Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field

The common thread to all these platforms is a service-oriented architecture (SOA) strategy built to meet current market requirements, such as hidden complexity, and low total cost of ownership (TCO). Sound product architecture is critical to enabling faster implementations, easier upgrades, easier integration to other non-native applications, and more flexibility to change processes on an ongoing basis. For acquisitive vendors, there is the benefit of lowering acquisition cost; they can assemble component pieces that are non-proprietary, with an upgrade path to greater functionality, while still maintaining the replaceable nature of these components (due to their standards-based quality). The idea is to build anew only what cannot be assembled from the existing component repository. SOA is the unifying integration factor, whereby one can assemble composite solutions from disparate components: some that are built internally; some that come with acquired companies; and some that come from partnering with best-of-breed vendors.

One can thereby thin down a monolithic application's bloated and unwieldy core, while putting increasing amounts of functionality in thinner layer components that can be snapped onto or shared with several application kernels as required. Software built in an object-oriented (OO) fashion is thus less unwieldy; the leaner, more modular architecture can result in quicker implementations, improved flexibility, and easier upgrades. This framework also provides agility and flexibility for integrating industry niche solutions, and for development of industry-specific solutions, with insulation from the vendor's major release cycles. For instance, SSA Global has recently been striving to add new functionality to support the food and beverage industry needs in the form of business logic that supports country of origin labeling (COOL), bioterrorism preparedness, and global trade item number (GTIN) compliance.

Although SSA Global has many service, software, and technology alliances or partnerships with companies around the world (such as Atos Origin, Accenture, Fujitsu, Cognos, Sirius, CSC, and Capgemini), its quintessential partnership is with IBM. This partnership was cemented in mid-2004, and aimed to more easily modernize and integrate disparate SSA Global systems across the extended enterprise. Under the terms of the agreement, the two companies jointly market SSA Global extended enterprise solutions built on IBM middleware, including IBM WebSphere Portal, IBM WebSphere Business Integration, IBM WebSphere Application Server, and IBM DB2 Universal Database. IBM Business Consulting Services and SSA Global also collaborate to offer implementation and consulting services.

With thousands of customers already running SSA Global solutions on IBM eServer xSeries, iSeries, pSeries, and zSeries technology, the joint solution should further reduce TCO and time-to-value, while helping these companies adopt a growing list of industry standards and information technology (IT) mandates. In other words, while Intentia, Lawson, and Infor are certainly major IBM partners, SSA Global has possibly become the most exclusive. SSA Global justifies this exclusivity decision by referring to the following three concepts:

1. Synergy: Together, SSA Global and IBM should offer a more complete and extensive solution, meeting both business and technology needs. Namely, SSA Global has been providing customers with the industry solutions they need for competitive differentiation, whereas IBM has been contributing leading technology and infrastructure (this technical standardization should ultimately lower the TCO).
2. Affordability: The two vendors have been developing solutions for large global customers—solutions that can be scaled down and made affordable for small and medium customers as well.
3. Interoperability: SSA Global is standardizing on the renowned IBM WebSphere middleware platform, providing its customers with industry-standard integration infrastructure.

Industry Trends

Like its peers, SSA Global has thoroughly analyzed the industry trends and issues affecting manufacturing and distribution companies worldwide. Business is now moving faster than most companies' ability to adapt. The velocity of business transactions—from orders by mail, to orders by phone, fax, and now the Internet—is ever-increasing, and as a result there are increasing demands on IT departments. In addition, executive strategies passed down through the organization are expected to be implemented faster and faster, which is putting further pressure on IT departments to be more agile and to implement solutions quicker and more efficiently. Globalization is also introducing new levels of complexity, and virtually no company, big or small, has been unaffected by globalization. Whether a company has operations across borders or whether its supply chain extends overseas, it must contend with economic, cultural, linguistic, and regulatory differences, putting more pressure on the IT infrastructure to efficiently accommodate these needs (see Merging Global Trade Management with Global Finance).

The trend towards lowering TCO requirements also needs only small mention, since top executives are wiser today than they were several years ago (given they are apt to have had direct or indirect experience with IT projects that failed to deliver promised business benefits). They are also under more competitive pressure to obtain a tangible return on investment (ROI) and to extend the value of their IT infrastructures. The level of detail for ROI studies has meanwhile increased, and executives demand information that tells them what the true, long-term cost of a technology investment will be (without a credible ROI forecast, the odds are that a given project will not be approved).

Bundled with this is the trend towards application portfolio rationalization; over the last few decades, we have seen a move towards decentralization, as a result of which companies have built elaborate localized technology infrastructures to support the needs of remote locations. Despite the flexibility and agility of autonomous remote divisions (see Standardizing on One ERP System in a Multi-division Enterprise), many top executives have realized that there is a high cost of maintaining a software infrastructure characterized by a disparate set of standard and customized applications. To achieve greater efficiency, cost reduction, and security, many user companies are moving to consolidate and standardize their applications and associated technology platforms, whereby the objective is to align IT infrastructure with business needs.

Technology landscapes are also consolidating, since customers are beginning to realize that they can get significant cost benefits by reducing the number of technology platforms they support. In addition, there is an inclination toward supporting open nonproprietary standards that offer more control over the applications they use and the vendors with whom they work. The industry consensus is that more than 75 percent of new enterprise application development is now built on platforms based on either Microsoft .NET or J2EE.

In summary, everyone needs more business agility, as well as the ability to conduct more transactions (including quality, service, management, production, and so forth) with fewer resources and assets (in terms of supporting applications and hardware). Like most of its peers, SSA Global is focused on providing business value via underlying technology improvements, such as solving the business problems of supply chain visibility, master data unification, vendor-managed inventory (VMI), and so on.

While the vendor is tackling recent buzzword-based technological concepts like Web services, composite applications, extensible markup language (XML), enterprise service bus (ESB), SOA, and so forth, the point is to map these concepts to true business value (in order to prove that this horde of whiz-bang terms and concepts really adds some value).

To that end, SOA describes modular software which is constructed using discrete executable tasks as the primary unit of subdivision, and which uses exposed service interfaces as the primary method of modularization (see Understanding SOA, Web Services, BPM, BPEL, and More). As mentioned earlier, users have an increasing need for greater simplicity, manageability, and agility, and if their business processes have changed, they want to know exactly how long it will take for an IT department to modify the software accordingly. As for what SOA means for customers, it should enable more rapid integration with existing systems, whereby customers can acquire new services without going through full upgrades. Additionally, it supports hybrid solution rollout and insulation against technology changes, and enables business process configuration and orchestration specific to vertical industries and distributed deployment.

SSA Global's Technological Vision

The SOA enablers of agility in SSA Global's case too are Web services, commonly accepted development standards, and common modules with standard service interfaces. This technology strategy has been driven by the customers' requirement to implement and manage their solutions quickly and effectively, while maintaining the lowest possible TCO. SSA Global's technological vision is thus characterized by the following objectives:

1. To support its recently minted corporate product strategy of "modernization, convergence, integration and industry focus." Obviously, the first three pillars have considerable technical implications. Industry focus has technical implications that are less obvious, but remains very important to companies that have specific technical requirements (for instance, specific industry electronic data interchange [EDI] requirements). In particular, some of SSA Global's ERP products have been helping companies comply with the requirements of Part 11, Title 21 of the Code of Federal Regulations (CFR) from the US Food and Drug Administration (FDA), which applies to pharmaceutical manufacturing; and with International Financial Reporting Standards (IFRS), the financial reporting mandates for companies doing business in the European Union. In addition, SSA Global has integrated tax capabilities with its ERP products, so that customers can more easily and accurately process sales and consumer-use taxes for US and Canadian requirements.

2. To provide a common environment in which customers can model, administer, and deploy their solutions, since many SSA Global solutions that currently have their own proprietary infrastructure should greatly benefit by leveraging a common set of tools and technologies (commoditized standard technologies).

3. To provide the lowest possible TCO by leveraging technology standards like J2EE and Web services as the vendor strives to provide more tailored solutions with fewer customizations and quicker deployments, all at lower cost.

Business Strategy

SSA Open Architecture follows a logical approach based on strategic business processes in order to deliver a message platform which is organized around four basic service tiers:

1. people-oriented services
2. decision-making services
3. business process services
4. application services

We will get into more detail shortly as to what these different service tiers represent. For now, let us explain what this strategy intends to deliver, starting with the most important element, which is preserving customer application and technology investments, rather than imposing a rip-and-replace approach. SSA Global pledges to protect customer investment as much as possible, while still modernizing user applications.

Another key component of the strategy is the adoption of the SOA model, whereby software is implemented in the form of modular services that can be reused across the enterprise. In order to do this, the vendor wants to leverage commodity technologies and standards to implement software faster and more cheaply than the competition.

Furthermore, given that SOA technology is not enough without industry-based context and experience, SSA Global also plans to focus on core competencies, and to leverage its selected deep industry expertise to deliver the best and most flexible solutions. Lastly, the vendor pledges to partner whenever someone else can provide value to the customer quicker and more efficiently. By standardizing first on an IBM technology stack (with some other upcoming complementary close partnerships), SSA Global emphasizes that it is not in business to create proprietary technology platforms, but rather to maintain its philosophy as a solution-oriented company.

