A recent TV ad pokes fun at an increasingly taxing problem for IT departments. A group of executives sit around a table gazing in awe at a 'universal business adapter', which connects everything from Linux servers to laptops and CRM. The only problem is that, to make the adapter work, the managers need an adapter. The message? There's no simple answer to real-time integration.
Linking ERP and supply chain technology offers tantalising benefits. Having real-time information on raw materials, shipments, logistics and fulfilment means that companies can plan their entire supply chain more efficiently. When a truck breaks down or a raw material isn't available, real-time organisations can quickly switch production schedules and adjust delivery estimates for customers. This all spells lower inventory, more automation and better use of capital, says Laurence O' Neill, a supply chain consultant with LogicaCMG. "Getting to that level of integration is the Holy Grail for most of the IT directors we speak to," he says.
When Vinten Broadcast, a manufacturer of TV cameras, rolled out an integrated supply chain application from IFS, the company cut order processing time from four days to under one hour.
In the past, Vinten's customers sent orders by fax, and Vinten then ordered goods from its suppliers using paper or email. Today, the IFS software provides a single portal for customers to place orders, and for suppliers to receive order information. Sales staff use the portal for real-time information on stock availability, which is particularly useful in the growing spare parts business, says Chris Stanghan, Vinten's business systems manager. "If a film crew is in Surrey filming a drama and a camera breaks, they want to know immediately whether we have a spare, and when it can be delivered," he says.
Real-time is expensive and time-consuming
Vinten Broadcast is fortunate because all its systems run on the same software, allowing near-real-time information sharing between ERP and supply chain apps. For most enterprises, the IT infrastructure is a spaghetti of mainframe applications, legacy systems, customised applications and networks that have been cobbled together over decades. Creating real-time information in this environment can be both expensive and time-consuming.
For many years, the most common way to get information from ERP to supply chain systems was using Electronic Data Interchange (EDI). This only provides batch-processing in near-real time, and can be frighteningly expensive. With the arrival of the Internet, companies can share data more cheaply across enterprise platforms -- but not necessarily more quickly.
Some industry experts don't think there is a way around the real-time information problem. "You cannot achieve real-time supply chain unless it is architected to achieve it from day one," says Joel Reed, director of supply chain marketing with JD Edwards. "If you have a range of platforms, you can use the Internet to integrate them and do batch processing, but if you want real time you have to rip it out and start again with like SAP or JD Edwards or Oracle -- something architected the right way."
Rip 'em out and start over
This attitude isn't particularly helpful for most companies, says John Norcross, director of technology transformation with Celerant Consulting. "I struggle with the 'rip 'em out and start over' attitude, especially in a time when companies are so reluctant to spend enormous amounts of money on large-scale IT implementations," Norcross says.
Norcross believes that technologies are available to help companies integrate ERP and supply chain applications in real-time without starting from scratch. "XML, .Net and SOAP can all make a big difference to companies that have legacy and customised applications," he says. Converting data from legacy applications into Web-based protocols such as XML can allow two different applications to communicate in what Norcross calls 'very near real time' with so small a delay as to be effectively real-time.
Some consultants are also working on software that could allow companies with non-standard infrastructures to communicate in absolute real-time across the supply chain. The effectiveness of these applications is often dismissed by ERP vendors because they represent a threat to their market, says Ian Walker, head of digital supply chain with CSC. "The big vendors are becoming very worried about the developments in architecture and business process management because it challenges the idea you need wall-to-wall SAP," he says.
CSC has developed its own proprietary supply chain process management software, which is currently being used by nine customers in the US and Europe. The e3 architecture pulls application data into a central data ring where it can be shared between any number of applications and platforms. The technology uses a variant of XML known as BPML (or Business Process Markup Language) to translate data from legacy and best-of-breed systems into a common format. The resulting data can then be presented through an application, a browser or any other interface the customer chooses.
The e3 architecture is an example of what EDS calls 'supply chain event management' technology. "We are seeing a breed of software applications that sit on the Internet and pull information from disparate platforms, and present them in a single, integrated view," says Paul Turner, a senior consultant with EDS. "They plug the gaps between ERP systems and other enterprise applications on the supply chain. It means that for the first time it really isn't necessary to have SAP in order to get real-time information."
Supply chain event management
Similar software packages are available from a number of independent software developers. For example, ERP vendor Strategix has developed a series of Microsoft COM business objects that represent particular functions -- such as customer specific pricing or invoice processing. Customers can use some or all of the objects to integrate their ERP systems into existing applications in real time. The idea is that users can access CRM data and functionality through the Strategix ERP software.
When Virgin Mobile rolled out Strategix, the phone company already had a CRM system in place. Real-time integration between the two was vital because the mobile phone market is so competitive and fast-moving. Call centre agents needed real-time access to stock availability and delivery data on the desktop, and new orders also had to be entered into the ERP system in real time. Strategix sits on the desktop alongside the CRM application and pulls out data in real time. "The user doesn't know the difference, but Strategix has effectively opened an account for a customer in the ERP system that mirrors the CRM," says Peter Lusty, Strategix chief executive.
At Virgin Mobile, the integration and rollout took under four months, but that's still a good deal of upfront work for the IT department. This can make real-time supply chain projects extremely costly, and businesses should approach them with care. The key to success is asking customers why they need real-time information and whether the benefits will justify the integration costs involved. "I think a case can be made for real-time data in most industries, but you have to look for right-time information too," says Norcross. In other words, look for the vital metrics and data sets that can provide real operational advantage if captured, measured and managed in real-time. "One of the reasons so many firms find moving to the real-time enterprise so difficult -- they try to get everything in real time," Norcross says. "Decision makers need to make a call on what data is important and what data is less important for their real-time initiative."