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COLLABORATION5 http://radjou.ASCET.com Navi Radjou The X-Internet Invigorates Forrester Research Supply Chain Collaboration

The X-Internet – an executable and extended Internet built from Rapid responses to unforeseen events. Web- post-Web technologies – will transform online collaboration based B2B apps like e-procurement rely on a between supply chain partners. rule-based workflow engine to automate rou- tine transactions between partners. But they’re not designed to let firms actively find Global firms pin big hopes on the Internet’s the world has changed: Empowered customers unplanned events like delayed parts or a capabilities to connect them with customers are more fickle and competitors challenge suc- looming equipment failure in a contractor’s and suppliers. For example, 84 percent of busi- cessful new products more quickly. Firms have plant, let alone resolve them in real time. To nesses surveyed by NAPM/Forrester in come to rely more on partners to improve their provide preemptive customer support and October 2001 view the Internet as a critical ele- supply net performance and customer service. continually optimize asset usage, firms need ment of their purchasing strategy. Many firms To meet the new realities of B2B collaboration, to sense and respond to unforeseen events are stepping up investments in business appli- business apps need to support: without human intervention. cations (apps) that promise to move their Rich, real-time collaboration. Web- offline supply chain transactions to the Web. anchored supply chain apps like those from The X-Internet Reshapes But so far, these Web-centric B2B apps have Manugistics Group can’t rapidly reflect Supply Chain Collaboration failed to deliver the promised benefits because changes in partners’ production schedules Since its birth 30 years ago, the Internet has they are undependable and sluggish. HTTP because their centralized databases need undergone multiple evolutions; the Web is (the Web’s underlying communication proto- hours to collect and process such scattered just its latest manifestation. Recently, the lim- col) was designed to deliver static content, not info. So high-velocity businesses like Cisco itations of the Web – and of the B2B apps built to run interactive apps like collaborative Systems that use these batch-based apps are upon it – have become glaring. To efficiently design systems that require minimal latency. forced to make decisions based on historical move their offline collaboration to the Net, Designers manipulating 3D models, for data. To continually track and improve its firms need a B2B app architecture that is free example, need to see the results displayed supply net’s actual performance, Cisco needs from the Web’s deficiencies. In the next immediately. So it’s not surprising that, after B2B apps that enable real-time collaboration decade, Forrester expects scores of post-Web pilot-testing Web-based design tools like those by exploiting a distributed data architecture. technologies to emerge and take hold – paving from SDRC, most manufacturers revert to their Everything, not just everyone. Although a the way for a more compelling Internet that old practice: sending CAD drawings to part- Web-enabled supply chain execution app we call the X-Internet. Unlike today’s ners via overnight mail. Another limitation of from a vendor like EXE can manage the cross- Web-rooted Internet, the X-Internet will be: Web-based collaboration apps is that they are company information flow associated with Executable. The X-Internet will exploit browser-bound and PC-centric. Current B2B order management, it doesn’t tie that data to smart code like Java and a distributed infra- apps were originally built to reliably serve a the physical assets used to fulfill that order – structure to push the locus of execution closer limited number of office-bound PC users – not the shop-floor equipment that manufactures to end-user devices – enabling these devices to engage in ephemeral communications with the product or the container in which the to talk back and forth with services in the net- tens of thousands of non-PC client devices. As product is shipped. To provide customers work using self-describing data. This exe- a result, today’s apps are inadequate for with more accurate and up-to-date order- cutable Internet will reduce latency and make mobile workers – a community that soon will status info, firms need B2B apps that can cross-firm app integration easier. represent 31 percent of the U.S. workforce – monitor all of the production and transporta- Extended. The X-Internet’s reach will who rely on tools like dial-up modems, tion assets within their fulfillment network. extend deep into the physical environment in phones, and PDAs to access their corporate data and to reach out to partners. Existing Web-based B2B apps were Navi Radjou is a senior analyst at Forrester Research where he covers supply chain integration and collaborative product development. Prior to joining Forrester, he worked as an IT consultant in Asia for three designed to support large corporations operat- years, and as a development analyst at IBM’s Software Lab. Mr. Radjou holds undergraduate degrees ing in a mature environment – with stable in computer science from the University of Paris and CNAM-Paris and an M.S. in information systems from demand and a captive supplier network. But Ecole Centrale Paris. He has also attended the Yale School of Management.