As for the abovementioned four service tiers, they can all be depicted rather simply. Namely, people-oriented services provide users with personalized UIs to provide a more effective experience and operating environment, allowing them to be more efficient employees. They also provide the ability to aggregate information across applications to give a single, consolidated view of the user enterprise, while they also enhance intracompany communication by providing the ability for employees to collaborate more effectively with the desktop and each other. Decision-making services provide reporting, analysis, and monitoring tools to decision makers within the user company, so that they can make informed decisions via better and faster manipulation, configuration, and analysis of business information. Under the SSA CPM suite (which is powered by Cognos business intelligence [BI] technology), the SSA Financial Reporting, SSA Enterprise Scorecarding, and SSA Analytics modules provide insight into business performance and required changes.

Business process services, as the term implies, aim at enhancing operational efficiency through improved business process management (BPM) functionality for automating, integrating, and collaborating across the enterprise and into the supply chain (see Business Process Management: A Crash Course on What It Entails and Why to Use It). Standards-based integration infrastructure opens up applications and allows automation of business processes, whereas collaboration allows users to interact more closely with their customers and suppliers. These advantages have been best illustrated with SSA Global's other recent focus on the area of financial and regulatory compliance; SSA Global's compliance framework appears throughout multiple product areas, including functionality in the SSA BPM, SSA CPM, and ERP product lines.

Within the SSA BPM suite, the SSA Workflow capability (with the embedded iFlow technology from Fujitsu) helps companies establish preventative controls to ensure that predefined business processes and business rules are strictly adhered to. In addition, the SSA Event Management capability helps companies identify processes and data that are not compliant. Several SSA Global ERP products have been tightly integrated with the SSA BPM, SSA CPM, SSA FM, and SSA HCM suites to provide a broad range of compliance capabilities. The use of BPM and graphic modeling tools can speed implementation and aid flexibility. For instance, the vendor has lately built a series of templates for its BPM engine, to allow WMS software components to be quickly assembled for particular industries, or styles of warehouse operations.

In recent years legislation and regulations have been introduced to ensure good corporate behavior or governance, but unlike the Y2K issue, the Sarbanes-Oxley Act (SOX) in the US, and IFRS and Basel 2 in Europe, the Middle East, and Africa (EMEA), are not issues looking for a technology solution. Compliance is achieved only through management best practices, and SSA Global recognizes that technologies such as corporate performance management (CPM) and workflow management can be used to facilitate the adoption of such practices. For these reasons, the availability of CPM and workflow integrations is standard within the SSA FM suite, whereas report and process templates will be available as SSA Global engages with customers to define them. For more pertinent information, see Joining the Sarbanes-Oxley Bandwagon; Meeting the Needs of Small and Medium Businesses.

Last but not least, the application services tier provides a common infrastructure across applications, which allows for more efficient modeling, administration and deployment of solutions. Their potential benefit is in reducing the complexity and cost of application management by providing a common, enterprise-wide administration tool set.

Solution Application Framework

The Solution Application Framework (SAF) delivers the previously described service tiers, and allows customers to model, administer, and deploy their solutions using a common set of tools and technologies.

The first SAF component is the studio environment, which provides a single integrated development environment (IDE) for modeling and customizing SSA Global solutions. This includes portal, UI, workflow, reporting, data warehouse, integration, and development environments for solutions built with J2EE, existing SSA 4GL environments (in other words, fourth-generation languages from Baan and BPCS AS/Set technology), iSeries, and others. This is a good example of SSA Global's ability to leverage commodity technologies, since Eclipse IDE is an open source tool (originally developed by IBM, but then donated to the open source community) which is freely available to SSA Global and its customers.

While IBM has provided a number of free plug-ins to support different languages, SSA Global has been providing its own plug-ins to enable developers to use a common development environment for coding in Java, Report Program Generator (RPG), or SSA 4GLs. This industry-standard technology is providing significant value to SSA Global, its customers, and system integrators who can leverage the same tooling for their own customizations.

As far as the administration section of SAF is concerned, common services like unified user management, single sign-on, central deployment, licensing, logging, and configuration should ease deployment and maintenance costs. The run-time services component actually powers UI, portal, collaboration, integration, workflow, application server, and other needs, and it also provides the common infrastructure that supports the various platforms and databases SSA Global currently supports (for example, IBM DB2, Oracle, Microsoft SQL Server, and mySQL). Finally, the repositories of metadata, solution registry, and global solutions represent a significant move toward adopting the SOA model by externalizing functionality in its solutions in an effort to reduce the cost of customizations. As is well-known, customizations requiring coding add significant cost to application ownership, whereas SOA reduces costs by componentizing functionality for reuse and by allowing customization of business behavior by changing the order in which the components are executed. SAF repositories thus externalize configuration to allow for changes in behavior, since by reconfiguring the repository, users can change the business logic and provide the custom logic they might need without incurring the cost of the customizations of the past.

SSA Global's strategy for delivering future solutions is certainly not a "big bang" approach; rather, it is evolutionary in nature. The vendor started by releasing people-oriented services components with the SSA ERPLN product launch in 2004, whereas with the SSA ERPLX launch some components of the decision services and business process services have been added. Shortly after the ERP LX launch in mid-2005, SSA Open Architecture 5.0 was released, and the vendor then initiated a cycle of two releases per calendar year (one in the spring and one in the fall) to continue to provide enhancements.

In September 2005, at its annual Global Client Forum, the vendor announced the general availability of SSA Open Architecture 5.1. The latest version of SSA Global's technology architecture, SSA Open Architecture includes enhancements to SSA Portal Studio, SSA Collaboration Services, and the new Eclipse-based SSA Studio for modeling and customizations. The latest release features new unified user management and single sign-on capabilities, in addition to other administrative enhancements. SSA Global also designed SSA Open Architecture, so that customers of its predecessor product, SSA Technology Architecture 5.0, could easily upgrade to the new product.

But the best way to describe SSA Global's technological vision is to invoke the idea of customer-controlled introduction of innovation, which is a key strategy for allowing customers to adopt technology at their own pace. If customers start down the path towards SOA, the vendor pledges to work with them to find the best course of action based on their set of implemented solutions. It is not a matter of rip-and-replace, since customers can introduce components to work in their existing systems as they choose. While most articles in the press focus mainly on new SOA applications, most of what customers will likely be investing in is the technology that will enable their current solutions to participate in SOA scenarios. This path should provide the best ROI in the short term and the best TCO in the long term.

Along these lines, at the end of March 2006, SSA Global announced the general availability of the next release of SSA ERPLN, a significant upgrade to its flagship ERP solution for discrete hybrid manufacturers. The new release provides customers with enhanced capabilities in logistics, finance, projects, planning, sales, purchase, and service, and is a key milestone in SSA Global's strategy to help companies better understand and meet actual customer demand by leveraging an agile, standards-based IT infrastructure. It is based on the above-depicted technology architecture, which provides a Web-based UI, eases the transition to SOA, and enables standards-based cross application integration. The new release embeds specific solution templates for its primary target industries: hi-tech and electronics, and industrial machinery and equipment. It also extends the global reach of SSA ERPLN (with new embedded localizations for southern European countries and Japan), and in addition to a range of other capabilities, adds an intuitive interactive graphical planning board to simplify the workload for planners.

SOURCE :http://www.technologyevaluation.com/research/articles/contributing-to-the-rejuvenation-of-legacy-systems-in-the-enterprise-resource-planning-field-18512/

Mid-Market Strategy: International Enterprise Solutions

Adonix Strategy

Careful acquisitions and internal development is giving Adonix (www.adonix.com), a privately-held, French enterprise applications provider for medium manufacturing and distribution companies, greater leverage in the international market. Its overall strategy is marked with two catchwords: "growth" and "independence". Growth entails organic growth to broaden Adonix X3 suite's functional scope, licenses, and services; and external growth through acquisitions.

The vendor plans to expand its international coverage into more countries, primarily in Asia, Northern Europe, and Latin America. From its early days, Adonix made a conscious decision not to target a direct presence in most foreign markets, and to go for product distribution mainly through partners and value added resellers (VARs). This has often proven to be advantageous to mid-market customers looking to keep costs down, because selling through partners requires a higher quality of product support, and accompanying documentation.

Part Two of the Adonix' Mid-Market FORMULA—Adopting Best of Both "Organic Growers" and "Aggressive Consolidators" Worlds series.

By deliberately steering clear of too ambitious expansionist policies, which have hindered so many smaller software companies in the past, and by focusing on a handful of core markets, Adonix has managed to keep itself on healthy track. Also, direct and indirect channels that have already been built in targeted countries (around 150 partners worldwide) has helped the company with product translation and localization issues, which has resulted in the product's solid multinational and localization capabilities. The vendor tries to engage partners that the mid-market trusts, and VARs, system integrators (SI), and consultants are carefully chosen and trained. They are selected for their integration and industry skills, and local presence, and are in charge of implementation, customer coverage, and industry specific enhancements.

Adonix also emphasizes its capacity to provide its customers with a wide choice of functionalities and underlying technologies. Vendor tend to appreciate open technologies and leading industry platforms, and Adonix 4GL, a data dictionary and event-driven, fourth generation language (4GL) platform is a consistent, underlying development platform. To provide different options for open standards, such as UNIX, Microsoft Windows, Linux, Oracle, Microsoft SQL Server, Microsoft Business Framework (MBF) etc., Adonix partners with leading technology firms, such as IBM, Oracle, and Microsoft.

These high-profile partnerships should bode well for the guaranteed evolution for existing customers, as functional offerings are refined on an on-going basis in pace with the needs of the market, and are tested in independent software labs and at pilot customer sites for performance. For example, during the last few years, Adonix has broadened the scope of its traditional back-office enterprise applications (manufacturing, distribution, and accounting) by integrating front-office applications, including customer resource management (CRM), customer service, and product configuration into Adonix X3.

