The e-business revolution is still in its infancy, but its impact on business has already been profound. A transformation of the most fundamental business precepts is occurring: how a company does business, how it enters new markets, how it communicates across the enterprise and how it deals with customers and suppliers. Those organizations able to effectively manage this transformation stand to achieve substantial gains in productivity and operating efficiency, improvements in end-user and customer satisfaction which ultimately affects the top line and greater flexibility to respond quickly to new business opportunities. Those unable to adapt will find themselves increasingly hard pressed to compete against the new breed of e-enabled businesses.
Yet, despite the strategic importance of e-business and the self-professed eagerness of executives to jump on the e-business bandwagon, there is surprisingly little consensus on the issue of what "e-business" actually is. Some think of e-business as the marketing of products and services via the Web. Others see it as the use of the Internet and corporate intranets to optimize business processes or to improve corporate communication. Still others see it as an advanced form of EDI, taking advantage of the new generation of business applications such as enterprise resource planning (ERP), supply chain management (SCM) and customer relationship management (CRM) tools to enable data exchange between a company and its distributors and suppliers.
While all of these describe potentially useful e-business processes, none addresses the most critical component of the e-business paradigm: information. The e-business revolution has created new e-business intelligence challenges: companies now have to analyze information that grows minute by minute with every online interaction and transaction.
The e-business revolution is, at the most fundamental level, a revolution in a corporation's approach to leveraging information resources. No matter what the goal of a specific initiative shortening cycle times, identifying supply chain inefficiencies, targeting marketing initiatives, lowering return rates, increasing retail sales at a Web site, reducing problem resolution response rates, capitalizing on consumer buying trends, etc. e-business addresses the problem at the level of the information, putting the right information quickly and reliably in the hands of decision-makers.
Consider the following examples:
- A consumer electronics manufacturer faces serious inefficiencies in managing its supply chain. The company, which distributes its products through a collection of retailers such as Circuit City and Best Buy, finds that it must maintain six weeks of inventory on hand at each retail location to insure against shortages. As a result of this inefficiency, the company is forced to allocate $25 million annually as "price protection" against discounts it may introduce that affect merchandise on hand at the retail locations. The company undertakes an initiative to share sales information electronically with its retailers and distributors, enabling it to increase the accuracy of its forecasting and improve collaborative decision making across the supply chain, ultimately reducing inventory on hand from six weeks to one. A Web-based e-tailer provides businesses with direct access to wholesalers and manufacturers and manages company purchasing online. The company discovers that despite the success of its e-commerce model it has no visibility into the purchasing patterns of its users and may be leaving a significant amount of business on the table. The company undertakes an initiative to gather information on site usage through the entire sales process, from site access and account setup through ordering and establishment of procurement and approval procedures. This information is made available via the Web and the corporate intranet to managers, enabling them to monitor key performance indicators in real time, respond quickly to problems and anticipate customers' evolving needs.
- A university with a number of geographically distributed campuses discovers that it squanders a significant amount of staff time answering queries from students and faculty on a range of administrative questions. The information is stored on a range of systems located across campus, ranging from Oracle and SAP R/3 financial applications in the administrative offices to Excel spreadsheets on departmental servers. The school undertakes an initiative, using the Web and a series of interactive "kiosks" located around its campuses to provide students and faculty with self- service access to the information they require, enabling them to make decisions more quickly and effectively while reducing the school's operating costs.
As these examples illustrate, the core of an e- business is not the back-office automation applications, the use of the Web or the electronic exchange of data it's the effective use of information to improve decision making.
Of course, businesses have always recognized the need to use information to improve decision making. However, in the e- business enabled world, the value of timely, accurate and up-to-date information has never been greater. Companies find themselves under tremendous pressure to decrease cycle times, improve time to market, respond quickly to changing customer buying patterns and increase the speed and efficiency of their internal business processes goals which can only be met by improving the speed and quality of decision making. Employees at these companies require access to the relevant business information in order to perform their jobs effectively to "manage with the force of facts."
The demand for information also extends outside the corporate firewall. In order to improve operational efficiency and optimize the supply chain, companies are increasingly seeking to share information with suppliers, distributors, subsidiaries, strategic partners and customers. In so doing, the companies stand to gain through improved decision making up and down the supply chain. Moreover, companies unable to share information are increasingly finding themselves at a competitive disadvantage as potential partners or customers move their business to a competitor who can offer real-time service metrics, account information, inventory data or other valuable information to improve their decision making.
The Information Bottleneck
Today, businesses have more data at their disposal than ever before. In preparation for Y2K, companies modernized and streamlined back-end processing, implementing and updating ERP applications and more specialized business applications that capture data about customers and the supply chain. More information is generated by legacy applications, corporate Web sites and sources outside the firewall. Additionally, end users generate a tremendous amount of information in the form of documents, spreadsheets, diagrams, audio and video files, and e-mail.
