Retooling for E-Business - Page 3

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Moving to Plan B

As successful as the advantage 2000 initiative was in meeting its original objectives, however, it turned out to have a major flaw. Like many major IT-led initiatives of the mid-1990s, Advantage 2000 was almost exclusively focused on improving processes within Owens Cornings walls. When e-business came along, customers and partners expected to be able to use the Internet to work with manufacturing companies faster and easier. Yet Owens Corning and many other companies discovered that, despite huge investments in ERP, they were no closer to e-business.

"We took more of an internal view vs. an external view and started thinking about how we could eliminate costs without being focused on our customers," said Johns, recalling the early days of Advantage 2000. "Not that we ignored the customer, but if we had to do it all over again, I would have started with the customer and worked backward. Thats what were trying to do today."

Indeed, in an attempt to give customers and suppliers online access to its systems, Owens Corning has begun retrofitting its SAP core infrastructure with a series of new Web-based applications. One is an extranet that gives customers and partners access to supply chain tools that determine how much product theyll need to order, when products will be delivered and where in the supply chain their orders are. Information is extracted from key R/3 systems and presented to extranet users along with the tools. Owens Corning also uses the extranet to survey customers to determine their levels of satisfaction.

Owens Corning is also installing SAPs portal software as part of an effort to make CRM and business collaboration capabilities available over the Web.

Finally, Owens Corning has begun to turn to vendors other than SAP for Web-based applications. Last summer, for example, the company went live with a new logistics system developed and hosted by e-BizChain Inc., a supply chain software vendor and application service provider in Pleasanton, Calif. All in all, Paul Fortner, Owens Cornings director of e-business and new digital technology, estimates the system saves Owens Corning more than 5 minutes per shipment. This savings is achieved by automating Owens Cornings logistics operations and allowing employees to use Web browsers to interact with trucking carriers, check the status of shipments and input data upon customer demand. Tied in to Owens Cornings back-office SAP system, the software sends information about carrier loads and delivery status, using XML (Extensible Markup Language) to translate EDI (electronic data interchange) data into a Web format.

Five minutes per shipment might not seem like a big improvement, but consider that the company handles more than 3,500 shipments a day.

While turning to suppliers such as e-BizChain to enable its ERP environment for e-business, Owens Corning has slowed its deployment of new R/3 functionality in some areas. The company has so far, for example, decided not to deploy SAPs Advanced Planner Optimizer set of supply chain management tools, said Johns.

Owens Corning is doing the right thing by focusing on how it can integrate customers online before adding new R/3 functionality, said Michael Burkett, an analyst at AMR Research Inc., a consultancy in Boston.

"Its like being the Monday-morning quarterback, where hindsight is everything," Burkett said. "Today, the way you interact with your trading partners outside your own four walls has become much more prevalent than eight years ago. But Owens seems to understand that the easier it is for you to bring in new partners and get connected, the easier it is to do business."

While Owens Corning will continue to rely on R/3 to run its business—and to upgrade its R/3 environment—Johns said the need to retool its IT strategy has taught the company that, in the e-business era, a single-vendor enterprise software vendor strategy may not make sense. A best-of-breed approach may be necessary, he said.

"We are an SAP customer, and we are moving forward with SAPs new release of products,," said Johns. However, he said, "we are a little smarter than we were in the past, and whether our solution will always be SAP—I dont think its realistic to say it will. SAP cannot be the end-all for everybody, and we certainly learned it is not for us. We will use the ERP infrastructure as a platform, but we will pick and choose what makes sense for us. Were not going to change our approach, but itll be a modified approach. Well be a little more open to other solutions and alternatives in the future."

Thats not the only lesson Owens Corning has learned as it attempts to rebuild its IT strategy for e-business. Its also learned that its important to be flexible in working with customers and suppliers.

A year ago, the company was actively pushing large customers onto EDI or to use XML-to-EDI-based technologies. In some cases, the company insisted that customers use EDI or they couldnt place orders.

It soon became clear, however, that customers werent taking the bait. After realizing that it had automated only 5 percent to 10 percent of its transactions, the company suddenly changed its hardball tactics and adopted a kinder, gentler approach. In July, the company deployed a suite of applications from BroadVision Inc. to consolidate groups of Web pages into customized portals for customers based on their locations and needs. It is also offering technology help to customers who want to take advantage of Owens Cornings XML and EDI capabilities.

"We are approaching our extranet rollout much differently from our EDI rollout," Fortner said. "We dont want to force people to use things they dont really want to use. Our direction has changed in that now were looking toward profitable growth for our customers, and were retooling our strategy to be consistent with that."

And Owens Corning is rethinking how and when it will use e-marketplaces. While the company continues to take advantage of public exchanges such as FreeMarkets Inc. and ChemConnect Inc. for some online procurement, it pulled out of a private consortium-backed exchange initiative being discussed by other large building suppliers last summer.

"There are just very few Internet marketplaces that are actually working and operating, and building materials is such a fragmented industry that its difficult to really get something going," Johns said. "Strategically, I think we made the right choice."

Johns is aware that, given his go-slow approach to e-marketplaces and his need to rework Owens Cornings strategy for e-business, he might be accused of getting to the party too late. But, particularly compared with dot-coms and others that placed all their bets on capturing so-called first-mover advantage in e-business, being a little late might not be such a bad thing.

"Our strategy is slow and steady. We never look further than 18 months ahead," Johns said. "Could we move faster? Im sure we could. Are we moving too slow? I dont know. Based on our problems and the opportunities we have available to us today, I think were doing all right."