Recently introduced CRM functions help customers manage sales opportunities, sales contacts, and marketing campaigns, whereas new customer service features are the ability to track repair parts, manage service calls, and maintain a knowledge repository to assist help desk personnel with resolving customer issues. The Product Configuration module features a rules-based engine that allows building customized products to match customer's exacting requirements. These have allowed Adonix to stand apart from most mid-market peer solutions, which are typically a collection of acquired packages bolted together to form a suite. Conversely, Adonix has deliberately taken the time and made the investment to build a solution on a single architecture that is portable to multiple platforms, via a single, central repository with n-tier client/server architecture on standard database platforms (Microsoft SQL Server and Oracle).

As for its mantra of financial independence, Adonix's growth has long been self-financed. It is a family-owned, private company with sustained profitability, despite its acquisitions of Gruppo FORMULA, CIMPRO, ABEL and Meta4 in only last few years. Adonix prefers to buy software companies that have assets that it values, either in geographic coverage and leadership, markets, technologies, functional areas, etc. Some may be behind the curve technically or financially, but will still have something that will work within the Adonix Group.

Sometimes the vendor maintains the acquired entity's organization, products, etc., which then continues to run separately from the X3-related business (which is the case currently with Meta4 HR/Payroll). For others (particularly for specific vertical markets or functional domains like the CIMPRO and ABEL acquisitions for process industries and fixed assets respectively), Adonix takes the functionality and builds it into the X3 development environment, so that mid-market companies can take advantage of as much functionality in one integrated software package as possible.

Thus, while Adonix X3 has been available in the US since 2000, the ABEL Enterprise's fixed asset management capability will be available in the next X3 1.4 release. As will be explained later in this series, the former Cle128 warehousing management system (WMS) was released recently under the Geode GX name. Meta4 PeopleNet's personnel management, payroll administration, workforce collaboration, and BI capabilities might also come to the US some time in the future, while the Loan Solutions, for the public sector and local authorities, and Logan Informatique software, for real estate management, will remain permanently in local European markets.

In the case of Gruppo FORMULA, the software seems as a good fit in markets other than Adonix' traditional markets of manufacturing and wholesale distribution. Namely, the solutions are also targeted at the retail, healthcare, utilities, and services sectors, all which are not currently covered by Adonix X3. Thus, from this standpoint, its certainly fit the mold of Adonix' typical acquisition target, particularly with its mid-market ERP leadership position in Italy and the markets it serve. However, it remains to be seen whether Gruppo Formula will follow the CIMPRO and ABEL route and be incorporated within X3, or if it will remain independent like Meta4.

This is Part Two of a four-part note.

Part One detailed the company and its products.

Part Three will discuss Adonix' WMS Response.

Part Four will cover technology, challenges and make user recommendations.

Supporting Product Development

In additional to acquisitions, The Adonix Group, based in Paris, France is also focused on internal development and continues to pour more than 20 percent of its revenue into product development. After "biting the bullet" a few years ago and committing a substantial investment to basically rewrite its flagship offering, Adonix X3 ERP, to make it both Web native and a Web services amenable solution (extensible markup language [XML] and Java compliant), Adonix seems to be thriving in the ongoing timid economy. Also unlike most of its peer vendors, which started their ERP applications in the manufacturing space, Adonix first established a strong presence and functionality in the distribution and logistics field. Having mastered the idiosyncrasies of French business requirements in distribution, administrative, and accounting procedures, the company has remained the local market leader, despite strong competition and onslaught from international ERP vendors.

Going even further in the past, to complement its initial solution, which had initially focused on finance and accounting, and distribution for the lower-end of the mid-market, Adonix acquired a number of companies during the last several years. The most prominent of these were Prodstar, a French manufacturing resource planning II (MRP II) solution for mid-market manufacturers and their international subsidiaries, GSI Transcomm, a US provider of distribution and financial applications called TOLAS, and the Geode product from Geodis Logistics, a European WMS solution. Consequently, Adonix started rewriting its solution in 1997 after the Prodstar's acquisition and released the first version of Adonix X3 in 1999. However, the combined Adonix legacy applications are installed in over 4,000 sites, with approximately 200 in the US. Although one may expect a substantial recurring revenue stream or a new license opportunity from this large installed base from, for example, the former Prodstar product and older versions of Adonix, the challenge of incremental migration and concurrent support remains.

Since mid-2002 when version 1.34 emerged, Adonix X3 has been a Web-native ERP solution designed for mid-sized companies. Its functionality includes fully integrated manufacturing, such as routing, bills of material (BOM), product configurator, master planning schedule (MPS) and MRP; costing; quality control; shop floor control (SFC), and capacity planning; distribution, including purchasing, sales, inventory management, and replenishment; and warehouse management, including receiving, put-away, location control, cycle counting, picking, packaging, shipping, optimization, and automation control. It also encompasses, customer resource management (CRM) functionality, including contact management, marketing campaigns and after-sale service; and finance, which includes budgeting, allocations, analytical accounting, accounts receivable AR, accounts payable (AP) and general ledger (GL). All of these are on a single common architecture.

Incidentally, the Internet-based product architecture for the extended enterprise, (without any code on the client side) runs using a standard Web browser, enables remote offices and traveling users, and secure real-time access for partners, suppliers, sub-contractors, and so on. The product also enables companies to extend Adonix X3 business transaction and inquiry functions to their Web sites, making it relatively easy to connect to customers, trading exchanges, and key business partners. Namely, the Adonix Xtend module uses industry standard middleware, XML technologies, and Adonix application programming interfaces (API) to create the connection. The product extends relatively easily to the Web via the publication of X3 business rule APIs in Java/XML format to interface Web applications, so that the same X3 central application is accessible from a browser. The product is therefore Web services-compliant, since it supports all the common Internet standards including XML, Universal Description, Discovery and Integration [UDDI], Web services description language [WSDL], and simple object access protocol SOAP) as part of its development toolset.

Adonix X3's evolution strategy is based on a technical development toolset that is the foundation for translating specific functional designs into components of a single integrated software solution. Consequently, Prodstar was leveraged for the Adonix X3 Discrete suite, TOLAS for Adonix X3 Distribution, ABEL Entreprise for Adonix X3 Finance, Geode for Adonix Geode GX, and CIMPRO for Adonix X3 Process.

Currently, 1,200 Adonix X3 customers represent over 35,000 users within manufacturing, distribution and financial mid-sized companies and subsidiaries of large organizations in process, mixed-mode, discrete and distribution-intensive industries worldwide. These customers might benefit from faster time-to-market for new Adonix X3 releases, reduced total cost of ownership (TCO) through a homogeneous platform (without costly "bolt-on" solutions), and will more likely see a return on investment (ROI) for ongoing maintenance over the life of the system. They are entitled to a regular release schedule of new, value-added components, including CRM, automated data collection (ADC), finite scheduling, etc., and a toolset is integrated into Adonix X3 for handling customer-specific personalizations that are preserved over the life of the system.

Adonix X3 is also an ERP product designed for mid-sized companies with a view towards an easy installation (via a phased approach and parameterization tools), use, maintenance, and customization/personalization. It adapts to customers' business environments and changes, given that personalization and customization capabilities make upgrades and maintenance easier. The product maintains its flexibility via powerful parameterization capabilities, whereby the parameters are user-definable, and can be linked to applications or workflows, and can be set at different organizational levels.

One of the biggest Adonix' trumps is its per-seat pricing structure that suits small cost-conscious, risk-intolerant manufacturers and distributors, which often want to pay a fixed price for a solution, whatever the functional scope and implementation timeframe of their projects may be. To that end, Adonix prices its software (including all modules with only three add-on exceptions: finite capacity scheduling, product configurator, and assets management) $3,500 (USD) per seat in the US, with an optional 18 percent annual fee for maintenance and unlimited upgrades. The number of users per client varies significantly (from eight seats to more than 200 seats), leading to an average deal size of 35 users.

As the company prides itself on fast implementations (36 months) and on implementation costs being within one to two times the software license costs (120 percent on average), it does not take a rocket scientist to calculate that most of projects cost in the range of $50,000$500,000 (USD). The price tag might be attractive even in the current era of reduced information technology (IT) budgets. The product's design typically prevents additional "hidden" costs, since maximum functionality is included in standard version, whereas easy customization capabilities are allowed with the Adonix X3 toolset, and object-oriented technology allows reasonable integration and easy upgrades.

Implementations are so rapid and costs are low because the product is relatively easy to use and agile through parameterization, and it can be relatively easily interfaced with likely legacy applications in place. Adonix' deep in-house experience, with over 1,000 employees worldwide who have on average 14 years of experience in application software and on average 10 years of tenure at Adonix, bode well for the deep understanding of the mid-market business.

Catering to Various Environments

The product has an impressive depth and breadth of distribution and order management functionality. Particularly powerful is its advanced pricing functionality that allows companies to create a complex customized pricing formula based on a multiplicity of categories, such as customer, region, territory, etc. It is also a workflow/event-based solution that enables enterprises to model business planning issues through, e.g., a network of tasks, resources, and inventory buffers on which strategies can be applied to optimize interrelationships.

