Background:
Based in Hunzenschwil (AG), Switzerland, Agro AG was founded 50 years ago and employs some 60 people. Agro markets innovative, high-quality electrical products all over the world. In Switzerland Agro occupies a leading market position . Recently Agro became a subsidiary company of the German company KAISER GmbH & Co. KG, Schalksmühle, which plays a leading role on the German market as manufacturer of electrical installations.

Agro supplies some 2,500 customers. Its products are positioned in the premium quality segments, although maximum availability of products remains of particular importance. Most of the production is outsourced. In a few cases products are sold ready-assembled, a quick and easy activity to perform.

The corporate goal is in achieving total customer satisfaction by way of specialist expertise and innovative drive. Agro’s employees identify with an obligation to provide customers at all times with outstanding service. Environmental protection is also firmly anchored in its guiding principles.


Industry sector, product and target group:
Agro manufactures mainly standardised, self-explanatory products. Discount structures with regard to pricing are relatively simple. The products and their areas of application are generally industry-typical, frequently with strandard characteristics. Thus Agro’s products lend themselves well to distribution via an e-shop.

Agro’s product range is organised in two core segments, distinguished by the target sector to which they are directed, although they overlap to a certain degree. Some products are sold in both target sectors.

Machine, Apparatus and Plant Construction
The core range for machine, apparatus and plant construction comprises cable connections and insertions; the solution range is completed by protective cable conduits, energy-conducting chains and accessories. These products are used in laying, inserting and protecting cables in machines, plants and apparatus. The entire range of industrial products is distributed via a well developed network of agencies in other countries and distributors throughout the world.

Electrical installations
Agro develops products which enable fitters to fit products efficiently and expertly in electrical building shells and extend electrical systems. The heart of the Agro range is its concealed installation materials; the range is completed by its surface-mounted installation materials, installation pipes and conduits, earthing materials, as well as cable glands and insertions. With these installation products Agro occupies the leading position in the upper price segment of the Swiss electrical installation market. Sales are made via the electrical wholesale trade.

In both markets, Agro’s competition strategy is based on two central factors: firstly the product quality should fully meet customer requirements; secondly, outstandingly high ability to supply should ensure that customer orders are always fulfilled quickly.


Corporate vision:
The company’s vision is orientated to customer needs. Based of their queries and problems, customers are provided added value for their own products and services, if need be in consultation with their own development department. The company vision culminated at the end of 2001 in the decision to launch Agro’s own E-Shop solution.

The corporate vision encompasses the following aspects:

• Decisive customer orientation as a basic approach.
• The Agro “Quality Connection” stands in equal measure for high-quality products (electrical connection components) and for high-quality customer relationships.
• Organisation is simple and thrives on teamwork and open communication.
• Agro employees think and act on their own initiative.

Importance of e-business in the corporate strategy:
Agro is still in the initial stages of introducing E-Business solutions. The E-Shop described in this case study was the first large-scale step which Agro sought to use primarily to gain initial experience. In future, it is hoped that E-Business will support competitive strategy and enable innovative business relationships between Agro and its customers. Furthermore, E-Business solutions should play a role in making all inter-company processes more efficient. This is centred mainly on developing electronic network infrastructure with major customers.

Before the introduction of the E-Shop, Agro used the internet chiefly for acquiring information and research into alternative suppliers, prices and technical data.


Partners:

ERP provider
Abacus Research AG, based in Sankt Gallen, has been developing successful standard business adminstration software for 18 years and, under the same name, provides ERP solutions for SMEs. The product range is used and recommended by well-known Swiss trust companies and includes the basic modules invoicing, order processing, general accounting, accounts payable, accounts receivable, asset and salary accounting, as well as the advanced modules of production engineering (PPS), calculation of service and project charges as well as operational data capture.

Abacus offers an E-Commerce solution which is reasonably priced and simple to administrate. The AbaShop is fully integrated into the Abacus ERP system. The server platform needed to host the E-Shop is provided by Abacus for a monthly fee.

