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JUNE 2004 |
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Welcome to the June Fast Five Minutes! |
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Executive Insight - Food Chain Comparisons |
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Case Studies and Recent Wins |
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Tech Insight: Extending Business and Workflow Processes Outside of the ERP Application - A Primer |
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Optura in the News |
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Fast Knowledge Tidbits |
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| Welcome to the June Fast Five Minutes! |
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Have You Experienced Improvement in Your Business Revenue, Profit, and Sales Pipeline? If your answer is yes to any of these questions, then ask yourself an additional question - are your business processes operating effectively enough to deal with the additional stress of the improving business climate? If your answer is no, then perhaps Optura can help you (if your answer is yes then you probably have one of our solutions in-house already). Whether it's in Accounts Receivable, Accounts Payable, or logistics, Optura has a solution that help you improve your business performance.
In this month's Fast Five Minutes (and subsequent month's) we will be providing you with insight into how other companies are putting process optimization to work in helping them reap the benefits of an improving economy (read the case study on World Kitchen and you'll get the idea). We're also adding some additional technical insight into our monthly mix while Coleman Barney again discusses some of the startling parallels you'll find when you're on your next plane ride.
In closing - welcome to June's Fast Five Minutes - and enjoy your summer!
The Fast Five Minutes newsletter is published monthly by Optura, a subsidiary of SBI Group. We look forward to providing you with this information via email regularly - please let us know if there are other things you would like to see included. Contact Bob Monio (rmonio@optura.net) with questions or comments.
Enjoy your Fast Five Minutes!
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| Executive Insight - Food Chain Comparisons |
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I saw it in USA Today during my last flight. A story that made me think enterprise software is red meat. The promise of a succulent meaty meal is irresistible but the reality of the amount of effort required to make it edible makes a consumer think long and hard before they buy it. Meat producers in the heartland are dealing with the same issues as the powers that be in the mighty IT industry. Now, as I dove into the Lifestyle section of the paper to read further I was 1) hungry 2) after reading my latest issue of Information Week I was left in a techno funk that carried over to my read of the morning paper, or 3) I officially no longer have a life outside of technology. But the similarities between the meat business and the software marketplace were obvious. And no, it's not the metaphors of "cutting out the fat" or "lambs to the slaughter" that bare similarities. It's something positive and encouraging. The story in the paper outlined how meat producers are beginning to realize they are in the "meal solution" business not just peddling raw red tissue. They are integrating meat and seasoning and special packaging into a single, easy-to-use, bundled offering. Now hang with me. Here's the leap to software. Enterprise software products are adding pre-defined business process improvement capabilities to their offerings for the same reasons the meat guys are injecting spices into a shoulder roast, smothering it with those little red potatoes and packaging it with a self-contained pan for the microwave - which doubles nicely as a stylish serving tray, I might add - technology has advanced to make it possible to provide a more complete solution out-of-the-box. And butchers know that if the market is going to grow, consumer stigma needs to be reduced.
All the signals these days point to enterprise software vendors getting into the "usable solution" business and evolving from offering just technical solutions. When Tibco bought Staffware they sent a strong signal that they are not just in the software integration business but want to fast track users to a return on their investment by expediting the way they supported business process modeling and business process improvements. And, when SAP announced they would more fully integrate NetWeaver with Microsoft's BizTalk they signaled they may finally be serious about making their traditionally arduous to configure ERP software something capable of connecting to the outside world based on predefined business processes and sophisticated business process modeling. And back in April, IBM announced a comprehensive Services Oriented Architecture (SOA) strategy while downplaying the technology and highlighting how WebSphere makes plugging together libraries of critical business processes possible and then connecting the information users need into a single application interface a reality. But again, it's not about the connections. It's all about supporting the way a user needs to do his or her job.
It's just the beginning. More and more we'll see the lines between Business Process Management (BPM) and Enterprise Application Integration (EAI) and even Application Servers and Development Tools blur. It's an exciting new world so get used to finding peas and carrots already in your Pot Roast.
Coleman Barney is a founder of SBI Group and the CEO of Optura. He can be reached at cbarney@optura.net.
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| Case Studies and Recent Wins |
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Overview
"Our executives challenged us to find a way to get new products to market faster. We found that the long cycle time for creating new SAP Material Master Records was a roadblock to reaching this goal. Optura Material Data Management (MDM) was a packaged solution that helped us remove that roadblock and directly benefit the bottom line." -- Randy Peterson, Director of Application Services.
