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Business-to-Business & Business-to-Customer
Prepared by: Table of Contents Executive Summary Executive Summary Regardless of whether you are considering business-to-customer or business-to-business e-business, both require a value chain1 focus. Integration of your value chain allows you to extend your services further down the value chain to better manage the process or further up the value chain to own the customers total experience. What does this mean to business? Integrating processes and applications which are part of the value chain, can lead to increases in revenue, higher customer satisfaction, new opportunities to offer packaged products/services, fewer defects, better visibility / control, and many more benefits. One of the goals of technology should be to remain open and flexible to support the changing objectives of the business. So, how do we remain open and flexible with so many past, present, and future technologies? Since we also can't dictate the architectures of our customers or suppliers (except in rare cases), we must work with their existing technologies and business processes. If we could find such a solution, we would be able to mitigate the risk of developing stand-alone obsolete solutions by providing upfront the ability to leverage our technologies over time. With a vast majority of the core Platform application functionality completed already in the form of vendor developed components, what then should a business moving into the integration of the value chain focus on for business-to-customer and business-to-business e-business? The answer is common domain interfaces. Common, industry-wide domain interfaces are the key to a flexible architecture and the OMG has the process, experience, and proven architecture to make your e-business strategy a reality. In addition, the specifications that OMG provides and continues to create cover the entire application integration and development process, so you can be sure open specifications are available to you from the time you gather your requirements until the time you deploy or integrate your applications. Proven specifications like the Unified Modeling Language (UML®), Meta Object Facility (MOF), CORBA®, CORBAservices, and Domain work together ensure the entire requirement, development and construction processes are covered instead of a single phase. The Object Management Group (OMG) will continue to develop industry recognized core foundation technology (Platform) and will continue to offer interoperability to new and emerging technologies to ensure your investment today will still be valuable tomorrow. We will continue to help design standard interfaces for Domain specific functions internal to your line of business and we will also begin to form specialized subgroups with a mission to define the "Domain Public Interfaces" found between your disparate lines of business, your customers, suppliers and competitors. Overall, our focus is to help members define open
architectures and interfaces that will remain as the enabler of application
integration for the business-to-business and business-to-customer e-business
models, and the entire value chain of your business. New e-Business
Model With customers choosing to become more involved in the procurement process, businesses today are faced with difficult challenges. How do they own the customers total experience amidst a rise in competitive pressures and advances in technology that make it easier for customers to choose alternative business offerings? Products once thought of as specialty goods are now becoming commodity products as the distance between the customer and the manufacturer collapses. With differentiators such as customer satisfaction equating into direct market share, the race to integrate further up and down the value chain becomes even more critical. The ability to control the customers total experience will likely result in higher levels of customer satisfaction; which can equate into customer retention, new customers, and bottom line results. To properly manage the value chain and ensure the trust of the customer, businesses will also need to guarantee both a robust architecture and proven Quality of Services throughout the entire value chain. Quality of Services, such as proper security, transaction control, messaging, and many more services are required throughout the life of the transaction, not just from the GUI to the application server, but throughout the entire value chain. Business-to-Business The stakes are high. The opportunities abound. The key question is not who will be involved in business-to-business e-commerce, but how they will integrate their heterogeneous applications with so many other businesses in a manner that is advantageous to all parties. The requirements for business-to-business transactions include those of the business-to-customer, but may need to account for higher transaction volumes, better audit trails, and tighter security as a result of internal or external pressures (e.g. regulation). Most importantly, business-to-business transactions will require the ability to integrate applications (or systems) that were designed, developed, and implemented by two or more different parties. The business-to-business model becomes more complex when you consider the effects of integrating value chains between many suppliers and many customers. And remember, a supplier for one business is a customer to another. The problem becomes very clear in this context and the need to integrate portions or whole applications becomes a critical success factor in succeeding with a business-to-business e-business strategy. Integrating
the Value Chain Integration of your value chain allows you to extend your services further down the value chain to better manage the process or further up the value chain to own the customers total experience. What does this mean to business? Integrating processes and applications which are part of the value chain, can lead to increases in revenue, higher customer satisfaction, new opportunities to offer packaged products/services, fewer defects, and many more benefits. It allows your business to remove non-value added steps in the process and reduce waste and/or cycle time in the process which equates into bottom line dollar savings for your business. From a business standpoint, integrating systems, eliminating waste, reducing defects, and the many more benefits identified above all lead to real business value for stockholders. The challenge is how to integrate such an assortment of different processes and systems technically, while ensuring a flexible solution that will work with the technology you invested in the past, technology you are using today, and future technology yet to be discovered. How