Workflow management covers all financial and distribution processes and, more recently discrete and process manufacturing. In other words, when information comes in from ancillary sources, such as electronic data interchange (EDI), the Internet, or sales force automation (SFA) systems, it can be imported into a system and can trigger exception events, that can be defined based on a user's information needs. The vendor plans to continue to improve and broaden the algorithms to address more industry-specific problems. Another attractive feature that the product offers is its native reporting and business intelligence (BI) capability, as it has built-in support for data marts for financial and logistics analysis by executive information system (EIS) systems. As will be explained later, the typical optional add-on modules are WMS options, shipping system options (custom or packaged solutions), product configuration, and finite capacity planning (with or without optimization).

Consequently, Adonix X3 comes configured in three slightly different offerings in North America. First, Adonix X3 Distribution provides an integrated set of application modules devised to help streamline business operations of wholesalers and distributors. The following modules can be installed completely to form either a full enterprise solution, or in modular fashion: CRM, sales management, inventory management, purchasing management, advanced warehousing and data collection (or Adonix Geode GX for more complex warehouse practices), financial management, demand forecasting, edi, shipping and manifesting, and Adonix Xtend (for integrating Adonix X3 to Web storefronts). With this suite of applications, distributors should be able to take advantage of features such as

* advanced order fulfillment for meeting critical customer delivery dates,

* comprehensive pricing and promotion capabilities,

* product configuration for locating and defining products according to customer definition,

* after-sales service with warranty tracking, service scheduling, and a knowledge base of product problems and resolutions,

* near real time BI for critical management reporting, including exception handling and performance measurements; and

* workflow management for ease in communicating exceptional events and transactions both inside and outside the enterprise.

On its hand, the Adonix X3 Discrete Suite is an enterprise-wide set of application modules that addresses the needs of mid-sized discrete manufacturers in a variety of manufacturing modes including make-to-order (MTO), configure-to-order (CTO), assemble-to-order (ATO), make-to-stock (MTS), and mixed-mode environments. The Adonix X3 Discrete Manufacturing module supports the planning, scheduling, and production control activities of a manufacturer within these different manufacturing modes, and it is fully integrated with the distribution, CRM, and accounting components.

Last but not least, Adonix X3 Process is a broad enterprise system that is specifically designed to support the dynamics of process manufacturing. Manufacturers try to achieve greater product and process consistency, while improving the ability to satisfy vacillating customer demand. To that end, Adonix X3 Process' advanced planning and control capabilities use near real time and historical information to help manage inventory levels and costs, optimize product mix, reduce waste, and shorten product development cycles. It combines the features of the company's flagship product, Adonix X3—a Web-native ERP suite that integrates manufacturing, distribution, WMS, CRM and finance functionality—with application features that address the unique and specialized needs of the process manufacturer, including formula management, lot traceability, shelf-life management, quality control, and regulatory compliance. The suite supports the specific needs of most formula-based process manufacturers including those in areas as diverse as dairies, bakeries, paints, lubricants, and cosmetics (for more germane information, see Process Manufacturing Software: A Primer ).

The process manufacturing module permits control over many planning and production control activities including formula management, routings, MRP, MPS, work in progress (WIP) accounting, and SFC, whereby the product supports both work order-based manufacturing and continuous batch environments. The distribution modules supports most required sales, purchasing, and inventory control functions including features to support quality control, lot control and tracking, expiration date management, and variable packaging units. Like in the case with the discrete manufacturing counterpart, the accounting modules are fully integrated with manufacturing and distribution, providing process manufacturers with complete AR, AP, GL and financial reporting capabilities.

However, Adonix X3 Process also provides complete quality assurance functionality, integration with material safety data sheets (MSDS), and helps US Food and Drug Agency-registered (FDA) manufacturers comply with regulatory requirements imposed by legislation such as the Bioterrorism Act and 21 CFR Part 11. It is ideally suited for companies producing coatings, adhesives, and sealants, as well as other batch-produced products. Since Adonix X3 also has solid discrete manufacturing capabilities to complement its process manufacturing orientation, it may also allow some mixed-mode manufacturing environments to freely adapt their systems to the style of manufacturing required.

For these reasons, the process-manufacturing suite has been a case of success at Adonix lately, with an enviable sample of customers in the industries, such as food and beverage, with Ganong Brothers and Simply Lite Foods (confections), Foxtail Foods (baked goods), East Coast Olive Oil, and Calico Cottage (fudge). Other industries of notice include the chemical industry, with Aceto Corporation (in chemicals distribution), Lubrication Engineers (lubricants), Garland Industries (tar-based products), Alloy Polymers (resins), and Golden Artist Colors (paints) representative customers; and the life sciences industry, with Fleming & Company (pharmaceuticals), UreSil (medical devices), Teikoku Pharma USA, and GS Cosmeceuticals (skin care). Some customers are notable multinational corporations, such as L'Oreal and L'Occitane (luxury goods), Sofradim (medical devices) and Stockmeier Urethanes .

SOURCE :http://www.technologyevaluation.com/research/articles/mid-market-strategy-international-enterprise-solutions-18177/

A Well-designed Solution for Sourcing: Its Technological Foundation and How It Works

TradeStone Software, Inc. (www.TradeStoneSoftware.com) has displayed consummate perseverance in becoming a provider of collaborative e-sourcing solutions for Global 2000 companies. The vendor offers what is possibly the first composite application to the retail global sourcing market that leverages an organization's information technology (IT) infrastructure. This application operates either on a stand-alone basis, or as a layer into an application mix to cover any global sourcing functional gaps. Built on modern technology and conveniently accessed through simply a web browser, TradeStone's offering, initially named SteppingStones (and recently renamed TradeStone Suite), supports most of the key functional areas of international buying and selling, such as the request for quote (RFQ) pre-buy process, ongoing order management, sourcing logistics, track-and-trace visibility, government-related compliance processes, and payment processing. It also provides underlying event management and alerting. It works across currencies, languages, and countries, without necessarily invoking the need to train users, even if they have lower levels of computer literacy.

Part Two of the series Collaborative Sourcing Solution Vendor Leaves No Stone Unturned.

For information on TradeStone's history, see Collaborative Sourcing Solution Vendor Leaves No Stone Unturned.

For an extensive discussion of global retail sourcing, see The Gain and Pain of Global Retail Sourcing, The Intricacies of Global Retail Sourcing, and The Fashion and Apparel Retailers' Conundrum.

In order to foster rapid widespread adoption with an intuitive "zero training" environment, and also to leverage and enhance current IT investments, all with rapid phased deployments that would ideally deliver return on investment (ROI) in 90 to 120 days, the TradeStone Suite architecture had to espouse several design principles. For one, it features global access by leveraging web browsers and the Internet using hypertext markup language (HTML). The application can be easily accessed not only by users within the client enterprise, but also by users (such as trading partners) via extranet. Furthermore, the application is accessible to other programs through the power and flexibility of integration via Web services (see Understanding SOA, Web Services, BPM, BPEL, and More). This brings us to the ability to leverage existing applications (with data views and extraction from several disparate source systems) such as order management systems, warehouse management systems (WMS), item master, vendor master, and so on; and the ability to aggregate them on a single screen, thus minimizing traditional "hard-coded" integration costs.

The product was also designed for collaboration from the ground up, to leverage e-mail alerting and workflows, so as to reduce dependency on pesky and tardy phone and fax communications. With a built-in security infrastructure, the application manages and tracks the users' workflows, whereby the screens are not meant simply for data entry, but rather have a built-in logic. The product suite is configurable via available system tools and rules-driven logic, and is also expandable, with the ability to add new functionality—not just by customizing, but by downloading from the hosted site, thus minimizing upgrade and implementation costs.

The TradeStone Suite is also a scalable, multi-tiered, server-based enterprise application built on the standards-based Java 2 Enterprise Edition (J2EE) development model, with support for Web services and extensible markup language (XML) leveraged for integrations (see Understand J2EE and .NET Environments Before You Choose).

On the database tier, the product supports IBM DB2 and Oracle, and IBM WebSphere as the application server. The Web server (which can be Microsoft Internet Information Server [IIS] or Apache Tomcat) has bidirectional communication with the Microsoft Internet Explorer (IE) browser via the hypertext transfer protocol (HTTP)/secure socket layer (SSL) combination. The application security consists of user authentication, network security (via firewalls and SSL), and the application security per se, which is role-based and also data-based (to provide transaction- and field-level security).

The Apache Tomcat open source web servlet container complements TradeStone's own model-based "data anywhere" architecture spanning multiple systems, thus leveraging an organization's current IT investment. It also aims at driving down IT costs by eliminating the need for redundant databases, replication and continual reimplementation, and retraining of employees and trading partners. With this architecture, the TradeStone Suite accesses data from multiple applications without copying or replicating the data, and ultimately eliminates the need for modifying existing applications. The "data anywhere" architecture can accept data from a variety of data sources and formats, and allows an application to provide a unified view of a transaction even if its constituent data is located in several different databases.

Rather than a traditional costly database-to-database integration approach, TradeStone's integration approach consists of a user interface (UI) engine, a model-based application logic independent of the database, and a dynamic data mapping integration engine. XML is used for data mapping and process definitions to Web services, legacy systems, and databases, or to any other third-party system. Data channels to data sources like databases, enterprise resource planning (ERP) systems, legacy applications, and so on, can go via Java database connectivity (JDBC), Web services, and messaging.

In other words, by leveraging the integration capabilities of standards-based Web services technologies, TradeStone has been able to put together an application that can be relatively quickly configured to shift data in and out of traditional enterprise planning systems. This should allow buying organizations to more easily intertwine the basic procurement information these systems typically store, with crucial sourcing data such as specifications, schedules, and statuses.