World Kitchen, Inc. manufactures and markets kitchen housewares products worldwide, for use in preparing, cooking, serving and storing food. Its products have led the housewares industry since the introduction of PYREX bakeware in 1915, and its brands today are regarded as the most widely recognized, owned and preferred in homes around the globe.
World Kitchen's powerhouse of well-known consumer brands includes:
- Baker's Secret metal bakeware - the top selling line on the market today.
- Corning Ware and PYREX glass and ceramic products - representing the two largest U.S. bakeware brands.
- CORELLE - the nation's top selling dinnerware brand in the mass merchant channel.
- Revere - a core rangetop cookware brand and one of the leaders in the stainless steel category.
- Magnalite - a highly regarded commercial quality cast aluminum cookware line.
- EKCO - kitchen tools, bakeware and serveware products.
- Chicago Cutlery - fine cutlery products.
World Kitchen employs approximately 3,000 people worldwide and has major manufacturing and distribution operations in the United States, Canada, and Asia-Pacific regions. World Kitchen sells products through multiple channels including mass merchants, department stores, specialty retailers, retail food stores, catalog showrooms, and the company's CORNINGWARE/CORELLE/REVERE Factory Stores.
Challenge
Many of the World Kitchen products used in our home's leverage trends and fashion that makes getting them to market faster a critical factor for company success. New products begin their journey from idea to shelf with a request from Marketing which then moves through various steps including design, prototyping, purchasing, etc. Along the way there are several approvals and several points to capture information. World Kitchen implemented SAP R/3 in 1999 and began collecting information and creating material masters on a decentralized basis. Knowledge workers were identified and assigned material master set up authority by product group. Requests were made via MS Word documents and faxed or routed as needed to collect data and gain approval.
Materials were established but cycle times ran around 90 days from initial request to final creation. Moreover because there was no central control, results were inconsistent and information was not collected which could serve as a basis for process improvement. In short, the process did not lend itself to management or continual improvement.
In 2001, World Kitchen's senior management began to focus on addressing serious operational changes to make the company more competitive. One of the critical focus areas emphasized was dramatically improving time to market. WKI's market niche demands products that are responsive to market changes in style and color. Getting a new product to market fast can mean capturing a quick turn in consumer mentality and execution speed has a real impact on the bottom line.
Several focus groups were established to identify the barriers to getting product to market. With up to a 90-day lead time, setting up new products in SAP turned out to be a real barrier. "We had some people focused on this issue with great backgrounds in process reengineering and they began to see workflow as a solid option", said Randy Peterson, Director of Application Services at World Kitchen. Peterson continued. "We had viewed SAP workflow as the 'golden nugget' we needed to get more out of our SAP processes, but we had limited experience. We needed a way to get our feet wet while attacking this key business process".
Optura Solution
World Kitchen got to know Optura the way many other customers do - through ASUG. ASUG, the Americas SAP Users Group, is a great forum for exchange of information and Optura is a prominent participant at the national and regional levels. Peterson explained, "We got a chance to see a demonstration of a product for creating new SAP Materials - Optura's Material Data Management™. We could see that this packaged product would create the centralized control and discipline we needed to rein in our cycle time. While we considered in-house development, our experience with SAP Workflow showed that there were alot of technical nuances and design considerations that we really didn't have time to learn. Most importantly, it was much easier for our users to understand and buy-into a solution when they could see it demonstrated interactively. If we had done it in-house, the requirements and analysis steps would have been very time consuming".
WKI found Optura's product an enabling tool in meeting IT goals because the product enforces a centralized control discipline. Requestors, such as Marketing, submit requests for new materials via an online form called an MCR (Material Change Request document). This document is then routed via workflow to approvers and other knowledge workers who add necessary data before the final SAP Materials are created. All of this is visible and under central control. The central team can view requests and perform quality checks if needed. They can also approve the final material before it is finally activated for use by manufacturing, procurement, etc. And finally, everything is configurable and can be tailored to the needs of each customer's requirements.
Peterson explained how they selected Optura. "We gave Optura a hard look. We talked to analysts, checked references, and found Optura well positioned with a solid track record of delivering results. Once we had done our due diligence, we moved straight ahead to write up the appropriation".
Making it Happen
After completion of the business arrangements, Optura's Client Services Manager (CSM) began coordinating with World Kitchen's Project manager to detail staffing, timeline, and tasks. By using Optura's Forward Motion™ methodology, the project became a perfect mesh of philosophies. Peterson explained, "Optura's ideas of control and management were in total synch with ours. We believe in control and planning. Optura's disciplined approach was welcomed at World Kitchen".
