro recently announced it would acquire Stratton Warren, Inc., a provider of inventory management and purchasing solutions for hospitality related industries. Stratton Warren's customer base is composed of more than 50,000 suppliers that together purchase more than $5 billion each year. Vertical markets represented by the suppliers include government, foodservice, entertainment, resorts, amusement parks and hospitality. Among the more recognizable suppliers are Opryland, Fort Jackson Army Base, Snowbird Ski and Summer Resort, MGM Mirage, The Broadmoor, Delaware Park Race Track, The Greenbrier, Harrah's Entertainment Inc., Mandalay Bay Group Resort, Park Place Entertainment, Pinehurst Resort and Country Club and Vail Ski Resorts.

PurchasePro will make Stratton Warren's solution available to its tens of thousands of members in the company's global marketplace solution for buyside/sellside e-commerce solution. "The acquisition of Stratton Warren enables PurchasePro to incorporate best of breed inventory management and purchasing solutions into our e-commerce products," said Geoff Layne, executive vice president of PurchasePro.

PurchasePro will pay less than $15 million in stock and cash and expects Stratton Warren's financial results to be accretive, excluding non-cash charges. The two parties expect to complete the acquisition by the end of the year subject to customary conditions.

Market Impact

PurchasePro made a sound decision in acquiring Stratton Warren. First, Stratton brings PurchasePro the potential to add thousands of new customers from among its 50,000-strong supplier base. These suppliers will contribute to PurchasePro's recurring revenues through subscription or transaction-based fees charged for their participation. Second, compared to the potential increase in revenue it brings, Stratton is a bargain at $15 million. Even if no more than 40% of Stratton's suppliers elect to stay with PurchasePro, the company stands to receive between $7 and million to $14 million in additional revenue per year (assuming 30 transactions per month per supplier at $10-20 per transaction). Third, in managing the integration of its products, PurchasePro is able to capitalize on a working relationship and common industry focus with Stratton that extends back to 1997. In fact, PurchasePro began as an online marketplace for large hotels, casinos, and restaurants and these companies make up a significant portion of Stratton's customer base.

Together, PurchasePro and Stratton Warren gain more ground against competitors, in particular GoCo-op.com (see TEC article, Does Someone You Never Ever Heard Of Hold The Keys To The E-Commerce Kingdom?). Both rivals offer digital marketplace platforms including software, services and catalogs for hospitality related verticals. In contrast to Stratton, GoCo-op's supplier base is composed primarily of large hotel chains like Marriott International, Inc. and Hyatt Corporation. The additional hospitality verticals that PurchasePro gains through Stratton give it considerable edge over GoCo-op, which itself would have benefited from a merger with Stratton.



SOURCE:
http://www.technologyevaluation.com/research/articles/purchasepro-acquires-stratton-warren-16238/

Commerce One: Everything but Profits

Vendor Genesis:

Commerce One began life in 1994 as DistriVision, originally focused on developing CD-ROM sales catalogs. The company took its first steps toward fame and fortune at age two-and-a-half when it grabbed Mark Hoffman, who had been CEO of Sybase, to be its leader. As new CEO, Hoffman quickly raised more than $7 million in venture funding for the infant company, and brought several former Sybase employees along with him. Hoffman said at the time that he supposed the company could reach $100 million within five years.

A few months later the company had a new name and a new product release to go with it. In April 1997 Commerce One released products for building online catalogs, for shopping and for transaction processing. Following upon this release the company entered into its first significant relationship, a partnership with MCI. Under the terms of the partnership MCI provided network infrastructure and 24/7 operations for Commerce One to build its marketplaces. MCI Systemshouse and Ernst&Young Technologies were signed to provide consulting services to suppliers. MCI also became one of Commerce One's flagship customers.

In 1998 Commerce One teamed with Microsoft, PriceWaterhouseCoopers and SAP to offer purchasing services in Europe. Microsoft's presence was due to Commerce One's strategy of basing its products on standard Microsoft software. SAP was to provide ERP software. Also in 1998 the company made a fundamental commitment to XML by purchasing Veo, Inc. Veo specialized in developing XML based products for trading networks. Veo had been spun off from CommerceNet, where it was instrumental in developing CommerceNet's proposed standards.

