As e-Business enters its next phase, many companies have the need to extend their boundaries and cannot wait whilst their business, IS and IT prepare a portal as a gateway into the wider world.
The problem is the data is not clean enough to make the journey. So they are looking at Exchanges. A good short-term tactic but is it a good long-term strategy?
Swap your portal for an Exchange !!!
This
will help in the short-term but will cause headaches over the long-term
unless access to the business data back in the company is sorted out.
As the portal craze wanes and e-Business tries to re-badge itself, the
immediate requirements are being picked up by the market-focused Exchanges.
The current offerings are simple and stand-alone with only tenuous linkage
to the organisation's business systems. They do provide an easy route
to market and the drive to extend the business boundaries. They must not
be mistaken for a strategic solution as the world will change dramatically
over the next few years. Many of the current Exchanges will no longer
exist; new players will enter the market with different business models;
application software functionality will change the not yet fully defined
business processes.
So why use an Exchange?
The main reason for using an Exchange is speed to market.
If it is not possible to enter the marketplace from the existing environment
for many reasons:
- Business processes too restrictive
- Applications too inflexible
- Infrastructure too expensive
- Security too prescriptive
If the business needs one of the many B2B platforms:
- Direct material
procurement
- An extension to the supply chain (buy and sell)
- Quickly reduce inventory levels
- Indirect procurements
- Quickly reduce acquisition costs
- Improve pricing through global competition
- Collaboration
- Partnerships
- Joint Ventures
- Improved productivity
- Transaction management
- Billing
- Security
The integration into the Back-Office is the problem. For many reasons, some being the same as those leading people to use an Exchange, the costs associated with the allowing access to the production systems are LARGE. The structure of the data, basically proprietary, does not lend itself to being exposed to the rest of the world. The contents are never as clean as they should be. This is acceptable if the problems can be managed internally but unacceptable if the key customers and suppliers are involved.
Middleware will help but IT cannot solve the data management problems. This is the fundamental issue. Years and years of bad data management cannot be resolved without a strategic decision to cleanup. Its only clean data that can be automatically translated into the information that can be exchanged with the business partners. Currently such interactions always have a human in the loop to validate the data. e-Business doesn't and by its very nature cannot.
So why use an Exchange?
Its because of the Back Office. If the business processes, information systems and the data are not good enough then lets all move to the new town. New roads, new buildings, new processes, etc. are always clean and you can show them to your friends, neighbours and even the mother-in-law. The problem is that unless you can take the contents of the old house with you, the experience is not the same and if you retain both, the costs will become too much of a burden.
As you can see, using an Exchange has its advantages BUT has its disadvantages as well. Use them carefully as part of a larger, well designed, strategy.