E-Commerce, 2.0

Collaborative commerce could reward those who have succeeded with ERP

With the stocks of the Internet superstars trending downward, it seems that the primal phase of the Internet economy is coming to a close. Some Web-based “storefronts” continue to be a great success — Dell Computer being the best example. And with the economy still humming along, we should have a bullish eHoliday-shopping spree in December. But the seeds have been planted for a new revolution that will be quite different from the storefront style: And these seeds will sprout into a very different kind of e-commerce in the next decade.

A good name for this next phase is “collaborative commerce,” coined by GartnerGroup in an August 3, 1999, Research Note (SPA-08-5311). GartnerGroup gives c-commerce a “0.8 probability,” whatever that means, of occurring by 2004. Actually, it is already halfway there, led by SAP AG and its new mySAP. com strategy.

SAP and its odd duckling cohorts that fall together in the enterprise resource planning (ERP) space have been taking it on the chin all year. The Year 2000 crisis, which may have initially helped their growth, has decidedly swung against the ERP solutions vendors as many organizations have taken a break from signing on the dotted line for massive software projects. E-commerce — the first phase, that is — has also dominated the attention of both business and IT leaders, who have been living in fear that unless they Web-enable today, they’ll be Amazoned tomorrow. And then there’s the hope that the Internet itself will soon foster cheaper application integration than what ERP offers. In other words, best to wait and see.

After several years of torrid growth, it has been interesting, to say the least, to watch how Peoplesoft, Baan, Oracle Applications, SAP, and the rest have responded to the downturn. Major executive-level turnover has left a lot of blood on the boardroom floor. Initially, you could sense their deer-in-the-headlights immobility as the bright lights of the Internet zoomed past. But as we move into the next phase of the Internet economy, which will be dominated by business-to-business e-commerce, the ERP vendors seem to be regaining their senses — just as their customers are also discovering that they need tightly integrated business processes and applications perhaps more than ever.

According to GartnerGroup, collaborative commerce describes the “dynamic collaboration among employees, business partners, and customers throughout a trading community or market.” C-commerce goes “beyond rigid supply-chain models and simple information sharing. C-commerce applications will replace static, Web-enabled supply chain/ value chain applications as the dominant application model.” GartnerGroup cites two developments as key to c-commerce: first, the range of application users, both internal and external to organizations, is expanding to include the “cybermarket”; and second, collaborative interaction is beginning to replace today’s “on-demand transaction reporting and proactive information dissemination.”

GartnerGroup calls c-commerce “the most advanced form” of e-business. “C-commerce applications will enable enterprises to deliver greater value to customers by both synchronizing and optimizing events and activities among a dynamic set of business partners, and by enabling dynamic, recombinant business process execution driven by supply and demand conditions.” Enough mouthfuls from Gartner: What does this mean for ERP vendors and users?

For SAP to understand the implications of c-commerce, it first had to hear a wake-up call from business reengineering guru Michael Hammer. According to Chris Larsen, recently appointed senior vice president for mySAP.com, SAP America, Hammer told SAP’s executives, “Look: You don’t even understand. You have the most unappreciated asset that is not even on your balance sheet. Also the most unreproduceable: Your customer base, the largest customer base in the history of IT. That is the gold in Fort Knox!” From there, SAP began to see itself in the role of an infomediary, helping its customers leverage their ERP investment across industries. In other words, as we move into c-commerce, the SAP Business Framework of Business Objects, component-based middleware, and “value” chain tools become the foundation for internal/external integration up and down the supply chain. And mySAP.com, first introduced merely as a portal, becomes the touchstone.

Larsen said that this fully realized vision of mySAP.com is “changing the way we do business. We are in as good a position — even stronger — than we were when we brought out R/3 in 1993.” If SAP can build a c-commerce ecosystem with its current 12,000+ customers, that would translate into market clout that could expand SAP’s customer base significantly — and also make it easier for emerging and midsize companies to participate via the open systems cybermarket.

Is SAP the only ERP vendor capable of moving into c-commerce? It could be that the whole ERP category itself is breaking apart as its members identify their core competencies, from which they can draw true competitive strength. In any case, the advent of c-commerce will reward organizations that have successfully integrated business processes and applications and moved away from the stovepipes of yesteryear.

David Stodder is editorial director of Intelligent Enterprise. He may be reached at dstodder@mfi.com.