HD Supply Facilities Maintenance, a unit of Atlanta-based HD Supply Inc., is one of the largest wholesale providers...
of maintenance and repair products in the country.
In the distribution business, the network is everything. Thousands of transactions cross HD Supply Facilities Maintenance's portals each day, many in electronic format.
In 2007, HD Supply, which was owned by The Home Depot Inc., learned that it was being sold to private investors. HD Supply Facilities Maintenance had six short months to get off Home Depot's legacy systems. At stake were 225 suppliers and 80 national customers.
Some of HD Supply Facilities Maintenance's national business accounts like to order using their own procurement applications rather than through the company website, said Mark Linder, director of e-business for HD Supply Facilities Maintenance . "They need real-time connectivity to get the full benefit of those applications. They want to submit purchase orders and get invoices back electronically. They also want to have real-time price and availability checks," Linder said.
Many of HD Supply Facilities Maintenance's vendors used electronic data interchange (EDI) infrastructure, the record of choice for electronic business transactions, said Deron Young, senior manager of application development, HD Supply Facilities Maintenance.
Others wanted to do EDI but were not there yet, still requiring expensive manual labor from HD Supply Facilities Maintenance to process the transactions. Then there were the new customers the newly spun-off company hoped to add, the additional business from existing customers to consider and the prospect of growing through acquisitions.
No penalty for growth
Some heavy-duty due diligence later, HD Supply Facilities Maintenance opted for a known quantity: on-demand data integrator Hubspan Inc., which it had used to connect to its business alliance partners.
Unlike the other vendors grilled, Hubspan said, "'Hey, let us help you contact all these vendors, and test the systems to meet the deadline you're under,'" Young recounted. "That really carried a lot of weight."
Moreover, Hubspan did not charge by the kilocharacter for transactions, a big consideration for a company starting from scratch with its own platform and hoping to grow. There is no easy way to forecast how big the transaction stream is going to be, Young said.
Linder summed up: "What it boiled down to was, they didn't penalize us for growth. On the business side, that was probably the biggest factor in our decision."
Like on-demand CRM, only hard
"Hubspan mediates the world of disparities," said Robert Pease, vice president of marketing for the Seattle-based vendor.
No matter what the system is on the sending or receiving side, Hubspan can mediate the flow of information, Pease touted -- and with an on-demand twist. Certainly data integration is not a new challenge for companies. But new technology and delivery models mean that companies can "elevate data integration to the business process level," he said, rather than settling for a one-off connection with customers and suppliers.
For example, when Boeing Co. sends a purchase order, it not only wants a receipt showing that its order was received but it also needs certain information contained in that order returned. For recipients who lack the systems to send the information back to Boeing, Hubspan can extract the data and re-associate it with the receipt, so the record is complete.
"It's the difference between letting the technology drive your business rather your own processes," Pease said.
They want to submit purchase orders and get invoices back electronically. They want to do real-time price and availability checks.
Mark Linder, director of e-business, HD Supply Inc.
On-demand data integration also differs from most business intelligence tools, which give businesses a backward view into the business record -- a view of what happened, Pease says. For many businesses, what did not happen is often the more critical piece of information for a business, he said, citing statistics showing that 25% of business orders fail based on bad data. Someone in the organization may know that data was bad, he said, but communicating that information up the command chain too often falls through the cracks.
Consultant Jeff Kaplan, managing director at THINKstrategies Inc. in Wellesley, Mass., has followed the shift to on-demand computing keenly. He said vendors such as Hubspan, Informatica Corp. and newcomers Cast Iron Systems Inc. and Boomi Inc. are capitalizing on the same value proposition that has made Software as a Service vendors like Salesforce.com Inc. so compelling.
"Businesses look at the time, the skills, the resources and money it would take to do this stuff, as well as operational requirements and then ask themselves if they need to build their own solution," Kaplan said. For behind-the-firewall or on-premise applications, the answer may well be, of course. But increasingly, a lot of business gets done outside the four walls of the company and, more important, outside the firewall.
"Hubspan has not only figured out how to integrate applications on premise but also across multiple entities, so enterprises can transfer data across their multiple divisions or with partners in a reliable way," Kaplan said. "It gives a whole new meaning to the old word, extranet."
Vendor as business partner
Hubspan's Pease agreed that on-demand data integration, like on-demand customer relationship management (CRM) products, is a disruptive technology. Like CRM, the software is expensive.
The difference, Pease said, is data integration is hard. And it's not a "do once and that's it" event.
"A lot of our job is change management, because all it takes is a database manager to change a data map or upgrade to the latest version of SAP to break a connection," Pease said.
Businesses may decide they need to invest in their own data integration platform, but in that case, Pease ventured, they've also just decided that data integration is a core competency.
For HD Supply Facilities Maintenance, going with Hubspan not only got the job done under a tight deadline, but it also freed up IT staff to work on stuff other than herding data, Young said. He said Hubspan not only keeps the information gateways open with suppliers and customers, but it also acts as a filter, cleaning up data and putting it in the proper format up front.
As more customers invest in spending management applications to drive down the total cost of procurement and make the move to EDI, an on-demand data integration tool that can get that customers on board electronically in 30 days or less is a big selling point.
Another plus, Linder said: Every A-list Hubspan customer is that much closer to becoming an HD Supply Facilities Maintenance customer because everyone is on the same network. The network is everything.
Let us know what you think about the story; email Linda Tucci, Senior News Writer.