Wednesday June 27 2001

Web Services and Collaborative Commerce

Collaborate or Die

John Fou

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Collaborative Commerce (C-Commerce) is the name given to commercial relationships carried out over a collaborative framework to integrate enterprises? business processes, share customer relationships and manage knowledge across enterprise boundaries. The ultimate aims of C-Commerce initiatives are to maximize return on intellectual capital investment, business agility and the quality of the customer experience. C-Commerce is far more crucial than basic B2B e-commerce that is designed to construct a virtual link for a pre-defined community of trading partners to buy or sell goods and services. Even after the fall of the dot-com era, corporate strategists and venture capitalists are embracing C-Commerce as the next generation of e-commerce and an evolution of the traditional supply chain process.

How Web Services Redefine Collaborative Commerce

So far, we are in a very early stage in the evolution of web business. We have been able to overcome the issue of the standardization of enterprise application programming interfaces around the web, and have managed to undertake tremendous business-to-business exchange transactions over the web, albeit with high integration costs. Web Services promise to revolutionize this process.

In the figure above, we can see the three stages of c-commerce, from bottom-left to top-right:

• First stage of C-Commerce - web enabled c-commerce, a one dimensional, single e-enabled business process that allows certain internal data to be visible to external trading partners, and vice versa. Typically, this meant implementing a web presentation of the data, and allowing partners access to it. This is a limited form of c-commerce, with very limited value, saving only labor cost. Typical applications would be displaying demand for production materials, showing sales forecasts to suppliers, or presenting bills electronically.
• Second stage of C-Commerce - B2B exchanges in markets such as steel, auto parts, chemicals or airline equipment. Buyers, sellers and suppliers are integrated through a web portal. In this stage, each enterprise can reconfigure its supply chain through the marketplace to leverage aggregated buying power and eliminate brokerage fees and middlemen.

The first two stages of C-Commerce have never reached the critical mass required for mass adoption by all industries, because of the cost of integration.

• Third stage of C-Commerce - will be built on Web Service as a core integration engine to deliver seamless process integration, seamless customer satisfaction integration and seamless product design integration. It is a plug and play sort of C-Commerce rather than a hard-wired, integration driven effort.

The Re-Birth of Collaborative Commerce with Web-Services

CTOs and CIOs are tired of struggling to build c-commerce systems by integrating enterprise with enterprise, application with application, internet with intranet, web with ERP, piecemeal.

In Web Services, C-Commerce may have found an innovative way to redefine its business model. With the advent of this technology, C-Commerce is given a solid platform to enable effortless and seamless integrations. Web Services is going to reinvent C-Commerce to offer new products, services and multi-dimensional collaboration, bringing global enterprises a step closer to realizing the promise of increased velocity in supply chains and efficient inter-enterprise processes.

Eventually the visionary CTO and CIOs will be able to use Web Service as a core integration infrastructure engine to easily architect their c-commerce systems based on a modular model that allows function-focused applications to be added or subtracted as required. While ubiquitous C-Commerce based on Web Services is probably inevitable, the road to this won?t be easy.

Lacking an open, reliable platform, traditional c-commerce vendors could not develop flexible, sharable drag-and-drop modules among their products.

Consequently, traditional c-commerce is a transaction focused, one-dimensional application. The majority of applications reside in the direct or indirect procurement area. So far, the key factor behind most current exchanges is price. There is no opportunity through this type of C-Commerce to negotiate enhancements to products in order to have them match unique customer needs and requirements. Web Services enabled C-Commerce will, potentially, fully integrate the trading partner?s intellectual library and customer?s demanding knowledge base to solve these issues without human interaction.

As problems and doubts about C-Commerce have grown, industrial leaders need an open framework solution. Supply chain software vendors, such as i2, SAP, Oracle have built up various layers of application module and integration infrastructure. It is just a matter of standardizing and connecting them dynamically to build an efficient service distribution pipeline.

Web Service Based Collaborative Architecture

Every architect of collaborative commerce would like to focus on business rules requirements rather than the nuts and bolts of hard wires between enterprises.

The ideal collaborative commerce architecture has four tiers (Displayed in the figure below).