businesses should Integrate... Since we also can't dictate the architectures of our customers or suppliers (except in rare cases), we must work with their existing applications and processes. We know we need a secure way of integrating our value chains, but we must be sure we have a proven security service that handles transactions securely between our business and our supplier or customer. We also said we would need to record transactions and maintain an audit record, so it will be important to have a service which provides this functionality. Lastly, we need the ability to permanently (or persistently) store information for trend and/ or historical purposes. Regardless of the e-business model chosen, these services (and many more) will be required before we begin to think about integrating applications. To ignore this basic foundation and integrate value chains without these services would be accepting undue risk for your stakeholders. We said we needed an open solution, not just today, but for future technologies yet to be introduced. We can't consider using an immature solution unless we are again willing to increase the amount of risk to the business; should this immature technology evolve into our next legacy application. However, let's consider the optimal solution. One which provides a flexible solution that allowed us to integrate future technologies with our current and past technology investments. If we could find such a solution, we would be able to mitigate the risk of developing stand-alone obsolete solutions by providing upfront the ability to leverage our technologies over time. Business
should begin integrating... However, integrating value chains involves more than just technology. First and foremost, are basic economic concerns that must be satisfied, followed by evaluating the process maturity of the entire value chain for both businesses. Only after this, can you gauge the likelihood of success. Are our processes mature enough to allow for the integration with our suppliers and customers? Have we assessed our own internal readiness and determined that we can offer the additional services that might be part of our newly extended value chain? Are we prepared to consider outsourcing a portion of our value chain that would be better managed by another supplier with core competencies in that particular area? Given that we need to consider international implications in our strategy, (e.g. European Data Privacy Initiative as one example), an e-business solution must consider global sourcing. Each business will be at a different level of process maturity and will need to determine their readiness and effectiveness before beginning to integrate their value chain to conduct e-business. CORBA®...a
flexible architecture Since not all businesses or departments within businesses will be at the same process or technical maturity, there is a need to participate at different levels of interest based on where you are in your specific business. The OMG considered this and is focused in two separate, but complimentary areas. For those who are interested in contributing to the success of the technical interoperability, there is the Platform group. This technology group is focused on Analysis and Design methodology (e.g. Unified Modeling Language or UML®) and interoperability issues such as making sure new technologies interoperate with other technologies (e.g. EJB and CORBA® Component Model (CCM), C++ and Java, etc.). For those interested in integrating their value chain or internal or external applications, there are several Domain groups working to define common interfaces by which integration can be achieved. So whether your company is just starting with the integration of your value chain, or if you are ready to help define the industry interfaces, the OMG has the methodology, proven success record, and forum to help you achieve your desired level of participation. We also discussed the need to have robust services. CORBA® provides a complete set of services that are stable in businesses around the world. There are several services to choose from (all based on the same specification), and together these services make up the foundation upon which future technologies will interoperate. The building blocks are there...so, there is no need to spend un-necessary resources or time re-inventing the wheel. By one estimate, as much as 30-70% of an applications functionality is already enabled by the CORBAservices. This allows you to focus on the domain or business logic necessary to integrate your applications and we will support you in this activity with the Unified Modeling Language (UML®) and Meta Object Facility (MOF). This leaves the "basic building block" work to your vendor. With most of the core application functionality completed already by vendor developed components, what then should a business moving into the integration of the value chain focus on for business-to-customer and business-to-business e-business? The answer is common domain interfaces. Common, industry-wide domain interfaces are the key to a flexible architecture. Just look at your own value chain. How many of your own internal interfaces are based on industry standards? How many interfaces are generic and agreed to by all of your suppliers? I would venture to say that in many domains, custom interfaces built to support a single supplier or customer are rampant and although similarities are common across all of your suppliers and customers, I doubt consensus was reached prior to implementing the interfaces. After all, you probably added them slowly over time as your business needs changed, rather than all at once. Business needs in the past didn't necessitate that entire value chains come together and define common interfaces. However, the value that can be gained today in defining and using common interfaces for your customers and suppliers, as well as interfaces that you will use as a customer of other businesses, will make integrating value chains a reality not just now, but into the future. As depicted by Model 1, a generic value chain has been constructed and divided by suppliers, the company, and customers / stakeholders. The company uses the CORBA® architecture in conjunction with the open services we discussed to form their foundation. The company then works on one or more Domain focused Task Forces that are of interest to the company. This is often based largely on the need to standardize throughout an organization, either horizontally between functional areas (e.g. Finance and Manufacturing), or vertically from one end of the value chain to the other end. As the model depicts, the second column shows Banking/Financial Services as the supplier to the company. Internally, the company will have a Finance department, and may have Financial Analysts or Stockholders as its Stakeholder(s). Today, the internal functions (e.g. Manufacturing, Finance, etc.) are being worked intently and an example of the work in the Manufacturing Task Force is included. Another benefit for standard specifications is the Domain Interfaces between the Company and the Suppliers & Stakeholders. This is the area for tremendous growth in the e-business model and a critical place to develop Domain Interfaces to help integrate value chains. Without these common interfaces defined, an exponential number of interfaces may result and make integrating value chains between suppliers, the company, and stakeholders economically or technically unfeasible. Another growing trend is the number of outsourcing opportunities throughout the industry. The ability to define and use common interfaces is a key enabler to outsourcing. If your interfaces are consistently applied, proprietary processes are not a requirement to administer the interface(s). This allows you to detach the value added work (which forms your competitive advantage) from your technical requirements and the work can be easily outsourced. The benefit of outsourcing may be lower operational costs, higher productivity by assigning your employees to higher-value work in the value chain, and higher quality if the technical portion is outsourced to a business with core competencies in that particular area. First
