Implementing supply chain web applications means companies have to link to legacy computer systems at the same time they are trying to figure out inter-enterprise integration.

Supply-chain web applications are all about sharing data between enterprises. Such sharing, however, assumes that the enterprises already are integrated internally, so information flows seamlessly within the four walls of the businesses. That is a big assumption, and one that too often is incorrect.

For example, the e-tailer “debacle of ’99” that resulted in so many order failures during the last Christmas season was more than a mere fulfillment problem. It was an integration blunder.

Overly eager e-tailers assumed their challenge was merely to use the internet to take orders. What they forgot is the need for real-time integration to the back-end systems that handled product availability, customer service, shipping or pricing. Even among those e-tailers that had adequate back-end systems, none were connected to the sales activity. Orders went into a black hole of unconnected systems. Many never came out intact.

According to David Livingston, director of product marketing for Viewlocity, the Atlanta-based integration solution company, many large businesses that should know better are finding themselves in a similar situation. He points to retailers that want to collaborate with suppliers, so they can issue purchase orders and replenishment schedules based on real-time demand. Unfortunately, these retailers have very little visibility into their own forecasting and inventory systems. At best, these retailers have an aggregate view of inventory levels at regional or distribution center levels. The retailer doesn’t know what is in each store or even what sales forecasts are based upon. So while suppliers may think they are gaining “visibility” into the retailer’s system so they can determine inventory needs, schedule manufacturing and route the goods to individual stores, the lack of the retailer’s integration severely limits the effectiveness of any inter-enterprise integration (IEI) efforts.

“In the B2B world, implementation has to be done in weeks, not months.”

Charles Allen, webMethods

“The vast majority of businesses today are thinking about what is needed to accomplish IEI with trading partners, and then they realize in horror that they are not nearly as integrated internally as they thought,” says Livingston. “It has been a wake-up call for everyone.”

Just about every company in the world has built its information technology (IT) systems on a broad variety of very expensive, deeply embedded, legacy systems such as enterprise resource planning (ERP), supply-chain planning, production scheduling, sales and order management and many more. Most are self-contained and require an extensive software integration effort just to work with other internal systems. None of these systems was designed with any idea of integrating with entire business communities of trading partners.

Thus, most businesses today face a double integration challenge. They need to complete their enterprise application integration (EAI) of legacy systems, and they also need to move ahead with IEI, or as it is increasingly being called, business community integration (BCI).

Given the decentralized nature of many large companies and the constant changes caused by mergers and acquisition, EAI is not a trivial matter. For example, Viewlocity handled the enterprise-wide integration for Volvo in Sweden. The task required back-end integration of 600 separate applications to the main ERP system.

“Every plant, every division had its own applications,” says Livingston. “When these systems were implemented over the years, there wasn’t much need for integration. Now there is.”

According to Livingston, many companies implemented ERP systems with the belief that they would automatically fix this legacy integration problem, but ERP is not a magic bullet.

“The span of most ERP integrations is usually only 20 to 30 percent of all the systems in a company,” says Livingston, who adds that financial and human resources systems are usually the first to be integrated. “Customer facing applications, such as sales and order management, and operational and planning systems such as supply-chain management often are not. There is a critical need to go back in to companies’ enterprise systems and complete the integration.”

Simultaneous integration

To make matters worse, the rapidly changing marketplace and the competitive realities of e-business do not give companies the time to handle EAI and IEI separately.

“It would be nice if companies could take the time to focus on the internal integration, get that fixed, and then work on the inter-enterprise challenge,” says Livingston. “Unfortunately, the competitive environment doesn’t allow that to happen. EAI and IEI are going to evolve together.”

Charles Allen, co-founder and vice president of industry solutions for the integration software company webMethods, based in Fairfax, Va., agrees that companies cannot do internal and external integration separately. They must now be done simultaneously.

“If you try this sequential approach, you will find that the requirements have changed by the time you think you have finished the internal integration,” says Allen. “You will miss the market opportunities that are constantly coming and going.”