Unfortunately, information use at most organizations is inefficient, uncoordinated and unresponsive to the needs of end users. Data remains bottled up, "stovepiped" in proprietary formats or extracted to data warehouses and data marts, available only to authorized users who have been trained on complicated OLAP and query-and-analysis tools. (GartnerGroup estimates that the average Fortune 1000 company maintains over 300 separate database systems, each of which is likely to have its own authorization procedure.) Ordinary users'- only access to the back-end data is through scheduled reports or manual requests to IT for custom reporting.
As for the unstructured data the documents, diagrams, Web pages, and so forth users have no way of knowing it even exists, much less of determining its relevance to their needs. Even when they know the information is available, they must retrieve it from any of hundreds of locations across the enterprise which may or may not be accessible via the corporate intranet. End users outside the firewall tend to be shut out completely.
Unlocking the Information Supply Chain
In order to improve enterprise information use, managers must first consider how information moves within their organization and between organizations. The flow of information can be thought of in terms of an "information supply chain." In this model, the information "suppliers" are the business applications, data warehouses, end users and external data sources; the "manufacturers" are the reporting and business intelligence (BI) tools that retrieve the raw data and transform it into useful information; the "distributors" are the means of securely and reliably delivering information to end users; and the "customer" is the decision-maker who must have a way to quickly and easily acquire the information "products" he or she needs. Like any supply chain, the information supply chain must be effectively managed in order to run smoothly and meet customer needs.
Optimizing this information supply chain represents the most important strategic challenge businesses face as they make the transition to e-business practices. To do so, they will require a framework that enables IT to manage the flow of information from generation to final delivery. Such a platform must offer, at a minimum, the following critical functionality:
Universal access to all data and information sources. To maximize the value of enterprise information, the framework must provide access to all data, wherever it is located and in whatever format it is stored. This includes both structured data from data warehouses, data marts, ERPs, relational and multidimensional databases, CRM, SCM and custom applications and unstructured information ranging from documents to multimedia files to real-time feeds. It also includes BI and analytical tools for deeper analysis by the end user.
Delivery of information and active content across the entire enterprise. The framework must provide a common mechanism for distribution of information and analytical applications to all points across the corporate intranet and beyond the firewall to Internet and mobile users including customers, partners and suppliers. It must scale to support a very large number of potential users, working on a wide range of platforms and generating an increasingly large workload. It must deliver the full range of decision- processing content from personal report viewing through data analysis and OLAP to advanced custom and packaged analytic applications. And it must output this information in the user's required format via any of a range of distribution mechanisms including the corporate intranet, the Web, e- mail, networked printers, fax machines, pagers, cell phones and small portable devices.
Support for the decision-processing needs of everyone in the enterprise. The framework must be able to meet the needs of all users at their level of expertise. Developers will require a uniform authoring environment, providing access to a broad array of BI tools for application and report development; administrators need facilities to control cataloging, authorization, load balancing, etc.; and end users need timely, accurate, easily accessed business information as well as analytical tools to enable them to pose more complex "what-if" questions.
In the past year or so, BI portals have emerged from obscurity to become the most widely accepted model for distribution of and self-service access to corporate information. According to META Group research, "In many Global 2000 organizations [BI portals] are becoming an anchor point that provides employees with the means of dealing with a richer set of information." The Patricia Seybold Group calls them "the most promising answer to the problem of connecting users with the business information they need to make decisions."
As the portal model has gained popularity, vendors of traditional BI and reporting tools have been frantically repositioning themselves as portal vendors. In contrast, customers are deriving benefits from more established portal solutions that meet all fifteen design criteria identified in a recent Patricia Seybold Group report as "essential requirements" for an effective BI portal solution. Among these are manageability, security, scalability, openness and ease of use/access.
Organizations that can effectively deliver information, reports and BI analytical tools to end users will already have achieved many of the benefits of a tightly managed, efficient information supply chain. But there is still another level of value added to a decision-processing solution: analytical applications.
Increasingly, businesses are looking for insight into persistent business challenges: telephone service providers seek to reduce churn, retailers seek to match customers with purchase patterns to target promotions, managers seek to improve forecasting in order to optimize their orders to suppliers, top executives wish to monitor a "dashboard" of key performance indicators. Data feeds from multiple sources and analytics, along with reporting and scheduling functions, can be combined into a targeted analytical application, giving decision-makers an easy way to get insight into even very complex business problems.
Effectively managing the e-business transformation will enable businesses to achieve substantial gains in productivity and operating efficiency, improvements in end-user and customer satisfaction, and greater flexibility to respond quickly to new business opportunities. Only when businesses learn how to master information will they truly be able to stay ahead of the e-business curve.
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