Internet agency
Based on the good experiences gained in other IT projects, WData AG, IT partner of many years’ standing was selected for involvement in the E-Shop realisation project. As part of a preliminary project, the IT consultants at WData initially analysed the existing business processes and product catalogues and authored detailed specifications for the E-Shop. Agro-specific requirements, such as the web design, were likewise realised by WData. At a later stage, WData performed as a communication hub in liaising with software provider Abacus.

Partner selection
A business relationship between WData and Abacus has existed for some ten years. At that time Agro was conducting an evaluation of business software providers and picked WData and its Abacus solution. WData is Abacus’ sales partner.

Initial talks with Abacus did not bode well with regard to the evaluation of a suitable E-Shop solution. At that point in time (2001) Abacus was still unable to fulfil Agro’s requirements in processing variable parameter groups. Agro then set about realising the E-Shop with another software partner. This project, however, had to be abandoned after six months because the interfaces for publication of customer and product data could not be realised in a satisfactory way. In the end the E-Shop was implemented with WData and Abacus, since Abacus had in the meantime succeeded in adding the required functionality to its standard solution.

In this chapter the integrated Agro E-Shop will be described from the perspectives of business, process and application, with the integration aspects in the forefront. Fig. 3.1 shows a general outline of integration of the shop solution and the ERP system.

Fig. 3.1: A general outline of the integration solution

Business perspective:
Prior to the introduction of the integrated E-Shop, Agro customers made their orders in writing or by telephone. Ordering by e-mail had also been possible for several years but this facility was hardly used. Agro sought to provide an additional ordering facility by introducing an E-Shop.

The prime motivation behind the establishment of the E-Shop was image enhancement for the company. Introduction of the E-Shop was also promoted by the staff of Agro. From the start, the largely youthful workforce was convinced by the project as they had received frequent enquiries from customers asking about an E-Shop. Thus it could be assumed that there was indeed a real customer demand.

The advantage for customers lies in the permanently available information and ordering facility, even outside Agro’s business hours. Electrical wholesalers also have the opportunity to incorporate a hyperlink in their own E-Shop directly to Agro products in the Agro shop. An HTML page is generated that contains neither frames nor Agro logos but shows instead the logo of the electrical wholesaler.

The E-Shop mainly contains standard products, accounting for one third of the entire Agro range. Products are sorted by product family (e.g. cable glands, installation materials) and by product group.

From its inception, it had been planned to integrate the shop solution into the existing Abacus order capture system in order to optimise the processing workflow for incoming online orders and to keep the data upkeep workload to a minimum. The shop lends itself especially to smaller customers because processing costs preponderate in the case of orders of small transaction value. In addition, experience was to be gathered through the shop’s integration for future use in realising company-wide process integration with important customers. It is planned to link important customers directly to the electronic ordering system.

The Abacus shop solution offers further advantages. Firstly, integration into the Abacus ERP system eliminates the need for manual input of incoming ordering data. Thus sources of error and batch transfer runs are eliminated. Secondly, the catalogue is generated and updated from the master product data in the ERP database. As a result data need only be updated in the ERP database. Thirdly, the Abacus shop is hosted by Abacus. This means no additional investments in hardware are required for the solution as Abacus handles operation and maintenance of the shop server. Abacus also runs a server farm with modern security technologies so that breakdown times are kept to a minimum.


Process view:
For customers the ordering process proceeds as in almost any E-Shop. Prior to their first visit, however, customers must apply by telephone for access to the shop as a customer; normally an E-Shop allows customers to register directly and change their personal data there, too. This functionality however is not used by Agro.

Registered customers have access to the full functionality of the E-Shop. Anonymous visitors can only see information about the company and product lines and can order or download print-version catalogues.

Having logged in, customers and customer groups are presented with the variegated price and discount structures definable in the Abacus order processing system. Thus customers are certain to find the purchase prices in the Agro shop consistent with what they are accustomed to.
Various search criteria are possible when searching for a product. Besides full text search, the user can enter an Agro number or the electrical material number (Swiss standard) as the search term. The search criteria take into account the varying search habits of electrical wholesalers on the one hand and those of machine-engineering companies on the other.

