Abstract

Developing ERP-based e-Commerce applications must include a good balance of the following three components: a well-defined Internet strategy, a proven technology base, and a well-thought out creative design. Oftentimes, solutions are biased in one of the three components, and thus fail to produce the expected ROI. Defining a clear strategy and clearly identifying the business requirements are critical steps in the process of formulating a viable solution. Rapid advances in technology provide a challenge in developing constantly evolving systems that make the best use of available technologies. The creative process of defining the user interface and screen flow that, while being intuitive and appealing, also satisfies the functional requirements and the business process of the back-end ERP, is also critical to the success of the implementation.

Introduction

There have been significant technological advances in the Internet space in recent years. Software systems are constantly being developed and each day brings another innovative way of using the new technologies. Until very recently, businesses have published marketing materials and product catalogs on the net, but most well established corporations have not participated in electronic commerce. However, this is quickly changing as more and more corporations are forced to provide the mechanism for their vendors, customers, and other business partners to access product information, and purchase and sell products via the Internet. To compete effectively many of these corporations are rapidly developing e-Commerce Internet and Extranet sites.

However, many of these same corporations recently invested millions of dollars in the implementation of Enterprise Resource Planning (ERP) systems to consolidate corporate information and provide consistency and effective use of information throughout the organization. The need to quickly develop an e-Commerce application that provides business partners with access to the corporate ERP data can be an unnerving undertaking for many organizations. Security and performance considerations have further increased implementation complexity, which is why some corporations have chosen to implement separate databases as the data source for e-Commerce applications, and synchronize the database with the ERP system. While this often provides a quick-hit for organization looking to quickly deploy an application, it does not allow an organization to fully realize the benefits of fully integrating an e-Commerce application with its ERP.

ERP systems, however, with their rich business logic and proprietary architectures, do not lend themselves to rapid development and implementation of e-Commerce applications. This argues for a good methodology that enables developing ERP based e-Commerce systems. In this article we discuss an effective methodology for implementing ERP-based e-Commerce applications. We also present several case studies of ERP-based Business-to-Business and Business-to-Consumer implementations.

Implementation Methodology

The methodology we present and have used in many of our implementations has several phases, including Plan/Define, Design, Develop and Deploy (see Table 1). While these phases, and their associated activities, can be named and organized slightly differently, it is imperative that the key activities identified are carried out successfully. The methodology provides high-level activities for every project phase and for each key element of successful e-Commerce site development: Strategy, Technology and Creative. Depending on the implementation, some activities may not be relevant, and there may be a need for including some additional activities.

Many of the processes and deliverables outlined in the technical and strategy aspects are common to ERP implementations in general, with or without e-Commerce. As with most implementations, an initial strategy and the identification of critical success factors is key to the success of the site. However, when ERP-based e-Commerce is considered, there are several additional elements that must be taken into account. These include internal organizational infrastructure and user-training to support the new business model. In the case of selling products via the Web, a new distribution channel may be required. In some cases, product warehousing and logistics will need to change. Additional in-house resources will most likely be required to support the site, both from a technology standpoint and via customer service. Finally, a well-defined user base should be identified quickly, as they will be looked upon to provide input at key points in the process.

There are several key activities and decisions that must be made regarding the technology component of e-Commerce implementations. These range from selecting a development platform, application server, and programming tools/languages, to considering security models, credit card processing applications, and data management techniques. Often, e-Commerce sites require data sources external to ERP-data. A major aspect of ERP based e-Commerce implementations is identifying appropriate interfaces and APIs that the ERP provides to simplify integration. SAP, for example, has been rapidly developing the Business APIs that it provides for interfacing with a web application or other applications. This is also true of the other Oracle, Peoplesoft, and other ERP packages. If a decision is made to implement e-Commerce functionality in a phased approach, identifying the APIs that an ERP vendor offers within various functional areas may dictate the business process to implement initially.

The most unique aspect of e-Commerce implementations is the Creative element. This element is often overlooked in a pure ERP implementation, even when custom screens are designed for business aspects unique to a customer. The screens are designed to be consistent with the other screens delivered with the ERP package. However, ERP-based e-Commerce sites offer a unique opportunity to customize the screens to the business processes and in many instances simplify the layout, minimize the number of screens that need to be navigated, and make the screens more intuitive to the end-user. Additionally, the screen flow must still support the ERP-defined business processes. The savings in training and customer support from a well-defined user interface are tremendous. Lastly, an inadequate user-interface can have a dramatic impact on the user's perception of the site, and can greatly impact the use of the site. For this reason, user focus groups are a key component of the Creative element of e-Commerce site development.

	PLAN / DEFINE	DESIGN	DEVELOP	DEPLOY
STRATEGY Activities	Define business requirements Determine ROI Conduct competitive research	Design organizational strategies and site marketing and media plan Consider long-term technology strategies	Complete user training Provide media placement	Implement organizational changes and new business processes Implement media plan
CREATIVE Activities	Define creative requirements and functional flow Design user interface, functional site flow and wire-frame diagrams	Design and review the graphical comps with user focus groups Perform usability testing	Develop and review graphics Complete final build-out of site content Perform final usability testing	Deploy the site and provide handoff of graphical assets
TECHNICAL Activities	Define functional, infrastructure and training requirements	Design system architecture Select software and application development tools Develop functional prototype, data architecture designs, and test & training plans	Develop application code & documentation and perform unit testing Complete integration and user acceptance testing	Migrate and deploy the site

TABLE 1: Methodology for ERP based e-Commerce Implementations.

