With the creation of dairy giant Fonterra, formerly known as GlobalCo, New Zealand has a multibillion-dollar exporter. As with many exporting companies grappling with the demands of the 21st century, Fonterra’s constituent companies have already travelled some way down the e-commerce track. It’s no simple or swift task.
Darren Greenwood looks at how exporters can e-enable their business — either from scratch or by knitting together previously unlinked infrastructures.
There is no shortage of e-commerce advice for the country’s exporters, from sole operators to aspiring Fonterra’s.
Vendors, consultants and the government’s export advice specialists, Trade NZ, which offers an e-enablement assessment service, are all keen to help. Fonterra, for its part, is coy about how it will achieve its IT integration and plan for an internet-centred future, so can’t be relied upon for any guidance.
Trade NZ e-business project leader Arama Kukutai says what matters is not technology for its own sake, but determining what you actually need it for. Consequently, any technology decision by a major firm should involve more than the executive in charge of IT, and management should rope in staff units such as HR and sales for their opinions, as their jobs may be intimately affected by the systems chosen.
A business needs to assess the afford-ability and payback for the project, says Kukutai, including the rate of return and the undesirable option of killing the project should it become too costly.
It needs to assess what the infrastructure is intended to do: will it be used to sell products overseas, simply be brochure-ware, or have to deal with the company’s electronic procurement? Firms must also look at the type of e-commerce systems in their industry, he says, as this varies across industries and what a website needs to offer.
Important to New Zealand, particularly in rural areas, are issues of bandwidth. What kind of loads can the regional phonelines support? Do they have access to Telecom’s fast internet service JetStream, or alternatives such as leased lines, wireless links, satellite hook-ups and the like? “Look at the environment to fit the technology,” Kukutai says.
Classification and language issues need to be tackled. Kiwi English differs slightly to the English spoken in England, the US, India and China, and carefully written language ensures visitors can find the site and understand the services and products available from it. Standardising categorisation saves time and misunderstandings. Trade New Zealand uses a classification system called Kompass and the United Nations UN standard product services classification (UNSPSC).
Auckland IT services company Optimation team leader Jonathan Ackerman says web content needs to be managed to ensure it is timely, correct and fresh, with features to make it “sticky” — interesting enough so people stay on the site and spend.
E-commerce architecture must also allow fine-tuning of services to fit customers and one-to-one marketing, while the work process should remain electronic and be easy to use.
On the technical side
The scalability of the technology matters, Kukutai says, both in determining how big you want the site to be and making it flexible for growth.
Microsoft NZ e-commerce solutions manager Mike Peters adds that electronic trading requires 24-hour, seven-day availability of systems. The openness and extensibility of architecture is important, as change is rapid, and he says using standard web technologies such as XML allows fast adaptation.
Gary Elmes, the Auckland-based business development executive of IBM Global Services, says all the parts that represent architecture — the operating systems, storage, security tools, staff skills and so on — must, when taken together, deliver what is required. For example, 24x7 delivery may impact on other parts of the IT architecture, and the equipment together must fit the design and budgets appropriate for what the company is trying to achieve.
Ackerman says firms need appropriate machines on which to run web servers and business-logic servers, meaning that fail-over hardware is needed along with facilities for disaster recovery. Security infrastructure such as firewall and routers must be bulletproof and include intrusion detection and monitoring. Ackerman also recommends the use of digital certificates to support encryption for e-business transactions.
Exporters need authentication, says Kukutai, to ensure they know whom they are dealing with, that people cannot intrude into the system and firms need certainty that they will get paid by the faraway buyers. In addition, firms need to decide whether to build the system in-house or outsource the work, including whether to use hosted services.
Kukutai recommends smaller firms buy off-the-shelf systems from the major vendors, while larger businesses will usually need a more tailor-made solution.
Ackerman says the service must be viable and firms shouldn’t “do” e-business simply because everyone else is. Valid drivers are needed, such as reducing costs, gaining competitive advantage, improving customer service, finding new revenue streams and improving management.
Things can of course go wrong and Optimation says many e-commerce systems suffer ill-defined requirements, ill-managed requirement changes, poor software development methodology, an unrealistic schedule and poor project management. Other problems include a lack of user involvement, stakeholder involvement, qualified people, tools, poor or no architecture and a lack of measurement and controls.
Optimation preaches The Mentum Way, which claims to offer the best development practices, methodologies and tools. Optimation trades in Australia under the name the Mentum Group.
All good advice if you’re starting from scratch or developing an integrated system, but what if you bring several systems together?
KPMG Consulting managing director Suri Bartlett says the newly merged entity should consider how an e-commerce solution has to be built, looking at the investment made in legacy and ERP systems, and what sort of middleware or integration systems are needed to deliver the solution, together with the impact on the technological infrastructure — for example, networks.
“Plot the route, using an appropriate combination of existing infrastructure and systems, package and component implementation, and specialised custom development,” says Bartlett.
Either starting afresh or merging systems is appropriate depending on the situation. “Building on existing components can limit the ability to provide new functionality to an extent, but leverages investment in system and infrastructure. Building from scratch has the benefits of a ‘blank page’ as far as system design is concerned, but carries the risk of increased investment as well as the uncertainty of not having a benchmark — ie the legacy systems — to match up against,” he says.
Ackerman agrees in looking at where systems overlap or are common. Then you find an architecture and set of technologies that complement or replace existing architecture. “Over time you need to reduce costs. You cannot run four systems. You realign to a set of technologies and merge your systems,” he says.
Microsoft’s Peters adds that a large exporter using web services, XML and UDDI technologies (see J2EE v Microsoft sidebar) could incorporate its business systems directly into one or more e-marketplaces using messaging hubs to distribute and translate the data to the various recipients.
What is Fonterra doing?
J2EE v Microsoft
How we got where we are today
A bit of practical advice