Real-Time Enterprise Summit 2008

Transcription

1 Real-Time Enterprise Summit 2008 US Markets - Integration & Data Management October 2, Liaison Technologies. All rights reserved. Liaison is a trademark of Liaison Technologies.

2 Agenda Introduction Real-Time Infrastructure Bob Renner CEO, Liaison Technologies 5 minutes Application Integration 20 minutes Master Data Management 10 minutes Summary 5 minutes 2

3 The Real-Time Infrastructure US Market Perspective 3

4 Effective Real-Time Enterprise Strategy can. Enable Business Agility Accelerates response to internal integration requests and external business partnerships Increases flexibility in accessing internal data across systems Supports real-time or event-driven business models Improve Cost and Efficiencies IT averages indicate that ~25% - 40% of IT spend is attributed to integration-related activities Opportunities exist for efficiency gains of ~30% - 50% through flexible reuse Function as a Critical Enabler of Strategic Initiatives Supply Chain Management Real-Time visibility ERP deployment and leverage Product tracing (i.e. RFID), anti-counterfeiting, and traceability Enable Growth Adding new internal & external integrations fast and consistent Support the timing of strategic sales initiatives 4

5 Taxonomy of the Real-Time Enterprise B2B Integration A2A Integration & Master Data Management SAP Business Partners Customers Suppliers Business Distributors Partner Warehouses Systems Transportation Banks Others AS2 HTTP/S SMTP FTP EDI VAN Direct Message Delivery Commodity EDI Network Interconnects LIAISON B2B DXP Hub Application Interconnects Data Translation & Validation Format Translation (Mapping) B2B Gateway Master Data: Customer Data Product Data Supplier Data Other A2A Connectivity Baan Other JD Edwards Oracle All three elements of the Real-Time Infrastructure are needed to ensure frictionless business processes and enable Real-Time Business 5

6 The Foundation of the Real-Time Enterprise A2A and B2B Integration 6

7 Implementation Architectures Research Research & Development Point-to-Point Architecture: Low cost for simple implementations Limited scalability Complex as connections grow Enterprise Software Manufacturing Sales Mktg. Information Flow Challenges Distribution Retail Logistics Other Other Banking Regulatory End Retail Users Channel Hub & Spoke Architecture: Research Research & Development Manufacturing Requires initial planning Lowest cost as the model scales Maximum flexibility & leverage Value-Added Network Regulatory Coordinated Banking Information Flow Other Distribution Retail Logistics Other Retail End Channel Users 7

8 Economic-Driven Evolution Data & Systems Integration Outsourcing (Managed Services leverage, improved margin and customer value) Integration Service Providers (ISP) (Born of Marketplace Vision investment in remaining VANs) Natural Selection (Round II) - EDI VAN (Further VAN Consolidation Maintain small remaining margins) Early Managed Services - Hosted AS2 Islands of Innovation SOA based Networks (SOA based platforms fuel new age VANs from obscurity to viability) Age of Innovation Web Services Networks (Lack of volume, Consolidated / Closed) Vertical emarketplaces (Lack of volume, Reincarnated / Closed ) Survival of the Fittest - EDI VAN (Price wars and cheap kilocharacters for all VAN Consolidation) The Golden Age of EDI (and EDI Profits) XML Appliances find their niche (Reminiscent of Cisco Systems and TCP/IP XML finds it way into hardware) B2B Software Industry Fights Back (B2B/EAI Translation & Transformation complexity locks customers into vendor specific translator strategies with a clear upgrade path and MTF emerges) SOA, ESB, BAM & BPM Fusion (or Confusion) (Software vendors vie for limited dollars with comprehensive Business Process vision) Early XML Design & Mapping Tools (Embraced by the middleware vendors and users) Hybrid Strategies Prevail (IT departments struggles to bring more in-house are moderated by economics and on-boarding/support complexity) Next Generation EAI/B2B Software (Self-reliance of the IT professional and Enterprise) Customer Revolt (AS2 Software Emerges) (Born out of high VAN rates and Free Internet) Dawn of the EDI VAN Early B2B Integration Experimentation The Dark Ages of Integration 8