More on the Design Principles

Also, to tackle the aforementioned global sourcing issues, the product can be sliced into several logical layers that cater to data and content management, embedded intelligence, dynamic processing, and industry engines (such as costing, planning, order batch sizing, and event management). For now, it suffices to say that the functional layer caters to the overall product design-to-delivery process (with underlying critical path and event management capabilities), logically grouped into five major modules: Design & Planning, Sourcing, Order, Logistics, and Finance, which will all be detailed later in this series. The collaborative layer is to help establish the nature of a collaborative process, as well as the roles and responsibilities to leverage trading partners' assets for mutual benefit. This is provided via shared data, alerts, automated emails, shared business processes, authorizations, and approvals, and is independent of the underlying data source, which should result in fewer delays in the critical steps in the supply chain.

Given that functionality alone is not sufficient if it is not guided by the business process context, the process layer is where the data is interpreted, both in terms of the functionality it calls upon, and the process it fits within (for example, the role of shipment details). The layer provides the tools that allow the application to be configured to support well-oiled business processes, rather than to be shoehorned (see Business Process Management: A Crash Course on What It Entails and Why to Use It). Closely related to this is the intelligence layer, where the system inherently understands how to process tasks, and where the complexities of international and domestic trade are masked from the user to let them focus on their particular job. The intelligence layer provides content as well as functionality, such as harmonized tariff schedule (HTS) data.

To bolster these two layers, in mid-2004 TradeStone Software and ILOG announced that ILOG JRules, a key offering in ILOG's Business Rule Management System (BRMS) product line, would enhance TradeStone's flagship product. The combination of TradeStone's global sourcing software and ILOG JRules has been enabling manufacturers, retailers, and other businesses involved in global trade to configure, maintain, and change their business processes with increased agility in response to business growth and other dynamic business demands.

Electronic sourcing refers to the ability to bring together different trading partners over the Web into a supply chain network that responds to changing market demands. ILOG JRules, which allows the business logic embedded in business applications to be represented as rules that can be managed by business analysts, supply chain planners, and other business users, enables businesses to automate business policies, procedures, and best practices, improving resource management and accelerating investment in business process management (BPM). As a key component of the TradeStone Suite, ILOG JRules has enhanced supply chain usability for IT and business users, helping to ensure that the suite is scalable to the needs of TradeStone's customers. Compliance solutions powered by ILOG JRules monitor high volumes of data in real time, enabling the immediate detection and reporting of faulty or fraudulent information. By embedding this industry-recognized business rules engine, TradeStone believes that the suite is deployed more rapidly, while the best practices are available too.

Last but not least, the underlying tools layer supports all of the layers of the application to reasonably rapidly bring together, configure, implement, and maintain a solution. It consists of features like the Query Builder, Model Builder, Composite Screen Builder, Step Builder, Business Rules Builder, Collaboration Tools, Integration Mapper, Application Configuration, and so on.

Recap

To recap, graphical UI and workflows that require hardly any user training per se promote more rapid adoption rates (user buy-in) throughout buyers, merchants, finance, logistics, and suppliers. The model-based "data anywhere" architecture means that the solution layers across legacy systems, dynamically tapping only key data, while concurrently filling in any functional gaps and providing one view of the data and one working environment for all users. As for exception-based workflows, they keep each trading partner focused on critical issues, and promote collaboration to resolve issues. Finally, a single view of the truth, which means one view of transactional data, regardless of legacy systems in place (or central repository for all commitment and contractual data), should eliminate redundancy by making it unnecessary to update multiple spreadsheets, hunt desperately for e-mail strings, or constantly re-key information in multiple systems.

In addition to a broad and focused sourcing functionality, backed up with a well-devised technology blueprint, TradeStone espouses the implementation approach, with the flexibility of either a tailored implementation or a straightforward out-of-the box deployment. In either case, the first step would be information gathering with key stakeholders within the business and IT organizations, so as to determine key business drivers, identify pain points and impediments, and identify opportunities for improvement. The next phase would be to develop a "scope document" that articulates, at a high level, the key business opportunities (in order to quantify a potential ROI), and for which one has to determine high level "as is" processes. Then the team would configure a prototype of the TradeStone solution based on the scope document, review the prototype with key stakeholders, and secure agreement on next steps for the functionality demonstrated in the prototype.

In case of the user opting for the "out of the box, from day one" implementation scenario, they would have to use standard business processes and workflows, standard screen interfaces, standard reports, and standard business form layouts. Since the touted "no training" environment provides intuitive workflows for all users, the vendor would merely provide the admin or user guide.

In the case of a more involved tailored implementation, though, the team would have to design, among other things, detailed business processes with associated business rules; custom interfaces (including the look and feel of transactional screens); custom reports; and custom requirements for business forms (such as requests for proposal [RFPs], bids, purchase orders, invoices, and so on). It would also have to develop custom training programs (for administrators, super users, end users, and the like), and customized documentation and "quick reference" materials. This type of customer still reports the TCO as being well under seven figures, and a hosted service was recently launched to accommodate IT budget-constrained customers. TradeStone is also developing a program that will allow even the "littlest guys" to pay per transaction.

A Simple Illustration of How It Works

To illustrate how the solution works, one scenario would be that a user company wants to extend an RFQ to several small manufacturers in the Far East to make a batch of polo shirts. The buyer would input the specifications in a preset form designed to support retail purchases, with fields for necessary data like size, fabric, or color. The buyer would also have to provide the e-mail contact addresses of the suppliers he or she desires to engage, and then would initiate the quote process. Currently, TradeStone does not help with finding prospective vendors in these faraway regions—this is in the long-term development plan—but for the time being, the retailers have to know their roster of suppliers and contractors beforehand.

The suppliers would then receive the e-mail invitations containing the RFQ, along with instructions to follow a hyperlink to a web page (hosted by TradeStone) to provide their bids. Once all the bids are in, the buyer would use TradeStone to compare them based on projected landed costs, using the HTS codes to determine the duties (with the system normalizing and synching all the data in the background, so as to avoid any awkward "apples to oranges" comparisons. When the buyer eventually decides to award an order, the data already in the system can be leveraged to generate a purchase order, transmit it to the supplier, and even apply for a letter of credit (LoC).

Through a Web services-based architecture that fosters loosely decoupled connections between the buyer's enterprise resource planning (ERP) system and TradeStone, the purchase order data would be written into the back-office system automatically, thereby obviating the need to re-enter the information to create an official order. Since TradeStone is tailored to the needs of the global sourcing process, it presents fields for the supplier to detail important milestones such as the expected production start date and expected ship date. When those dates come close, the solution can automatically remind the supplier to provide an update on status and any changes, and should the supplier forget or ignore the reminder, the system will repeatedly send reminders via e-mail (or escalate with higher frequency) until the required crucial information is received. There is also the ability to collaboratively discuss, online, back and forth, details of the order before the purchase is finalized. The system also has an online change order request, so that buyer can select a still outstanding purchase order and send it to the supplier with a proposed change.

When production is complete, the supplier can once again leverage the data (without ever re-keying the information) to create appropriate, accurate shipping documents such as the bill of lading (BOL) and the commercial invoice. If equipped with electronic data interchange (EDI), the supplier can even upload EDI-formatted documents such as advanced shipping notices (ASNs) into the buyer's TradeStone system. When a purchase order is complete (landed and duty paid [LDP]), the system offers the ability to compare actual to estimated landed costs, so that the buying company can adjust its formulas as needed for the future. For well-established, recurring relationships, the buying company can even upload inventory and point of sale (POS) information into TradeStone, so that the trusted suppliers can actively plan production and ship replenishment orders.

Different Stokes For Different Folks

The year 2004 was a time of controlled expansion, with three more development partners/customers signed (The Children's Place Retail Stores [US], American Eagle [AE] Outfitters [US], and Deutsche Woolworth [Germany]), and more staff of similar experience and heritage added. More former RockPort staffers joined the fold in their familiar Gloucester, Massachusetts (US) facilities, and former QRS moved out (literally and symbolically), while TradeStone moved in. The four first high-profile customers may also demonstrate the versatility and applicability of the solution to cater to differing customers' sourcing needs ( la "different strokes for different folks"). Still, the common theme for all of them would be that TradeStone has streamlined their entire purchase order management processes, allowed merchants to understand and analyze their businesses better, eliminated errors caused by piles of spreadsheets, and ultimately reduced data entry and training hours.

For example, the very first customer, Ocean State Job Lot, sells off-price electronics, housewares, lawn and garden items, stationery supplies, gourmet foods, sporting goods, toys, pet supplies, home decor, computer supplies, and seasonal items. With a chain of about 70 stores in New England (US), a typical Ocean State store stocks more than 4,000 items, many of them imported from a wide array of small offshore suppliers. Because the retailer provides "opportunistic" merchandise—which changes frequently based on availability—it was vital that the retailer have a global sourcing system that would enable it to move more quickly while dealing with a large variety of small suppliers. Opportunistic buying assumes little or no training at all for neither internal employees nor casual suppliers, although deep and rapid collaboration and global visibility certainly had to be deployed with vendors.

