ST.

LUCIE PRESS
A CRC Press Company
Boca Raton London New York Washington, D.C.
ERP
Using Your
Existing System to
Support Profitable
E-Business Initiatives
OPTIMIZATION
Cindy M. Jutras
Copyright 2003 CRC Press LLC

This book contains information obtained from authentic and highly regarded sources. Reprinted material
is quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonable
efforts have been made to publish reliable data and information, but the author and the publisher cannot
assume responsibility for the validity of all materials or for the consequences of their use.
Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic
or mechanical, including photocopying, microlming, and recording, or by any information storage or
retrieval system, without prior permission in writing from the publisher.
The consent of CRC Press LLC does not extend to copying for general distribution, for promotion, for
creating new works, or for resale. Specic permission must be obtained in writing from CRC Press LLC
for such copying.
Direct all inquiries to CRC Press LLC, 2000 N.W. Corporate Blvd., Boca Raton, Florida 33431.

Trademark Notice:

Product or corporate names may be trademarks or registered trademarks, and are
used only for identication and explanation, without intent to infringe.

Visit the CRC Press Web site at www.crcpress.com

2003 by CRC Press LLC
St. Lucie Press is an imprint of CRC Press LLC
No claim to original U.S. Government works
International Standard Book Number 1-57444-332-1
Library of Congress Card Number 2002031871
Printed in the United States of America 1 2 3 4 5 6 7 8 9 0
Printed on acid-free paper

Library of Congress Cataloging-in-Publication Data

Jutras, Cindy M.
ERP optimization : using your existing system to support protable e-business
initiatives / by Cindy M. Jutras.
p. cm.
Includes bibliographical references and index.
ISBN 1-57444-332-1 (alk. paper)
1. Electronic commerce. 2. Production management. 3. Management information
systems. 4. Business planning. I. Title.
HF5548.32 .J88 2002
658

.05dc21 2002031871

SL3321_frame_MASTER.book Page iv Thursday, November 7, 2002 1:13 PM
Copyright 2003 CRC Press LLC

DEDICATION

To my husband Glenn, who is truly my other half.

Together we are much more than we could ever be alone.

SL3321_frame_MASTER.book Page v Thursday, November 7, 2002 1:13 PM
Copyright 2003 CRC Press LLC

PREFACE

While businesses cannot operate effectively today without it, Enterprise
Resource Planning (ERP) alone cannot meet the needs of businesses
undergoing an E-transformation. Yet what company is not required to
make such a transition? Today no company can operate in isolation or
even at arms length from customers, suppliers and partners. ERP forms
a foundation for successfully meeting your E-business needs. But future
success will be derived not only from a rm, supportive foundation, but
also from a solid E-business superstructure to manage and guide it through
the complexity of a value chain that has grown longer and more complex.
This book provides a technology-centric approach to guiding your
company through E-transformation an approach that leverages current
investments and minimizes disruption to your business. But it does not
require you to be a technologist, or even technology literate, to understand
what you must do and the tools at your disposal to make it happen.
Written in a business vernacular, it effectively bridges the gap between
technology and business strategy.
Starting from the beginning of the transition, the book takes managers
through the process of assessing their current position, and introduces
them to the technology that can provide them with a unied view of their
organizations, effectively leveraging all available information to provide
true business intelligence. It details the steps they will need to take to
assume a leadership position within an integrated business community,
demonstrating how to support secure information exchange with custom-
ers, suppliers and partners. It shows them how to dene interactions
within and between companies, how to automate business process ows
and most efciently drive events throughout the value chain.
No, ERP alone is not enough to secure and maintain a leadership
position in todays economy, yet it provides a backbone and an infrastruc-
ture of enterprise applications that are necessary, essential prerequisites

SL3321_frame_MASTER.book Page vii Thursday, November 7, 2002 1:13 PM
Copyright 2003 CRC Press LLC

to conducting business. Preserving and leveraging this value is the secret
to success now and in the future. Whether you are a business executive
today, or hope to be one in the future, this book offers a comprehensive
guide for effectively building on the foundation of ERP in order to manage
and guide a business successfully into the E-business world.