Current stock levels are not displayed in the E-Shop. Tracing and tracking is not possible either. These functions are superfluous at Agro, because customers normally receive their goods one day after they place their order.

Internal order processing workflows at Agro remained almost unchanged after introduction of the E-Shop, which merely affects order capture. As they are transferred electronically, orders taken in the shop need not be input manually into the ERP system.


Application view:
As shown in Fig. 3.1., the Abacus ERP system forms the basis for the Agro E-Shop solution. The system is supplemented by an E-Shop server, AbacusCity, hosted at Abacus. Communication between the actual ERP system and the shop server occurs via the Java client AbaShop. AbaShop is a fully integrated E-Business software module which complements the basic ERP system module. The E-Shop module is run on the same fat clients (PCs) as the basic module, meaning that additional hardware is no longer necessary

The central element of any E-Shop is its product catalogue. Agro’s is generated from the master product data saved in the ERP database (cf. Fig. 12.2). The E-Shop module generates the catalogue by reading the product data units intended for the product catalogue from the master product data. The data sets are gathered into files, which in turn are converted into XML data and compressed. The E-Shop module sends the XML files – preferably encrypted – to the E-Shop server via the internet where they are reconverted into a proprietary data format and saved in a database. Customer data is transferred to the E-Shop server in the same way.

The E-Shop server uses the same data format as the basic ERP system. Basically, the solution consists of two identical business software solutions. The data necessary for the Agro shop are mirrored on the Abacus server.

Fig. 3.2: A diagram of functions and data flows

The ERP system logs every change in master data relevant to the shop. At preset intervals or on manual request the E-Shop module reads off the mutation protocol and transfers the mutated data units as described above to the shop server. In this way, the data mirrored on the shop server is constantly updated. This procedure is called replication, because in the opposite direction, customer data changed on the server can be copied to the ERP database. At Agro, no customer data from the shop is transferred to the ERP system because customers in the Agro shop are not permitted to make changes to their data.

The E-Shop server carries out the tasks of publishing catalogue data in the web and collecting orders. It saves the incoming order data in its database. As soon as an electronic order is received, the E-Shop server reports it by sending an e-mail to an Agro employee (cf. Fig.3.2).

Agro employees call up electronically-received orders periodically or as the need arises. All orders in the server database are then converted into a proprietary XML data format, sent from the shop server to the E-Shop module and saved temporarily by the latter in the ERP database. These temporary orders in the ERP database are inspected one by one and sorted. They are then converted into another table form and input by the E-Shop module as orders into the basic ERP module. Manual intervention is also required here. Order confirmations are generated in the course of order processing by the ERP system and forwarded by post to the customer. The ERP system also takes over further processing of the order up to dispatch and invoicing.

The introduction of an e-shop as an additional sales channel caused no significant change to workflows either in internal order processing or interaction with customers. WData analysed the internal processes prior to the shop’s introduction through a preliminary study which revealed that a redesign of the existing processes was not necessary.

After analysing business processes and the existing product catalogue, Agro and Wdata drew up specifications for the E-Shop solution. In the course of completing this task it became clear that a configurable standard solution would make sense. The solution proved to have specific requirements with regard to catalogue design, access system and the web design; WData was to be able to take on the latter.

The preliminary study also revealed that the catalogue data would first have to be cleaned so that product groups could be formed. The classification of products hitherto was not suitable for display in the internet because single product groups contained several hundred products. Therefore a new product classification system with 96 product groups was devised.

Classification of a product into a product group is done in the master product data where it is allocated to a particular position in a tree structure. This allocation determines where the product will appear in the web catalogue. The classification is saved in two database tables which provide information on classification and the catalogue’s structure.

Each product group is described in greater detail by a number of parameters (e.g. weight, dimensions, screw thread size), which can assume different values for each product. As not all the 96 product groups had the same number of parameters or they referred to different properties, a limit of 10 was set for the number of parameters. Parameter groups were also denoted according to the product group they referred to and saved in a separate file. This measure allows correct interpretation of the corresponding parameter value and simplifies file structure considerably.