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which firms operate – a real world made up cian to install the new filter. Meanwhile, • Object monitoring. New tagging tech- of billions of physical objects that range from Carrier extracts the performance history of nologies and standards that improve shop-floor equipment to pallets. The X- the filters in all its existing HVAC installa- device-to-device interoperability will Internet will use ever-cheaper sensors as well tions, combines it with details of the make it easier for firms to identify and as smart tagging and tracing technologies to Taiwanese filter failure, and dashes the track physical assets. track every product from inception to fadeout. package electronically to the filter supplier. • Adaptive planning. Intelligent agent The X-Internet’s executable and extended The supplier runs a root-cause analysis, technology will enable machine-to- attributes will enable B2B apps to deliver a mapping the Taiwanese incident against all machine resolution of problems that whole new level of benefits to users – helping other customer uses – and spots a previously involve multiple firms – boosting part- them make the transition from flat data undetected pattern: The filter’s performance ner networks’ adaptability. exchange to contextual collaboration. Among businesses today, online supply chain Net-Resident Services collaboration is limited to simple document exchanges. But in the X-Internet era, static Partner Object Adaptive Integration Monitoring Planning queries will give way to executables – encap- sulations of app logic and data along with Partner A Partner B codified knowledge of companies’ business rules and constraints. Firms can then transi- tion from an explicit but context-insensitive style of B2B communication (“Ship me 10 widgets!”) to one that is more implicit, yet richer (“I need to launch this new product next year – how can you help me?”). The X-Internet will extend the scope of B2B collaboration from people-centric to any-to- Figure 1 X-Internet technologies will provide the foundation for a new B2B architecture. any interactions. So, if your supplier’s truck is stuck in traffic, it can notify your shop-floor degrades whenever it is operated below Partner Integration Services. systems and alert you. The X-Internet will 65˚F. The supplier immediately tells its Eighty-two percent of Global 3,500 firms have support the migration to network optimiza- customers to set their HVACs’ tolerance level yet to integrate a majority of partners to their tion. Today’s intra-enterprise decisions can to 65˚F – and directs its R&D team to internal apps. But the X-Internet will simplify inadvertently hurt partners’ performance. But improve the filters’ performance level in partner integration by offering Net-resident the multi-tier supply network visibility and low-temperature conditions. That’s how the data synchronization services. Rather than real-time data provided by X-Internet services X-Internet can transform collaboration. invest a fortune in integration software from will let firms run trade-off analyses to recon- firms like Vitria Technology and hardwired cile multiple partners’ incongruent goals, The X-Internet Will Create a connections, firms will leave these hassles to driving improved asset utilization and cost New Supporting Infrastructure e-business brokers like Grand Central reductions across entire value chains. To reap these benefits – maintenance based Networks that offer Net-resident, subscrip- The X-Internet’s capabilities will reshape on real data, product-design feedback loops, tion-based data translation and transforma- the way firms work with suppliers and and proactive customer service – firms will tion services built on open standards like customers. Here is an example. Today, HVAC need new technologies. These technologies XML and SOAP. Partner integration services suppliers like Carrier maintain their prod- extend – not replace – existing ERP and SCM also consist of semantic translation services. ucts on set schedules. But when unforeseen systems. The X-Internet will spawn new Even XML isn’t enough to support complex factors cause its products to fail, Carrier Net-resident services to turn these inward- B2B interactions like negotiation and media- must rush orders to suppliers to replace any facing apps outward, making them fit for tion, which require greater levels of concep- affected part in its defective product. Fast- dynamic collaboration. Over the next six tual knowledge (like terms, constraints, and forward to 2005. Sensors embedded in all years, a new structure will emerge, with three relations). But, semantic translation service critical parts of Carrier’s HVACs continually new classes of Net-resident services built on providers like Metallect will make it easier for relay real-time data on their status. In one existing apps (Figure 1): partners to knowledge – all in a format instance, a sensor in a Carrier system at a • Partner integration. Emerging Net- that machines can understand. Taiwanese chip foundry flags a performance resident data brokering and semantic degradation in the HVAC’s filter. A software translation services will simplify Object Monitoring Services agent rapidly identifies the nearest source of integration within partner networks – Object monitoring services help firms’ manu- filter replacement and dispatches a techni- improving responsiveness to partners. facturers track in real time the location and

