E-markets must solve data exchange problems
With the transaction technology and governance of big business-to-business, online trading hubs in place, operators of many of those ventures are finding that setting up the venue is only the first step to getting suppliers to trade at the sites.
The roadblock in many cases has been the difficulty those suppliers have had connecting their IT infrastructures to those of the trading hubs.
Auto-industry-sponsored e-marketplace Covisint LLC and General Electric Co. have separate efforts under way to ease the integration of suppliers ERP (enterprise resource planning) applications into B2B settings.
Covisint, of Southfield, Mich., late last month signed up enterprise application integration software developer WebMethods Inc. to integrate the applications run internally at the exchange with apps run at its external partners and suppliers. The thousands of auto industry suppliers targeted by Covisint will be able to use WebMethods Extended Enterprise Solution Suite integration platform as an on-ramp to connect to the exchange.
The integration issues at Covisint, as in most B2B cases, boil down to a couple of main points. One is a technology barrier that includes scalability and standardsa lot of suppliers simply dont have technology in place that is scalable to buyer expectations. The other is that industry standards for technology integration and data exchange are still being defined in many sectors.
Another issue is business processes, or, more precisely, changing the manual way a company does business to real-time, Web-based processes.
Getting suppliers out of old habits and making them use online business processes is a challenge for Larry Mieldezis, vice president of technical services at forest products exchange ForestExpress.
"The way I buy product today is very manual, very one-on-one, with a lot of phone calls back and forth," said Mieldezis, in Atlanta. "The challenge is to put your arms around that process and put your arms around technology that embraces that and around how things flow and work today."
E-marketplace platform provider Commerce One Inc., which is in partnership with Covisint and WebMethods, of Fairfax, Va., is beta testing a host of supplier enablement products that it developed with Microsoft Corp.
The jointly produced software solutions, expected in the next quarter, couple with a Commerce One connectivity kit that supports different business processes, such as invoicing, inventory and order to promise.
Commerce One, of Pleasanton, Calif., expects to announce this quarter a product to provide suppliers a much more effective way to market their services to marketplaces and buyers while providing more traditional procurement capabilities such as managing inventories and change orders, according to Mike Micucci, vice president of solutions strategies at Commerce One.
In a further effort to ease integration of ERP systems with e-marketplaces, Commerce One last month quietly released MarketConnect, software that extends SAP AG legacy applications to Commerce Ones e-marketplace environment.
Meanwhile, GE, of Stamford, Conn., is looking to its GE Global Exchange Services business unit to overcome many of the integration technology hurdles that hinder its suppliers from taking part in e-commerce.
First, GE has to raise all its suppliers to a base level of e-commerce capability by involving them in its private exchange, GE Supplier Network. The company last year said it would save $10 billion by integrating its 15,000 suppliers into GSN. Thus far, GE has connected only a quarter of those suppliers and saved just a tenth of the target amount, a GE spokeswoman said.
But the company is not backing off from its expectations and considers its supplier integration successful to date, even if "integrated" in most cases means it just has the ability to exchange e-mail with a supplier.
GE has mandated that by November, 100 percent of its suppliers must be able to transmit e-purchase orders and e-payments. Those that cant wont be doing business with GE, the spokeswoman said.
Once suppliers gain the ability to share purchase orders and invoices electronically, GE plans to move them a step further into the wired world by integrating their systems with GE Global Exchange Services. GXS, as it is known, operates one of the largest B2B e-commerce networks in the world, with some 100,000 trading partners.
To facilitate this leap into the big leagues, GXS late last month made available an interface that connects its GE InterLinx and Enterprise System integration brokers with Enterworks Inc.s Process Integrator. The interface enables system integrators to build custom-tailored applications for modeling, executing, monitoring and tracking supply chain processes, according to officials at Enterworks, in Ashburn, Va., and GXS, of Gaithersburg, Md.
Business processes that can be automated include procurement workflow, warehouse logistics and exception handling, the officials said.
GE isnt out of the woods yet when it comes to knitting the business processes of its suppliers with its own and with those of the buyers that use GXS.
Gary Hare, who formerly worked for GE, said the company has made a start but still needs to help suppliers create catalogs. "They are not anywhere near where they want to be on the front end," said Hare, who late last month became CEO at online catalog maker Vinimaya Inc., of Tarrytown, N.Y.
Still, what success GE has seen in getting suppliers involved in B2B e-commerce may be more than other companies can claim, Hare said.
"They have a wholly owned subsidiary of the oldest EDI [electronic data interchange] provider and have the middleware that competes with WebMethods," Hare said. "So, with all that GE has going for them, you can only imagine the situation with other companies that dont have GEs assets."