By March of 1999 Commerce One had released a fully functional online product suite based on XML as a connector that would enable other companies to link with its software. With this software Commerce One's customers could go through Commerce One's marketplace, called MarketSite, to reach such vendors as Office Depot and Grainger. An XML tool, called the XML Commerce Connector, allowed buying companies to link from their own internally maintained catalogs into MarketSite, and also linked MarketSite to supplier catalogs. Overall, Commerce One's position regarding business languages in general and XML in particular has been to support open connectivity.

The same year, 1999, was Commerce One's IPO, which brought the company $69 million. However, soon afterward Commerce One suffered a setback when, as a result of its merger with WorldCom, an Ariba customer, MCI switched to the Ariba Network. But the loss was not fatal (although. Ariba's PR people made the most of it). By the end of the year Commerce One's stock price had shot up twenty fold, giving it a market capitalization of $20 billion, and it had partnerships with companies like British Telcom, Nippon Telegraph and Telephone, PeopleSoft and such financial institutions as Toronto-Dominion Bank of Canada and Banacci of Mexico. It had signed to develop General Motors' GM Marketsite, and had purchased CommerceBid to gain the technology to add auction capabilities to its product line.

Toddling into the year 2000 Commerce One has been moving strongly, especially in the international part of the world. It has developed regional trading hubs in China and South Africa to add to its others in Japan, Australia and Southeast Asia, Europe and North America.

Figure 1 shows the company's revenue history. Through Q3 of 1999 license revenues were growing faster than exponentially and service revenues were growing slower than linearly. This was an excellent position to be in. (Growth in revenues has been so amazing that were it to continue at those rates it would exceed $5 trillion within two years. So, of course a slowdown was to be expected, and must be seen as healthy. Growth in Q4 seems to have slowed in geometric terms, but this should not be of much concern, especially given the dramatic upturn in Q1 of 2000.)

However, licensing is not where the company expects to make its money. Much of its revenue is expected to be in the form of transaction fees for the purchases made on the various networks it manages or has revenue partnerships with. The company also expects to garner revenues from commissions on auctions and from subscriptions to hosted services. There are also revenue sharing agreements with at least 75 portal partners and the company is developing other services.

Overall, to date the only significant revenues have been from license fees. This is in line with all reasonable expectations, but we'd look to see those revenues begin to flow by Q3 of 2000, and Commerce One agrees that the next year or two will be critical in proving their financial viability.

Figure 1

Vendor Strategy and Trajectory:

Commerce One's initial strategy can be contrasted with that of rival Ariba, which went IPO a week earlier. Both companies discussed desktop (buyer-side) software and marketplaces. Commerce One claims that their emphasis from the beginning was always on the marketplace and that Ariba's was focused more on the desktop. It is possible to read the initial documents this way, although both companies left plenty of room to reset their directions after launch. However it is clear that Commerce One has been moving aggressively to build a large global network, and that the development and growth of the marketplace is a keystone of its strategy.

Commerce One identifies three types of marketplaces as being central to its future.

Mid-market: These are marketplaces dedicated to a single midsize company's supply chain or to a vertical niche. The Promus Hotel chain runs a marketplace of the former kind and OmniCell has one of the latter, in the healthcare industry.

Exchange Markets: These are larger markets organized around supply chain optimization. Examples include Commerce One's partnerships with General Motors, Shell and CitiCorp.

Regional Markets: Commerce One has been busy building regional marketplaces though partnerships with such companies as BT in the United Kingdom, Cable and Wireless Optus in Australia and NTT in Japan, to name about a quarter of these partners.

Commerce One ties these three market types together loosely in a Global Trading Web. For example, a pub equipment supplier in Australia might create a marketplace for its supply chain. If the marketplace operator allows, members of the marketplace can be given access to the regional market or even to the Global Trading Web, which would in principle allow them to sell their beer mugs and skittles to companies across the world. There are about twenty core regional participants in the Global Trading Web, with about twenty core verticals in each region.

Besides its marketplaces Commerce One maintains its desktop purchasing application, Commerce One BuySite, which currently supports about fifty enterprise customers. Commerce One's target customer is the large multi-national member of the Global 1000 or Fortune 200 with $500 million in indirect spending and 500 or more employees. The company is also looking for ASP opportunities, which Corio is the first to develop.