Allen says integration in the internet age is a difficult balancing act. If a company focuses too much only on internal integration, the competition is going to gain marketplace advantage. But at the same time, companies can’t blunder into IEI and e-business.

“If you expose your operations to customers, suppliers and all the demands of e-business before your technology is ready, you are inviting disaster,” says Allen. He adds that the very basic messaging systems that many companies are using to link their legacy systems with trading partners results in woefully inadequate performance.

To meet these multiple integration challenges, many integration solution companies attempt to address all levels of system interaction. WebMethods, for example, has three product groups, two of which are focused on legacy system integration: mainframes and other enterprise applications. WebMethods’s third group focuses on business-to-business integration (B2Bi) through the internet. According to Allen, half of the company’s revenue still comes from the mainframe and enterprise integration.

“Companies have been addressing this part of the business for a long time, but it’s now just getting the budgeting and attention it deserves,” says Allen.

Since ERP systems are at the heart of most companies’ systems, that is often where webMethods starts. In fact, SAP, the largest ERP vendor actually offers as part of its package webMethods’s Business Connector software that enables SAP to integrate directly with other systems. In addition, webMethods and its recently acquired Active Software division offer more than 75 adapters for internal and external integration of manufacturing, warehousing, finance and many other applications.

Allen explains that these adapters encapsulate application-programming interfaces (APIs) in the various systems so they can be exposed to messaging from other systems.

“We make your business framework independent,” says Allen.

Internet integration

The problem with legacy systems, according to Allen, is that software vendors never contemplated the multiple frameworks that their customers would need and the adapters that would be required for each. “With one-to-one integration, it is almost impossible to create a community because there are so many direct connections,” says Allen. “What happens is that more and more data has to be sent in batch mode, which really defeats the idea of supply-chain visibility and synchronization. The data is not real-time. There is less flexibility in how partners deal with the different types of technology that each is using.”

Viewlocity’s Dave Livingston agrees that business community integration among multi-enterprises increases the complexity of the challenge by two to three levels of magnitude.

“As more trading partners are added, the connections grow geometrically,” says Livingston. “Since all companies are involved in multiple supply chains, every enterprise is the center point in a bow-tie-shaped business community with many customers on one side and many suppliers on the other. This type of integration requires a smart messaging capability that most companies lack today.”

The integration problem is not all a matter of technology. According to Allen, companies need an entirely different approach to integration. He says both EAI and IEI have been changed dramatically by the internet.

“Internal integration has traditionally been based on a strong command and control approach,” says Allen.

He says large companies mistakenly assume they must control connections with trading partners in the same rigid fashion. What they end up with are cumbersome one-to-one connections or inadequate messaging systems that lack flexibility.

“The internet is about becoming protocol independent,” says Allen. “Any company must be able to do business with any trading partners.”

The reason that this approach to integration is so important, according to Allen, is that no business — even the largest — can control the marketplace environment. Trading partners are at very different levels of technology. There are partners coming and going all the time. These partners are all running different applications, all of which use different messaging. On top of that, companies tend to be in many different supply chains.

According to Livingston, the first challenge companies encounter in IEI is the ability to deal with partners at the level of technology they can handle.

Livingston says that major U.S. soft goods retailers are a textbook example of how not to deal with this issue.

At least a decade ago, these big retailers decided they only wanted to deal with suppliers that had similar levels of EDI capability, which meant that they could integrate only with the largest suppliers. According to Livingston, the result has been that most big retailers now handle essentially the same lines of clothes from the same suppliers. These companies have allowed their technology decisions to limit their merchandizing opportunities and their ability to differentiate themselves. To make matters worse, the brands for the large suppliers became more important than the brands of the retailers, which prompted some large suppliers to open their own retail outlets and compete directly with the big retailers.

“If these big retailers could integrate with all suppliers, regardless of size, these businesses would greatly broaden their options,” says Livingston.