9 B2B Market Consolidation After several years of stagnation the US B2B industry woke up in 2004: AT&T partnership with Grand Central Communications May 15 th, 2004 NuBridges acquires MCI EDI VAN May 27 th, 2004 JDA to acquire QRS June 17 th, 2004 (not executed) (JDA Software Group Inc. Demand Chain Software, Retail) ICC acquires Electronic Commerce Systems - June 22 nd, 2004 Click Commerce acquires btrade July 6 th, 2004 (btrade - secure communications, data sync and trading partner mgt. capabilities) NuBridges acquires TrailBlazer - August 25 th, 2004 (TrailBlazer provides ebusiness connectivity software) Inovis to acquire QRS September 3 rd, 2004 (in process) Digital Evolution acquires Flamenco September 13 th, 2004 (Flamenco was initially a web services MSP for B2B service transactions) GXS acquires IBM (Services Business) October 21 st, 2004 GXS announces partnership with webmethods November 8 th, 2004 Liaison Technologies Acquires Expresso XML Network May 10 th, 2005 A second wave of consolidation is underway. This will reach deeper into Europe as large Integration Service Providers are becoming more global. 9

10 B2B Integration Trends Consolidation / Rationalization of B2B solutions and services The B2B Outsourcing trend that began in 2005/06 has continued in the US and is now considered mainstream / best practice. Integration Service Providers are being asked to provide more comprehensive services and solutions due to customer-driven vendor rationalization efforts. The historical boundaries between B2B & EAI (or ESB) are blurring due in part to outsourcing, technology convergence and distributed infrastructure deployments. The traditional VAN market has consolidated and Tier 1 VANs are attempting to hold the line on per-unit pricing for commodity EDI services (unless the service mix is changed). Large Tier 2 VANs are more aggressively competing on price to gain market share. The traditional EDI VAN market is growing slowly (estimate < 6% CAGR) compared to B2B Outsourcing (estimate > 15% CAGR), 10

11 A2A Integration Trends Companies have overspent, overbuilt and underdelivered on Enterprise Application Integration (EAI) Optimization & light-weight delivery models are emerging for A2A integration with smaller technology footprints and lower license requirements. Companies are looking to mitigate recurring expenses associated with initial, large scale EAI implementations. Selective organizational down sizing (or repurposing) and outsourcing is a significant part of Lean EAI efforts. EAI software vendors are reinventing their businesses around Business Process Management (BPM) & Business Activity Monitoring (BAM) offerings. SAP Customers are planning for the impact of SAP PI (XI) & beginning selective migration (~2 year process). EIA remains a key part of the Real-Time Enterprise. However, companies must begin to move away from usage-based cost justification models [using EAI for everything possible to justify high recurring costs ] and right size EAI

12 Obtaining Business Value in Real-Time Enterprise Master Data Management 12

13 Master Data Management Company View Required for ERP Consolidation Supports new product launch process Deliver cost reduction Reduce transaction costs Reduced reconciliation issues Increase Net Turnover Improved data quality for improved customer procurement processes Improved data quality for up-selling, cross selling Supply Chain View Deliver cost reduction Platform for consolidation and process standardisation Improved data quality for spend analytics Reduced reconciliation issues Customer Mandates Supports RFID, Global Data Synchronization (Retail), Product Price Lists, Web Site data. Risk Management Regulatory & Business Compliance Clean and accurate Master Data is one of the top 5 issues on the U.S. CIO s agenda in

14 Master Data Management Master Data Management has become a mini ERP project for many companies (with many of the same pitfalls) The vast majority of the MDM market is serviced by the large ERP software vendors (i.e. SAP & Oracle). Many companies are rethinking a single vendor strategy for Master Data Management and moving to hybrid approaches. The last of the standalone MDM / PIM providers are being consolidated (FullTilt was the most recent acquisition). ERP Customers are generally disappointed with the MDM capabilities outside of these applications. Master Data Management remains one of the most significant challenges in large companies

15 Economics US Market Perspective 15

16 Realized Cost Benefits There are three key variables involved in estimating the savings a company can expect on shared (hub-based) A2A & B2B infrastructure: 1. Cost differential for new projects leveraging a shared infrastructure versus the current state (point-to-point integration model) Staffing Model (fixed versus variable) Data Translation (largest transition costs, most strategic B2B technology issue) 2. Cost differential for maintenance and support of a common, standard infrastructure compared to the current state (a collection of point-to-point integrations) Staff Leverage (implementation, support, etc.) Gateway Software / Hardware (upgrades are the largest hidden costs) Legacy EDI environment (VAN consolidation, management & rates) 3. The adoption and/or conversion rates from one architecture to the other (point-topoint to shared infrastructure in this case) 16