On the other hand, The Children's Place is a specialty retailer of high quality, value-priced apparel and accessories for children (newborn to age ten), and designs, contracts to manufacture, and sells its products under the "The Children's Place" brand name. It operates about 700 stores, with the vast majority of stores in the US, and about 40 stores in Canada. It also sells merchandise through its virtual store located at www.childrensplace.com. The Children's Place selected TradeStone's suite hoping to more effectively collaborate with global suppliers, and improve its production tracking and global visibility into the pre- and post-shipment supply chain. TradeStone also replaced some legacy sourcing systems (such as product costing, vendor self invoicing, and so on) in a "fill-in-the-gaps" manner, to create a single global order management infrastructure for sourcing of domestic, international, direct, and indirect materials. Using TradeStone Suite has allowed the company to notably reduce the cost of merchandise and transportation, improve its back-office productivity, and reduce markdowns.

At AE Outfitters, TradeStone provided a global order management composite layer over the mix of existing legacy systems, as a great example of composite applications in action. For example, the existing systems have thus been integrated via TradeStone's overlay. These systems include product development (via Gerber WebPDM, which provides data such as item characteristics, attributes, and images), merchandizing (via JDA Software's Arthur Allocation, which provides data such as seasons, master data, merchandise hierarchies, and the like), sourcing (via Inovis Sourcing, which provides data such as item collaboration, RFQ, costing, event management, item characteristics, sell channels, size and color flows, and packing), and planning (via Island Pacific's order management system). AE Outfitters is a lifestyle retailer which designs, markets, and sells its own brand of relaxed, casual clothing for 15- to 25-year-olds, providing high-quality merchandise at affordable prices. Its collection includes modern basics like jeans, cargo pants, and graphic t-shirts, as well as a stylish assortment of cool accessories, outerwear, and footwear. Its Canadian subsidiary, Bluenotes/Thriftys, offers a more urban-suburban, denim-driven collection for 12- to 22-year-olds.

AE Outfitters currently operates about 750 stores in 49 US states, the District of Columbia, and Puerto Rico; 64 AE stores in Canada; and over 100 Bluenotes/Thriftys stores in Canada. The retailer also operates via its Web storefront business, www.ae.com, which offers additional sizes and styles of AE merchandise. TradeStone's solution has allowed AE to leverage its current investment in software, while strategically expanding functionality such as vendor collaboration, ASNs, packing lists, self-invoicing, and so on. The idea is also to expand the suite's capabilities for all parties to better define products, collaborate, and manage purchases across the global supply chain.

Finally, in 2004, German retail group Deutsche Woolworth (operating more than 330 outlets in Germany and Austria, with 14,700 employees and revenues of approximately $1.4 billion [USD]) tapped the global sourcing solution from TradeStone Software to purchase global merchandise for its own stores and to offer a service bureau environment to smaller retailers who buy through Woolworth. This agreement marked TradeStone's entry into the European market, and the vendor has worked with Deutsche Woolworth and implementation partner IBM to tailor its global order management functionality (which replaced the legacy one) to meet the unique requirements of the European market, such as the need to be integrated with the planning system at the product category level to drive global sourcing. The resulting solution supports Woolworth's global order management requirements with sourcing and order management collaboration across its supplier base. Having been embraced by the merchandisers, this capability has gradually been expanded to the company's customer base, which should then be able to use the software to source goods from Woolworth, its suppliers, and its service providers. Deutsche Woolworth recently garnered two prestigious awards for its TradeStone implementation: Computerwoche's IT User of the Year, and Retail System's Global Retail Achievement Award.


SOURCE :http://www.technologyevaluation.com/research/articles/a-well-designed-solution-for-sourcing-its-technological-foundation-and-how-it-works-18652/

Development of an Internet Payment Processing System

Early in 1999, the author was asked by E-Bank (http://www.e-bank.co.yu), one of his clients, to develop the first Yugoslav Internet payment processing system. This client is a Yugoslav payment processing company that uses BankWorks software by RS2 Software Group (http://www.rs2group.com) to process transactions made at ATMs (Automatic Teller Machines) and POS (Point Of Sale) terminals.

Developing an internet payment processing system in Yugoslavia under bizarre circumstances, during bombing raids, and power-cuts, was definitely an unforgettable experience. The system was deployed in September 1999 and has worked ever since without any problems. It has sustained numerous attacks by hackers and would-be intruders.

The system architecture is very similar to the Three Dioxin (3D) model that started to emerge later. 3D model will probably become a de facto standard for transactions on the Internet, when its specification is finalized. The developed software received the Diskobolos 2000 (http://www.jisa.org.yu/2000.htm) award in the finance category - an annual award granted by the Yugoslav Informatic Alliance. This article describes a success story that is worthwhile sharing with a wider audience.

E-Commerce Applications

Before we proceed any further, we have to distinguish two types of transactions on the Internet:

Transactions of the first type are not performed in real-time. When a card holder submits payment and gets a response, payment is only posted for further processing. Actual authorization of the transaction is performed (manually) at a later time and consequently at a higher operating cost. This is acceptable when delivery of goods and services is slow, e.g., via regular mail. As an example, when the author purchased a book from Amazon.com in August 2000, the order was approved after an hour or so.

The other type of transaction is performed in real-time. When a card holder submits payment and gets a response, payment is completed. Money on the card holder's bank account is earmarked and transfer of money to the merchant's bank account is guaranteed. This type of transaction is required when delivery of goods and services is imminent (e.g., download of software or MP3 files). Despite this requirement, some e-commerce sites use the first type, and deliver goods and services based on an assumed success of authorization in the future. This approach risks losses due unauthorized transactions.

The system described in this article can configurably work in either mode. When it works in the second, fully automated mode, the system interfaces with the BankWorks system in order to authorize transactions. This interface is simple and should be easy to adapt to other systems for authorization.

Business Model

In order to offer the best options (e-commerce application cost vs. sophistication tradeoff) to merchants and card holders, based on the above discussion, a business model of transaction processing has been developed. It divides merchants on the Internet in three groups, depending on their e-commerce application:

1. Those interested in collecting payments
   
   
2. Those requiring pre-processing and authorization
   
   
3. Those requiring preprocessing, authorization, and post-processing

Merchants in the first group are only interested in collecting (often periodic) payments on their goods and services. The best examples are utility companies and subscription services. Such payments are identical to payments made at some ATMs. A card holder logs on an ATM, selects a merchant (e.g. a phone company), and enters the amount and the payment reference ID (e.g., his/her phone number). Similarly, on the Internet, a card holder can log on the portal of the Internet payment processing company and pay bills. In order to further facilitate the payment process, merchants can, for a fee, keep account balances of their customers in the Internet payment processing system. In such a way, card holders may review their account balances, get a pre-filled payment form, and simply confirm payment.

Note that, merchants do not even need their own web site. Mobtel (http://www.mobtel.co.yu), a post-paid mobile phone company, operated in such a way for a brief period of time, when it was redesigned to a more sophisticated e-commerce application (also developed by the author) that includes calculation of promotional discounts and payment pre-processing.

The next group of e-commerce applications has a more complex business logic executed at the merchant's web site. However, these applications do not have/need any automated processing after payment is completed. Delivery of goods and services is based on payment reports available on-line from the processing company. Examples of such applications are Simpaid (http://www.simpaid.co.yu), a pre-paid mobile phone company, and Eunet (http://eunet.yu), an Internet service provider. The payment process is shown in Figure 1. The final bill is presented to the card holder on the merchant's site. The information about payment (merchant's name, payment reference ID, and amount) are passed to the payment form on the payment processing site. Here, card holder fills card information and completes payment. Note that confidential card information is protected by SSL (Secure Socket Layer) protocol at the payment processing site, and the merchant does not need SSL on his/her site.

Figure 1.

The last group of e-commerce applications includes all three phases of payment processing: pre-processing, authorization, and post-processing. Pre-processing is performed at the merchant's site and may include collecting information about the card holder, calculation of cost, taxes, discounts, shipping and handling, etc. Authorization is executed at the payment processing site in a form of a remote procedure call made at the merchant's site. Based on success/failure at this step, post-processing is executed at the merchant's site. The purchase order is completed, and goods and services are delivered (e.g., MP3 file is downloaded).

Implementation of such e-commerce applications is not an easy task. A transaction consists of multiple applications executed at multiple computers across the Internet. The chain of events may be broken at any step, at any time, and for any reason (e.g., power failure or communication cable cut). For example, failure after authorization and before post-processing is completed, could leave the card holder's account charged without delivering goods and services. The e-commerce application must have recovery procedures developed so it can either backtrack (e.g., credit card holder's account and cancel purchase order) or finalize order (e.g., deliver goods and services). An example of such application is Atlantik (http://www.atlantik.co.yu), an on-line betting company.

System Users

There are three types of users in the system described in this article:

Besides purchasing goods and services on the Internet, card holders may view information about their card accounts using the portal of the Internet payment processing company. This information includes account balance, previous payments, and history of accesses to the account information (for security purposes).

Merchants may view information about their accounts using the portal of the Internet payment processing company. This information includes previous payments made to the merchant, and history of accesses to their account information (for security purposes). Merchants can also change password for access to the account information.

The system administrator of the processing company manages the system using the portal and back-office applications. The administrator may configure in the system database numerous merchant's operational parameters such as type of e-commerce applications, types of cards accepted by individual merchants, appearance of payment receipts, etc. The administrator can use detailed security and access logs to track and locate would-be intruders.

System Architecture

System architecture of the Internet payment processing system is shown in Figure 2. All system components are connected via the Internet. The system has a multi-tier architecture that is typical for applications on the Internet.

Figure 2.