Consider Multi-Phase Development

Whether an ERP is already implemented or is simultaneously implemented with the e-Commerce system, a phased approach often is the best solution. If the ERP is simultaneously implemented, accounting for the e-Commerce implementation in the Business Process Redesign phase of the ERP implementation proves valuable. Such an approach makes obvious those business areas that most readily can utilize an e-Commerce system. It also helps to improve confidence with e-Commerce systems.

One approach to phasing ERP-based e-Commerce solutions that has proven successful is to implement reporting solutions over the web as a first step. This removes from the ERP system those users who use it only for viewing information. This approach also has the advantage of building the infrastructure needed for other e-Commerce enhancements while creating acceptance of the technology in upper management and users.

Another approach to phasing the e-Commerce activities is to do so according to business processes or functionality. Certain departments within organizations may be more willing and enthusiastic to accept e-Commerce activity. Such champions offer the opportunity to showcase the advantages of ERP-based e-Commerce.

Case Studies

The case studies discussed below provide a representative sample of ERP-based e-Commerce implementations that have shown significant improvements in existing business processes and have provided tremendous value by leveraging existing ERP systems.

Major Oil Corporation

Challenge
The challenge for this organization was to improve customer service for its distributors by allowing them to complete complex transactions without any customer service staff assistance, thus reducing internal operations costs as well.

Solution
The solution was to implement a Business-to-Business EDI-enabled Extranet that integrated the company's legacy systems, it's SAP R/3 system and an Oracle database to provide customer access to up-to-date product information for distributors. The application included online transaction processing for order creation and tracking, and it supported the organization's complex business rules, including complex ordering rules related to specific load and weight specifications.

Benefits
The ROI from this implementation was tremendous, as the site eliminated over $100K in annual VAN communications system costs and replaced a burdensome DOS and Windows-based EDI front-end. Management of software distribution and maintenance for distributors was eliminated, while order accuracy was increased from less than 50% to 100%

Leading Pharmaceutical Distributor

Challenge
The challenge for this company was to improve its inefficient back office operations in the areas of customer account management, specifically accounts receivable and credit invoicing. It was also in need of a means for providing a consolidated view of multiple A/R systems.

Solution
The solution was to provide consolidated customer information for it's 3,000+ customers in one system for employees and clients to access and review. This allowed for a user-friendly single point of access for A/R data, which could be viewed simultaneously by employees and customers.

Benefits
The benefits of the system were immediately realized in timely resolution of invoicing and credit discrepancies and online verification of product shipments. A majority of customer service efforts were redirected from paper-based and telephone inquiries to an automated system. Overall accounts receivable costs decreased by 25%, while collection rates increased. Customer service operations were streamlined, while removing the users from the complexities of SAP processing.

Major Audio Equipment Manufacturer & Distributor

Challenge
The challenge here was to improve order fulfillment efficiencies and provide more effective methods for dealers and consumers to purchase consumer electronics. Additionally, the organization was searching for another distribution channel for its products.

Solution
The solution was to build two sites: a Dealer Extranet which enables on-line creation of sales orders, order history, returns processing and current dealer account information, and a Consumer Internet site for viewing product pricing and availability, purchasing products and checking order status information. In order to increase operating efficiencies and ensure existing business processes were maintained, both the sites were integrated with the existing SAP ERP system, effectively extending the ERP business processes to the Internet.

Benefits
Benefits included a reduction in overhead costs for order processing, including fewer fax, telephone, and paper orders & inquiries. Order fulfillment turn-around time was dramatically reduced. An additional sales & marketing outlet was created for the company's consumer electronics products. Finally, customer service was improved as the site empowered customers, strengthened relationships and increased support to 24x7.

Conclusion & Lessons Learned

In this paper we have presented a methodology for implementing ERP based e-Commerce systems. In addition, several case studies of successful e-Commerce implementations have been presented. In each of these implementations, the methodology was a key element to the success of the project, including the components of strategy, technology, and creative design.

Below are a few noteworthy lessons learned to consider when implementing an ERP-based e-Commerce system:

• Assess the organization's readiness for change regarding the way it does business
• Uncover the disparate data sources and evaluate the cleanliness of the data for presentation to customers and business partners
• Ensure that the organization is prepared for maintaining and continuing the progress of the system
• The organization must be ready for 24x7-support needed for such applications
• Building the requisite security for real and perceived threats to data is expensive and requires constant attention. Ensure that the organization is ready to provide the needed resources for the technical infrastructure and for developing and enforcing security policies
• Validate that the ERP system can handle the potential increase in transaction volumes
• Real-time vs. non real-time e-Commerce application to ERP data source integration can significantly impact project costs/timeline and complexity
• An organization's marketing department should be involved in the implementation to market the site to internal customers and business partners
• An application such as this can become somewhat of a product (infrastructure must be in place to handle fielding user phone calls, managing the application beta period user expectations, etc.)
• Don't underestimate the user experience in the application - if it is not considered during system design, rework may be required at a later date