Observing the marketing hype over the last five years invokes the question, what does it all mean and where is it leading? Imaging, Workflow, Document Management, EDM, PDM, ERP, Supply Chain Management, Customer Relationship Management, Knowledge Management! You’ve undoubtedly heard one or more of these terms used as the “latest and greatest, the end-all of your information needs!” No wonder that executives of user companies are confused. Add to this the continually changing platform environments, i.e., Internet, Intranet, Microsoft, Java, Thick Clients, Thin Clients, etc., and you have to think that chaos is the only solution. I believe that there is a logical solution that involves all of these technologies to meet the Number One Executive Challenge:

HOW TO TRANSITION FROM TOTAL ANALOG (MANUAL) INFORMATION...

TO TOTAL DIGITAL (ELECTRONIC) INFORMATION...

WHILE MAINTAINING THE STABILITY OF YOUR DAILY OPERATIONS...!

Each technology can provide limited functionality in reaching the overall goal of total electronic commerce for the enterprise. Finding the right combinations of these technologies for your organization is the only way to survive in today’s business environment. Let’s put each of these technologies in the proper context for management:

1.   Imaging -

The electronic backbone to handling all legacy paper- and microfilm-based information.

This involves scanning the manual documents and converting them to (pixel-based) images in standardized, compressed formats. Your organization may have already converted some or all of your documents and may have an “Imaging System(s)” already installed. That Imaging System probably includes scanning, storage and some image retrieval capabilities that can be integrated with additional technologies.

The issues of Imaging include:

¨        Which documents to scan-convert? Use an as-needed basis versus archived document groups?

¨        In-house versus Outsourced conversion?

¨        Quality of documents to be converted? Can they be scanned without some kind of cleanup activity?

¨        Indexing schemes and execution during the conversion process?

¨        Are OCR capabilities needed to capture information for retrieval purposes?

¨        Storage method? With the drastically reduced costs of storage, this is no longer a big issue but needs to be addressed.

¨        Transmission bandwidth? In spite of the progress that has been made with cable and fiber, this still remains a significant challenge, particularly if distribution is needed on a global basis.

¨        Standards and/or Best Practices? Even though standard file and compression formats are available, the technology keeps changing, always offering better performance, but possibly at the expense of some other capability or interchange ability. In addition, the distribution of large-format documents and CAD files may require some compromises that invoke a “best practices” approach to eliminate the overloading of existing networks.

CAUTION: WHEN IMPLEMENTING A NEW TECHNOLOGY, THERE IS ALWAYS THE DECISION OF WHETHER TO SCRAP AN EXISTING TECHNOLOGY OR SYSTEM. I SUBSCRIBE TO THE LEVERAGING PRACTICE PROMULGATED BY DR. RAINER HOFF OF THE GATEWAY GROUP (www.gatewaygrp.com) AND OTHERS:

PAY ONLY ONCE FOR SOMETHING!

THIS MEANS THAT YOU NEED A STRATEGY THAT BUILDS ON THE EXISTING SYSTEMS (OR SOME OF THE KEY CAPABILITIES OF EXISTING SYSTEMS). AN IMAGING SYSTEM USUALLY FITS THIS LEVERAGING APPROACH.

ANOTHER LEVERAGING PRACTICE ADVOCATED BY DR. HOFF IS TO “USE OTHER PEOPLE’S MONEY WHENEVER POSSIBLE.”

THIS MEANS CHOOSING VENDORS THAT ARE INDUSTRY WINNERS AND ONES THAT HAVE ALREADY INSTALLED AND HAVE SUCCESSFUL SIMILAR IMPLEMENTATIONS. AVOID PAYING FOR CUSTOMIZED INSTALLATIONS WHERE POSSIBLE.

2.   Workflow -

Sometimes considered the backbone of the way electronic files are routed within an organization.

I have always been amazed at the amount of effort that can go into choosing something so seemingly mundane as workflow software. Some people have accused me of not understanding the complexities of the software problem to solve this. And in the case of defining a transaction process, that may be true. But for most engineering and manufacturing scenarios, workflow is usually only required for the engineering change order (ECO) process. (I can think of some manufacturing processes where the flow of process plans or shop floor instructions should follow the Process.) But I look at our everyday use of email systems and their inherent capabilities, and I still wonder how big the market can be for standalone workflow systems.

My opinion is that workflow should be purchased as part of a solution, such as the ECO process of either an EDM or PDM system. Today’s ERP systems supporting transactions for enterprise-wide electronic commerce generally need more extensive workflow capabilities.

3. Document Management/EDM -

Electronic Document Management systems provide storage and retrieval of 2-D documents in their native formats, whether images, CAD files, spread sheets, etc., with the ability to group related documents into folders.

Depending on the indexing scheme used and the application involved, this document-oriented approach can provide 80% or more of the functionality of a PDM system at less cost to implement. The process industry with its government-regulated documentation and the manufacturing process in general with its ISO documentation, have been key applications for EDM systems. EDM systems have been widely used in customer service applications and to supply documents for the transaction-based ERP systems.

The issues of EDM systems include:

¨        Most or all of the issues of Imaging, especially storage and bandwidth.

