February 27, 2003, 12:00 AM

Serving up the new connectivity

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Among other applications for which retailers might use web services are: integrating loyalty programs among alliance partners; electronic billing, presentment and payment systems shared with trading partners; automated order placement or confirmation with b2b exchanges, such as the WorldWide Retail Exchange; and self-service human resource applications, under which an employee could access an online application for customized data pulls from back-end databases, such as to check health care benefits or 401(k) plans.

Supporting alliances

Web services will also support marketing alliances between different retailers, because the flexibility they provide in integrating web sites makes it easier to maintain a branded presence when linking to another company’s site. “If you’re just using HTML to link between two web sites, you’d have to create a special page to keep the same brand,” says Daniel Sholler, vice president of application development strategies at research and consulting firm Meta Group Inc. But web services make it easier for a company to display on its own branded site information it has integrated or pulled from a partner’s site, he says.

Web services will broadly impact all types of businesses, and another way that will bring their benefits to companies is through enterprise portals that provide access to integrated applications. “Web services make it easy to bring together multiple business objects, using the same business logic in multiple ways, so you can have automated data among different applications and even extend them to handheld devices,” says Don LeClaire, vice president of the Office of the CTO at Computer Associates International, a provider of enterprise software.

“Web services allow companies to take content, or portions of corporate information, and integrate it into a portal environment with other applications into their own custom web page application,” says Christopher Ovens, web services marketing manager for Ottawa-based Cognos Inc., which specializes in business intelligence applications. “The point of web services is to allow application developers in an organization to do whatever makes sense for their companies.”

Ovens offers an example: Web services could enable automated reports of inventory levels to appear on a portal page, where managers could use integrated business intelligence tools to analyze sales data and projections with current inventory levels, production schedules and expected deliveries of goods. “So you can have a complete 360-degree view of inventory and sales all going on in an organization,” he says.

That marks a drastic contrast to the traditional challenges retailers have faced in handling data, which typically lies within three broad areas: headquarters, the supply chain, and in-store. On an annual basis, retailers may be processing billions of transactions, including sales, supplier invoices and employee records, that have to be gathered and compiled from multiple systems-a task that relies on a complex arrangement of computer servers as well as extensive data entry work. “It’s been traditionally hard to get that all to work together,” says Bob DeLaney, director of retail systems technology at Sun Microsystems. “Now with web services, integrating all that is easier.”

For example, H-E-B Grocery Co., a Texas-based chain with 55,000 employees and 300 stores in Texas, Louisiana and Mexico, is developing a web services infrastructure to better integrate applications that contain information related to employees, customers and suppliers. Don Beaver, CIO of H-E-B, says he’s deploying web services technology in Sun’s Open Net Environment platform to provide application integration with the flexibility to accommodate growth. Without the flexibility of web services, integrating those applications could require additional program code-writing and hardware, he says.

Fundamental shift

Web services also hold out promise for a fundamental shift in the way managers and executives have used technology. Instead of fitting their business processes to the technology system built by an IT department, management will have more control over making technology systems suit their preferred business processes. It will also free them from having to rely on IT staffs to access and analyze back-end data.

Oracle Corp. is promoting this route with its recently released portal environment for its Oracle 9i application server. The new package is designed to make it easier for non-technical users to customize portal content and integrate data from multiple applications with self-service interfaces.

As retailers learn to compete in different ways, particularly as they minimize operating costs, web services integration may help them develop new ways of operating that don’t fit today’s conventional definitions of retailing. “With the web services approach, it’s making things considerably more blurry between b2c and b2b,” says Peter Baskin, vice president of store strategy for Retek Inc., a provider of retail store management systems. For example, he says, web services integration will make it easier for retailers to accept special orders for inventory they don’t own in cases where they forward orders to manufacturers for direct-to-consumer deliveries and then account for them as store sales. Outside of web services, such activities would not benefit from automated application-to-application communication, requiring more direct data entry by retailers.

Multi-channel

REI’s Hughes adds that web services will also blur the lines between different selling channels, because it will make it easier for retailers to build network links between online and offline operations. “If we want to have a successful, common user experience across all the channels, that means we need integrated systems,” Hughes says.

REI, which right now is using XML to integrate data between REI.com’s e-commerce platform and the corporate-wide customer relationship management application, is planning to use web services to build more integration between its CRM system and its three selling channels-stores, catalog and web site. That will enable the CRM system to better collect and analyze customer buying behavior in all channels and issue targeted marketing programs to audiences based on buying behavior, Hughes says.

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