One of the key challenges in this project was migrating from a decentralized process with little accountability to a centralized process with closed loop statistics and close management. As with any change, this created challenges as staff began to understand the impact of the changes and increased accountability. Peterson elaborates, "Optura's Blueprint documents were very useful in creating a visual image of what the new process would look like. While we have our change management challenges, this approach was very useful in managing this change."
Peterson explained the outcome of the project. "The project came in more or less on time and on budget. We had to work hard to get the centralized control and accountability in place, but we made it. One of our key success factors was requiring each user to be fully trained and certified in the operation of the new tool before they could obtain system access. This was a tactic that really paid off when we went live."
Bottom Line
Peterson explained, "Yes we had some push back as the new discipline was digested, but we succeeded and the data speaks for itself. We reduced our cycle time from 90 days to about 22 days with more control than we ever had before."
Another key benefit of MDM is that is provides a complete platform for continuous process improvement. Peterson explains, "After implementation we were able to really get a handle on our processing metrics. The tool comes with reports, which isolate bottlenecks and help us focus on continuous process improvement. We really see our initial implementation as the start of our continuing to refine and improve our results. We expect to build on what we have done here in the future. The Optura product also played a role in helping us reduce our overall costs of operating this business process by about 50%."
"We were able to establish a controlled information system for managing this process where we used to have inconsistencies and delays. This was quite an accomplishment", said Peterson. He went on, "Now, we have a paperless information system and a platform to build upon. We have been impressed enough with the Optura solution that we licensed a second product - Vendor Invoice Management™ - to help us improve our Accounts Payable function. This product was easy to justify based on what we have accomplished with MDM".
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| Tech Insight: Extending Business and Workflow Processes Outisde of the ERP Application - A Primer |
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A Little History
In today's world, many companies are looking to extend business and workflow processes outside of their ERP environments. It is well known that applications such as SAP, PeopleSoft or JDE OneWorld provide best of breed functionality in specific areas - but lack the ability to provide cross application collaboration around data and workflow. By exposing the data and transaction functionality stored in these environments externally, companies can improve performance, cut cycle time, reduce the cost of doing business, and introduce additional revenue streams to the organization.
Does this sound like something your business is doing? At Optura we specialize in helping organizations unlock the benefits of their backend systems through collaborative middleware and packaged composite applications. But what does this mean and why should it be important to my business? In what has been traditionally a topic left to IT personnel to address, Line of Business professionals are increasingly finding themselves having to understand what "collaborative applications" are about and why they are important. What are you supposed to do?
Here's how we're going to help… Over the course of the next several Fast Five Minute issues, we will provide you with a Primer on how what collaborative applications are, how they can work for your organization, and what is required in order for you to begin using them. Starting with some history (this kind of effort has been around for a while - the tools have improved, but the process issues are still there) and a simple example, we hope to get you on the right road. So let's begin!
Setting the Stage
Integrating with legacy ERP environments has gotten progressively easier over the years. As we stated earlier, this is nothing new - organizations have been trying to "unlock" the information in their backend systems for quite some time. The integration points to these types of applications were for the most part relatively simple, although maybe not extremely efficient or the best real-time technologies. This was ok - since tight (and real-time) integration was not always necessary as the applications that were interfaced were also relatively self sufficient in nature. As a result, data was usually passed to and from the ERP system, some operations were performed on the data, and then it was returned back to the ERP system. This kind of integration was very simple and was usually a batch data transfer process. Organizations got the result they wanted - simple integration, simple data updates, and an "opening of the backend environment" for greater leverage.
This leverage of backend applications created a maelstrom of ROI improvements and benefits for the companies that attempted the effort. Paired with business process reengineering, the idea that you could leverage your IT assets and "extend" them as part of a larger business process promised even greater returns if both the technology and process could come together seamlessly. Prior to the late 90's dot-com boom, this wasn't a true reality - but today it is. Organizations are now looking to take highly-complex applications and workflow, link them through middleware technology, and reengineer how entire portions of their businesses operate. As a result, investments in people and technology are leveraged while "opening" up the business process to the extended enterprise (suppliers, vendors, customers, etc.).
And therefore we come to Collaborative Applications. These applications comprise business process workflow, data, and people into an integrated application that lives in a unified manner inside an organization. At Optura, we like to call these Packaged Composite Applications (PCAs). These PCAs bring immense value to organizations and allow them to reduce the cost out of doing business. They also provide a roadmap for other forms of process optimization - as they demonstrate a template for on-going development (process, system, integration) that can be replicated. At Optura we have many of these types of solutions - financial, logistical, etc. All leverage a common theme and architecture that fits your Services Oriented Architecture (there's another topic - SOAs - but that was covered in our last issue of FFM).