Commerce One has the philosophy that partners should share risks and rewards; as one executive puts it, "both sides should put their skin in the game." Thus, the company will take equity positions in small market makers, trading revenue sharing for lowered license costs. On the other hand, some of Commerce One's larger partners have taken equity positions in it.

Commerce One tends to believe that it is on track with both the BuySite application and the marketplaces, and is looking to extend its capabilities and offerings. A prime area here is developing supply chain solutions, which are being pursued through partnerships with Aspect Development (but see below) and with Adexa (see TEC note: What's in a Name for Supply Chain Vendors?)

Another is in the area of auctions; its Commerce One Auction Services product, based on technology acquired with its merger with Commerce Bid, can be sold as a standalone product or integrated with a marketplace solution. The overall direction of the company is to be a provider of enterprise portal solutions that are leveraged thought the Global Trading Web.

ANALYSIS:
Vendor Strengths

Commerce One's hierarchical network structure is an attractive environment for buyers and suppliers.

Commerce One has also built a very strong position in XML and catalog management, the latter through its acquisition of Mergent Systems. It has displayed a willingness to be an open system, much more than has Ariba to date, and this is helpful because it enables partnerships of many kinds. Not the least of these is its willingness to make network membership available through second tier products. Peregrine Systems and RightWorks are two of at least fourteen partner companies that can compete for the smaller companies within Commerce One's range, but which proudly offer access to MarketSite.

It is important to recognize that Commerce One's commitment to XML is far-reaching and represents a real technical strength. In particular, where XML itself is a standard that is technically neutral to the values passed in fields, Commerce One has incorporated data field validation ("strong typing") into its schema language.

Vendor Challenges

For any company in Commerce One's position - high market capitalization, done almost everything right, never shown a profit - the biggest challenge is going to be to keep the music playing. Although losses have been growing steadily, Figure 2 shows that over the last year the loss per dollar of revenue earned decreased significantly, which suggests that the company may be moving in the right direction.

Given that Commerce One's business plan still calls for it to make the majority of its revenues from transaction fees, it is unfortunate that much of the control of whether that happens is passing into the hands of other large companies. We have no reason not to expect that the various regional marketplaces will develop as long as the global economy stays strong, although it is not clear at what rate that will happen. However with the large exchange markets Commerce One is somewhat at the mercy of the relationships between the major partners (such as GM and Shell) and their supply chains. Those are complicated relationships that might not bend easily to the use of an exchange market.



SOURCE:
http://www.technologyevaluation.com/research/articles/commerce-one-everything-but-profits-15796/

Usability

Introduction

There have been several reasons given over the years to explain the success of Microsoft's software products. Rarely has usability featured in these discussions.

Many of us would recall how painful it was to draw a table in WordStar or WordPerfect. Microsoft Word made it simple, intuitive and fun to draw tables. The same goes for text formatting, mail merge, envelope printing, and so on.

Extra wide screens in many software packages force users to scroll horizontally. As a result, speed suffers because users need to lift their hands from the keyboards and keep reaching for the mouse. On the other hand, some packages have thoughtfully laid out their screens in such a way that horizontal scrolling is not needed and users can instead concentrate on their keyboards.

Many of us have come across web sites that take up several paragraphs to explain how to perform a certain tasksay, check contents of shopping cartwhen a hyperlink placed right there would have done the job easily. The Search feature on different web sites result in wide-ranging hit lists: some web sites provide matches only if the search term matches exactly with the way the web site has stored it; others are smart enough to present a hit list of approximate matches. Some on-line shopping web sites even lack a shopping cart feature and force you to keep entering the same information (for example, name, address and credit card details) separately for each item you want to buy.

Poor usability leads to irritation and fatigue, even if users do not their feelings. It has an adverse impact on the usage experience. In an on-line shopping web site, it can lead to loss of revenues. Poor usability of business applications leads to increased help desk costs.

On the other hand, better usability makes our usage experience more fun and can increase productivity. A highly usable on-line shopping web site tempts repeat visits, builds customer loyalty, and increases its revenue-earning potential.