steps of integration... One of the first things to consider is the silo strength (or culture) in the organization. Ask yourself and your other functional leaders whether it would be easier to integrate with your own suppliers & customers, or with each other. Since internal culture is very difficult to change, you may in fact see faster benefits by focusing outside your business initially and working with the OMG to define common interfaces between your suppliers and customers. Additionally, you will want to be realistic about organizational dynamics as this will help you determine your risk accurately and will likely be a good indicator of the probability of success should you pursue an internal focus. As with most businesses, some departments will be more open and their processes will be more mature. These portions of the business are ready to define industry standards external to their own business. As we discussed earlier, the OMG offers different levels of participation based on your particular growth and development in technical maturity. Given the varying levels of maturity, a business will likely have both an internal & external strategy and actively solicit input from the entire value chain to work throughout the entire chain rather than just focus internally or externally. The
OMG offers solutions throughout the application integration / development
process... We discussed earlier the work of the Platform and Domain groups and their specifications have formed the foundation for CORBA® compliant and branded Object Request Broker's, CORBAservices which act as the basic building blocks required by most if not all applications, and Domain specifications used to define common interfaces for business. The specifications developed by these groups have become implementations offered by various vendors and are readily available today. The CORBA® specifications defined the ORB and various other facilities required by the transport layer. Much of the complexity required to manage communication between layers is handled by the ORB and simplified for the developer. With the commercial availability of CORBAservices built from the OMG specifications, another portion of work can be purchased, rather than constructed. However, the option always exists for a company to develop their own CORBAservices, based on the OMG specifications. The introduction of CORBA® components once again reinforces the OMG's commitment to open standards and a flexible architecture for the changing needs of business today. CORBA® components tightly integrate with the CORBA® specifications and the CORBAservices specifications to simplify even further the effort required by the development staff to build or integrate robust applications. CORBA® components work with EJB's and many other languages, so whether you are working with C, COBOL, Java, EJB, or some other technology, CORBA® components will enable your architecture to remain open and flexible. As the Domain specifications continue to grow, the next level of commercially available services for application integration and development will be available and companies can choose to purchase an implementation or code to the OMG specification. Keep in mind that coding to the OMG specification will ensure flexibility in your architecture; just one of the critical success factors that we discussed earlier. All of these specifications can be used in the design phase
during the integration or development. Imagine designing flexibility into your
project very early in the process...even without knowing what implementation
language you will choose. As the construction phase approaches, make vs. buy
options present themselves and based on your businesses core competencies, you
can then decide if developing the specification or purchasing the specification
is better aligned with your business needs. As deployment nears,
interoperability found in the OMG specifications offer you flexibility and an
open solution that will work with legacy systems, your present development, and
future development that hasn't yet been invented. The OMG will work with our members and other organizations that control industry interfaces to define common interfaces for everyone to use. One example might be an industry where there is a regulated monopoly or an oligopoly where there is a need to define common interfaces. Influence to participate may need to come from not just the industry businesses today found in the Platform and Domain groups, but from customers of those businesses and stakeholders who also have a vested interested in defining common, open interfaces. In fact, the days of pressuring each of your vendors for custom solutions that meet your changing business needs can be done more effectively through the OMG process as a consolidated "voice of the customer" rather than a single customer request. Overall, our focus is to help members define architectures and
interfaces that will remain as the enabler of application integration for the
business-to-business and business-to-customer e-business models, and the value
chains of businesses. Model 1 The OMG: Enabling e-Business throughout Value Chains
Model 2 The OMG: Intra and Inter-Company Domain Opportunities throughout Value Chains
Model
3 The OMG in the Application Integration and Development Process
Last updated on 11/09/2007
Note to editors: CORBA®, The Information Brokerage®, CORBA Academy®, IIOP® and the Object Management Group logo® are registered trademarks of the Object Management Group. OMG™, Object Management Group™, the CORBA Logo™, ORB™, Object Request Broker™, the CORBA Academy logo™, XMI™, MOF™, OMG Interface Definition Language™, IDL™, CORBAservices™, CORBAfacilities™, CORBAmed™, CORBAnet™, UML®, the UML Cube Logo®, and Unified Modeling Language™ are trademarks of the Object Management Group. All other products or company names mentioned are used for identification purposes only, and may be trademarks of their respective owners. Acknowledgement: Special thanks to the entire OMG team and
Kevin Tyson for reviewing this strategy paper and providing comments. 1 "Value Chain: The set of activities an organization performs to create and distribute its goods and services, including direct activities, such as procurement and production, and indirect activities, such as human resources and finance. Competitive advantage, according to Harvard Professor Michael Porter, is achieved when an organization links the activities in its value chain more cheaply or more expertly than do its competitors." http://www.cio.com/archive/enterprise/051598_killer.html
2 By year-end 2003, the confluence of product and pricing transparencies, sellers' increasing ability to identify buyers through personalization databases and the increasing use of extranet supply/value chains by sellers to gauge inventory, production and demand will lead to acceptance of market pricing for all goods sold on the Internet.
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