I read an interesting post over on InformationWeek yesterday that was talking about how Apple had re-introduced their online Inventory Tracking Tool to let consumers see where they could buy the new iPhone 3G S in North America. 

The tool is updated every hour to allow potential customers to see the latest availability. Looks like most of the current shortages are across California and New York states and there seems to be shortages in Las Vegas as well, no doubt caused by the tourists making impulse purchases. From Apple’s perspective they were able to see that the most popular model was the white 16Gb version and as a consequence they are able to adjust the supplies to key stores to compensate for any potential shortages of this particular model.  This is a great example of how improved visibility of consumer demand can help improve the efficiency of a supply chain and it may also go some way to explaining why Apple has once again appeared at the top of AMR’s list of Top 25 supply chains.

The iPhone 3G S has only been on the market for a few weeks but it sold nearly a million handsets in its first weekend, compared to the new Palm Pre handset which sold only 55,000 in its first weekend. RIM’s Blackberry and earlier versions of the Palm handheld have traditionally been sold to corporate or business users where as Apple’s iPhone has been sold into the general consumer market. Not to be outdone by the iPhone, newer Blackberry models have been designed to appeal to the general consumer market as well. But is there a place for the iPhone in the corporate world?, will it ever over take the Blackberry as the main mobile device used within the business community and what about the Palm and its new Pre device, will it ever return to the levels seen ten years ago when it was the handheld device of choice for many business and corporate users?

In July 2007 I wrote a blog on how the iPhone could impact the business community, but will the 3G S finally be able to deliver on this or will we have to wait for the much faster  4G version which is due at some point over the next couple of years?  One of the reasons why the iPhone has been successful is its online app store, and many of these apps have featured in numerous TV adverts, the one below is relatively good at showing how the iPhone can be used from a possible B2B perspective, monitoring the shipment of goods around the world. 

So will there come a time when companies will want to download supply chain or B2B related apps to their corporate iPhones to allow them to manage and interact with their supply chains, or will the growing cloud computing movement encourage the development of more cloud based applications that can be used across many users?  One thing is for sure, improved speed and better global standards for mobile data exchange would probably need to be introduced before the iPhone went mainstream within global corporations.

Apple’s new 3G S is claimed to be twice as quick as the previous generation iPhone, but would this be quick enough for the corporate user who may be trying to interact with corporate systems and other applications whilst on the road?  Would they be better off waiting for the next generation Apple iPhone which is rumoured to be supporting the proposed 4G mobile communications network. It is quite clear that having a high speed, highly available communications platform in place is important for many companies so perhaps many will be holding off deploying the iPhone 3G S to corporate users for the moment. 

On the standards front, I wonder if we will see a new EDI document standard being developed for mobile business platforms?, this will ensure that electronic business documents can be transmitted in one common format around the world.  Will we see Mobility Standard 1, being introduced in the near future? There are numerous discussions going on at the moment regarding a new common standard for cloud based computing. So I guess at some point we will see a standard being introduced for mobile platforms.  Will we see Rim’s Blackberry, Palm’s Pre and Apple’s iPhone adopting some form of MS1 document standard in the future?, watch this space.

Just over a year ago Ford sold its luxury car brands, Jaguar Land Rover (JLR) to Tata Motors Limited, India’s largest vehicle manufacturer, in a deal estimated to be worth $2.3Billion. In a blog entry that I posted in March 2008, “Ford says Tata to Jaguar Land Rover”, I provided my thoughts on the sale of JLR to one of India’s largest companies.

Over the past year Tata has been true to their word, despite the global downturn in the economy, they have continued to invest in the JLR brands and they have retained employment in the UK rather than shutting JLR’s factories and moving production to India. Tata’s CEO, Rajan Tata, is passionate about British brands having already acquired Tetley Tea and the steel producer Corus. He has the same passion with the JLR brands. In terms of Jaguar he has plans to develop the brand with a new roadster to compete with the Porsche Boxster and the new XJ saloon is expected to be launched later this year. Their new XF model has been successful in toppling BMW’s 5 series off of the top of the executive car list and more importantly JLR is investing in new model development now so that when the market starts to grow again JLR will have the right cars in place to sell to the market.



JLR has also confirmed that they will be selling their vehicles in India, not really an unexpected move given that Tata owns the company, but more surprising given that cars are still very much a novelty in India with two wheel bikes and three wheeled vehicles dominating the market. In fact Tata has recently launched the world’s cheapest car, the Nano, to new potential consumers in India as a way of trying to migrate them towards owning their first four wheeled vehicles. Needless to say, owning a Jaguar or Land Rover vehicle will be an impossible dream for most of the Indian population but JLR is a great asset for Tata to use for promoting their capabilities in the global automotive industry.