For a company developing a software product, better usability plays a significant role in defining the brand appeal and conveying a certain positive brand experience. The enjoySAP initiative of SAP AG is a case in point. Owing to enjoySAP, the previously difficult-to-use screens of SAP software were completely re-designed, making them much easier to use.

As more and more software products tend to become commodities, traditional functional criteria will take a backseat to usability aspects. Says Mark Rolston of frog design, "In future, the behavior of controlling elements can be configured in an objective or playful way, and thus become part of the brand experience." Operating elements such as zooming or scrolling menus may ultimately determine whether a product is accepted or rejected by the market.

In a broader context that is equally applicable to software and web sites, C.K. Prahalad, management guru and professor at the University of Michigan Business School, recently unveiled a roadmap wherein companies will have to make a rapid transition from product and consumer orientation to customer solution orientation, and finally to the personal consumer experience viewpoint .

Defining Usability

While all of us have an intuitive understanding of what usability means, it is now time we looked at some definitions.

Fundamentally, usability is concerned with making systems easy to learn and easy to use. The term is used to describe the quality of a user's experience when interacting with a system whether a software package or a web site. A usable system is one that enables users to perform their job effectively and efficiently.

The International Standards Organization (ISO) defines usability as the "effectiveness, efficiency and satisfaction with which a specified set of users can achieve a specified set of tasks in a particular environment."

Usability relates to both form and content.

Microsoft Word and Excel are two examples of excellent usability among software products. The mail merge wizard in Word make it easy to create form letters. Word has similar highly usable features for printing mailing labels and envelopes. Excel provides an excellent paste function wizard (invoked through the f* button) for defining complex formulas with ease, and a highly usable chart wizard to quickly convert numbers to graphs.

Amazon and Expedia are examples of two web sites that display tremendous commitment to enhance the total usage experience.

Amazon's 1-Click ordering feature improves usability by enabling the registered buyer quickly order an item without having to enter shipping address and credit card details during each buying session.

Amazon's recently launched Search Inside the Book feature (see figure 1) allows buyers to search millions of pages to find exactly the book they want to buy.





SOURCE:
http://www.technologyevaluation.com/research/articles/usability-17186/

Enterprise Application Provider May Deepen Market Impact

Market Impact

The past several years have been tough for SoftBrands, a Minneapolis, Minnesota (US)-based provider of enterprise solutions for the manufacturing and hospitality industries (see SoftBrands' Recovery Softens the AremisSoft Bankruptcy Blow and Fourth Shift's evolution within SoftBrands' DemandStream). However, the worst is certainly past for SoftBrands, and there are some glimmers of hope for a better future.

For a discussion of the Classic Fourth Shift and Fourth Shift Edition for SAP Business One products, see Classic Enterprise Resource Planning Solution Shifts Over. For a discussion of the evolution and DemandStream products, see Extended Enterprise Resource Planning Vendor Shows Its Lean Side. For details on SoftBrands Hospitality, see Vendor Extends the Welcome Mat for Hospitality Industry.

This is Part Five of the five-part SoftBrands' Recovery Softens the AremisSoft Bankruptcy Blow series.

SoftBrands' manufacturing customers are concentrated in the life sciences, machinery, chemical and plastics, automotive, consumer products, and electronics industries. We believe that the life sciences and consumer products sectors represent potential growth markets for SoftBrands in North America. In the Europe, Middle East, and Africa (EMEA) markets, there is growth potential in Eastern Europe, primarily in the Czech Republic, Poland, and Russia.

When it comes to the Asia Pacific market, the manufacturing sector in China is growing rapidly, and the vendor should be well positioned to capitalize on this growth. In particular, SoftBrands should gain an advantage from the facts that the erstwhile Fourth Shift was the first enterprise resource planning (ERP) vendor to be certified by Chinese authorities, and that, for a long time, the Chinese market lacked the strong local competition found everywhere else. There might also be potential for SoftBrands to gain market share with private Chinese enterprises as a result of the Fourth Shift Edition for SAP Business One offering. However, the vendor will likely need to produce local language versions before it can generate substantial sales of Fourth Shift Edition for SAP Business One in the Asia Pacific market. In addition, localization of value proposition, implementation services, and functionality will be required to adapt the product to the cultural differences found in Chinese companies.

