By Duncan MacRae
Maintaining a network of customers, partners and suppliers brings with it an equal amount of benefits and challenges. Duncan MacRae talks to the end-users, vendors and integrators spearheading the adoption of extended enterprise thinking throughout the Middle East market.
The extended enterprise term is one that many people in the IT business seem to have trouble defining. If CIOs do not fully understand its meaning, then they are going to have difficulty grasping how it could benefit them - and there are plenty of benefits to be had.
Extended enterprise is the concept that a company is made up not just of its employees, its board members, and executives, but also its business partners, its suppliers and, last but not least, its customers.
With so many different groups involved it is important to integrate and consolidate business resources - both humans and systems - for improved management and operations within a global competitive environment.
When it comes to running a business, bringing more people into the picture can obviously be of great benefit but the problems that a network of working relationships brings can prove to be too much for some.
Companies are often put off expanding their enterprise, to their own detriment, as the rest of the business world embraces the concept and forges ahead.
This is where the IT department can step in to steady the ship and bring everyone together to work in harmony. Creating an IT environment that embraces the extended enterprise - incorporating partners, suppliers, customers and even employees - can revolutionise a business, but it is never a straightforward task.
Your customers and partners need to know about your latest products or services as soon as they're available. Your board and CEO need to have the latest financial information at their fingertips in order to make appropriate decisions about the company's future. There is so much to consider.
There are many IT solutions designed to help business relationships run that much smoother though, including customer relationship management, partner relationship management, supply chain management, enterprise application integration, e-procurement, collaborative commerce and business intelligence. With e-procurement, for example, buyers can search electronic catalogues to find items they require, place requisitions, route for approval and send to suppliers for fulfilment.
One provider of such a service, Tejari, says now is the time for companies in the Middle East to begin integrating with the people they do business with or lose out.
"Right now Dubai has got a lot of competition coming in," explains Hani Obeid, director of consulting services at Tejari. "Many countries in the GCC are signing free trade agreements, all about transparency.
Companies are now moving towards doing more with less and this is where the extended enterprise comes into perspective."
The benefits range from increased market reach, capitalising on key experts in the field of procurement, tapping into technology at a very minimal to no cost, and increasing that knowledge that Tejari and others that provide extended enterprise services to organisations.
"You really need organised and set service level agreements. I would never ask an organisation to move into an extended enterprise relationship without really agreeing on why they're getting into it and knowing what they're looking to get out of an extended enterprise.
According to Obeid, such agreements must have certain key performance indicators (KPIs) in order for all parties involved to make sure they are all getting the benefits they are looking for.
"For example, if you're looking at a contact centre in an extended enterprise you need to know certain response times for calls, if you've resolved the calls or not," says Obeid.
"If you're looking at procurement, can you manage my suppliers for me? Can you educate them and train them to meet my e-procurement needs? So I think one of the biggest challenges is as quickly as we should move to an extended enterprise, do we fully understand what our issues are, what our challenges are and sit together with our partner to put together and develop a framework for cooperation."
One company reaping the many benefits of the extended enterprise is Dubai Ports Authority, part of Dubai World, which has been making the most of Tejari's eProcurement service. It is one of the world's leading ports in the implementation of advanced computer systems.
A prime objective is improving service in advance of customer demand. The port, therefore, needs the flexibility to adapt software to specific customer requirements and the expertise to create packages in an ongoing program to develop and keep abreast of advances in electronic data interchange. Krishna Kumar, support and contracts manager at Dubai Ports' department of procurement and contracts, cites the ability to channel overall spend, have more control and get better value for money as the primary benefits they have seen.
Kumar explains: "We're able to get better deals from the market as well as making sure we provide the right quality within the right timeframe that the end user has asked for."
As far as problems are concerned, he says there are none, and it should only be looked at in a positive manner.
"We see it as an advantage because we're leveraging technology to its best," explains Kumar. "We are providing an online requisition system and an online catalogue access system to the market so the end user can pick up the right product that he or she wants, rather than giving a vague description and allowing the procurement to imagine what the requirement could be. It may end up being the wrong item or not what they had in mind.
"Transparency is very important. If I'm an end user asking for an item I would like to know where my requisition stands, at what price it's being bought and when I'm going to get it. If I'm not going to see it transparently online then I would have to phone to find out or wait until I get the goods and think ‘Is that the price I'm going to pay?!'"
Although the company has first-hand experience of enterprise extension and all the benefits that come with it, Kumar can still understand why some companies remain hesitant to make the change.
"There are companies who aren't keen to work with other companies because they are scared of losing control over their own business but I don't think that should be the attitude.
