Term Paper on "Service Oriented Architecture for E-Business Integration"

Term Paper 15 pages (5138 words) Sources: 1+

[EXCERPT] . . . .

equivalent to Why Enterprise Service Bus Architectures in Manufacturing Matter Now the many business drivers that are influencing and growing the use of Enterprise Service Bus (ESB) architectures throughout global manufacturing are also making it critical for manufacturers to take into account the need for greater synchronization of supply chains across the many sourcing, supply chain, manufacturing, fulfillment and service centers. Over and above the need for manufacturers to synchronize these disparate, legacy and often non-integrated systems with ERP, supply chain, distributed order management, and often, global CRM systems is the more fundamental challenge of turning all these systems into competitive advantages in the marketplace.

The key business drivers in manufacturing leading to greater adoption of SOA as a competitive strategy in conjunction with ESB architectures include the following. First, there is the exponential rise in mergers and acquisitions across many of sectors of global manufacturing. The heightened levels of mergers and acquisitions has in turn lead to the development of distributed governance models, and specifically for those companies operating in the U.S., an adherence to compliance more than ever before due to the Sarbanes-Oxley Act (SOX) (2002) and many other forms of compliance legislation. Indian outsourcing companies including Infosys, HCL, and others claim that during their fiscal 2005 financial year, one of our every three dollars earned was the direct result of compliance spending by global manufacturers who had significant presence in the U.S. market and traded securities on American-based exchanges. Clearly the business drivers that are enabling the growth of ESB adoption, development, and use also favor the adoption of BPEL-based workflows in response to the demanding compliance requirements for manufacturers who choose to participate in U.S. capital markets. In reality SOX has done more for the adoption of SOA and with it, ESB frameworks and the resulting gains in process re-definition and efficiencies. SOX, for many global manufacturers participating in U.S. capital markets, have become the impetus to completely re-define their core business processes. The logic of many global manufacturers is that while they are incurring the costs of attaining compliance to government regulations and standards for financial disclosure, they can at the same time completely re-define their it strategies to better align with the needs of their business. In this regard many manufacturers today look to compliance as the impetus for change, and the primary reason to re-architecting how information technologies and services support making their organizations more agile and flexible. As Abrahams (2005) mentions, compliance is also the impetus for overcoming swivel-chair integration, which has continually plagued companies who have not specifically addressed their manual integration challenges yet. Many manufacturers are in this category.

The key it drivers that are supporting the growth of ESBs throughout manufacturing include the need for route requests more efficiently throughout the many ERP, order management, supply chain, logistics, CRM, and service applications that manufacturers in many cases have allowed to become too decentralized and siloed in performance. This key it driver of ESB adoption has to do with the integration of multiple ESBs located throughout a global manufacturing enterprise. XML-based messaging and schema also contribute to the real-time integration between ESB hubs, allowing for multiple state engines specific to the dominant processes in each location to be synchronized and also predicted in their overall performance. One critical measure of this overall level of synchronization of systems is the attainment of the Perfect Order, a key performance indicator manufacturers who have mass customization strategies rely on for measuring performance gains in processes over time. Additional drivers from the architectural standpoint for ESB adoption and growth in manufacturing include resolution in many manufacturers as to if they should electronically enable their direct and indirect channels for real-time integration, and if so, which business models are most amendable to the change. From an it perspective, the development of real-time integration connections throughout either an indirect or direct channel is challenging, costly, and very time-consuming. The flipside of the argument in must manufacturers today however is that it is a critical competitive advantage and sets the stage for deploying more Web Services-based applications outside the firewall into the broader indirect channels. The growth of ESBs, their integration points, and the need for allowing for loosely coupled ESBs to exist in the broader SOA strategy of deploying services and using the many diverse databases, all originally created to serve the channels and the sales forces, is being explored by many manufacturers, the foremost being Dell Computer, Intel, and HP in the high tech discrete manufacturing industry, and Proctor & Gamble who has created an impressive set of private trading exchanges specifically using the strategy of gradually increasing the number of real-time integration points over and above the manually-based ones that had pervaded their channels prior to the pilots. Table 1 provides a comparison of the strategies manufacturers are using to accomplish real-time integration throughout their channels, and also defines those tasks by channel strategy that manufacturers today are leaving in batch mode relative to enabling through ESB architectures to become more private trading exchange-like in their ability to quickly sense and respond to market demands. In those areas of real-time integration, manufacturers mentioned previously are piloting Web Services and relying on BPEL-based workflows to create greater efficiencies and a strong focus on measuring business benefits as a result.