JLR had to make some tough decisions on how they were going to manage their IT environment both during and after their divestiture from Ford. From a B2B perspective they had to decide whether to continue managing their B2B environment internally or outsource their B2B environment to another company. JLR had some important considerations when making this decision, none more so than how do they maintain continuity of their business and associated processes and also minimise any disruption to their trading partner community. In the end, JLR decided to outsource the management of their B2B environment, to GXS.  In fact it was about this time last year that I was involved with my first meetings with JLR to find out a bit more about their specific B2B requirements and how we could possibly help them. 

In previous blog entries I discussed divestiture situations and how companies need to think about possibly outsourcing B2B processes etc in order to maintain continuity of their business processes and JLR is a classic example of such a situation. However this has been complicated still further by the fact that Jaguar has been under Ford ownership for many years and JLR will have to unravel themselves from nearly every Ford IT system. This may seem like an impossible task, but at least from a B2B perspective, JLR will not have to worry about their B2B environment, as it is now in trusted hands.

GXS announced the new JLR deal via a press release today, to find out how GXS will be helping to implement a future proofed B2B environment for JLR, please CLICK HERE. Needless to say as we progress with our Managed Services project at JLR I will keep you informed of the progress.  For GXS, this project shows continued momentum in our Managed Services offering and indeed from an automotive perspective we are seeing a lot more B2B outsourcing opportunities coming down the line.  This to me confirms that for the time being at least the market demand for outsourced B2B services is actually anti-cyclical to the state of the economy. Cost cutting is the number one priority on the minds of many CXOs around the world at the moment and GXS Managed Services allows them to meet their cost cutting goals whilst trying to make their operations leaner and meaner, so to speak!

Well this has been an interesting week for the automotive industry, GM finally announced their move into Chapter 11 and they also announced that a number of their brands have been successfully sold off. GM entering bankruptcy proceedings had been widely predicted for many weeks but will the $30billion injection of government funds be enough to help GM through its extensive restructuring process and how will the Obama administration manage the day to day operations of the company?

For the past few months GM has been working hard to reduce costs by divesting off various parts of its global business and terminating dealer relationships so that they can focus on four core brands. So what has happened to the iconic brands within the group and is there a chance that GM will emerge from this episode like a phoenix rising from the flames?

This week Hummer was sold off to a little known Chinese industrial equipment manufacturer, Sichuan Tengzhong Heavy Industrial Machinery Co, who has pledged to keep Hummer development and manufacturing in North America. This is actually a more significant acquisition than it looks as this Chinese manufacturer has acquired not only a leading U.S car brand but also gets an indirect foothold into the North American market.  This is something that no other Chinese OEM has achieved as yet. The increase in fuel prices and the subsequent quest to find greener vehicles really put the nail into Hummer’s coffin and I thought late last year that GM would probably end up selling Hummer to either a Chinese or Indian company, mainly because those countries have up until now been less affected by fuel price rises and green campaigns. Ford has been looking to sell off its Volvo division for nearly a year now and I still believe that Volvo will end up in the hands of a Chinese OEM. Given that many Chinese OEMs are having trouble making inroads to western markets due to concerns about the safety of their vehicles, acquiring a car brand with the safety ‘halo’ that Volvo has will be a smart acquisition for a Chinese OEM.

GM also announced this week that they had successfully sold their European operation to a group headed by the Canadian automotive parts manufacturer, Magna. Throughout the buyout discussions, Magna has always been positioned as the main bidder against Fiat for control of the GM Europe operation which comprises of the Opel and Vauxhall car brands.  In fact Magna will only own 20% of the new group, 35% will be owned by the Russian company Sherbank, GM would retain a 35% stake and Opel’s employees would own the remaining 10%. This is an interesting move as the Russian car market is growing exponentially even with a global recession and Magna has seen an opportunity to expand into Russia via the Opel brand. Magna recently won a significant deal from Porsche to take over the manufacturing of their Boxster and Cayman sports cars from Valmet of Finland. So despite the global downturn in the economy some automotive companies seem to be doing quite well at the moment, and I think this acquisition is one of the first by a Tier 1 supplier to the automotive industry, is this a growing trend?, will we see some of the more successful Tier 1 suppliers step up to become complete vehicle manufacturers in their own right?, only time will tell.