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status of all their physical supply chain assets. makers will face the challenge of sifting OSGI will enable these service providers This will allow firms to become more respon- through the petabytes of data collected. They to deliver inter-site device interoperabil- sive to the physical environment in which will leave that arduous task to software ity. The upside? Manufacturers will be they operate. Cheaper integrated circuits will agents – Net-resident services that can be able to provide customers with accurate put Internet connections into billions of phys- configured to collect, analyze, and act on order status and load-balance capacity ical objects, such as pallets, machine tools, real-time data without human involvement. on the fly. and even bearings. Monitoring their status in real time and connecting them to business How Will the X-Internet Get Mainstream Adoption of apps will become easier with networks that Traction in the B2B World? X-Internet Will Vary Widely collect sensor data. Using networks from ven- Most X-Internet technologies are still in stan- Mainstream adoption of X-Internet technolo- dors like Savi Technology and WhereNet, dards committees or in vendors’ R&D labs. gies will vary widely across industries. firms can track the location and movement of But some aggressive users and vendors will Industries like construction that use, make, the containers that carry their products. The quickly realize their potential. The result? A and move physical objects will need more Auto-ID Center at MIT is creating an alterna- few influential firms will provide the first time to adapt than will sectors like media that tive to the bar code system with trillions of footholds for the X-Internet. Over the next deliver largely intangible products. Similarly, unique identifiers which – along with five years, we will see: industries with simple supply chains, like low-cost, Net-aware smart tags – will let CPG • Old-school vendors like SAP try to rein- financial services, will see more rapid bene- suppliers track every individual item from the vent themselves with the X-Internet. fits than those with complex value chains like plant to retailers’ shelves. Startups like Infravio and Viewlocity automotive. The adoption of the X-Internet Another major benefit of object monitoring blaze the X-Internet trail. But smart will proceed in three waves (Figure 2): services is that they will simplify intra- and ERP and CRM vendors will see in the X- 2001 to 2003: Finance, media, and logis- inter-site device interoperability. Because Internet a unique opportunity to extend tics benefit quickly from the X-Internet. existing plant control systems don’t talk to their inward-facing apps’ capabilities Many mainframe-based apps used by one another, manufacturers struggle to gain to support dynamic collaboration. SAP financial firms are decades old. X-Internet an aggregate view of their capacity and inven- has already partnered with adaptive technologies provide a unique opportunity tory levels. But device interoperability serv- planning pioneer BiosGroup to deliver to rapidly extend these legacy systems to ices from vendors like eMation and Echelon by mid-2002 a set of supply net partners. It’s not surprising that Putnam will simplify the linkage between proprietary management services that exploit Lovell Securities uses Grand Central’s production equipment and enterprise apps. agent-based technology. partner integration services to connect more Standards like the Open Services Gateway • Private hub platforms like Dell’s use X- tightly with its numerous mutual fund Initiative (OSGI) will make it easier to inter- Internet standards such as UDDI. Large clients. Digital media pioneer SONICblue is connect diverse operational assets across firms like BMW and Dell Computer have using Bowstreet’s services to extend its multiple industrial facilities. shunned public e-marketplaces like legacy apps to its multiple distribution Covisint and E2open and are instead channel partners. More freight haulers Adaptive Planning Services building private hubs to improve collab- will follow J.B. Hunt Transport Services’ Adaptive planning services will let partners oration with their existing partners. But lead in using object-monitoring services like be more responsive to one another. X-Internet private hubs will become a source for ObjectFX’s as they look to optimize the technologies will allow firms to cope better new partners in the next two years, as capacity use of their truck fleet. with disruptive changes. In particular, busi- platform vendors like Model N begin 2004 to 2006: Deregulation and competition nesses will be able to increase their decision- embedding UDDI-based discovery serv- spur utilities, telecom, and auto. As the U.S. making velocity by tapping exception man- ices into their offering. When Dun & energy market becomes deregulated, utilities agement services. Long-term planning apps Bradstreet’s business service warns Dell will try to optimize their ROI – by tapping like i2’s that rely on forecasts and batch-mode that its capacitor vendor’s financial via- object-tagging and object-monitoring services processing won’t cut it in the X-Internet era, bility is declining rapidly, Dell will use its from vendors like Echelon and iVita. As the when environmental data will be gathered private UDDI registry to rapidly identify auto giants’ battleground shifts to the emerg- and acted on in real time. Event monitoring a precertified alternate supplier. ing markets of China and India, Nissan’s and exception handling services from ven- • Service providers like GE Cisco build up Indian manufacturing engineers will exploit dors like Viewlocity and Verilytics will allow shop-floor device interoperability. Over Net-resident semantic translation services like firms respond to glitches in their value chains the next five years, device interoperabil- Verticalnet’s to communicate local shop-floor in a split second. Adaptive planning services ity service providers will use IP networks constraints to their R&D peers in Japan. will be built upon intelligent agent technology. to help manufacturers close the informa- 2007 and Beyond: CPG, heavy industries, Once they’re connected to thousands of tion loop between their shop floor and and construction connect. It will take years partners and billions of devices, decision- the top floor. Emerging standards like for heavy equipment makers and consumer