In terms of the hospitality sector, SoftBrands has a hospitality customer base of approximately 2,500 worldwide. Organic growth in hospitality might come from replacing legacy systems with new products such as Medallion, and winning new-name accounts.

Regardless of industry, however, all the above forays should be backed up by substantial progress in developing an indirect channel to supplement the company's direct sales force. SoftBrands currently has direct sales offices in several countries, including in Minneapolis, Minnesota (US); Reading, UK; and Tianjin, China.

Manufacturing sales offices employing about forty direct sales personnel are located in Singapore; Shanghai, Beijing, and Guangzhou, China; Johannesburg and Cape Town, South Africa; Dublin, Ireland; and Mexico City, Mexico. The vendor's customer service hubs for the manufacturing business are found in Mexico City, Mexico; Blackburn, UK; Mantua, New Jersey (US); and Johannesburg, South Africa. Despite the fact that SoftBrands distributes its manufacturing software and services through a combination of direct sales and resellers, essentially all its revenue is generated through the direct sales offices. The following table summarizes the principal means of distribution for SoftBrands manufacturing products by geography.

Table 1. Distribution of SoftBrands Manufacturing Products by Geography
Product Distribution
Fourth Shift Direct sales in the US, EMEA, and China Resellers in Europe, Japan, Taiwan, Malaysia, Australia, and Brazil
DemandStream Direct sales in the US, China, and EMEA
Fourth Shift Edition for SAP Business One Direct sales and resellers in the US, EMEA, and Asia Pacific
evolution Direct sales in the US and Asia Pacific.
Direct sales and one primary channel partner in EMEA

SoftBrands has quite a dispersed organization for a relatively small vendor with a number of diverse products. However, we believe that without development of a loyal channel beyond the current contracts with approximately twenty-five resellers and referral partners, the company's growth will be insufficient and SoftBrands will remain only marginally profitable. This is particularly true in light of many tier one vendors' painful learning experiences regarding the importance of resellers in the lower end of the market.

SoftBrands Future Focus

We expect SoftBrands to increase the amount of distribution resources devoted to its newest product offering, Fourth Shift Edition for SAP Business One, within the next few years. In addition, SAP will more than likely help SoftBrands round out its functionality in areas such as distribution requirements planning (DRP), transportation management, plant maintenance, and enterprise asset management (EAM), where SoftBrands would require significant investment to deliver on its own.

However, the markets for some of SoftBrands' more established products are mature, and the vendor may have difficulty generating significant new software license sales in those markets. In North America, for instance, the combination of a decline in the level of manufacturing activity and ERP software package purchases by a substantial portion of mid-sized manufacturing concerns can be expected to limit the potential for new license sales growth of existing ERP packages.

In these markets, SoftBrands may depend for growth on new software products that have a less consistent record of sales and service revenue, such as DemandStream and Fourth Shift Edition for SAP Business One. Demand Stream is a new application for lean manufacturing and a potential gold mine, but SoftBrands needs to form a respectable and knowledgeable team of business consultants that can help customers apply the technology to their lean initiatives.

While the vendor may become increasingly dependent on such products, which are not yet widely accepted (and which no one can be certain will ever be, since they have not sold in substantial quantities so far), SoftBrands will continue to invest in its other manufacturing applications, such as its classic Fourth Shift application and evolution. Given the apparent refocusing and transfer of the sales force to the SAP Business One edition, the vendor will have to tread carefully so as to not disconcert users of the original Fourth Shift. This is especially true in light of the fact that this product's recurring revenue remains a major chunk of the company's revenue. At the very least, SoftBrands should clarify for both existing and prospective users the functional, technological, and pricing differences between Fourth Shift and Fourth Shift Edition for SAP Business One. In other words, if someone was attracted to Fourth Shift in the first place, why should she or he consider (or not) the SAP Business One edition?

SoftBrands currently employs a staff of over eighty developers in its manufacturing software development department, and has contracts with a handful of independent developers. Table 2 shows the geographical spread of the product development departments for the various manufacturing products.