GM Europe’s brands of Vauxhall and Opel are very successful in their own right, mainly because they produce a range of high volume, small cars which appeal to the European market. In fact my family, like many others across the UK has had a Vauxhall car as their daily runabout at some point in their driving career. Their cars are cheap to run, easy to maintain and has always been a good seller both from a private and business buyer perspective. This is the main reason why the GM Europe brands were able to find a buyer so quickly. I wonder what would have happened if GM North America had decided to take some of their smaller European car platforms to North America, there is a chance that this whole Chapter 11 process could have been avoided. Ford are now using the experience of their European operations to develop smaller car platforms that can be used globally.

Just before the collapse of GM, they tried to sell the successful Opel Astra in North America under the Saturn brand, now Saturn is up for sale as well. Saturn has so far received nearly 15 bids for the entire operation, including one from Roger Penske. In fact today it was announced that Penske was the winning bidder for the Saturn brand paying between $100million - $200million for the brand and associated assets. Finally, GM’s Swedish brand Saab has three potential buyers lined up, again one is believed to be a Chinese company and another is the Swedish super car manufacturer, Koenigsegg. I am sure from a job preservation point of view, another Swedish company taking over Saab would be the preferred option.

So over the past few weeks, General Motors has gone from being ‘Global Motors’ with significant manufacturing operations and joint venture operations in every major automotive market around the world to ‘Government Motors’. They have had to sell a lot of their brands at knock down prices in order to reduce operational expenses. The U.S government has said that it does not intend to be the long term owner of a car manufacturer, despite now owning 60% of the company, their goal is to help GM restructure, become leaner, greener and focus on four core North American car brands. As part of the restructuring GM will acquire some core business units of Delphi’s business and provide a cash injection of  $2.5billion to a private equity firm who will hopefully help Delphi emerge from their own Chapter 11 proceedings.

In an earlier blog entry I made reference to an article over on Informationweek which discussed GM’s global IT infrastructure. So who would like to be working as part of GM’s IT organisation at the moment?, after spending years developing a global IT infrastructure to support their global manufacturing operations they now have to unravel it, in order to allow the divested operations to be able to operate autonomously.  In fact there was a great article yesterday over on Information week which asked GM’s CIO six questions about his future IT budget and outsourcing strategy following their filing for bankruptcy.

This is an ideal time for GM to re-evaluate its IT vendor contracts and possibly see how outsourced IT services can benefit their operation during this period of restructuring. Whether GM exits chapter 11 within the next few months or not remains to be seen but one thing is for sure there is still a lot of work to do to restructure the whole business before this can happen.

In my previous blog entry I highlighted a number of business drivers that could lead a company to want to outsource the management of an ERP/B2B integration project. In the last of my ERP related blog entries, well for now at least!, I will take a look at some of the key areas where B2B outsourcing can help improve the management of ERP/B2B integration projects and more importantly discuss how it can improve the quality of information being fed into an ERP system. So let me start with document mapping......

Implementing Document Maps
Of all the integration challenges facing a company looking to integrate their ERP and B2B systems, document mapping remains the most complex task to try and complete. Mapping is a highly skilled task and quite often these skills may not exist within a company. If they do then they are likely to be used on an infrequent, project by project basis. With the possibility of having to create 100s of maps or provide maps to link with ERP systems such as SAP, ensuring that maps can be created on time is one of the most important aspects of an integration project. Creating these maps internally is not a very efficient use of expensive IT resources and outsourcing this particular process would be beneficial for any company undertaking such an integration project.

Managing Trading Partner Communities
Another challenge with ERP/B2B integration projects is trying to manage the implementation and ongoing support expectations of a global community of trading partners. These projects require interaction with both internal and external users. With many companies having globalised their operations, the on-boarding of trading partners across different time zones can be difficult to manage. In many cases, companies simply do not have the resources to manage the on-boarding of trading partners in different geographical regions. Depending on the requirements of the integration project, there may well be a requirement to establish new trading partnerships with logistics and distribution companies around the world. Working with an outsourcing vendor that already has many of these relationships in place already can save considerable time on these projects.

Monitoring Data Quality
As explained in my last blog entry, one of the major problems with ERP systems is that a lot of the information entering an ERP system actually comes from outside the organisation. This information will no doubt have been created in different systems, using different standards and yet companies think that there is no reason to clean this data before it enters an ERP system. If I was a CIO of a company that had just spent $5m on implementing a new global ERP platform, I would want to be sure that it was processing and using clean and accurate information.

B2B integration can provide the capability to check externally sourced data before it enters an ERP system. For example checking to make sure that part numbers, units of measure or other attributes of the goods being ordered or shipped are correct. If your company has the ability to pre-process information before it enters an ERP system then it will minimise any re-work needed to be carried out on the information, it will ensure that any mapping processes can run un-interrupted and more importantly it will ensure that any downstream systems that are fed by the ERP system receive clean information as well. The proliferation of un-cleansed data across an extended enterprise can lead to numerous inefficiencies being introduced to a supply chain process.