17 Average Annual Cost per A2A Integration 40,000 Average Annual Cost per Integration 35,000 30,000 25,000 20,000 15,000 Support & Maintenance New Integrations Transition (One-Time Costs) 10,000 5,000 0 Current Baseline Adapt to New ERP Optimize for New ERP Redesign & Replace * Averages costs are based on Liaison customer experience, assumes a Lean EAI implementation Return in Investment calculations vary by company with the expected return achieved in months. NOTE: In most cases it will not be possible to maintain a point-to-point integration environment with a new ERP implementation. Therefore, the ROI should be compared to the base-case of Adapt to ERP and not the Current Baseline which is not sustainable. 17

18 How Real is the Real-Time Enterprise? US Market Perspective 18

19 Customer Case Study: xpedx For years we struggled with the workload and investment required to process our suppliers product information now we can focus on new and exciting ways to use the information. - Dave Wallace, Director of ebusiness Challenge Solution Results 260 distribution and retail locations with multiple disparate applications and data silos Need to provide current, accurate, complete product information to customers Complete solution from strategy to implementation to support Liaison s Content Director MDM application External Data view perspective Data maintained outside of core systems Increased Agility - dramatic reduction of new product introduction time from 8 weeks to <10 days Lower Cost decreased work load for supplier communications and data maintenance Source of product information was outside the company s immediate control Significant investment in people and technology expended to acquire, standardize, and publish product information Partner Enrollment Services Multiple back end systems data integration approach strategically supporting eventual SAP implementation Reduced Errors and speed to market due to single data source 19

20 Customer Case Study: Central Lewmar "With real-time inventory checks, you don't give your customers the chance to call anyone else. You can answer and make the sale right away. --Steve Fraistat, Vice President of Corporate Purchasing Challenge Solution Results Enhance a already high level of customer service Efficiently and accurately check strategic supplier's inventory in Real-Time. Ensure sales are not lost due to customers shopping for available product. Synchronous XML transaction service across the supply chian Adapted B2B solutions to breath new life in to legacy systems Supplier network to support an extended view of the supply chain Differentiated customer service and procurement processes Real-Time integration with supplier systems ( < 10 second average response time end-to-end) More efficient, less errorprone purchasing system 20

21 Customer Case Study: Unisource World "There is no doubt that synchronizing our product information has positioned us well to squeeze cost out of our supply chain flow. We now have enterprise-wide visibility to consistent, high quality product data, enabling us to streamline strategic sourcing and replenishment processes while increasing our overall service levels." -- Donna Long, Director of Information Technology Challenge Business could not easily report on sales by region or product line: Products were represented differently across multiple regions Recognized the need for a single customer number across several locations Distributed system environment Duplicate items with inconsistent quality Difficulty making purchasing decisions due to lack of accurate inventory and sales information Business goal to increase inventory turns Solution Central Integrated MDM Repository Single repository for all item modifications No modifications in legacy systems System synchronization Iterative approach to systems consolidation Manage data modifications of product data from a central repository Integration infrastructure and workflow to keep all systems synchronized in near Real-Time Results Clean Data Consolidated legacy systems Unique Product Data reduced from 1.5M line items to 250K line items Single central repository of record synchronized to ERP systems Consolidated company reporting More efficient processes Infrastructure supports new initiatives (product launch, price changes, assortment management) 21

22 Summary 22

23 A few Differences but many Similarities Transition Challenge United States Significant Legacy EDI Infrastructure Scale based B2B integration (commodity pricing) Europe Lower Penetration of legacy EDI then the US Premium pricing & fragmented service provider market Data Mappings are not portable and represent a common barrier to transition away from legacy (or point-to-point) integration architectures. Integration Architecture? Clear delineation between B2B and A2A integration? Blurring of A2A & B2B Integration (one Integration Service ) Integration Outsourcing Growing Outsourcing trend, B2B Projects & Services B2B Outsourcing is often done as part of larger IT Outsourcing Economics Basic Transactions processing is a Commodity Competition is beginning to put price pressure on B2B services ERP Influence ERP projects often control Integration & Master Data Management strategy. The result is a Real-Time architecture that is ERP centric. 23

24 Final Thoughts. The Real-Time Enterprise concept extends beyond Supply Chain efficiency to R&D processes, CRM, Sales Force Automation, etc. Flexible and robust B2B & A2A integration forms the foundation of the Real- Time Enterprise. Rationalized Master Data is the key to unlocking the power of the Real-Time Enterprise concept. Without high quality Master Data, systems integration simply accelerates the exchange of bad information. ERP systems are a critical part of the Real-Time Enterprise but currently do not provide adequate integration or data management platforms to meet the needs of most large enterprises. There is an undeniable trend toward Outsourcing B2B integration. This trend is being fueled by the reinvention of traditional EDI VAN s and the commoditization of basic electronic messaging services. 24