 |
||||||||||||||||||||||||||||||||||||
 |
|
|
The Sound of Front and Back Offices Talking
Microchip manufacturer National Semiconductor provides components for all manner of consumer electronics products, from CD-ROM players to cellular phones, and even automobiles. But the $2.6 billion (sales) company started suffering from the same fate as Bill Murray in the movie "Groundhog Day." Life kept repeating itself over and over again. In National Semiconductor's case, sales growth remained flat for a decade. One of the primary reasons for the reruns was that sales forecasts generated by the front office (the marketing department) didn't align with the production predictions maintained by the back office (database personnel) and developed in conjunction with manufacturing management, according to Phil Gibson, a director of the Silicon Valley titan.
Sound familiar? Probably does for many manufacturers, for it is the same set of problems suffered by metal benders, automakers, and the like. "With four different world regions and seven plants, there was an enormous need to transfer product to all locations," adds Gibson, "to ramp up each factory, to get people up to speed, to get messages across to them, and put them at the forefront of a person's attention." National Semiconductor eventually figured out how to solve its problem. Somewhat. The company began integrating front-office and back-office operations on a limited basis. To do this, the company uses Lotus Notes messaging in conjunction with sales quote software from MFJ International. The resulting integration improved sales by strengthening communication with manufacturing. By tackling its data and materials challenge in this manner, National Semiconductor chose a best-of-breed solution, rather than a single vendor, to solve its problem. The result has been positive: The company has reduced product marketing costs by 40 percent and is predicting a 30 percent sales increase for the future. In addition, custom sales orders are now handled more easily than in the past. The Integration Challenge Back in the late 1980s, organizations began to focus on optimizing cross-functional business processes. This was all part of the business process re-engineering craze. In recent years, vendors have begun introducing enterprise resource planning (ERP), customer interaction, and supply chain management software. Since no single vendor existed in the early 1990s to supply the depth of functionality these products now promise, manufacturers were forced to purchase best-of-breed solutions from the diverse areas of manufacturing planning, warehousing and distribution, and customer marketing. Because these applications were never really designed to work together, companies were forced to integrate their own solutions. Despite the success many manufacturers have had in linking these functions, whether through best-of-breed or single-vendor solutions, many front-office and back-office operations have yet to be integrated. Manufacturing automation theorists reckon that performing a feat of this magnitude--integrating all functions--remains a fantasy.
The job is just too costly for some and too complex for others. But certain functions and some types of information can be automatically shared between the front-office folks and their back-office compadres. Evidence of the success achieved in some areas of front-to-back-office integration can be found in the sales force automation (SFA) arena. Gartner Group projects that the market will reach the $1.7 billion mark by the end of 1998. In addition, IDC projects that the market will grow by at least 30 percent per year through the year 2000. "We're seeing redefinitions of things," says David Shimberg, vice president of MFJ International, a 14 year-old New York City-based developer of software to automate front office operations. "Sales automation, marketing automation, customer service, and support are part of a new equation. All of these pieces of the puzzle are focused around a broader, more effective relationship with the customer, and a broader user base within the corporation is using the technology. Sales people need to know what customer relations is doing. Customer relations needs to know what is happening with an order. It's a major integration job." The Players An array of vendors are starting to emerge which offer to integrate the "necessary" business processes to get disparate apps to function as an integrated suite. The leading vendors in this market include Trilogy, Calico, BT Squared, CrossWorlds Software, Baan, and Oracle. Based in Austin, Texas, Trilogy Development Group Inc., as it is properly known, is a purveyor of enterprise software solutions for sales and marketing. In the last year, Trilogy has expanded its best-of-breed front-office technology into the e-commerce market with the introduction of its Buying Chain sofware. Meanwhile, the company has initiated a number of alliances with ERP vendors in order to provide front-to-back office software solutions from a single vendor. Calico Technology is another big name in the front-office and back-office integration business. Customers include Cisco, Cabletron, and U.S. Robotics. A year ago, the company only offered sales configuration software. But now it is expanding, offering clients an array of integrated sales support tools, including marketing encyclopedias, quote systems, and the like. Atlanta-based BT Squared is a six-year-old company that develops packaged software applications designed to enable manufacturers of complex products to accurately analyze customer requirements and better sell their products and services. The company's main products consist of a package suite of applications known as the Interactive Selling System. The system consists of five modules: quotation, configuration, a marketing encyclopedia, data synchronization, and proposal generation. 
