Remember Web 1.0? Among the many misconceptions taken as truth during that era was the notion that electronic commerce tools, such as online product configurators and customer relationship management (CRM) systems, would magically simplify ordering processes for customers and drive growth for manufacturers.
At many organizations it didn't work out quite that way, and now executives, such as David Macaulay, senior vice president at diversified manufacturer Siemens AG, are left to clean up the mess. Over the past few years, Macaulay says, systems intended to make it easier for customers to order and for Siemens to track its customer relationships were implemented in a departmental and stand-alone fashion. As a result, he says, Siemens today has some 500 different CRM systems and 100 product configurators spread across the company. And there's little integration among Siemens' customer-facing systems, such as those it uses for CRM and order management.
As a result, Macaulay says, Siemens has a hard time getting accurate, up-to-date visibility into company-wide customer ordering patterns, nor can it easily compare different business units in terms of metrics, such as sales effectiveness.
"It's even hard for us to know at any given time who are our top 10 customers," Macaulay says.
In response, Siemens has embarked on a major, multi-year project intended to allow the company to more effectively manage its end-to-end opportunity-to-cash processes. The first step, now under way, is to drive common customer-related data definitions across the company and to replace disparate CRM systems with a Web-based version of SAP's mySAP CRM platform.
In about two years, Siemens will integrate its new CRM environment with the back-office systems and processes it uses to manage customer ordering and fulfillment processes. A data warehouse that combines consistent customer data from the CRM environment and up-to-date order information from Siemens' ERP system will let the company accurately assess things like which sales regions are most effective and whether the company is charging the right prices for its products, something it can't easily do today.
Siemens is not the only manufacturer attempting to standardize and integrate the systems and processes used to manage customer-facing operations, such as generating leads, taking and fulfilling orders, configuring products for customers, and coordinating warranty and other post-sales services. As business models become more complex — often involving multiple sales and ordering channels and extended networks of indirect sales partners — manufacturers are quickly realizing they can no longer afford the inefficiencies and lack of visibility that come with disjointed systems and processes. Instead, they want to manage the entire opportunity-to-cash value chain as a unified process with common, integrated systems and data.
"The first wave of e-commerce a few years ago saw manufacturers put a bunch of extranets, customer portals, CRM applications, and other systems in place, but a lot of that was done on a departmental level, and it wasn't integrated," says Rob Bois, research director at AMR Research. "What they ended up with was a hodgepodge of systems and ways for customers and partners to interact with them, and that resulted in overlapping and incongruous processes for customer and channel management. They ended up with multiple catalogs for selling, multiple configurators, customer information spread all over the place."
Who's in Charge?
As manufacturers strive to create consistent, integrated processes and systems to manage the opportunity-to-cash process, however, they often run into significant challenges, experts say. One of the most common barriers to an integrated opportunity-to-cash business process is that no single executive or office is responsible for the smooth operation of the entire process. In fact, in a recent survey of 53 enterprises attempting to deploy integrated order hubs to manage the opportunity-to-cash process, Forrester Research found only one company that had designated a single business owner for the entire cycle.
With multiple functional groups claiming ownership of various parts of the process at most companies, says Forrester analyst Ray Wang, "processes continue to be siloed by functional areas, such as sales, marketing, fulfillment, and finance."
In much the same way, traditional enterprise application software packages have not easily supported the management of end-to-end opportunity-to-cash processes, experts say. While ERP systems, for example, have done a good job of managing the order entry, order management, and fulfillment parts of the process, they typically have under-delivered on the front end, such as in the creation and management of custom catalogs, product configuration tools, and guided selling and multi-channel order capture. "In areas such as these, the big enterprise software vendors have not been very well-positioned," says AMR's Bois.
One reason is that important parts of the opportunity-to-cash process vary considerably by industry. For automotive suppliers, for example, being able to include accurate transportation costs in orders is more important than it is for, say, suppliers of consumer packaged goods.
"Historically, we haven't had a good way to deal with that variability," says Assim Chandra, vice president of high technology and industry strategy at Oracle Corp.
Now, however, using a combination of Web services technologies and, in some cases, acquisitions, ERP and other vendors are taking steps to string together separate applications to help manufacturers more easily manage the process.
Oracle, for example, recently announced a strategy, called the Oracle Application Integration Architecture, to integrate its various applications so that they will share both data and industry-specific business processes. The first two processes to be supported as part of a planned integration of the Oracle E-Business Suite and Siebel CRM are the order-to-cash and opportunity-to-quote lifecycles.
The integration combines the lead generation and multi-channel order capture capabilities of Siebel with the order management, fulfillment, and financial record-keeping functionality of Oracle's E-Commerce Suite. After defining and implementing workflows and business process that are common among industries — using standards, such as OAG, Web services, and middleware, like its Business Process Execution Language (BPEL) Tool — Oracle will add processes and workflows tailored to specific industries. Manufacturing customers also will be able to modify or create their own opportunity-to-cash processes using the same SOA tools that Oracle is using, Chandra says.