Card holders access e-commerce applications via the Internet. Depending of the type of e-commerce application, card holders may pay through the portal of the Internet payment processing company (first type), partly through the merchant's site and partly through the portal (second type), and entirely through the merchant's site (third type). In the last case, the merchant's site contacts a transaction server to authorize payment. In order to balance the load in the system, there may be multiple transaction servers.

The operating system of the web server (portal) and transaction server(s) is Linux. The web server is Apache with the Jserv module for execution of Java Servlet Internet applications, and the SSL module. We selected this configuration for various reasons. Due to the requirement that the system must work 24 hours a day, 7 days a week, we selected a reliable UNIX-based operating system. Furthermore, 57% of all web servers in the world are Apache, while an additional 3% are Apache derivatives. Also existing third party software for transaction authorization (BankWorks by RS2 Software Group) runs on a Windows NT platform.

All software components developed in this project are based on Java technology, a de facto standard for Internet applications. The latest developments in this technology were closely watched. Software had been often developed using early-access releases so it is ready when the underlying Java technology is officially released. Furthermore, Java is the underlying technology of the Visa Open Platform (VOP) that defines standards for the development of Smart Card applications. Due to portability of Java code, it runs on any contemporary operating system. The software has been tested on Linux, Windows NT, and Windows 95.

The web portal is implemented using standard Java Servlet technology. The application is highly configurable with respect to look and feel. All language related elements such as character-set, text strings, and error messages are also configurable.

The transaction server is implemented as a standalone Java application. Both the portal and the transaction server generate various security and access logs that allow detection and tracking of attackers on the system.

Merchants who use the first type of e-commerce applications are initiated by simply entering information about them in the system database. Since these businesses do not need necessarily a web site, no further development is required.

To facilitate the development of the second type of e-commerce applications, developers are given a template HTML form that contains HTTP payment parameters that are passed from the final bill on the merchant's site to the payment form on the payment processing site, as shown in Figure 1. The developed application has to adhere to the defined convention on passing payment parameters.

To facilitate the development of the third type of e-commerce applications, VPOS (Virtual Point Of Sale) terminal software has been developed. It handles payment authorization in a form of a remote procedure call. The VPOS terminal communicates with an appropriate transaction server using SSL protocol and the strongest commercially available 128 bit key encryption. To achieve even greater security, a VPOS signs data it sends to the transaction server using 32-128 bytes keys.

The VPOS terminal is easy to configure. This pertains to types of cards accepted and transaction servers that handle authorization. Each type of card may be handled by a different server. Also, for greater reliability, for each card type, it is possible to configure a list of alternate servers. In case the first server on the list is out of order, the next one is contacted and so on. The VPOS terminal component is easy to incorporate in an e-commerce application. It is delivered as a set of Java libraries, well documented simple API (Application Programming Interface), and sample code that demonstrates the use of API. If necessary, engineering services can be provided to custom build an Internet store.

Security Issues and Experiences

Even before we started development in early 1999, we knew that the system would be the prime target of hackers' attacks and that security was of the ultimate importance. At that time, the SET (Secure Electronic Transfer) protocol was promoted by Visa. However, development of such a system and its certification at http://www.setco.org was a lengthy and costly process we could not afford. Besides that, SET is not practical since it restricts card holders to using only computers that are certified for their specific cards. For that reason, we decided to build a proprietary system, and verify card holders using E-PIN (Electronic Personal Identification Number). It turned out that this solution and the entire architecture is very similar to Three Domain (3D) model that started to emerge in 2000, as shown in Figure 3.

Figure 3.

The merchant's identity is verified by the acquirer and the card holder's identity is verified by the card issuer. A transaction in our system is functionally performed in the same way except that the issuer's and acquirer's functions are collocated. We expect that 3D model will be widely accepted when its specification is finalized. Then, depending on available funds, we may decide to separate issuer's and acquirer's functions to two servers and fully comply with the 3D model.

There are two aspects of security that we addressed: protection and prevention. We believe that we addressed both very successfully since none of numerous attacks were successful.

Protection pertains to actions aimed at minimizing the system's vulnerability to attacks when they actually occur. The most basic step is to use 128 bit SSL encryption that protects the system from eavesdropping. In order to protect from fraud with stolen card numbers, we introduced E-PIN. Cards are blocked after a settable number of attempts to enter an invalid E-PIN.

The next step was to build an elaborate system of security/access logs that log all interesting events on all active system ports. Events are ranked according to their importance, and may be filtered and shown in different colors on the administrator's console. The system clock is automatically periodically synchronized with an atomic clock so events can be matched with other logs like those of ISPs.

The final step was to carefully scan the system with a scanning tool in order to detect and replace faulty components of the operating system. If you don't do this, bad guys may do it for you. In the logs we found that the system was scanned by a US company that, guess what, specializes in Internet security. We also captured that local celebrity hackers poked around the system.

Prevention is a set of legal/marketing/media actions aimed at detracting people from even trying to break in the system. As we expected, break in attempts started virtually from day one. Logs contain enough information to locate would-be intruders. Legal actions against them are still not possible, or at least not easy, in Yugoslavia. Laws against crime in information technology are still under development. The legal validity of electronic documents, like logs, is still questionable. In countries where such laws exist, a legal case with good media coverage would greatly contribute to crime prevention and the system's reputation.

Nevertheless, complaints are regularly filed with administrators of offending domains. In the case of ISPs, some were cooperative and cancelled the accounts of offending users. Other ISP administrators do not even bother to respond, especially when attacks came from their own intranets and were most likely carried out by administrators themselves. In one case when an attack came from a university computer center, the offending computer was located, but not the person since students come and go to do their assignments. As a result of the filed complaint, the staff of computer center started to log student IDs and the times they spend working at each computer so any future attempt could be sanctioned.

Finally, the author created a media event by challenging hackers on a news group with a statement that "hackers have to realize that a new sheriff for software has come to town". That instantly provoked an avalanche of daily attacks that diminished after some time. The word about system's reliability and security got on the streets. Now, about one third of all transactions with cards, processed by the processing company, are made over the Internet, and about one half of all active cards are also used on the Internet.

Conclusion

In this article we described author's experience with the development of the first Yugoslav Internet payment processing system. The system has worked reliably and securely since September 1999. Its architecture is similar to the Three Domain model which specification is yet to be finalized.

SOURCE :http://www.technologyevaluation.com/research/articles/development-of-an-internet-payment-processing-system-16681/

Made2Manage Affirms Its Technological Astuteness Part 2: Strategy

Made2Manage Strategy

In the lower-end discrete assembly-to-order (ATO) manufacturing realm, Made2Manage has found a market with good opportunities, and it has developed most of the part-and-parcels it needs to defend its turf. Thus, while the competition cannot be discounted for Made2Manage's revenue slump, the customers' no decision' stance still seems to be the vendor's biggest adversary. Its primary competition still comes from North American Tier 2/Tier 3 vendors focused on small-to-medium enterprises (SMEs), all of which Made2Manage can in effect compete against, given its target market focus and/or sole Microsoft technology deployment.

From its early days in 1986, the company has put all of its efforts solely into serving discrete manufacturing SMEs in need of enterprise application solutions that are intuitive and, consequently, easy to use and implement. End users of smaller enterprises have indeed long been impressed with the product's intuitive user interface (UI) with Windows metaphor, which provided ease of system navigation (the "Navigator" feature) and of information retrieval (the "Locator" feature), and with underlying workflow & messaging system capabilities (the "Notifier" feature).

However, during last few years, Made2Manage has further evolved from a vendor of traditional MRP/ERP software to a provider of one-stop-shop' enterprise business applications. The company has, gradually, mostly by developing internally, and partly through acquisitions or partnerships, garnered a line of integrated collaborative e-business, customer relationship management (CRM), business intelligence (BI), and advanced planning and scheduling (APS) components within its core ERP solution.

In other words, the Made2Manage Enterprise Business System now offers a broadly integrated application solution for automating business processes from selling and product design, finance and human resources (HR), customer service and support, through scheduling and distribution, basically, it contains most of the functionality that any company would expect even from a top-tier enterprise applications provider alike. It includes traditional ERP capabilities (i.e., financials, distribution & logistics, procurement, production & shop-floor control, sales, estimating and quoting, quality management and customer service), along with extended enterprise applications such as supply chain management (SCM) (i.e., demand planning, APS and finite capacity scheduling), CRM, and BI. As mentioned earlier, Made2Manage recently added an enterprise portal and a new integration layer to its suite, utilizing XML (eXtensible Markup Language) web services based applications via M2M's VIP e-commerce portal running on the Microsoft.NET platform.

The last two years were particularly active for its product development department, since it released two new major product versions during 2001, with over 900 enhancements largely as a result of feedback from its user group, as well as a series of new extended-ERP products. 2002 has seen the release of M2M ERP 5.0 SQL, now with support for multi-site manufacturing (integrating production, finance, engineering, sales, HR and quality control measures across multiple operations) and some enhanced financial capabilities. Other key new features include progress billing for project-orientated industries and multi-dimensional inventory management (see Made2Manage Offers New Functionality And A VIP Treatment). 2001 product extensions would include M2M Synchronizer (that utilizes a combination of optimization and Theory of Constraints (TOC) scheduling module in alliance with ILOG); M2M BI in the form of Advanced Notifier; M2M CRM; HR/payroll; and Fixed Asset Register. As for the future, Made2Manage aspires to expand both geographically and functionally, albeit still while penetrating more its discrete manufacturing SME arena. The firm has aspirations to move more into multi-site, multi-language, multi-currency, multi-national manufacturers with its new functionality, but will not desert its heartland nor will it depart from its adherence to the Microsoft .NET strategy for its ongoing web-based developments. The above-mentioned partnership with Infoscan should further extend the M2M's opportunity beyond traditional manufacturing realm.

