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Integrating Electronic Commerce

Electronic commerce (EC) in business applications is no longer confined to electronic data interchange (EDI) and electronic funds transfer (EFT). As the Internet begins to take off as a routing infrastructure for consumer-to-business and business-to-business transactions, business applications vendors are scrambling to EC-enable their existing packages. A whole new group of Web EC applications are coming to market.

Defining Electronic Commerce Applications

Consumer-to-business EC is focused on the use of a virtual storefront on the Web -- often part of a multivendor mall of such storefronts -- that allows any Internet user to browse and order goods or services from the storefront's online catalog. The paradigm is clearly modeled on the real-world shopping experience, with "carts" (order forms) to drop your goods into and "checkouts" (payment processing) to settle your bill with a credit card. Most of the security concerns that have been voiced about EC on the Web actually relate to consumer-to-business EC because of this transfer of credit card data across an unsecured public network. Consumer-to-business EC is little more than a step up from traditional mail order or more recent telephone-based ordering systems.

Business-within-business EC takes the intranet beyond its popular role as a corporate and product information center. Here the EC is strictly intracompany, and payment processing is not an issue. The transfer of funds is purely an accounting transaction via a chargeback or an intercompany billing, rather than a true payment where details of a credit card or bank account are being passed over the Internet. In this scenario the intranet becomes a conduit or service center for the exchange of goods and services among the subsidiaries of a large company -- a means for internal salespeople and retail or captive outlets (single-source customers) to place orders or for employees to requisition and purchase approved goods and services. Business-within-business EC is a significant new market opportunity for existing and startup EC application vendors to exploit.

The real action, however, is in business-to-business EC, where end-to-end business processes, such as fulfillment and procurement, are being reengineered to function electronically and without the need for private, value-added networks (VANs). Vertical niches within business-to-business EC, such as online banking, are already becoming important markets in their own right and appear set over time to completely change the way whole industries work. Business-to-business EC is an area where many business application suppliers in the accounting, supply-chain, and manufacturing sectors are focusing their attention right now; it's also the area several new startups expect to break into. Business-to-business EC is the catalyst behind the rise of the extranet, an intranet whose boundaries extend beyond internal corporate users to include external business partners, such as customers and vendors.

Transaction Processing

Even existing EC "standards" in the areas of EDI and EFT leave much to be desired. EFT formats differ from country to country, so software vendors often just custom-build EFT formats on demand. EDI has not become pervasive in the business community despite the fact that many Fortune 1,000 enterprises -- such as General Electric Corp. -- demand that their major business partners interact with them using EDI. Although the Internet reduces the cost of routing EDI transactions when compared to traditional VANs, EDI data-mapping capabilities are not integrated into many business applications and, instead, are optional third-party add-ons that are supplied by specialized EDI software vendors. To secure its place in the world of Web EC, EDI must become the de facto transaction import/export format in business-process management applications, just as the Lotus and Excel spreadsheet or Word and WordPerfect document formats are between desktop applications. (See Peter Benson's article, "EDI and the Internet," Internet Systems, May 1996, page 29.)

Infrastructure

Managing Web EC Processes

• As a conventional packaged sales order entry or purchase order entry module within an accounting suite that has been Web-enabled to allow users to enter and manage orders through applets that can be downloaded into, and run from, Web browsers
• As a "front-end" Web-based ordering package used to manage the EC transaction until it needs to be fed into the appropriate "back-end" accounting system modules through either a batch or realtime (using triggers and/or stored procedures) interface.

The second option may offer a more Web-friendly user interface and closer integration with both the Internet itself and Web-based EC-related services, such as participant or payment authentication systems. Whereas in the first approach, full integration with the accounting system's business rules and data can be assumed, in the latter option this integration will usually need to be custom built -- unless you want to replicate all the accounting data and rules in some sort of "mirror" system. You might also need to build custom routines to allow for online credit checking in order entry, budget checking in purchase order entry, or inventory backordering because cash receipts, departmental spending budgets, or purchasing of inventory are controlled in the back-end accounting system. It's these exception events in the EC business process "pipeline" that generally require information retrieval from or writing to the back-end accounting system. Consequently, some duplication of effort may be inevitable if a front-end Web EC package is used in conjunction with a back-end accounting system.

Some Back-End EC Solutions

Peachtree Software. The Peachtree Business Internet Suite is a complete package for setting up a Web storefront and managing orders and order status through the use of the PeachLink order processor and an email program. The package utilizes technology from EDI vendor Harbinger Corp. and links to Peachtree's own Complete Accounting for Windows suite of applications.

