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Value-added networks

With the right choice of technology and some process management pointers, you can spend less time maintaining your software and more time maintaining your business relationships.

SOAs with BPM could be the answer to stem the tide of small-to-medium-size business bankruptcies – and give larger companies important choices.

At last, technology has caught up with what businesses have known all along. Your network is not solely about kilo-characters, phone lines, and data transfer protocols. In the truest sense, your network is comprised of significant business relationships.

Along the same lines, networking – in its most profitable reality -- is mostly about enriching those relationships through business transactions that improve your bottom-line success and about collaboration that helps you achieve common goals. Today, you have a choice. You can experience what is commonly called Value Added Networking with or without the actual technology of aVAN.

More than 20 years ago, the first VANs responded to collaborative process needs. Amid a wave of corporate mergers and acquisitions, a customer base growing in sophistication began demanding increasingly complex products and services for evermore decreasing prices. Companies identified their core competencies and outsourced the rest. Up and down the supply chain, electronic connectivity was important, standards were critical, and EDI (Electronic Data Interchange) was law of the land.

VANs came along to standardize connectivity and remove the burden of partner communications management. The "V" in VAN was mostly the pipe, the secure and reliable transfer of files from point to point. VANs opened trading communities that could otherwise have not existed.

Today, electronic exchange, in all its many flavors is in full flower. There are more choices, more technology and more pressures; indeed, life and death pressures for the small-to-medium business (SMB). Half of new SMBs fail within four years, which translates into over one half-million small business bankruptcies each year. For the typical small business, compliance with a single large partner can represent nearly a third of annual revenue. Yet, compliance isn't easy. A study this past February counted at least 100,000 manufacturers, 144,000 retailers and 114,000 wholesalers lacking sufficient IT infrastructure to participate in automated trade along their supply chains.[1] This predicament matters even to the large IT-endowed hubs in the supply chain, for they do not enjoy the full benefits of business process collaboration until their entire trading constellation is onboard.

To meet the collaboration needs of businesses large and small, two design elements tend to set the best solutions apart from the rest. Whether product or service or both, the best choices are built on a service-oriented architecture (SOA) with executable business process management (BPM) at its core. To be a smart shopper for these solutions requires that you look under the hood.

The secret of an SOA is its standard framework into which disparate elements (services) can be plugged to create a composite best-of-breed implementation that is at the same time sophisticated yet low-cost. A real-world analogy may help describe the benefits of such a framework. In 1970, home stereos were pieces of furniture, closer in appearance to a cherished curio cabinet than to the sleek, gadget-laden audio systems we own today. Then a tsunami called the Consumer Electronics Boom swept across the land and increasingly finicky and highly price-conscious consumers began demanding that all sorts of bells and whistles become part of their stereo. No existing stereo manufacturer was an expert at producing all the needed components. Outsourcing was needed.

Now, think of the back of your stereo. All those standard wires fitting snugly into all of those standard connection sockets. Because the framework is plug-and-play, best-of-breed components could be selected to make the perfect system. Competition among component manufacturers drove down prices and reduced time-to-market delivery cycles. Modular audio systems increased feature sophistication for a reduced cost.[2]

If you like, you can visualize an SOA like the back of your stereo. A mix of services with standard interconnection points are plugged into what passes for the framework's standard sockets, and thus a composite application is created. The analogous feature set to those sophisticated audio bells and whistles are system-level qualities that make whatever services are plugged into the SOA safe to run in an enterprise production environment. These are enterprise-quality features like reliability, interoperability, security, scalability and extensibility.

It is highly advisable to drive the applications built on the SOA by BPM techniques. Begin by modeling your business processes, the way your business does business. Break each process into tasks or steps. These tasks become the services in your SOA. By employing BPM, the services retain their relevancy to the enterprise, for they can always be traced to the business process that motivated them.

The language used to model your business processes should be an executable business process modeling language. BPEL and BPML are examples. The reason the executable nature of the language is essential has to do with the typical requirements gap that exists between IT and the business side of the enterprise. Most often, when business analysts create models, what they produce is a picture. When finished, they heave the picture over to IT. IT studies the picture, makes assumptions, and bravely pounds out an implementation, foisting it upon completion back over to the business. Business users stare at it mystified, and carp their disillusionment back to IT. What lies between the two camps is a requirements gap that results from the need to interpret a model originally formed by an entirely different method than its final implementation.

Executable business process modeling languages minimize the requirements gap because the act of modeling is the act of implementation. Using the same language, the business user draws each process flow and IT configures the services that are the steps in that process flow. In this way, IT experiences a decreased labor burden by adding a surprisingly helpful analyst to the project. The business analyst experiences more empowerment by becoming a frontline participant in the implementation.

Selecting which processes will be the focus of your BPM projects can become a project in itself. Start by choosing the processes where automation can deepen and extend the relationship with your most reliable partners, those businesses who most consistently deliver on their promises in an accurate and timely fashion. Identify those key performance indicators (KPIs) useful in signaling whether things are going well and what things are going wrong. Your business process model should incorporate those KPIs, and your solution should monitor them in real time and alert you when things are amiss.

The more comprehensively you analyze your business, the greater improvement opportunities will be uncovered. Financial data integration is an area teeming with possibilities. Examine the processes you have for sales, invoicing, accounts payable and receivable, pricing and returns.[3]

Once you've found an area of focus, time to employ all you've learned about relevant technology. Choose a solution built on an SOA with BPM at its core. After you've found a process and a tool, secure a pilot project. Managing pilot scope is crucial as endorsement for all future work is more easily obtained at the happy conclusion of a successful pilot. With the wonder of an SOA, new successes are often built upon previous ones at decreasing cost.

Over time you will have extended your infrastructure with a new kind of value-added network. One with superior communications, partner management, integration and monitoring that enables business process collaboration and end-to-end process insight throughout your entire trading community, including your SMB partners. The real value in this value-added network is its ability to let you get past connectivity concerns and concentrate on the true networking – enriching those business relationships that help you run a more efficient, agile enterprise.

1 Helen Chan, "The SMB Supply Chain Squeeze," Optimize February 2004.
2 Nathanial Palmer, "High Octane Software," Optimize, August 2003
3 Helen Chan, "The SMB Supply Chain Squeeze," Optimize February 2004.

About the author:
Jeanne Baker is Vice President, Technology, for Sterling Commerce Inc., a subsidiary of SBC Communications and a global provider of business integration solutions. In this role, Baker shapes and articulates the company's product strategy and solutions architecture. Baker joined Sterling Commerce in 1996, and most recently served as Vice President, Solutions Engineering. Prior to that, she held various positions including product strategy director, product development director, software development manager and software developer. Baker is a frequent guest speaker at conferences hosted by Yankee, Gartner, ebizQ, Delphi, Brainstorm and others on the topics of e-business integration, software reliability and business process management. She is chairman of the international nonprofit Business Process Management Initiative (, which promotes and develops the use of automated business process management by establishing universal standards for process design, deployment, execution, maintenance and optimization.

About Sterling Commerce:
Sterling Commerce, a wholly owned subsidiary of SBC Communications Inc. (NYSE:SBC), is one of the worldbs largest providers of business integration solutions. For Global 5000 companies and their customers, suppliers and partners, Sterling Commerce software and services help maximize business performance and improve business metrics through integration of applications, external partner systems and people both within and between companies. With more than 29,000 customers in a vast range of industries, Sterling Commerce is a recognized leader in business integration.

This was last published in November 2004

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