This solution can be elucidated by a simple example:

• In the case of Product Group 1 the values entered in the data table refer to: weight, dimensions, screw thread size,…
• In the case of Product Group 2 the table values refer to: inner diameter, maximum permitted pressure, delivery length, ....

The format of the images was also changed. Different sizes of image were used previously in the catalogues which had a negative effect on file sizes and the space required by illustrations. The use of size-optimised JPEG format was Therefore established as standard.

Maintenance:
As already mentioned, the AbacusCity shop server is run and maintained by Abacus, allowing Agro to concentrate on updating data in the ERP system and on simple maintenance work. Updates to the ERP system (normally carried out once a year) and day-to-day software updates are carried out by WData.


Costs and benefits:
Introduction of the Agro shop incurred one-off costs of CHF 45,000 for software (E-Shop module), consulting and training, shop design and modification of shop content. There were no costs for hardware. The price of the E-Shop module is based on the value of the ERP software. This value in turn is determined by the modules used and user numbers. Add-ons to the shop software which Agro needed were not charged. The IT partners were interested in developing generic (standard) modules which they could then offer to other customers too.

The day-to-day costs of the solution are incurred chiefly through use of the E-Shop server. The basic fee for use of the shop and for hosting it is CHF 209 per month. This amount covers inclusion of up to 10,000 products in the shop. In addition, there are fees to the order of CHF 75 for the add-ons used by Agro: Price and Discount Structure, Expert Mode, Design Customising, and Foreign Language.

Agro sees the primary benefit of its shop in image enhancement. Customers who use the shop are satisfied with it. Of the 20,000 to 30,000 orders a year, 300 to 500 are currently processed via the shop. Agro can post a reduction in processing costs for these orders thanks to extensive integration of AbaShop in the Abacus business software.

Other benefits resulted from the preparatory, systemising activities prior to introduction of the shop. These included:

• Product group formation
  The previous catalogue had to be purged to reduce instances of duplicated data and inconsistencies. Hitherto, locating some products was neither easy nor application-orientated, making them difficult for customers to find.
• Defining required parameters
  Because systemisation of parameters was essential, it was necessary to focus on the most important parameters. As a result the effort required for data capture and updates has been reduced.
• Catalogue structure logic
  While there are different printed Agro catalogues for each target sector (electrical fitters, mechanical engineering, apparatus and plants) only one online catalogue should be created. As a result, the company succeeded in ensuring that overlaps between the printed catalogues did not occur in the online catalogue. The formation of the 96 product groups led to a clear catalogue structure.

Special features of the solution:
The introduction of an E-Shop was a successful launch into E-Commerce. Four factors contributed significantly to this success:

• Full integration of the E-Shop module into the remaining business software
• Use of the Abacus E-Shop server (no proprietary hardware required, etc.)
• Support of the project by IT partners of many years’ standing
• A team of employees whose members were convinced of the project’s value.

The solution is based exclusively on standard modules. Conceived as a standard E-Shop, AbaShop still allows individualised design variations to be incorporated into a website. The solution also remains release-capable even after tailored modifications; as a result high follow-up costs are avoided. Another factor that proved to have a positive effect on the cost structure was Abacus’ favourably-priced offer of the E-Commerce solution as a marketing measure. Abacus added E-Business functionality to its ERP solution aimed at providing an enhanced benefit to customers and interested parties.


Lessons learned:
In the end, the initial mistaken choice of an alternative shop provider led to the discovery that the wrong partner with the wrong approach can never achieve the desired objective. Above all, the relatively long time it took to familiarise new providers with the business processes of their customers and with the specific workings of an industry sector was problematic.

Conversely, good experience was gained with the IT consultants from Abacus and WData who knew Agro very well on the basis of many years of partnership and were therefore able to create a suitable solution.

Overall, the project was realised very successfully. Agro is already planning steps in the direction of a direct B2B integration with major customers. The main problem here is seen as being in communicating between differing ERP systems. Solutions which offer a large number of customised interfaces are not desired; Agro hopes here to find a standardised solution which allows connection to a variety of customer systems.