In contrast with these U.S. clothing retailers, Livingston points to a mid-sized retailer in Europe that has many small suppliers, none of which can deal with full EDI. This retailer takes its EDI orders and uses Viewlocity software to map the EDI messages to simple internet messaging that the suppliers can read with a browser.

“The goal of integration must be to have the ability to deal with any supplier, any customer and service provider regardless of their systems capabilities, and to make it easy for all parties to do business with one another,” says Livingston.

Another problem today is the need for rapid integration. According to webMethods’s Charles Allen, taking up to a year to complete an integration project used to be fairly normal and acceptable.

“In the B2B world, the implementation has to be done in weeks, not months,” says Allen.

WebMethods has eclipsed many competitors because “we show companies how to get moving fast. We promote the idea of revolutionary pragmatism. Our philosophy is to get the application going, so trading partners can gain whatever advantages are possible. The operations are not going to be perfect, but this is the only way to learn, move ahead and stay ahead of the competition. You adapt to meet needs that are always changing.”

Business community solutions

Integration among trading partners in a business community is still in its infancy. There is no universal agreement on the best solutions for IEI accept to say that the options will increase and the best practices will change along with new technology.

Most companies, especially if they have a few major trading partners, are still relying on direction integration, which requires each organization to negotiate and implement a separate electronic relationship with each trading partner. While this approach allows companies to build close relationships, it is extremely inflexible and is essentially limited to EDI-based transfers of large amounts of batch data. A great deal of time must be devoted to the technology of the custom integration, as well as to the maintenance of the partner relationship.

“These direct integrations are very cumbersome and enormously time consuming,” says Livingston. “Point-to-point connections require APIs between specific applications, and these can take nine to 12 people six months to set up. The Viewlocity approach is to use a message broker backbone that allows universal connections and can be fully implemented far more quickly than direct links.”

WebMethods’s Charles Allen agrees that the direct integration is a very limited option, but his company favors integration based on extensible markup language (XML), which he says is a data standard that can be made to work in conjunction with EDI or any other data format.

“Someday there will probably be more universal standards, but companies can’t wait,” says Allen. “They need integration now that provides them the maximum ability to do business with partners regardless of whether the data is formatted as EDI, XML or even e-mail. We are focused on standards, as they become available for specific applications. We don’t create them, and we don’t favor anyone over another. We believe they must be used as they come available.”

XML is a very loose standard because it allows an infinite number of versions or “schema” that companies or industries can customize to their needs. In fact, there are scores if not hundreds of XML schema.

“The longer companies delay integration, the more money they leave on the table.”

David Livingston, Viewlocity

“XML is catching on because entire industries can take the basic XML standard and then structure data in ways that make sense to them,” says Allen. “As long as all users agree on the structure, it works very well.”

While XML still accounts for a small amount of internet communication, it is most prevalent on B2B exchanges, where many buyers and sellers must collaborate with a minimum amount of integration infrastructure. Among webMethods’s customers are exchanges that originally did their own integration. They are finding that integration is a lot of work that really doesn’t build their businesses.

“Increasingly, B2B exchanges are using packaged solutions such as webMethods as an option,” says Allen. The chemical exchange Ventro, for example, was one of the first B2B exchanges.

“As they became more successful, they found that scaling for more users created a lot of integration problems,” says Allen. “They have opted for webMethods.”

Another reason that users are beginning to use XML rather then EDI is the need for real-time data communication.

For example, Burlington, Mass.-based Logitics.com recently adopted webMethods B2B and enterprise technology for its Digital Trans-portation Marketplace (DTM) exchange. In addition to the ease of integration for the transportation exchange’s users, Logistics.com selected the webMethods’ technology because of its real-time capabilities.

WebMethods B2B is a cross-platform suite of products that enables companies to integrate existing enterprise applications with those of their customers, suppliers and other trading partners in real time over the internet. The core B2B product allows bi-directional information exchange between disparate applications within a business community. There is a portal version that extends the B2B capabilities to manage very large online communities and provide rapid links between operational systems of all business partners over the internet.