Trading Partner Connectivity
Another challenge facing companies who may be looking to integrate their ERP and B2B systems is trying to ensure that all users across manufacturing plants, offices and external trading partners can all connect to an integrated ERP / B2B platform. There are many communication protocols in use around the world, from legacy communication protocols such as X25 and X400 through to the more recent internet based standards such as HTTPS and AS3. The appropriate communication protocol needs to be chosen according to the technical capability of the user or trading partner concerned.

The other concern that companies have is ensuring that their ERP / B2B integration platform is highly available and doesn’t experience any outages towards the end of a sales quarter. If an advanced shipping notice fails to get through to a manufacturer for example then this will have an impact on the delivery of goods.  It is important that the integration platform runs on a highly available platform which has the capability of being connected to trading partners around the world.

Program Management
ERP / B2B integration requires an immense amount of co-ordination across the extended enterprise.  Ensuring that maps are created correctly, trading partners are all connected properly and more importantly, any changes made to the ERP system are reflected in the B2B system as well.

To achieve an integrated platform implies that any changes made to one system will be reflected in the other or vice versa. During an ERP / B2B integration process numerous change requests will be issued to modify one or other of the systems. This change management process needs to be managed and monitored efficiently otherwise the implementation of the project can be significantly delayed. Having a dedicated program manager look after the implementation can be a worthwhile investment, they not only ensure that valuable IT related resources are being used effectively, they will also ensure that the project comes in on time and more importantly to budget.

Providing Global Support
Many companies have globalised their operations and have now become 24/7 follow the sun operations. As a result, all users of the ERP/B2B integration platform must have access to a global support infrastructure so that if any problems arise they can be resolved as quickly as possible.

Global ERP / B2B integration platforms must be able to support manufacturing plants, offices and trading partners anywhere in the world and as such must have access to multi-lingual support services. Proactive monitoring of all transactions provides a valuable service for many IT managers who want to understand how business transactions are running across their network. If any problems are detected then the necessary steps can be taken to resolve the issue before any further problems arise.

To find out more information on how GXS Managed Services can help to keep your ERP projects on schedule, please visit www.gxs.com/products/outsourcing

In my previous blog entry relating to ERP I discussed how the automotive industry has become so reliant on these systems for running their day to day manufacturing operations. Implementing an ERP or B2B system are the two most labour intensive IT projects that can be undertaken by a company. 

Quite often, ERP projects will use a large amount of IT resource and in many cases resources that would normally be used to manage B2B infrastructures will be diverted to an ERP project instead. This could potentially put a company’s B2B infrastructure at risk if any problems occur or if there are issues with on-boarding new trading partners for example. As ERP systems are integrated to nearly every aspect of how a company operates, if there are delays with either implementing a new system or upgrading to a new ERP version then this will have serious implications further down the line. But what about those companies who are keen to integrate their ERP and B2B systems?  For companies that have either been newly divested from a parent company or find themselves in a position where they are switching to a new ERP vendor, this can sometimes offer the best time to integrate to a B2B platform. After all, the company will be able to start from a clean sheet of paper. At GXS we have seen an increase in the number of customers wishing to integrate their ERP and B2B systems together, and many as a result of trying to consolidate numerous instances of an ERP system which are located in different locations around the world.

Due to the demands placed on a company’s IT resource during an ERP related project, outsourcing the management of a B2B infrastructure and any associated integration to the ERP system can bring significant operational and financial benefits to a company. Quite often GXS are seen as an extension of the many IT departments that we work with around the world. So what are the key drivers for companies having to integrate their ERP and B2B systems together in the first place?

• Most data used by an ERP system is obtained from outside the organization
• Data that is fed into an ERP system is often inaccurate
• Lack of ERP/B2B integration can lead to less informed business decisions being made
• Integrating to global ERP instances can be a challenge

So let me just spend a few minutes looking at each of these drivers in turn

Most data used by an ERP system is obtained from outside the organization

Most data used by an ERP system is obtained from outside the organisation. ERP systems use information from a variety of external sources, for example distributors, logistics providers and financial services institutions. This information could originate in numerous business systems and could have been created using different industry related standards. Due to the global nature of many companies there are constant challenges with on boarding suppliers and getting them integrated to a company’s ERP platform. The on-boarding capabilities of a vendor such as GXS can really help to accelerate the speed with which new trading partners are on-boarded. Irrespective of their technical capabilities, GXS can ensure that trading partners have the correct electronic trading capability in place and at the same time provide a seamless integration to the ERP system.