Table 2. Location of SoftBrands Product Development Departments by Product
Product Development locations
Fourth Shift Minneapolis, Minnesota (US) Tianjin, China
Fourth Shift Edition for SAP Business One Minneapolis, Minnesota (US) Tianjin, China
evolution Blackburn, UK Noida, India
DemandStream Minneapolis, Minnesota (US) Golden, Colorado (US) Bangalore, India

The Fourth Shift development staff focuses on developing new functionality that customers have indicated they desire and extending the interoperability of Fourth Shift with other software products and new platforms. Additionally, the vendor is still currently devoting substantial effort to integrating selected portions of the base Fourth Shift code with SAP Business One for Fourth Shift Edition for SAP Business One. On the other hand, SoftBrands' evolution development staff is focused on custom programming using the evolution tools to create individualized ERP systems for evolution customers. The DemandStream development staff has created, and continues to create, new software technology that further enhances this new product.

The idea of gaining economies of scale by building common application components as commodities that can be deployed within the entire product portfolio is tempting and promising in the very long run. However, the flagship back-office product lines will likely remain on separate tracks for some time to come, owing to their quite disparate, and in some instances proprietary, technologies and user bases. The disparity in the technological foundation of the products is also a disadvantage in that it has likely multiplied development expenses and caused difficulties with product integration, which also complicates the tracking of third party partnerships to compensate for the products' different weak areas.

Challenges

This technological diversity is not SoftBrands' only problem. In addition to the problem of blending many formerly independent organizations together, SoftBrands is still figuring out how best to bring their different technologies and industrial experiences to bear. Even if one puts aside the vendor's tainted parent's past (and the resulting negative market sentiments), the new company is left with multiple products whose brand recognition is quite low due to both the recent re-branding effort and brand confusion caused by the multiplicity of manufacturing products (not to mention the host of hospitality products).

Also, while the products may have their separate niches (i.e., Fourth Shift will be sold to Microsoft-centric smaller enterprises with up to $50 million (USD) in revenues within medical or surgical products, machinery, automotive, rubber and plastics, and furniture and cabinetry segments; evolution will go to larger enterprises with up to $250 million (USD) in revenues that prefer the UNIX and Oracle platform combination within the converters and packaging, apparel, textiles, food, and primary and dimensional metals segments), they may in some instances be similar enough to confuse former Fourth Shift and evolution direct sales representatives and value-added resellers (VARs) when selling the combined portfolio (e.g., to platform-agnostic, mid-market enterprises in the electronics and fabricated products sectors).

The channel partners for the most part will continue to concentrate on one product or the other, at least for now, which will demand little cross-training. Further, only selected members of SoftBrands' direct sales teams in selected geographies will be in the position of representing multiple products, and these individuals will be assisted by pre-sales consultants from one product group or the other who know their products in-depth. Still, the conundrum of how to show a single face to customers certainly remains, especially when it comes to more vigorous enticement and reactivation of over 1,000 dormant accounts. One should also be closely watching the impact of Fourth Shift Edition for SAP Business One on SoftBrands' revenue in the next several quarters as additional geographical releases enter the market.

That being said, SoftBrands faces fierce competition on many fronts. The market for ERP software is intensely competitive worldwide and also price sensitive because the functionality of many of the product offerings in this market have become similar to each other. Moreover, the North American portion of the market has matured and is largely saturated by existing vendors. Competition in this market has become particularly acute, and the market has shown reduced growth since 2000. The EMEA and Asia Pacific markets are less saturated and stronger growth opportunities exist.

Some key competitors for Fourth Shift include Epicor Software, QAD, SYSPRO, Microsoft Business Solutions, Oracle, PeopleSoft, and Infor Global Solutions. Key competitors for DemandStream include QAD, Oracle, Infor (formerly Lilly Software), Pelion Systems, Factory Logic, Exemplary, etc., while the evolution product competes with vendors of financial and enterprise management products from a number of suppliers, including QAD, Oracle, IFS, Infor (formerly MAPICS), Intentia, Glovia, Verticent, and SSA Global. The enterprise software market for the hotel and resort category is also highly competitive and fragmented. SoftBrands' property management systems (PMS) products compete primarily with Micros-Fidelios, HIS, and Springer Miller, while in the leisure management systems (LMS) realm, Springer Miller is the primary competitor. Similar to their manufacturing brethren, SoftBrands' hospitality products compete primarily on the basis of functionality and integration capabilities


SOURCE:
http://www.technologyevaluation.com/research/articles/enterprise-application-provider-may-deepen-market-impact-18438/