WebMethods freely allows its customers to make available a scaled down version of its software called B2B for Partners to their B2B trading partners. It is a feature-restricted version of the full product that allows the trading partner to have a platform for multiple supply chains. It will work in multiple chains where other customers are using the main webMethods B2B product that manages all supply-chain communications.

“When trading partners find out how powerful it is, they usually opt for the whole package, so they can use it with their downstream suppliers,” says Allen. “We have gone five to six tiers deep into supply chains.”

WebMethods makes the partner version of the B2B product available through the B2B.com web site, which contains a variety of other tools for supporting the webMethods software.

The messaging backbone

Critics of XML argue that it is not the ultimate solution, nor is it even a true standard because there are so many versions.

“The lack of true standards means you are back to the trading partner mapping problem,” says Livingston.

“Neither party is sure what a particular tag or field means. For instance, a tag called ‘delivery’ could mean the product is delivered, or it could mean that it needs to be delivered. You end up with the same cost problem that EDI created because of the manual process of maintaining the data structure maps for all trading partners.”

Livingston says the best approach is to have a common messaging standard that allows multi-enterprise workflow from internal systems, to supplier system to customer facing systems.

Viewlocity’s flagship product is a message broker backbone called AMTrix. It has components for internal integration between systems, inter-enterprise integration and B2B exchange integration. With more than 3,200 installations around the world it is the world’s largest integration solution for supply-chain applications.

AMTrix components consist of a routing switch and connectors for every application involved. Viewlocity has connectors for all major enterprise systems and all major applications. Implementation for additional applications can happen very quickly, often in one day, according to Livingston. There is no footprint on the receiving side. Messages are remapped for each application and are sent directly to the partners.

Viewlocity’s newest integration products, soon to be introduced, are Trade Synch Shipment Visibility and Trade Synch Inventory Visibility. According to Livingston, AMTrix provides the messaging infrastructure that allows partners to exchange important data. Trade Synch products provide the visibility and business intelligence to allow users to take action. The synchronization capabilities allow users to take action at the same pace as your trading partner for specific activities such as ordering, replenishment, shipping, etc.

The Trade Synch visibility products allow trading partners to see the status of supply-chain activity up and down stream as far as the business community agrees to extend its collaboration.

Trade Synch Inventory Visibility is integrated beyond the local level. There are actually three levels of inventory visibility.

The first level is inventory in any of an enterprise’s locations around the world. The second is inventory visibility at third-party facilities under the user’s control. The third level of visibility is at supplier warehouses. The integration can be two-way, so suppliers can see when replenishment will be needed at customer locations.

“We also provide intelligent filtering to sort out meaningful data based on business rules and control limits,” says Livingston. “Users only see information that is outside of certain control limits, so they can take action. Everything else just happens automatically.”

All is not lost

For the majority of companies that have not developed strategies for integrating their legacy systems with external trading partners, webMethods’ Charles Allen says there is still time to make important choices, but the clock is ticking.

“News of major successes makes many companies think that supply-chain automation is widely adopted,” says Allen. “There is still more talk than action in this space. Companies are still struggling with the concept of the internet and how it really changes their businesses. It’s good to learn, but it is time to act.”

Viewlocity’s David Livingston agrees progress on the integration front is lagging.

“There is no choice except to accomplish this integration task as quickly as possible,” he says. “Industry leaders such as Frito-Lay, Wal-Mart and other leading-edge companies have implemented best supply-chain practices for over a decade. They are moving ahead with new best practices driven by the internet. If you are going to compete with these world-class companies, you absolutely need both enterprise and inter-enterprise integration. It is just that simple.”

The good news, according to Livingston, is that the task is not technically challenging, at least at the basic level.

“Integration is a stair step process,” he says. “Companies can move along the continuum to higher and higher sophistication as quickly as they are able. The longer companies delay, the more money they are leaving on the table. In the long run, it will not just be loss of profit, but the ability to compete.”