Data that is fed into an ERP system is often inaccurate

As ERP systems receive information from a variety of external partners there is an increased chance that unchecked, inaccurate data could enter an ERP system. Quite often, information from external sources is not clean enough to be processed correctly by the ERP system. This will quite often lead to manual rework of the incorrect information to try and make it compliant. If unchecked information is allowed to enter an ERP system then there is a chance that it could spread into other business systems leading to inaccurate information being used across the extended enterprise. A simple mismatch of part numbers for example could lead to incorrect electronic documents being created which could result in delayed payments to suppliers.

One of the main benefits of integrating an ERP and B2B system is that it is then possible to establish what can best be described as a firewall around a company’s ERP system. My colleague Steve Keifer discussed the concept of an ERP firewall in an earlier blog entry. The aim of the firewall is to protect the ERP system and ensure that incorrect data does not enter the system. Whether you are trying to protect your ERP system from information being sent in by customers and distributors, logistics providers, suppliers or financial institutions, integrating to a B2B system can provide a higher level of security around your ERP applications and downstream business processes.

Lack of ERP/B2B integration can sometimes lead to less informed business decisions being made

These systems need to process information from various internal and external sources.  Business decisions, especially in tough economic times, need to be made in real time and this cannot be achieved if data has to be re-worked and re-entered into the system. Without a fully integrated ERP and B2B environment it is difficult to gauge the true pulse of how the company is operating. If a company does not have visibility into any potential problems then it is very difficult to take any corrective action.

For many companies, getting access to real time information and ensuring that the platform is available 24/7 is crucial to the operation of their business. For example many high tech manufacturers insist that their IT infrastructure does not go down near the end of a quarter so as not to affect sales. In another example, if a car manufacturer does not receive an ASN to notify them that parts are on their way to a factory then this can have downstream implications as well which could lead to a production line shutting down. Automating the flow of information via the integration of ERP and B2B systems ensures that business critical transactions can be processed in real time.

Integrating to global ERP instances can be a challenge

Globalisation has forced many companies to establish new manufacturing plants and offices around the world and as mentioned earlier, many companies operate multiple instances of ERP systems to support their global business. Ensuring that these instances are fully integrated to provide one enterprise wide view of ERP related information is a challenge. Having to work across different time zones and trading partner communities, who may be speaking multiple languages, can impact the overall efficiency of a supply chain as well.

Next week I will discuss how B2B outsourcing can help address some of these issues. Until then I have a question for you, what challenges is your company facing with trying run ERP and B2B systems across your business?

It has been an interesting month in the enterprise server market, in my previous blog entry I discussed the consolidation in the high tech industry with IBM, at the time, making a bid to buy Sun Microsystems. Well that deal fell through, however yesterday, Oracle showed their trump card by acquiring Sun for $7.4bn.

I have to say that this was an unexpected move by Oracle but with the other changes in the market, are we witnessing the dawn of a new era in enterprise computing? The server OEMs such as Sun, IBM and HP have relied in the past on building relationships with software companies in order to help sell their hardware. My old company, Computervision, was acquired by Prime Computers in the late 80's for this very reason. In fact I found this video last week which shows an advert from Prime Computers in the late 80's starring Tom Baker from the TV series Doctor Who, how things have changed!

During the 80's it was the large automotive and aerospace companies such as Ford and Boeing  who were fuelling the growth of the Unix workstation market as they were using them for running their high end computer aided design software. At the same time, many ERP vendors such as Oracle and SAP were developing their own software to run on these same computers. Whereas in the past we have seen the computer OEMs driving the market, now we are seeing a major software vendor acquiring a computer OEM.  Admittedly Sun Microsystems has changed their business considerably since the dotcom period in 2000, developing their own software offerings, focusing on open source, Java and continuing to develop their Solaris operating system.

When I first heard about this acquisition, subject to the deal being approved by shareholders that is, I was wondering what Oracle may do with Sun’s hardware business. My immediate thought was that they may divest the hardware business and continue to focus on Sun’s other two main assets, Java and Solaris, after all, Oracle databases have been running on the Solaris platform for years. In fact Larry Ellison said yesterday that Oracle has more databases running on Solaris than any other operating system in the world, so I guess by acquiring Sun, Oracle protects their lucrative database revenue stream. Then again, Sun servers, including their Blade hardware is at the heart of many enterprise data centres around the world, being used by global corporations in many different industries. Through the acquisition of Sun, Oracle has a foothold in nearly all the major data centres around the world and will be at the heart of the growing interest in cloud computing.