Incidentally, in addition to choosing the right focus and the appropriate accompanying functionality footprint, the company has concurrently been trailblazing the majority of its peers with regard to the technological aspect of its product. The object-oriented product architecture has been devised entirely from scratch in-house within the Microsoft context. With the release of Made2Manage for Windows in late 1995, Made2Manage became an early adopter of Windows NT and was reportedly the first manufacturing software application to receive the "Designed for Windows 95" endorsement.

This is Part Two of a three-part note.

Part One discussed recent developments.

Part Three will cover Challenges and make User Recommendations.

Using Microsoft Technology

Today, Made2Manage uses Microsoft's technology virtually for all aspects of its product development, and its strategic relationship with Microsoft has proven to be of the utmost importance given its market segment's infatuation with the technology, whose performance, reliability and scalability has long been significantly improving. By leveraging the capabilities of the Microsoft platform only, Made2Manage should be in a better position to be responsive to delivering new functional features that its customers may demand. In contrast, a smaller vendor that covers multiple platforms often spends more than a half of its R&D budget on porting issues; thus making a cross-platform solution the prerogative of only bigger vendors.

Given the vendor embraced Microsoft platforms (e.g., Visual FoxPro, SQL Server, VBA) long before the advent of the .NET framework because they were far more affordable than midrange or mainframe alternatives, adopting .NET would be the next logical move. The .NET strategy has been Microsoft's view of harnessing Internet based on XML, Simple Object Access Protocol (SOAP), and it is a view of the next-generation Internet computing environment as consisting of Web Services accessed by devices that interact with other services and content applications.

The integration between disparate components should be made possible through XML Web services, which are small, reusable applications written in XML, de facto a universal coding language used for data exchange. XML Web services should enable communication between dissimilar sources and foster common interfaces for client-to-client, client-to-server, server-to-server and service-to-service data exchange. Although counterpart competing Java 2 Enterprise Edition (J2EE) platform might offer the equivalent features and it might have the advantage of an early start (at least 2 years) and a cross-platform deployment that is attractive to larger enterprises, many small manufacturing systems vendors may see strategic advantages in harnessing .NET technology (see Liberty Alliance vs. WS-I; J2EE vs. .NET; Overwhelmed .YET?).

Recently released Visual Studio.NET (VS.NET) has virtually provided Microsoft with a tool to compete on an equal footing with the formidable J2EE community of developers and abiding vendors. For instance, by comparing Java Server Pages (JSPs) with Microsoft's equivalent, Active Server Pages (ASPs) tools, one could even notice .NET taking off feature wise. Both ASPs and JSPs provided component architectures for generating HTML Web pages dynamically, but the new version of ASP for the .NET platform, ASP.NET, reportedly adds the ability to separate Web page visual controls from the business logic used to generate it. Further, made2Manage cites .NET to be a more productive development environment that should reduce the amount of coding. For instance, when rendering a Web page, the XML document is automatically converted into an object with its own properties and methods, eliminating the need to write additional source code.

Still, because the .NET framework is fairly new, vendors are at varying stages of adding or migrating their functionality to the new technology. To that end, Made2Manage has so far finished migration of its above-mentioned hosted portal modules, such as M2M VIP, which enables customers to view information such as order status through a simple Web page. As for its business suite, .NET applications available already include Order Status, Order Entry, Invoice Status, Product Catalogue, Inventory Availability, Request for Quote, Quote Status and some other features for sales staff and distributors.

Therefore, Made2Manage belongs to a selected group of vendors that have delivered their products leveraging .NET and other Microsoft technologies much sooner than Microsoft Business Solutions (MBS) division, Epicor, Frontstep, Syspro, and Best Software being the other examples. Having been an early adopter of SOAP, Web Services, Microsoft BizTalk, Office XP Web Components, VS.NET, and the Mobile Internet Toolkit (MIT), the company was especially pleased and honored to share the stage with Microsoft's CEO Steve Ballmer in February in Chicago at the launch of Microsoft's VS.Net as one of several showcased applications that had made the move to .NET early.

Spearheading Wireless and Mobile Technology

Further, as the time might have also come for more widespread adoption of wireless and mobile technology on the shop floor, Made2Manage seems to be spearheading the trend. These offerings have not gained much momentum during their first push of a few years ago though, and they have so far been confined to ostentatious functions such as mobile travel arrangements and sales force automation (SFA). Steadily, however, wireless solutions that leverage PDAs have gained traction in areas such as field service, order placing, inventory checking, alerting, plant scheduling and plant maintenance, which have a natural need for mobility.

Concurrently, a number of things have additionally morphed in the past few years that may make the timing right for a practical wireless/mobile solution to make an impact on the shop floor/warehouses. There has been a convergence of technologies and advancements both in the software and the hardware that has provided a foundation to make these solutions viable. For example, a significant improvement has been accomplished to bring these applications down to a size that will fit onto a thin client like a PDA or tablet, without holding out on functionality. In its first attempt, the technology could not support the idea, except in a very basic fashion, which was of little use to the people on the shop floor. Of particular help were also the recent proliferation of small devices, and the fact that the price point has come down dramatically. Wireless access points can now be set up for less than $200, and the wireless devices themselves cost only several hundreds dollars each, with both prices expected to go even more down in the future.

This may mean that a clipboard carrying outdated information, and the practice of running back and forth from the production and warehouse areas to the office to get current manufacturing information, including job orders and inventory data, will now become a matter of an archaic past. M2M Mobile Manager indeed replaces the clipboard and post-it notes approach, but because it is a wireless read/write client to the live back-office system, the wealth of information such as shop-floor schedules, inventory levels, customer information, job, work center, part number, shipping info, and sales/quote orders info remain current (i.e., there is no need for PDA cradle synch-up). Filtering capabilities should allow for quicker location of critical-only data, within no more than 3-4 taps. The solution is also roles-based, with the initial available roles focusing on specific tasks in manufacturing, sales, purchasing, and shipping. Roles' range expansion is expected in the future, as the development of the mobile solution has been simplified by use of the Microsoft MIT tool with which, Made2Manage develops a M2M Mobile Manager role once, and the toolkit takes care of the technical intricacies of formatting that role for different PDA platforms, which should curb development.

Program Flexibility

More on the technology front, in addition to being entirely Microsoft-centric, the M2M software is available in a multiplicity of ways from traditional license purchase, to rental and leasing options, with both client/server and web-based delivery. The company's proactive grasp of the hosting/application service providers (ASP) opportunity is commendable, particularly in light of its peers' tardiness and/or non-compelling value proposition in that regard. While manufacturers usually prefer to keep their critical information in-house, many may still opt to use Made2Manage hosted applications for collaborative commerce with the best of both worlds' hybrid hosting principle, which is available through M2M VIP portal. With this solution, Made2Manage hosts the collaboration servers, but not the sensitive data, which is kept behind the customer's firewall via a little piece of software called a managed gateway'. This way, the vendor not only can host its own offerings, but it also hosts e-business applications such as web sites and e-mail and collaborative tools.

Possibly thought leading is the company's readiness to provide mid-sized discrete manufacturers with a number of portals that offer a broad range of collaborative, interactive and personalized applications including, vendor managed inventory (VMI), virtual design' - collaborative engineering design tools (e.g., AutoCAD and ProEngineer), on-line trading exchanges, with streamlined inter-business processes and workflow, and access to information resources via M2M VIP that offers trade partner-facing portal functions and thereby solidifies relationships with distributors, suppliers, employees, and customers (in other words, improves communications within the entire channel, both up- and downstream).

Made2Manage also offers a Web-based training and support program for its customers called M2M University. This subscription-based education program along with additional service and support functionality is available through a customer-facing portal called M2M Expert, giving users on-line access to a knowledge base of logged queries and faults and their solutions. Another example of Made2Manage's alertness in service and support cost reduction by harnessing the latest technology, like live Web-based training, to deliver inexpensive users' training. As a summary, by leveraging the above advanced technologies, the company has been agile enough to spar with a constantly morphing business environment, and to meet the latest customers expectations of 24/7/365 access availability to place and track orders, or to obtain any urgent system support.

Made2Manage has long offered pricing models on a value-based foundation, which should be amenable to its cost-conscious mid-market customers. While it still offers applications on a per-seat basis, many applications also are offered on a subscription basis that reduces the upfront cost and spreads the expense over the useful life of the application. Again, M2M VIP portal, as well as its educational services, are offered on a subscription basis. For example, a user company can have 5 people go through training, or have one person go through training 5 times, which should gives enterprise the flexibility it needs. Given that M2M VIP does not necessarily require the hardware, software, and maintenance investments that other solutions typically require, it may bode well for the new revenue stream despite the current difficult economic climate.

Also, the company has been savvy in developing an indirect channel to supplement its direct sales force and to address the low international presence and recognition. Customers and VARs should benefit from the recently instituted "Team One" reseller program because it allows both internal and external sales groups to share consulting services, education and product configuration/customization services. Almost all of its VARs are located in North America, where the vendor sells both directly and through VARs (with an equal revenue contribution), while in the new markets like the UK, sales are through sole VAR agreements.

SOURCE :http://www.technologyevaluation.com/research/articles/made2manage-affirms-its-technological-astuteness-part-2-strategy-16860/