There are the exacerbating factors of ensuring order state engines across ESBs can function correctly and can communicate reliably when any channel-based strategies is considered in the context of SOA. Many manufacturers are using XML-based linking to provide real-time analytics visibility throughout their demand channels, ensuring that forecasts arriving at manufacturing centers in fact can be build specifically to the requirements of the businesses ordering them. These scenarios as they relate to real-time vs. batch integration strategies in Web Services are dominated by B2B companies who measure, monitor, and modify their strategies in the context of channel velocity.

Table 1: Planning Web Services for Channels: Real-Time vs. Batch Integration

Channel Strategy or Business Model

Channel and Business Model Characteristics

Batch or Real-time Integration Web Service Structure?

Direct Sales Model

Sales force calls directly on customers; High margin and high ticket products and services sold directly to customers; cost per sale is high; response time on sales cycles is high; price elasticity of products is low.

Batch-oriented tasks: Lead management and escalation; structured content and catalogs; content for sales configurators; training materials; competitive analysis; pre-sales support and training; post-sales support and service training.

Real-time tasks: Pricing for quotes; order management and supply chain links for Available-to-Promise (ATP) and additional supply chain information that customers in specific industries expect; quoting and pricing approval process.

Indirect Sales Channel - Single Tier

Manufacturer's sales force calls on distributors and value-added resellers only; product information is sporadically provided and pricing is updated periodically.

Batch-oriented tasks: Product information including new product introductions; changes to products' positioning and end-of-lifing a product; lead management and escalation; definition of pricing strategies.

Real-time tasks: Quoting responses; Special Pricing Requests; Lead escalation on products targeted for specific promotions; exception-based transactions.

Indirect Sales Channels - Multiple Tier

Manufacturers' sales force calls on both distributors and resellers; supports the first tier of distribution with leads, pricing, training and product knowledge to second tier of dealers. Lag time between manufacturers and second tier resellers is often perceived as lack of responsiveness.

Batch-oriented tasks: Comparable to Single-Tier Indirect Channels including new product introductions; changes to product positioning and end-of lifing products; multi-tier channels also include more coordination of batch processes for sales promotion programs; greater requirement for batch-oriented warranty reimbursements to 2nd tier channel participants; this channel strategy requires the greatest level of support for channel partners and their dealers and resellers.

Real-time tasks: Support for Special Pricing Requests; coordination of training and benefits internally throughout multiple layers of distribution channels; extensive support for exception-based transactions; heavily focused on automating Special Pricing Requests and providing real-time self-service tools to multiple layers of the channel.

OEM Sales

Manufacturer sells directly to Original Equipment Manufacturers (OEM)s who many times have products tailored to their specific needs.

Batch-oriented tasks: Mftrs rely on direct sales forces to sell into OEM accounts; heavily batch-oriented for presales, sales and support.

Real-time tasks: Intensive real-time support on design and engineering validation; pricing is often done in real-time; supply chain integration necessary for tracking customized builds for OEM accounts.

The ongoing debate of whether to bring real-time Web Services integration into indirect channel partners, and with it, a fundamental re-ordering of process using BPEL as the modeling framework for re-defining in-channel processes, all interlinked via XML and inter-ESB communication, is today focusing on the velocity of transactions that manufacturers can accomplish first, and cost reductions second. The re-thinking of channel partners as being on their own systems, often in batch-mode and very constrained in terms of performance and responsiveness both to other channel partners and customers, is pervasive. The impediments these "islands" of batch integration are causing is forcing manufacturers to further focus on how to propagate… READ MORE

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