¨        File access across multiple networks and document repositories?

¨        Internet implementation? How is it accomplished?

¨        User access privileges and security methods?

¨        Check-in/check-out for document version control?

¨        Audit trail for version control?

¨        If configuration control is needed, how can it be accomplished through indexing?

¨        Degree of coupling and interaction with CAD system?

¨        Multiple file viewing capabilities to cover all stored native files?

4. PDM -

Product and Process Definition Management systems are tightly integrated with CAD systems to access and control all CAD information in its native hierarchical form, whether 2-D or 3-D.

In the customized manufacturing environment, PDM can be the ultimate provider of released shop floor information with the degree of configuration control needed for the application. PDM systems can also include all of the document types included in the EDM system, traditionally at greater cost than for a document-only system. Recently, we have been seeing progress made in PDM Internet implementations, which will have an effect on driving down the costs of PDM implementations.

The issues of PDM include:

¨        Most or all of the issues of EDM systems.

¨        How is configuration control accomplished?

¨        Tight integration is provided with what CAD systems?

¨        GUI interface? Is it Windows compatible?

5. ERP -

Enterprise Resource Planning systems are said to have been installed in nearly 70% of Fortune 500 companies.

Unfortunately, not all of these large dollar implementations are yielding the expected returns, partly because of the customization needed, the training needed, and other technical and non-technical factors. Many installations may need the added capabilities of EDM or PDM systems to provide legacy documents and product information.  ERP systems are transaction-based and tend to be modular, allowing a company to tailor a system to address the business-critical functions such as:

Ordering - Sales Representative takes an order and checks price including any customer discounts. If appropriate, credit history of that customer can be checked.

Availability - The Inventory module checks stock and may notify the sales representative that one-half of the order can be filled immediately from an overseas warehouse. It also tells the representative that the remainder of the order can be supplied from one of their factories within 2 weeks.

Production - The Production module schedules the production and notifies the warehouse to ship the existing stock to the customer. An invoice is automatically printed for the quantity shipped.

Human Resources - The Human Resources module identifies a shortage of workers needed to fill the remainder of the order and alerts the personnel manager to the need for more workers.

Purchasing - The Materials Planning module notifies the purchasing manager to reorder components needed to produce the product.

Order Tracking - Order tracking can be performed online by the customer, eliminating the need for customer service to become involved, unless there's a problem.

Planning - Based on data from the forecasting and financial modules, a manager may learn that certain products are in demand and are also highly profitable. He or she can decide to offer some complementary products.

Additional specialized functionality can be supplied with any of the major modules.

One of the key issues surrounding ERP usage, is document redundancies between the major ERP modules. A document strategy that employs a centralized EDM repository to provide the documents as needed by each of the ERP modules, can reduce operating costs and provide a greater Investment Rate of Return (IRR).

ADVANTAGE: IMPLEMENTING EDM AND ERP AS AN INTEGRATED SOLUTION PROVIDES A HIGHER IRR THAN CAN BE REALIZED BY IMPLEMENTING EITHER ONE OR BOTH AS STANDALONE SYSTEMS. TO REALIZE THIS GREATER RETURN, DEVELOP AN EARLY STRATEGY THAT COMBINES THE DOCUMENTS WITH THE TRANSACTIONS AND THE CAPABILITIES OF BOTH SYSTEMS.

6. SCM (Supply Chain Management) -

Transaction-based systems tailored to address supply chain issues.

The Ordering, Availability, Manufacturing, Purchasing and Order Tracking modules of ERP systems can be customized to address theses issues, or specialty ERP vendors can supply streamlined versions that address only the supply chain issues. The goal is to provide JIT deliveries of products and components needed to assemble products to the correct release, specifications, and performance.

The issues of implementing are basically the same as for ERP systems, but the latest trend is to use suppliers to provide design and manufacturing input during the design process. This has lead to a new class of technology: Collaboration and Visualization.

Collaborative design is not new, but the technology to implement it on a wide basis is now available on the Internet.

Visualization is the latest buzzword for viewing technology, which also is not new. But the capability to do real time viewing of a 3-D CAD model at reduced cost, without using the native CAD software, is relatively new.

Combine these technologies on the Internet as some new vendors have done to address Collaborative design for the Supply Chain, and you have a new tool to address efficient use of your Supply Chain.

7. CRM (Customer Relationship Management) -

Tracking your customers and prospects worldwide while maintaining histories of relationships.

This is an extension of the order entry and customer service processes, and is primarily a sales tool with an executive planning function. The ability to track customers by projects and/or products is a desired capability that few products can do without customization.

8. KM (Knowledge Management) -

One of the most hyped and least understood terms to come down the pike since the early days of Artificial Intelligence.

KM is a culture that organizations need to instill to address the age-old problem of not losing critical design or process information when “Jake” retires or otherwise leaves the organization. Many companies have taken the right approach to build repositories of knowledge assets. But many more believe that they can buy software products that can solve the information overload. And while there may be some products that can heuristically profile some of a user’s habits based on experience to filter Internet and email information for that user, the majority of KM products are little more than relabeled EDM or Imaging products.