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goods firms to Net-enable most of the physi- The X-Internet Will Re-invent The X-Internet will favor decentralized cal assets in their value chains. But by 2006, Supply Networks Management decision-making structures. In the X-Internet large retailers like Wal-Mart Stores will com- As firms embrace dynamic collaboration over era, environmental data gathered from bil- pel CPG suppliers like Unilever to use Net-res- the next five years, they will need tools that lions of objects will need to be processed and ident asset-tracking services like Auto-ID to let them work flexibly across corporate acted on quickly – a task at which software help them with store-level replenishment at boundaries. Most vendors, stymied by pro- agents excel. To perform at their best, these the SKU level. As cement supplier Cemex prietary interfaces and centralized data archi- agents need wide latitude, but firms with a gains more market share by shrewdly exploit- tectures, won’t be able to fulfill these needs. hierarchical, command-and-control structure ing its Net-aware assets to deliver 99 percent Net-resident X-Internet service providers will will be reluctant to delegate decision-making service levels, rivals Lafarge and Holcim will fill the gap and grow in influence. By 2007, authority. Decentralized firms, on the other begin to monitor their own trucks’ perform- ance remotely using Networkcar’s services. 4 How To Get Started with Finance The X-Internet The X-Internet presents all companies with Logistics 3 opportunity. For certain industries, though, Health care Utilities Media

t Telecom this is a make-or-break chance to streamline fi manually intensive processes, tame complicated supply chains, and meet growing Aerospace 2 High-tech customer requirements. For example, the Product Food and Petro chemicals X-Internet gives notoriously conservative agriculture Automotive Construction insurance companies a golden opportunity to Paper overhaul their inefficient processes, like 1 Industrial equipment claims processing, which today involves mul- Heavy industries tiple human handoffs and sloppily coordi- Consumer goods nated workflows. The X-Internet will enable 0 firms to pass the whole context of a claim 04123 quickly and easily from one stage to another. Industry readiness For utilities, the X-Internet offers an oppor- tunity to bind customers by helping them First wave Second wave Third wave become more efficient. Smart utilities like of adoption of adoption of adoption (2001-2003) (2004-2006) (2007+) Reliant Energy will increase switching costs for their commercial customers by offering Figure 2 Industry adoption of the X-Internet will occur in phases. them Net-resident services that let them react to real-time shifts in energy prices. enterprise app vendors that have failed to hand, will be more successful – willingly As for retailers, the X-Internet technologies evolve will be relegated to a supporting role. delegating their monitoring and optimization allow them to provide their suppliers The X-Internet will also give a big boost to activities to software agents. something they have been wanting for years: the budding field of distributed computing. Expect the X-Internet to collapse the live sales data. Twenty-four hours after the Adaptive planning services that enable split- end-to-end replenishment cycles in many September 11, 2001 terrorist attacks, second decision-making will use agent tech- industries, particularly the consumer Wal-M-art knew that its stores had sold nology to quickly analyze and act upon data packaged goods (CPG) sector. By 2008, 116,000 American flags. It could report such gleaned from partners’ apps. These perform scan-based trading retailers like Wal-Mart data quickly because of its heavy investment best when deployed across multiple servers will force CPG suppliers to own store-level in Net-enabled point-of-sale systems that let (or client devices), rather than executed on a inventory until it’s scanned at the checkout. it – and its suppliers – track daily store-level single server. Instead of investing in super- To protect their own margins, smart data. But Wal-Mart’s rivals’ store-level data is computers to meet their agents’ huge pro- suppliers like Procter & Gamble will upgrade at best 12 days old by the time their suppliers cessing requirements, partners will tap the their supply nets, tapping X-Internet get it. To catch up, they must stop engaging latent CPU power in their networks. As services like agent software and Auto-ID’s suppliers in protracted forecasting exercises; demand booms for distributed computing item-level tracking. The result? Procter & instead, they should upgrade their POS to systems from players like Entropia and Gamble will shrink the end-to-end Net-based systems like IBM SurePos 700 and DataSynapse, these vendors’ market caps will replenishment cycle for Tide from four feed suppliers with live sales data. soar - and new money will flood their sector. months today to less than a day. I

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