SL3321_frame_MASTER.book Page viii Thursday, November 7, 2002 1:13 PM
Copyright 2003 CRC Press LLC

THE AUTHOR

Cindy Jutras

is a seasoned software and business professional with over
28 years of experience in applying software solutions to business prob-
lems. Experienced in a wide range of functions related to the software
industry, including sales, marketing, product development, customer sup-
port and product management, she is also an industry observer and
trendsetter in business and business applications. Having worked with
manufacturing companies for the full extent of that time, she is both a
visionary and a pragmatist.
She is currently Director of Solutions Management for SSA Global
Technologies, since their recent acquisition of interBiz, previously a divi-
sion of Computer Associates. At Computer Associates she was divisional
Vice President of Product Strategy and was instrumental in dening and
guiding the product direction of ERP systems as well as advanced tech-
nology products. Prior to this, she held positions at a variety of manufac-
turing, consulting and software companies, where she played a diverse
set of roles in operations management, research, design and development,
as well as both product and project management.
A native of Massachusetts, Cindy graduated summa cum laude from
Merrimack College with a degree in mathematics, with concentration in
physics and computer science. She went on to receive a Masters of Applied
Science from Boston University.
Ms. Jutrass work has been published and she is frequently quoted in
industry publications on a variety of topics including manufacturing, ERP,
E-commerce and E-business management, and customer relationship man-
agement. She is the original author of the concept of Virtually Vertical
Manufacturing and speaks at industry events on this and other topics.

SL3321_frame_MASTER.book Page ix Thursday, November 7, 2002 1:13 PM
Copyright 2003 CRC Press LLC

CONTENTS

1

Can ERP Meet Your E-Business Needs?

Time The Most Precious Commodity
Virtual Integration
E-Business Equals Full Exposure
Beyond QualityPriceDelivery to Interoperability
The Effect of E-Business on Your Business
The Sell Side of E-Business
The Buy Side of E-Business
Summary

2

The Empowered Executive Knowing @ The Speed
of E

A Story
What Do You Need to Know?
Transaction-Based Systems a Start, but Not Enough
Its Not Just about Infrastructure
Building a Management Superstructure
Information Overload
One Companys Approach
Aligning Business Strategy with Information Technology
Connecting Myers Divisions
Notifying Myers Management of Changing Markets
Searching for Hidden Factors
Recruiting Intelligence Agents
Managing Proactively
Using Events of the Past to Predict the Future
Myers Predicts Failures before They Occur
Summary

3

Company Culture Its Impact on Your Future

How Do You Dene Culture?
Absorption of Change

SL3321_frame_MASTER.book Page xi Thursday, November 7, 2002 1:13 PM
Copyright 2003 CRC Press LLC

The Not Invented Here Syndrome
The Art of Communication
Is It Art or Is It Science?
Technology and Your Corporate Culture
Accelerating the Speed of Business
Silos of Information
Summary

4

The Evolution of E-Business Where Do You Stand?

The Three Generations of E-Business
But First, Some Denitions
E-Information The First Generation
Communicating with Your Employees
Communicating with Customers
Connecting Distributors Another Way to Look at Bricks and
Clicks
Connecting with Suppliers
The Transition to E-Commerce
E-Commerce The Next Generation
B2B vs. B2C
Outbound Communication B2B vs. B2C
Automating Processes
Full E-Business Integration The Final Frontier
How Does E-Business Change Your Business?
The Story of Dell
Preparing for Full E-Business Integration
An Analysts Perspective
Information Services
Interaction Services
Integration Services
Collaboration Services
Exchange Services
Summary
References

5

E-commerce One Step along the Journey to Full
E-Business Integration

Choosing a Business Model
Direct Selling
The Intermediated Business Model
E-Commerce Platform Requirements
A Shaky Beginning
The Value E-Marketplaces Bring
Evaluating Trading Exchanges
The Buy Side of E-Commerce
The Benets of the Buy Side
Lower Purchase Administration Cost
Control Maverick Spending

SL3321_frame_MASTER.book Page xii Thursday, November 7, 2002 1:13 PM
Copyright 2003 CRC Press LLC

Shortened Purchase Cycles
Lower Price of Purchased Items
The Purchasing Process
Spend Analysis
Supply Strategy
Requisition
Source and Price
Transaction Automation
Vendor Management
The Difference between Direct and Indirect Materials
Transaction Automation of Direct Materials
Transaction Automation of Indirect Materials
Summary

6

Integrating All Information Assets

Why Is Integration an Issue? Reason 1
Why Is Integration an Issue? Reason 2
Why Is Integration an Issue? Reason 3
What Constitutes Integration?
What Approach Do You Take?
Summary

7

Predicting Business Events

Speed vs. Timing
Clues to the Future
Beyond the Capacity of Humans
The Possibilities
The Limitations
Summary

8

Epilogue
Appendix
Business Process Outsourcing

References

SL3321_frame_MASTER.book Page xiii Thursday, November 7, 2002 1:13 PM
Copyright 2003 CRC Press LLC