In addition, Oracle for the first time will be able to offer a true end to end enterprise ‘environment’.  Their Oracle software, with Java components, will run in a Solaris operating system which in turn will be hosted on Sun servers. Oracle would become a one stop shop where a potential customer can buy everything from one vendor, ERP system, operating system and hardware, effectively an enterprise system in a box. Cisco recently announced that they would be entering the server market, what if they were to acquire a leading software vendor as well?  HP acquired EDS to bolster their services division, but what about IBM?. They spun out their PC business a few years ago to Lenovo but they still have a very active enterprise server division and of course they have their web development tools such as websphere. In some ways this acquisition is similar to what Microsoft has been doing for years, developing leading office software to run on their own Windows operating system which is then installed on most computers around the world.

Now you can be sure that IBM won’t be sitting around watching Oracle sweep up most of the enterprise market, what about if IBM made a move to acquire SAP?, that would put things back on an even keel with Oracle and IBM is one of the few companies that could afford to buy a company such as SAP, let alone integrate them into them global operations.  Yes there will be potential overlaps in their offerings, for example their respective BPM solutions from Cognos and Business Objects, but these could be resolved.

GXS has worked with the major ERP vendors for many years, helping our customers to integrate their ERP and B2B platforms and the current consolidation in the market can only make it easier for our customers to develop their global enterprise and B2B networks. I guess we will find out in the next few weeks what will happen between Oracle and Sun and if indeed other vendors decide to go down the acquisition route.  I will take a closer look at ERP and B2B integration in my next post and in particular how Oracle’s acquisition of Sun will impact the way companies trade with each other in the future.

Over the past few weeks there have been a number of stories relating to the high-tech industry, in fact more stories relating to the big computer OEMs than I have seen in the last few years. One of the more significant rumours doing the rounds is that IBM may be about to buy Sun Microsystems for $8 billion. Cisco announced that they will be moving into the server market and only yesterday Silicon Graphics, SGI, were placed into bankruptcy and were immediately bought by Rackable Systems for $25million.

Now over the years I have worked very closely with both Sun Microsystems and SGI, in fact when I was at my previous company I setup visualisation centres based on Sun, SGI and HP visualisation servers. I, like many engineers, spent ages crafting my UNIX based skills on Sun’s workstations.  Over the past few years Sun has developed a keen following with their open source software applications based on JAVA and their Solaris operating system is used by many companies around the world. Their hardware is used to power many IT and B2B environments and so it is no surprise that IBM would want to take an interest in acquiring them.  IBM would acquire a useful portfolio of software and applications to offer companies as an alternative to Microsoft’s software products.

Both IBM and Sun servers can be found in many data centres around the world and with the current explosion of interest in cloud computing, you can be sure that there will continue to be a strong demand for these server offerings. In fact it is interesting how things have come full circle, in the 1970s, IBM mainframes were hosting software applications, then the desktop workstations emerged during the 1990s and now with SaaS and cloud based technologies we are going back to seeing large rack and blade based servers hosting web based software applications for distribution and use across the internet.

As for Cisco, due to the increasing interest in setting up new data centres for cloud based applications, they announced a couple of weeks ago that they would be moving into the server market to compete against the likes of HP, Dell and IBM.  They plan to offer a series of new servers with data storage components and network routers offered in one box.  This will simplify the deployment of a new data centres to meet the growing need for hosted or cloud based environments.

SGI has been in the server market for many years, always focusing on high end visualisation servers used for 3D modeling and simulation purposes.  If it were not for a major contract with the U.S defence department then I think they would have gone out of business a few years ago.  IBM seems to dominate the super computer market at the moment and the increasing graphics and processing power of today’s PCs has slowly contributed towards the erosion of SGI’s revenues.  Whether the SGI brand name will disappear altogether remains to be seen but one thing is for sure, SGI has contributed a huge amount to the film, entertainment and simulation industries over the past two decades.

With the growing interest in cloud computing, the time is right for a shake up in the high tech industry, however I wasn’t expecting to see so much consolidation activity in such a short time!  One thing is for sure, over the next few years we will see a range of new cloud computing technologies and dare I say it, standards being introduced. You can be sure that GXS will be keeping a close eye on these new emerging standards and I will be discussing cloud based standards in the near future.

Silicon Valley is moving to the next phase of its growth now and it will be interesting to see the mix and type of companies that move into the region over the next few years.

Integration, this is an important word on the minds of many CIOs around the world, and yet many companies underestimate the importance of it, especially when trying to implement and work with countless back office systems. Let me try and compare a company trying to use a mixture of different back office systems to a musical orchestra.

