Gotcha! Creating An Electronic Exchange

By Sean Gallagher  |  Posted 2002-07-02 Print this article Print

Your exchange will only work as well as your ERP system lets it.

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Your exchange will only work as well as your ERP system lets it

If there's one lesson he's learned from deploying an electronic exchange, it's "Know your ERP (enterprise resource planning) system, because it has idiosyncrasies that need to be respected," says Mark Mendelson, e-Business leader for North America at plastics manufacturer Basell. "People see [exchange systems] and get seduced by their features. The temptation is for the tail to wag the dog"—to change the ERP system to fit the bells and whistles of exchange software—"but it doesn't happen that way. ERP systems are pretty big dogs, and they have lots of sharp teeth."

The biggest issue, he says, is connecting to and passing data between the ERP system and the exchange software "We find that these systems have a lot of administration issues associated with them."

One typical problem: Orders for nonexistent products, such as "item 999." The transactions can be meaningless.

You'll need some directory assistance

One of the big administrative problems of exchanges is handling who can connect—and to how much information—without requiring dozens of system sign-ins. An electronic exchange needs a directory service to allow users or customers to sign on safely and securely, from their offices or on the road. This will also help personalize what they see. That means registering—and managing—each customer's profile. While outsourcing an exchange may reduce the administrative burden, it doesn't make it go away—you'll need access to the directory to manage your electronic relationship with customers, or risk ceding it entirely to the exchange provider, losing contact and control.

Job #1 is "paperwork"

When you move your customer service to an electronic exchange environment, keeping customer and product data clean is even more important. " 'Master data administration' is looming as a larger and larger resource requirement," says Mendelson.

If customers are going to effectively view data on their orders online, customer, order and product information has to be kept consistent—or orders may disappear between systems. You'll have to "rationalize" product information, putting every item you'll sell or track on the exchange into a common classification system, or taxonomy.

That means that as employees spend less time handling customer service, they'll need to expend more effort keeping customers' data straight. "As we get better integration with the customer, and more and more of the [tasks of customer service] are handled by the system, what used to be administrative becomes the real work," says Mendelson. That can create culture shock for customer service reps used to dealing with the data as an afterthought, he says.

Whether you do it yourself or let someone else host it, there's going to be pain in making the parts work together

Exchanges generally have software "connectors" to try to integrate their operations with major enterprise planning software packages. But this isn't shrink-wrapped stuff. These connectors may not work with the ERP system you've implemented. "It never looks like Legos," says Robert Parker, vice president at AMR Research. "Tools from exchange vendors generally cover SAP, Oracle and other major ERP vendors, (but you) always have to be careful—an exchange may have an SAP adapter. But is it compatible with your version, patch level and the modules you're running?"

Even if after choosing a supplier carefully, Basell ran into issues when it implemented its exchange across North America, Europe and Asia, based on a product from Haht Commerce. With each new region, "we had to contend with idiosyncrasies in the way SAP had been configured," says Mendelson.

It doesn't always pay to go with the devil you know

SAP customers may be tempted to go with SAP's electronic exchange of choice. But that may not be the best move right now, says Parker. "The problem is that SAP is getting its [exchange technology] from Commerce One, which is a Frankenstein's monster right now—it's an ugly combination. CommerceOne had bought CommerceBid and a bunch of other products, and has no single architecture to put it all together."

He does believe, however, that SAP will rebuild its exchange software over the next 12 months into a more manageable product.

Competitors haven't exactly rocked the electronic exchange market, either. Parker says the reception for Oracle's exchange software has been lukewarm. And, from the outside, PeopleSoft appears to be still getting its act together. "PeopleSoft has a good strategy," says Parker, "but it is being very deliberate."

Sean Gallagher is editor of Ziff Davis Internet's enterprise verticals group. Previously, Gallagher was technology editor for Baseline, before joining Ziff Davis, he was editorial director of Fawcette Technical Publications' enterprise developer publications group, and the Labs managing editor of CMP's InformationWeek. A former naval officer and former systems integrator, Gallagher lives and works in Baltimore, Maryland.

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