SBT Corp. WebTrader is another consumer-to-business Web EC package that offers connectivity to the accounts-receivable and order-entry modules in SBT's Pro Series accounting software that runs on PC LANs.

Great Plains Software. Dynamics.Merchant (for consumer-to-business EC) and Dynamics.Order (for business-within/to-business EC) are new modules that deliver Web-based EC to the Great Plains Dynamics and Dynamics C/S+ accounting suites. Both modules make extensive use of Microsoft technology including FrontPage and ActiveX to deliver the customizable data entry and inquiry forms for use in a Web EC session.

Walker Interactive Systems. Walker Commerce Client is a newly announced applet for managing the procurement process electronically from requisition to payment. Commerce Client integrates the BuySite technology from Commerce One Inc., to deliver EC capabilities from client computers connecting to Walker's Tamaris accounting suite hosted on an IBM S/390 mainframe server. Skylight Systems. Through use of the Java-enabled version of the Passport 4GL, Skylight has Web-enabled its RFS accounting suite, which is built into Passport. Skylight's functionality lets you capture customers orders, check inventory levels, approve orders, and monitor order status over the Web.

Ross Systems. OpenEDI is a new module for helping to pump EDI transactions sent to and from the Ross Renaissance accounting suite across the Web. As a receiver, OpenEDI polls business partner VANs for EDI transactions and then downloads and converts them into Renaissance formats. As a sender, OpenEDI polls Renaissance for output transactions and packages them into standard EDI formats for transmission across VANs or the Internet to their destination business partners system.

Some Front-End EC Solutions

Procurement, or "buy-side," EC is attracting a lot of attention -- and venture capital -- as vendors attempt to improve the fragmented process of purchasing office supplies, contract services, and low-value, high-volume capital equipment in larger organizations. These new Web-based purchasing systems rely on the use of online catalogs for selecting approved items to buy and the electronic transmission of orders directly to the vendors supplying the goods and services. All these solutions are leveraging leading-edge technology to deliver their solutions.

Elekom Procurement is a Microsoft-centric solution that uses ActiveX components and HTML on the client connecting to an NT server running Microsoft Internet Information Server (IIS) and the Automated Data Connector (ADC) to interact with a Microsoft SQL Server database. Elekom enables employees to search approved product catalogs, pick products to requisition, link to the supplier's own catalog on the Web to confirm specifications or pricing, and then route the requisition via email to automate the requisition-approval process. Email messages simply contain a URL to link the approver back to the Elekom HTML page used to approve the requisition or order.

The Ariba Operating Resource Management (ORM) system is a client/server solution written entirely in Java that consists of three components: a transaction approval engine, a suite of graphical purchasing applets, and optional interface modules for linking to internal accounting systems and external commerce and credit card systems. The Connect PurchaseStream product is targeted at the Unix platform and uses the Oracle RDBMS for data storage. PurchaseStream complements Connect's other Web EC products, OrderStream (for reseller/distributor ordering) and OneServer (a commerce server platform). Another vendor moving into buy-side EC is Commerce One, which builds on the foundation of its REOS 5 EC transaction server with its supplier catalog and ordering products, BuySite and SupplySite.

In the EC fulfillment area, one contender is SpaceWorks' OrderManager, which is already in use by customers such as computer products distributor Merisel Inc. Merisel uses an OrderManager system to provide direct order entry and order management across the Web to some 20,000 reseller partners. According to SpaceWorks, this system is already processing more than 300,000 transactions per month. OrderManager is being used by Merisel not just for order processing, but for linking to FedEx and UPS shipment tracking systems, for generating realtime custom pricing, and for promotional selling, such as daily, red tag, and excess inventory promotions. One key attraction of EC fulfillment is that it is not only for capturing orders, but it's also for capturing information on customer buying patterns and manipulating that information to increase volume or sell more profitably. OrderManager provides for secure transaction processing through the use of RSA encryption and SSL, and it has been linked successfully to back-end accounting applications running on IBM mainframe and AS/400 platforms and to SAP's R/3 suite.

These Web fulfillment and procurement packages are already threatening to encroach on the space currently occupied by the order-entry and purchasing modules in conventional ERP systems from such vendors as Baan and SAP AG. Furthermore, all these solutions must be integrated on a site-by-site basis with the in-house accounting systems. So we can expect to see the rapid development of partnerships between the Web EC startups and the ERP vendors and possibly some synergistic acquisitions in the near future.

Reengineering Processes

Table 1. Elements of Internet, Intranet, and Extranet Electronic Commerce.

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