When the UK division of electronics components distributor Premier Farnell made a commitment to become more customer-focused in 2000, it naturally decided one of the most effective ways it could do so was by opening itself up to customers over the Internet. But with 1.25 million customers spanning a whole spectrum of size and technical sophistication, this has proved a major challenge.
"We needed the technological equivalent of the ‘Babelfish' universal translator from A Hitchhiker's Guide to the Galaxy – something that would translate all of our customers' electronically generated purchase orders into ‘Premier Farnell speak'," explains ebusiness development manager Mark Piers.
Until the late 1990s, Premier Farnell's customers could only order components through a series of paper catalogues, or by phoning or faxing their order. It was only when a growing number of Premier Farnell's larger customers began to put in place online procurement strategies that the company realised it would have to make its products available over the web.
This realisation spurred a £1.5 million investment in a business-to-business (B2B) ecommerce infrastructure that has subsequently helped the company clinch global procurement deals with blue-chip customers such as BAe Systems. By 2003, Premier Farnell expects to execute around 30% of its sales online.
Getting to this point has been a slow process. First, its systems have to deal with multiple procurement systems at the customer end. While large customers tend to use e-procurement applications from software suppliers such as Ariba and Commerce One, or industry exchanges such as Covisint, smaller customers – which make up around half of the company's revenue – use a wide range of mechanisms from web portals to email.
The challenge for Premier Farnell was to ensure it could process these orders, regardless of format.
Underpinning this translation mechanism is a complex infrastructure of middleware, personalisation and customer relationship management (CRM) technologies. One of the first steps Premier Farnell took to put this infrastructure in place was to integrate its multiple databases using IBM's WebSphere MQ (formerly MQSeries) messaging middleware. It then deployed Siebel's CRM suite on top of this integration layer. This allows managers at the company to analyse the underlying customer data so that they can target offers or respond to customer requests in a more tailored manner.
Tying Premier Farnell's customer-facing activities to its back-office operations is a crucial piece of middleware technology – an XML data mapping and translation engine, Orbix E2A, from integration software vendor Iona. Orbix E2A connects customers to Premier Farnell's e-procurement application and translates their order into an XML-based request, which is then sent to its integrated product database. Although there is a considerable amount of data exchange and translation occurring between Premier Farnell's back-office systems, these processes are invisible to the customer.
In the future, Piers hopes to open up Premier Farnell's architecture still further using web services. This, he believes, will make Premier Farnell's architecture more flexible, as well as ’embedding' Premier Farnell services into customers' ordering and procurement systems.
Managers in the financial industry dream of being able to settle trades within a day of execution, according to Mark Hunt, global director of enterprise product marketing at Reuters.
Reuters, although best known for its news and information services, also supplies customers in the financial services market with a range of software products and systems integration services. But Hunt's one-day settlement goal is still some way off. Until recently, it typically took two weeks for a currency trade, for example, to be settled. Even now, the process normally takes about five days. The cause is simple: a lack of integration and consequent inability to perform ‘straight through processing' (STP).
This lack of integration slows the settlement process down and often means that employees must re-key data as it passes between disparate systems. Typically, cross-border currency trades involve up to 25 different people, processes and systems. As a result, mismatches occur in about 10% of instructions and up to 20% are not settled in time, according to research carried out by bank transfers organisation SWIFT. This costs the financial services industry an estimated $12 billion every year, it says.
The solution to this problem will involve a combination of enterprise application integration (EAI) software, portal software, web services technology and business process management systems, says Hunt.
‘Total business integration' Reuters-style involves implementing EAI within the client organisation to connect disparate systems. Reuters' STP product offers a Tibco-based integration package that is tailored to the specific implementation challenges faced by high-end financial services institutions, says Hunt.
EAI-based approaches are already being augmented by the introduction of web services to help connect more processes internally, as well as connecting the organisation with e-marketplaces, customers and distributors.
How these processes flow through the organisation and out to business partners will be dictated by business process management systems, believes Hunt. The picture is completed by portal software that provides an alternative access point for employees, partners and customers.
"It's all about linking and exposing your company's processes to other companies. That creates some very difficult challenges. It certainly has for Reuters and our major investment bank customers," he says.
But today, even the most rock-solid of financial institutions are wary of embarking on major projects unless a sound return on investment (ROI) case is made, and organisations want to see a return in an extremely short time, he says. ROI in the financial services sector used to be around two and a half years for a big infrastructure project, "but we know customers now who are demanding an 18-month ROI", says Hunt.
Given that the savings that can be made from tighter integration can be quantified much more easily in the banking industry than other industries, Hunt does not believe business integration is a difficult sale if the case is plainly stated. Quite simply, STP will help clients save money. And where the early-adopters of the well-resourced financial sector lead, companies from other sectors follow.
Rob Marston, IT infrastructure manager at recruitment company MSB International, has some front-line experience in change management. After using business process management (BPM) technology to automate a paper-based system at the company, he found that many die-hards refused to use the new system. His solution? "We hid the last stocks of blank paper forms."
MSB manages a pool of around 4,000 IT contractors and handles a weekly payroll of around £2 million. The unpredictable nature of contract employment often means that the rates paid to contractors and the lengths of projects they are deployed on change every week.
Until 2000, the company used a paper-based system called the Contractors Out Form (COF) to document details of projects, rates and contractors. Marston says it was the complexity of managing this form as it was passed from department to department that "forced MSB down the BPM route".
After arranging a job for a client and negotiating a contract with a supplier, explains Marston, sales executives would have to "walk COFs around the building", getting them approved by various departments, each of which would take the form and add their own information. The costs to the company of errors, incomplete information and lost paperwork were significant, he says. "Even our best employees make simple mistakes. And usually, it was whoever sat closest to the accounts department who got the best service," he confesses. "I see it as the job of BPM technology to protect our companies from such mistakes."
After making the decision to use BPM technology in 1999, the company eventually settled on BPM software specialist Metastorm's e-Work product in 2000. This decision was sprung on Marston, shortly after he joined MSB. "My involvement started when a box landed on my desk, with a large manual and a note saying, ‘Please implement this'," he explains.
Marston then sat down with business managers from various departments to model the process of completing a COF. These meetings provided everyone involved with a real insight into how MSB managed data about its contractors, he says. After a few days, they had added new requirements to the document, and identified so-called ‘mandatory' fields that were, in fact, redundant. "We had been insisting on [gathering] information that we never did anything with. Nobody had noticed before because nobody had ever thought to ask who used it," he says.
After three months, MSB had fully automated its first business process. Marston believes that the first-year savings made by the business of automating the flow of COFs were approximately £100,000, including the costs of the software, hardware and training.
"In the good old days, when a salesman would walk his form around the building, it would take 60 minutes on average. Now the average COF is processed in nine minutes," he says. If the appropriate person is not available to sign off a COF, then the system automatically delegates the job to someone else. Moreover, if an employee fails to perform a task, the system will automatically email them, and "prod them" into getting on with it. Marston says MSB has discovered other hidden benefits in BPM. The whole process is easier to audit since Meta-storm's software provides the company with a comprehensive audit trail. In addition, he says, because the system uses a standard enterprise database, it can be interrogated by reporting tools such as Crystal Reports from business intelligence software vendor Crystal Decisions.