Oracle Corp. started shipping a new sales force automation suite last fall
that integrates with back-office human resources, financial, and
manufacturing software.
The reason so many firms are getting into this field and, in the process, transforming sales force automation and configuration packages into front-and-back-office automation packages is simple. Experts say the days of home-grown systems for front-office and back-office operations are coming to an end, and must necessarily do so if the goal of overall, interoperable automation is ever to be accomplished. And because this is the sort of integration manufacturers in greater numbers are beginning to ask for, there is money to be made here. Best-of-Breed: A Popular Direction Companies such as AutoDesk, U.S. West, and Siemens have all gone with the best-of-breed approach, choosing some modules of front-office functionality from SAP, (see "Single Vendor" sidebar), but signing up CrossWorlds Software to integrate the front-and-back-office systems and add other functionality.
Focus of the Future
Scott Nelson, an analyst at Gartner Group, Stamford, Conn., predicts six to nine new products will come to market during the next five months, specifically geared toward marketing. "I think there can be a large impact here," he says. "Marketing processes at most firms haven't changed since World War II." The new marketing automation software responds to and tracks customer information requests, determines when an early lead is a qualified sales prospect, and evaluates which marketing programs are most effective in generating sales.
Beta testers are saying they are pleased with results so far, although implementation in most cases is still in the early stages. N.E.T., a Redwood City, Calif., company, plans to use software from Rubric to boost marketing efficiency and better track and qualify customer leads for the sales force and communicate with manufacturing. The overall goal is to make sure "we never lose a contact," says Maria Fey, manager of marketing communications. "So far, it's been easy to use, intuitive," she said. But, as these products come to market, Gartner's Nelson says, companies will again be reminded that integrating marketing software into existing World Wide Web, sales, and other applications is "not a trivial matter." He also warns that companies must be ready to examine and revamp practices before computerizing them. "If you take a bad process and automate it, all you have is an automated bad process," he says. "You're going to see a lot of that." A Consortium to the Rescue? Is there finally a solution to the question: Best-of-breed or single vendor for front- and back-office integration? Perhaps. Pivotal Software, KPMG Peat Marwick LLP, Microsoft Corp., and Hewlett-Packard this fall announced a Customer Relationship Management (CRM) consortium for mid-enterprise organizations to produce fast, results-based solutions. The best-of-breed consortium aims to target mid-sized enterprises and provide them with virtual one-stop shopping for front-and-back office integration, giving them cost-effective access to the experience and industry knowledge of KPMG, the functionality and extensibility of Pivotal Relationship 98, and enterprise-ready software and hardware technology from Microsoft and Hewlett-Packard. As a result of this consortium, the players say, mid-sized businesses can implement comprehensive sales, marketing, and customer service solutions that include integration with manufacturing, data warehousing, Internet, and back-office solutions. "Companies need to leverage technology for quick business gains," says Chris Pavlic, research analyst for the Aberdeen Group, Boston. "To date, customer management implementation projects are simply taking too long, causing many projects to stall or veer off course from their original objective. This approach is unique in setting obtainable results that will drive more rapid return on a customer's investment." The effort is key to KPMG's strategy for mid-size companies. "Our strategy is to offer a cost-effective alternative to the traditional method of separately purchasing services, applications software, and hardware," says Doug Holden, KPMG's partner-in-charge of the customer management practice. But just because it is KPMG's strategy, doesn't mean that every company can afford to purchase the services. For example, companies in industries with very thin profit margins, such as bakery and beverages, are finding that they can trim a lot of their costs with a more limited, realistic view of automation, says Paula Heikell, vice president of Descartes Systems Group, Waterloo, Ontario. "If sales people have access to historical data when they are on the road, they