"I think it's only a matter of time before that mindset changes and these companies realign themselves to the market because the marketplace demands that you're technology savvy. I don't think you have a choice.
"Imagine a time when companies had secretaries that had to have shorthand skills. Without that the secretary was not hired. Today, the managers, directors, CIOs and CEOs all correspond themselves through e-mail. The concept of secretary help is more or less gone. Technology is advancing and we have to move with it too. Everyone needs to be involved."
Sage Software, a leading supplier of accounting CRM and business management software, believes that before companies throw themselves at the idea it is essential that they first understand their own needs.
First of all you need to make sure you don't extend your enterprise for technology's sake," says Marc Van Der Ven, Sage managing director. "Whatever you're putting in place has to have a proper purpose so that you're not overloading people with information and giving them all kinds of access to things that they shouldn't have access to.
"Security is an element you need to be careful of. When you give external users access to information you need to make sure you give them the right kind of access. You need to have proper internet connections whenever you're dealing with partners and suppliers and you need to decide what kind of information you really want to share.
"If you spend too much time setting up web services that integrate but don't really add much value then you're wasting your time," he adds.
Symantec, a major security solutions provider, knows all too well about the IT security issues involved. "You have your employees, your partners, suppliers and customers - all part of one large network," says Bulent Teksoz, senior systems engineer at Symantec MENA. "As a company, you have to make sure all parties are connected securely and operate in confidence," he adds.
"Unfortunately, this challenge is tougher than ever as a result of shifting threat landscape and evolving network perimeters. We believe what makes the concept of extended enterprise work in the Middle East is confidence. And confidence comes only when all those in the connected world believe that their information is protected, their interactions are secure, and the risk of harm is minimal," Teksoz adds.
Symantec believes that protecting information and securing interactions within an extended enterprise takes more than bolt-on security. It will take integrated products and services that provide a holistic view into an organisation's security posture, according to Teksoz. "It will also take solutions that identify risks early so that steps can be taken to mitigate them and prevent an attack. And it will entail enabling customers to manage their security events no matter what products they may already have installed," he explains.
Another major security vendor, McAfee, also believes that tightening security will help give companies the reassurance and encouragement they need to get involved in extended enterprise. "From a security point of view, we must make sure that every entity within the extended enterprise is as secure so that we don't get data leakage or security breaches," says McAfee's regional director for the Middle East, Patrick Hayati.
"For example, when you look at a business chain, where two companies spend millions on security and another two don't invest anywhere near the same amount, this presents problems and issues.
"At McAfee we offer Central Management Control where the entire extended enterprise can be managed from one central location. This means that companies can ensure the security is comprehensive and integrated across the whole extended enterprise.
"It is also crucial for companies to inject the right advice - when a supplier and customer are familiar with each other, solutions that the customer is facing are better tailored."
That is really the key to a successful network of working relationships - good advice. As with all aspects of running a good business there is a need for sound understanding, focus and clearly defined goals.
As far as Tejari's Hani Obeid is concerned, education is the vital ingredient. "We heard from the market that we had great technology but we had to get an expert to provide value added services, whether they're integration services or specific procurement services," Obeid explains.
According to Obeid, plenty of countries are still lagging behind in terms of finding extended enterprise as a top priority and that's why, he says, Tejari is an advocate of e-commerce. "We can't do it alone though. We need governments, public sector and other organisations to unite on this front and continually educate all companies on the benefits of e-commerce - be it the transparency, the extended market reach, the proven savings, whether it be in material costs or reductions in sourcing cycles.
"Those are the types of things that we really need to highlight, and also the ease of use. It's not really a difficult transition in terms of using the technology. It's not replacing relationships. I would say that's the biggest fear when people have dealt with other people for a long time. You can still develop and enhance relationships. We're just streamlining the process," he adds.
Sage Software similarly faced the challenge of preaching the benefits of solutions to customers that had never even heard of the solutions.
"Everybody has their own jobs and their own ways of doing things and unless you take people out of their own environment and show them what else can be done they're not never going to know," Van Der Ven says.
"Educating people and getting the message out to people is the best way to help company's understand. Our channel and resellers on the ground make a difference," he adds.
Over the years more and more companies in the region have developed extended enterprises and with vendors continually attempting to educate the unconverted the need for extended enterprise management solutions is sure to grow steadily.
And for companies still considering whether to take that leap of faith into an extended enterprise Dubai Ports' Kumar feels that making the changes sooner rather than later could prove to be a most fruitful decision.
"Extended enterprise management solutions are not cheap but I would say it's not really expensive. It's a good investment and I would say you would get a return on such an investment within two years, or within five years at the latest," he concluded.