From top to bottom:

• First tier - C-commerce vendors, which provide application components tied to basic business building blocks such as logistics, material resource planning, human resources, sales force automation, and financial transaction management. The major vendors are i2, Oracle, SAP, People Soft, Siebel and EXE.
• Second tier - Web Services, which provides a plug-and-play platform for various application building components. It provides a seamless integration among the building blocks; also it is a transparent layer between the building blocks and the enterprise web portal.
• Third tier - The business rule engine is defined by experts from the enterprises? trading partners. The rules will be kept in an artificial intelligence tool that fires event triggers when it comes across certain indications while it processes business data. Knowledge Management is a core C-Commerce competency.
• Fourth tier - Multi-dimensional c-commerce enterprise web portal. For example, to assemble an application in a Collaborative Inventory Management System, we can build it on a Demanding Module from SAP, a real-time inventory control from i2, and a shipping logistics module from EXE. With the application of specific business rules, an application for enterprise is assembled to manage collaborative real time inventory

Web Service Based Multi-Dimensional C-Commerce

Web Services pushes C-commerce into a higher margin business model that provides high quality information, such as real time inventory, material availability and customer satisfaction level, which can effectively help with intelligent decision-making. The frenzy over transaction-based exchanges is disappearing.

Multi-Vendor Supported Open Frame C-Commerce

Without a Web Services infrastructure, C-commerce applications are large, monolithic single vendor products, and most of them address self-centered enterprise business processes, such as MRP (Material Resource Planning), Sales and Distribution, or Customer Service. Now, all these processes are in transition into an e-procurement based system, with strategic sourcing, web-based variant configuration, contract negotiation and web-based customer relationship management. In the near future, all these components will be ready to plug-and-play within integrated c-commerce applications.

Supplier, Customer and Partner Focused C-Commerce

Web Services enabled C-Commerce will provide business trading partners with collaborative product development, an important competitive strategy to reduce the cost and to eliminate the redundancy of communication in high-tech companies? business cycle. For example, Web Services will help Texas Instruments' cellular phone chip design process to collaborate with real time feed back from its customers' requirements, and material availability from its suppliers. Using C-Commerce, Texas Instruments will know what kind of available materials they can put in the chip, and also satisfy customers? needs, in a real time fashion.

Web Services enabled C-Commerce is going to give Suppliers the capabilities of collaborative inventory management, equipment balancing and transportation forecasting. For example, Web Services will allow Agere Systems (formerly Lucent Microeletronics), a $3.7 billion international integrated circuits and opt- electronics components company, to capture and share knowledge across its plants that allows it to effectively shift supply to the plants with more capacity at a given point in time. C-Commerce will drive down costs and speed up cycle times. Plant and product information is available via the Web so that Agere can instantly provide customers with accurate, automated and rapid capable-to-promise (CTP) commitments based upon up-to-the-minute yield information, something that previously took days.

Web Services enabled C-Commerce promises increased customer satisfaction, and it drives the business by the customer?s mission. For example, available-to-promise data, and product and pricing configuration rules all will be accurately and consistently offered to channel partners and customers. For example, Breyer?s is a North American packaged ice cream manufacturer and distributor. Web Services will enable them to share accurate information about sales and replenishment requirements for Breyer?s and its suppliers. Quality information saves Breyer?s tremendous capital in wasted ice cream.

Conclusion

"Collaborate or die," according to J.D. Edwards? advertisement in the Wall Street Journal. The question is, how do you collaborate? The answer is Web Services.

Web Services is the core technology integration infrastructure for collaborative commerce. It gives C-Commerce a chance to redefine every process of the business cycle: design, plan, source, execute and fulfill. With Web Services as an engine of integration, we can finally realize the value of C-Commerce.

Readers of this article may also be interested in reading Business Architecture for a Web Services Brokerage and Web Services and the Insurance Business.

John Fou is the co-founder of E-Dynamic Inc., a strategic technical consulting firm focused on enterprises' value chain, and reengineering processes. E-Dynamic has developed and sold a cutting-edge financial supply chain software package to Lucent. E-Dynamic's clients include Lucent Technology, Delta Airlines and Motorola.

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