can go to a manager of a store and say: `At this time last season, your sales went up 25 percent. Based on that, would you like X amount of bread?'" This means linking key back office functions--databases containing customer histories, with order processing and sales force automation. That is probably the route that most small companies will follow when integrating front and back office operations. Single-vendor state of the union What article on the expanding footprint of enterprise systems would be complete without checking in with the industry's 800-billion-ton gorilla, SAP? The Grand Teuton may not be the fastest to market with innovations, but its vision typically defines the state of the single vendor conceptual art. In line with this history, SAP is now moving forward with a front-office functionality offering, while at the same time trickling advanced supply optimization, planning, and scheduling features out to its manufacturing users. At its November FOCUS on Customers initiative kickoff in Chicago, SAP execs Hasso Plattner and Peter Zencke painted a picture of integrated ERP and front office systems in three areas: sales, marketing, and service. If the company is successful with this integration, it could be a coup for high-end users seeking a single-vendor integrated system--that is, once SAP delivers on its SCOPE (supply chain optimization, planning and execution) initiative. After having described customer relationship management as the number one topic in boardrooms around the world, Plattner and Zencke laid out their plan for a distributed-database style "customer information pool" with standard forms, plus Web and geographic interfaces to enable "knowledge marketing." Using this setup, orders can still come in to the enterprise via traditional means, but the sales/service agent will have automated telephony tools to provide a customer profile with preferences, billing practices, service history, etc. The sales rep will then be able to service the customer better by speeding the order into reality, while mobile sales will gain access to remote, Web-based available-to-promise production and inventory numbers. Finally, customer orders will be integrated and automatically routed into the ERP system's production workflow and order fulfillment routines. Alliances offer quick integration fix While SAP may be comfortable trickling out functionality to its user base, mid-market ERP (enterprise resource planning) players are plying the alliance route to achieve complete front-to-back-office integration--a strategy that has served them well in adding other functional modules. Interestingly enough, this path is designed to provide users best-of-breed functionality with a single vendor source for sales and support. One could say this arrangement offers the best of both worlds. We'll be watching to see if manufacturers feel they are getting what the vendors promise. As we were going to press, announcements broke from two of the major best-of-breed front office players in regard to alliances. The first of these came from Trilogy, Austin, Texas, which announced new alliances with JBA, SSA, and American Software. These alliances are similar to Trilogy's other partnerships with Friedman, Glovia, Computer Associates/ MK Group, and Symix in that Trilogy's front office application suite is tightly integrated with the ERP vendor's back office offerings. The slack that has been cut to many software providers with regard to the lack of integration between modules is going away, according to Naren Nath, vice president of strategic alliances for Trilogy. The mid-market wants best-of-breed functionality, but they want it delivered as an integrated solution. "The way for us to deliver what the mid-market wants is to strike very deep level partnerships with mid-tier ERP vendors," Nath says. This evolution in the ERP marketplace, as evidenced by the growing requirements of mid-market buyers "signals the end of the early adopter phase of ERP implementation." The second announcement was made by IFS, Tucson, Ariz., which had just acquired a majority stake in front-office solution provider Exactium, Atlanta. This partnership will allow IFS to offer more tightly integrated front and back office operations by embedding Exactium's configuration technology. Exactium will continue to operate as an independent company and develop and deploy configuration solutions for independent software vendors of sales force automation, ERP, supply chain, and electronic commerce applications. ©1999 Software Strategies |
|||||||||||||||||||||||||||||||||
SOLUTION GRPS | NEWS/EVENTS | CAREER OPPS | CONTACT US | SITE MAP © Copyright 1999 Waterstone Consulting |
||||||||||||||||||||||||||||||||||||