Creating a “knowledge environment” with processes to capture the knowledge assets of your organization is important, but it will probably be most successful once most of the technologies of electronic commerce have been implemented.

DO NOT EXPECT TO IMPLEMENT KM AS A TOOL THAT WILL SOLVE YOUR ELECTRONIC COMMERCE NEEDS. THE OTHER TECHNOLOGIES ENUMERATED FOR ELECTRONIC COMMERCE WILL PLAY A LARGE ROLE IN DEVELOPING A KM CULTURE IN YOUR COMPANY.

9. Portals -

An old term revived for a new use. Providing browser-based access to a number of electronic commerce functions from the interface of a single system, usually an ERP system.

While the concept is good, it usually supposes that you have an ERP system as the backbone of your organization. And while that may be the case for many companies, the ideal situation is to have an Internet backbone with all systems accessible by browser. Many users object to having ERP being the function that every other function has to fit into. All vendors and systems should be viewed as part of a larger world. The world should not revolve around a single vendor’s system. On the other hand, many other vendors of enterprise systems are providing portal software packages that integrate ERP systems, another option that should be considered.

ERM and the Virtual Enterprise

Every company that sells a product (other than software that may be produced from intellectual assets), buys raw materials, components or parts of some kind, builds or adds value, then sells the product.

The Virtual Enterprise Model implements electronic commerce to connect the various functions and departments of that basic process so that customers can be literally connected to the supply chain.

The back office which maintains all of the financial transactions, and designs and manufactures the product, is connected directly to the supply chain, while the front office which provides all of the marketing, sales and customer services, is connected directly to the customers. Customers can access supplier information to whatever extent the front office and back office operations allow. Delivery schedules, as updated and agreed to by the involved departments, should be available for online access by the customer.

All of the front office and back office transactions are handled by the ERP system. In this way, the ERP system provides the backbone for electronic commerce. All other systems should provide the supporting information for the transactions. For example, an entered order from customer service or sales should trigger a search of inventory, which in turn would trigger an order to manufacturing if the product is not in stock.

If the product is not already in production (released from engineering), the EDM or PDM system would provide the released product information to manufacturing.

Custom product orders would automatically trigger the EDM or PDM system to release the finalized design information to manufacturing.

Collaboration and Visualization can be utilized to involve the supply chain or to allow global design.

Internet Implementations of Everything?

The common expression of every executive is to implement these technologies on the Internet. What better way to distribute globally and to provide a known interface to users? Unfortunately, not all of the technologies have been Internet-enabled to the extent that they can plug and play. ERP systems, expected to be the backbone of electronic commerce, are less Internet-enabled than any of the listed technologies. But technologies progress and some of the smaller and nimbler ERP companies do offer Internet solutions. Also, some of the companies that are providing portals (see above), offer a solution to a total Internet-implementation.

Some leading-edge companies like Cisco Systems are implementing internal Internet-based, global electronic commerce systems that include PDM and ERP functionality. By carefully choosing the proper products, it is possible to implement most functions of electronic commerce now, rather than waiting for a total COTS solution.

AN INCREMENTAL APPROACH TO IMPLEMENTATION ALLOWS ONE TO MAINTAIN THE STABILITY THAT IS CRUCIAL TO EVERYDAY OPERATIONS.

Business Issues

Today most executives now understand that they need to implement electronic commerce to remain competitive. Does that mean that it is no longer necessary to do investment analyses? Investment analyses can provide the roadmaps to successful implementations and should not be totally scrapped. But at the same time, extended analyses can deter the fast-track implementations that are sometimes necessary.

Obviously, a balance is needed. One of the older methods of thinking, “the time value of money,” is now being replaced with, “the money value of time.” Using time wisely, acting with a sense of urgency and being first to market, can pay bigger dividends in today’s fast-paced, global economy. Timid decisions rarely propel an enterprise to gain the top market share. Four key metrics are enumerated from the Meta Group’s (www.metagroup.com) multiclient survey, entitled ERM Solutions and Their Value:

1. Total Cost of Ownership (TCO). This includes hardware, software, professional services, and internal staff costs.

2. Time to Implement (TTI). This measures how long it takes to implement a solution, and, once a system is live, how much longer it takes until tangible benefits are achieved.

3. Return on Investment (ROI). While the majority of the benefits are achieved through cost containment, respondents also quantified revenue attainment benefits.

4. Net Present Value NPV). This calculation factors in all the TCO variables, plus post-implementation costs and quantified benefits.

REMEMBER THAT INCREMENTAL IMPLEMENTATIONS WITH THE PROPER PRIORITIES CAN PROVIDE THE STABILITY OF DAILY OPERATIONS THAT WE ALL SEEK.

A PRIORITY SCHEDULE OF THE FUNCTIONS TO BE IMPLEMENTED WILL GO A LONG WAY IN REDUCING THE FOUR METRICS AND ACHIEVING THE GOAL OF TOTAL ELECTRONIC COMMERCE.

Richard N. Stover is Chairman and Principal Consultant of Enterprise Resources Management

(www.ermdm.com), a strategic analysis firm. He can be reached at 480-585-5580 or email: ermdm@aol.com