Each musician in an orchestra has their part to play in the musical performance, if one musical instrument is out of tune or a beat is missed for some reason then the audience will notice it straight away. It is no different for a company trying to integrate back office systems, the reason for doing this is to ensure a smooth flow of information around the organization, making sure that the relevant people in the various departments get the right information at the right time. Without backend integration, companies will struggle to orchestrate the flow of information across their extended enterprise. Whilst on the subject of orchestras, this was one of my favourite automotive adverts from last year, which was performed on actual car parts.

Enterprise Resource Planning (ERP) systems have been used for many years to manage materials and enterprise resources within a company. Now unless a company makes everything in house, which is very rare these days, companies will have to manage a range of different suppliers and interact with customers on a daily basis. So there is clearly a potential barrier to information flow here, an ERP system is managing the flow of information within a company, but by itself it cannot manage a global network of trading partners as well. There has to be some level of integration so that the barrier can be removed and information can flow freely across the extended enterprise. Imagine being able to utilize ERP related information across your trading partner community, imagine being able to smoothly receive information from trading partners without any re-keying of information or having to interrogate multiple business systems. Integration, CIOs should not under-estimate the power that this word has and outsourcing the management of the B2B to ERP integration process to a trusted partner such as GXS should be given serious consideration.

SAP is the most widely used ERP platform in the automotive industry today, and many companies rely on SAP software to manage their global manufacturing operations. Many European automotive companies, particularly those in Germany, have globalised their manufacturing operations in the past few years. They have established operations in ‘old’ emerging markets such as China, Brazil and India and the ‘new’ emerging markets of Thailand and Vietnam. As the automotive companies stretched their operations around the world it became more important to provide integration to multiple SAP instances and to also provide a means to manage their ever expanding community of trading partners. Ideally, the car companies need to get a single, consolidated view of their resources across their extended enterprise. Providing an integrated B2B and ERP platform allows the automotive companies to improve how they manage inventory levels, trading partner relationships and of course reduce costs across their business.

GXS has worked with many companies over the years to integrate their B2B and SAP ERP platforms, in fact we are currently working with one global automotive tier 1 supplier to integrate 80 instances of SAP that are scattered across their global network of manufacturing plants. As you would expect, we have been able to establish a valuable knowledge base of information associated with integrating our Trading Grid® B2B platform with many SAP installations. However we can offer companies much more than this, let me briefly explain.

• GXS has over 40 years experience of working with companies in the automotive sector, in fact over 70% of the world’s Top 100 automotive suppliers are connected to our Trading Grid infrastructure. GXS can provide seamless SAP integration to a global B2B platform where nearly all the major suppliers already have pre-configured connections to our service
  
• We offer a mapping centre of excellence which provides a centralized location for managing over 30,000 maps. We can also provide support for a number of different SAP IDOC documents, for example SHPMNT03, INVOIC01, DELVRY01, ORDERS01.  As you would expect GXS are fully certified by SAP for Netweaver® integrations
  
• We offer support for the broadest set of communication standards in the industry, whether it is mediating between legacy communication protocols or the latest internet communication protocols or indeed FTP over SAP ALE, either way we can make sure that you can connect to your trading partners irrespective of their technical capability
  
• Providing global 24/7, multi-lingual, support services ensures that your trading partners can be on-boarded and supported anywhere in the world. GXS recently acquired Interchange in Brazil which now allows us to work more closely with this important automotive manufacturing region
  
• You would have peace of mind knowing that your SAP implementation would be integrated to one of the most modern and highly available B2B infrastructures in the world. This means that your global instances of SAP would be connected to a future proof B2B infrastructure that has the flexibility to grow as your company grows
  

Now I have only scratched the surface here and in future blog entries I will cover each of the above in more detail and explain how they help contribute to the smooth integration of many ERP related back office environments around the world. For further information on how GXS Managed Services can help your company, please click here >>>

GXS was one of only five technology vendors to be honoured by the North American Automotive Industry Action Group (AIAG) yesterday.  Based in Southfield, Detroit, AIAG is a unique not-for-profit organisation providing an open forum for members from all layers of the supply chain to collaboratively resolve critical issues in the automotive industry. GXS was recognised amongst thirty member companies for their 25 years of dedication and support to the association during changing economic climates faced throughout their membership.

Since AIAG’s inception in 1982, GXS and the other honoured companies have made an investment to improve the profitability and complexity of the global automotive industry. "Our members are a tremendous resource for AIAG," said Brian Vautaw, AIAG Chairman of the Board. "By contributing their automotive industry knowledge and skills, they serve as the catalyst towards a seamless, efficient and responsible automotive supply chain. We are proud of our member companies' 25 years of accomplishments and commitment to AIAG, and we look forward to creating continued success and improvements in the global automotive industry in the future."