SAP AG is taking a similar approach. Having made most of its enterprise applications compatible with Web services, SAP is working with industry-specific councils, comprising key customers, to define business process best practices that can help customers tie together the various pieces of the opportunity-to-cash cycle, says Dominik Feiden, vice president and product manager for mySAP CRM and e-commerce. SAP is working with automotive suppliers, for example, to define processes and Web services that can be used to integrate spare parts management with the rest of the order-to-cash cycle.
Other software vendors are attempting to address the full opportunity-to-cash cycle through acquisitions and partnerships. Sterling Commerce, a unit of AT&T, has long been a strong provider of business-to-business order management and fulfillment through its Networked Warehouse Management and Transportation Management products. The company, however, lacked tools to address the customer-facing front end of the cycle, such as lead generation, order capture and configuration, and content management. Last year, Sterling fixed that with a $155 million acquisition of Comergent Technologies Inc., an e-commerce leader, according to Forrester's Wang.
Sterling's plan is to integrate the Comergent applications with its existing multi-channel fulfillment applications to deliver support for end-to-end opportunity-to-cash processes.
"We're seeing a convergence of these processes," says Ken Ramoutar, Sterling's director of applications product marketing. "Manufacturers are realizing that, from the customer's perspective, selling and fulfillment are part of the same process. It's about meeting customer expectations. If you can do that, you'll grow the business."
Sterling's integration will occur in two stages, Ramoutar says. The first phase, which took place in June, enables the Comergent and Sterling applications to exchange data so that, for example, an order captured using the Comergent system can be moved automatically to the Sterling applications for fulfillment. Phase 2 will deliver a single, integrated platform with pre-built processes and workflows to support the end-to-end opportunity-to-cash cycle. That is expected to take place by the end of the year, Ramoutar says.
The Partnership Route
Similarly, BigMachines, Inc., an 8-year-old vendor of on-demand software focused on the inquiry-to-order process is pushing to address a wider swath of the entire opportunity-to-cash cycle. But BigMachines is doing so through partnerships with other software and on-demand vendors, rather than through acquisitions.
BigMachines, whose applications let manufacturers' customers see online descriptions of products, configure them, and receive an accurate quote, has signed partnerships with CRM and sales force automation vendors Siebel (Oracle) and salesforce.com. The idea, says Greg Swender, BigMachines' director of marketing, is to seamlessly link guided selling and sales planning and forecasting processes from the CRM world with BigMachine's online quoting and configuration tools. The partnership with salesforce.com, for example, lets salespeople working in the salesforce.com sales management environment directly configure and price products for customers using the BigMachines tools, and link accurate product pricing and cost data maintained in the BigMachines environment back into the sales planning process.
That kind of integration is key to Pearson Packaging Systems, a $30 million maker of industrial packaging machinery. Pearson completed its deployment of BigMachines — integrated with salesforce.com — late last year. Before that, the front-end selling and quoting process was not integrated with up-to-date production bills of material and parts cost data, so there was often a discrepancy between the expected and actual profit margin on orders. Now that the BigMachines configuration system is tied directly to Pearson's IFS ERP system and up-to-date parts data, sales officials have accurate cost information when they bid on a job and place an order, says Pearson CFO Randy Bell.
As SAP, Oracle, Sterling, BigMachines, and other vendors pull together software that supports more pieces of the opportunity-to-cash cycle, some customers are taking matters into their own hands. Rohm and Haas Co., a $7.9 billion maker of specialty materials, for example, is deploying Web-based portals. The portals will give customers one-stop access to information related to all aspects of the buying process — from pre-sale activities, such as requesting a sample of one of Rohm and Haas's products, to the provisioning of post-sales services.
"We want customers to be able to go to one place to do transactions and get information in a consistent way," says Larry Weiner, e-selling and service process specialist at Rohm and Haas. "We're trying to pull all the pieces together and be as transparent as possible."
A first step for Rohm and Haas was the launch last year of Order Status Stores, secure sites where customers can perform a variety of tasks after ordering, such as check order status, print invoices, and track shipping status. In order to pull that information into one place from many sources, including Rohm and Haas' SAP ERP system, the company created its own Web services using SAP's NetWeaver development toolkit.
While the portal will give customers centralized access to a wide range of information, it will also be a boon to Rohm and Haas, which will gain a better way of tracking customer activity and generating leads. "It would be nice if, when our salesman shows up, he could say, 'I see you ordered a sample of one of our products yesterday. How can I help you with that?' Right now, we can't really do that because we don't have an integrated process," Weiner says.