Does that sound too easy? Are you still wondering what it means? Let's use an example of a fictional company to illustrate what is involved and the impact that a Collaborative Application can deliver.
Vendor Invoice Management at BatJac Enterprises
Batjac Enterprises is a fictional company that builds boats for recreational use. With many thousand of suppliers providing parts to the manufacturing process, Batjac is constantly struggling with the issues of accurate and timely accounts payable to the supplier base. Batjac has looked at beefing up the number of people taking calls and thought about trying to open up their chosen ERP system (SAP) to the outside world. However, this solution still doesn't address the core problem and at best only puts a "band-aid" on the situation. Batjac therefore had decided to find a better way to address their invoice processing flow while leveraging a collaborative application to allow the supplier to participate and not add additional headcount. Batjac in this case chose to go with Optura's Vendor Invoice Management solution (VIM).
Batjac had three things they needed to address - linkages to their core enterprise systems, reengineering the business process, and linking to the outside vendors. Together with Optura, Batjac did the following:
- Mapped and Reengineered their Invoice processing workflow.
- Implemented the data, workflow, and process in a combination of software components running within Batjac's IT infrastructure
- Trained the Outside Vendors in usage of the Self-Service components of the system and how it would work for them.
Batjac's IT infrastructure comprised a number of systems and architectures - including:
- SAP R/3 Version 4.6c - RS/6000-based with AIX
- DB/2 database for SAP
- WebSphere Application Server
- WebSphere Portal server
Optura's VIM solution has components that reside in SAP and within the J2EE application server space. Batjac's optimized workflows that comprised the invoice approval and status process are exposed to Vendors through a Portal interface - therefore allowing vendors to submit invoices based on valid Purchase Orders (POs) and invoices that may not have associated POs. Vendors can also view the current status of a submitted invoice and in some cases participate in problem resolution without having to actually involve a live person. These operations allow Batjac to immediately reduce the headcount of their AP processing staff and take on more volume as Vendors were now self-sufficient.
Batjac's investment in SAP is also leveraged and enhanced - Optura's solution provides custom tables for data translation and custom ABAP functions, transactions and RFC's for workflow integration. Traditionally SAP doesn't provide the kind of workflow integration that Batjac required - Optura's approach provides the kind of end-to-end integration needed to extend the SAP asset for them. As an example of a typical vendor interaction, Batjac's system now provides:
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A PO is sent to the Vendor - if the vendor is a Self Service Vendor, the VIM workflow calls an RFC server hosted by VIM to send the PO to the database so the Vendor may see it. |
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The Vendor is notified of the PO - they then log into the VIM portal to access the PO. |
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If the PO is in a certain state and is valid, the vendor can enter an invoice based on that PO. |
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After the Vendor submits the invoice, VIM passes it to SAP via an asynchronous call - the workflow within SAP is then set to an invoiced state for processing and approval if necessary. |
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As each approval step occurs, Optura's workflow notifies VIM via RFC calls to update status for the Portal user. |
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If the Vendor wants to see status of the payment on the PO, they can monitor it via the VIM Portal - thereby never having to interact with a Batjac Payables person. |
This is just a simple example of the kind of workflow that can be facilitated through a collaborative application. Batjac no longer needs to have personnel available via phone to check status and address PO invoice workflow. By leveraging the SAP system as part of an end-to-end workflow with a Portal user interface, Batjac saves money and operates more efficiently with the end result being cost savings and a happy vendor.
Closing the Loop
In the example of Batjac we have demonstrated how a collaborative application can be leveraged to improve how an organization operates and drives costs savings to the bottom-line. Based on real success stories and case studies, Batjac is not an anomaly - rather what they have done with their company is something that you can do today if you have the right architectures in place. As we said earlier, technology has improved to the point where middleware can be leveraged as part of workflow to drive the business gains that we seek through reengineering… and organizations like Optura have the solutions to help you get it done.
In our next installment I will discuss the underlying technologies required, some of the pitfalls and issues involved (it's not ALL THAT rosy), and what you must be prepared for in order to begin using collaborative applications inside of your company. Needless to say, the future is bright and now is the time to start taking advantage of what these solutions have to offer.
Tim Jarvis is the Senior Vice President of Development for Optura. He can be reached at tjarvis@optura.net.
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