GXS works with many industry associations and standards bodies around the world and we leverage these relationships in many different ways, for example taking part in annual conferences, contributing towards workgroup projects, or helping our customers implement best practices defined by these organisations. In tough economic times like these, many companies will look to these industry associations for advice on how to improve their supply chains through the implementation of new B2B related best practices.

In an earlier blog entry I mentioned that I would be looking to leverage the MMOG/LE related project work that had been undertaken by AIAG and Odette in Europe. Well, I have concluded my initial research into this area and I will be discussing this in more detail in future blog entries, one thing is for sure, AIAG and Odette’s MMOG/LE continuous improvement tool will be very much in demand by the automotive industry over the next year as they restructure their operations.

This is the important question that many car manufacturers will be asking themselves over the next few months. We have seen numerous news stories over the past year relating to increasing inventory levels, with new cars continuing to roll off the end of production lines only to end up spending months in large storage compounds.

Only last week Toyota announced they were hiring large roll-on roll-off ships to store newly manufactured cars. Honda in the UK, has more or less completely filled a new car storage facility at Southampton docks, this facility was only suppose to be used to store cars as they were unloaded from ships arriving in to the country.  Nissan UK is another example, once the most efficient car producer in the UK, now they are stockpiling newly manufactured cars on their own test track.

Even though the credit crunch has affected the buying habits of many consumers around the world, the car manufacturers continued to manufacture their cars and six months later they are wondering why they have billions of dollars tied up in unsold stock. This has led to many car manufacturing sites working shorter weeks and in the case of the Honda plant in the UK, they stopped production just before Xmas and will not resume again until June this year. Inevitably some of their employees will be leaving but what about the suppliers, are they just expected to close down as well until Honda restarts production?

There was an interesting announcement at the Geneva motor show last week which said that Renault, the leading French car producer, would be moving more towards a ‘Build to Order’ model, with the primary aim of trying to reduce their high inventory levels. Dealers may have to wait a few more  weeks for new cars under the build to order system, but they are able to set out the specifications they want. Renault’s aim is to become more reactive and avoid having stocks of ageing vehicles. Renault aims to go beyond its target of cutting stocks of unsold cars by around $1Billion this year. I guess the fact that Renault saw a 78% drop in net profit during 2008 had nothing to do with this decision?

This is not the first time that Renault has tried to increase its build to order production volumes, in 1999 Renault launched a new distribution project to try and cut order to delivery time in Western Europe, (which then averaged 8 weeks), down to 2 weeks. The primary aim of this project was to reduce inventory levels and improve efficiencies across their supply chains. In 2001 only 21% of their customers were actually receiving their cars within the 2 week order to delivery period and Renault decided to abandon this relatively short delivery period citing supply, logistical and distribution problems. I expect a lack of supply chain visibility may have had something to do with this as well.

Now of course ten years is a long time in the automotive industry and I think we are on the verge of seeing some drastic changes in how cars are produced. I think that more volume car manufacturers will be following Renault’s decision to increase their build to order levels. The North American OEMs, Ford, GM and Chrysler, have seen a high proportion of their cars being built for stock. However with their current situation and in the case of GM and Chrysler, their acceptance of bail out funds, they are going to have to re-think their production, logistics and distribution strategies and align more with consumer demand. They need to build flexibility into their production lines so that they can build different car models on the same production line. The Japanese manufacturers and in some cases the German car manufacturers have been doing this for years.

BMW for example is one of the leading examples of a build to order manufacturer. How many large storage compounds do you see that are full of BMWs?. No two BMWs that go down the production line are the same and in fact a customer can change the specification of their car up to 6 days before the car gets produced. You want a different engine, no problem, prefer aluminium trim instead of wood on the dashboard, no problem, prefer a leather seats, consider it done. BMW has a very efficient supply chain and distribution network allowing dealers to inform their customers of the exact build status of their cars. Even though BMW may have sold less cars than normal in the last quarter of 2008, they certainly did not have the high inventory levels that some other manufacturers have had. Rolls-Royce and MINI cars have both done well under BMW ownership, mainly due to the fact that these cars are built to order as well.

So the next couple of years will be painful for the automotive industry, particularly in North America, whilst they rejuvenate their production lines and distribution networks and they try to better align their production output with consumer demand. Build to order versus build to stock may be difficult to achieve for many car manufacturers but I think we will see more car manufacturers following Renault’s lead over the next few years. I will discuss how this directly affects the supply chain in a later blog entry.