Comergent chases channel efficiency

CEO Jean Kovacs and CTO Bill York talk about partner relationship management

AS ENTERPRISES SEEK to build efficient channels, it seems business intelligence, PRM (partner relationship management), application integration, and Web services are headed for a collision course. Redwood City, Calif.-based Comergent's President and CEO Jean Kovacs and CTO Bill York talked to InfoWorld 's Editor in Chief Michael Vizard, Test Center Director Steve Gillmor, and West Coast News Editor Mark Jones about the company's emerging role at the intersection of this trend.

InfoWorld: What is Comergent's approach to application development?

Kovacs: What we've seen historically is that enterprises are buying software that addresses their internal processes, whether it's manufacturing, managing their suppliers, [or] managing their sales reps. We focus on the external processes -- customers, partners, distributors, [and] channel people. And we have a whole suite of applications that help you [inform], transact, or serve your customers. Our first [job] was [building] Cisco's reseller marketplace, where resellers could come and then order through distributors. And then we went through this phase where [our customers] said, "Forget my channel, I just want to do direct commerce." Yet [regarding] Comergent they said, "I'm going to buy you because eventually when I want to automate my channels, I know you can do that, too." If you look at our pipeline, it seems like more customers now are thinking of channels.

InfoWorld: Are they developing channels or even other distributed processes, like The Choice Hotel, for example?

Kovacs: That's right. The Choice Hotel has a franchise of EconoLodge, Clarion, and Rodeway Inn [hotels], so they have something like 400,000 hotel rooms under management. They wanted a single place where all of their hotels could log in and purchase products, whether it's paper towels, sheets, TVs, [or] mattresses. So their initial thing was, this is a buy-side marketplace. When they went out to all the suppliers, they quickly realized the problem is not on the buy side, because we control the buy side. It's on the sell side; it's getting all these vendors to put information in, having multivendor catalogs. It's collaborative commerce, so they're using us for that.

InfoWorld: There's a handful of these sell-side applications out there, like Calico and Ironside, so what differentiates Comergent?

Kovacs: If you look at most of our competitors, they started as business-to-consumer. So it was, "I want to create an Amazon. I want to take my charge card, go to the Web, and buy a product." We started as total business-to-business. What we saw that's different with businesses was Cisco sold 67 percent of their business through the channel. So we said, "OK, that's not just one to one, that's a reseller going to Cisco, bouncing out to a distributor, getting pricing, placing the order, [and] maybe calling in a service provider." So we started out by doing this whole distributed e-commerce solution.

InfoWorld: One of the biggest trends in the channel is vendors changing their minds on the percentage of direct vs. indirect sales. How does the technology cope with that?

York: The good news about setting up what has come to be called a "reseller marketplace" from the manufacturer's point of view is that it allows you to service both styles. It actually allows you to adjust that mix, because they all are starting at the same anchor site and they're using the same product data, the same guy [who's] selling tools, the same quoting mechanism. It's just guy A, [and] when he sees a quote, it's being pulled by a Web services invocation to a distributor's commerce site to say, "What's this guy's price?" Whereas guy B, who is one of your key VARs, is seeing a price that's coming right out of your SAP system because you have him on record as a direct customer. So once you get people orchestrated around these core sites, these common processes, they can push it either way.

Kovacs: On the manufacturer's side, they want the ability to choose and make decisions. One of their biggest problems in the past was they had no visibility because [resellers were] placing orders through distributors. So we let the resellers go right to the manufacturer, get the product info, and then bounce out to a distributor. It's this distributed processing and we have patent pending on [that] and it's really a form of Web services.

InfoWorld: People tend to say, "I'm a SAP shop," or "I'm going to buy all Oracle." How will Web services make it easier for you guys to show up essentially as a best-of-breed play that plugs in on top of a customer's platform?

York: We have quite a bit of experience [with] how that helps. Whether it's customers like DuPont, Seagate, Cisco, or Maytag, they've all got big back-end investments. They're often heterogeneous. The reason we feel there's a strong value proposition for a separate front-end layer of software to manage all these processes is [that] part of what we can do is hide that complexity. And we do that largely through an integration approach, which I think of as kind of Web services, inside and outside the firewall. So the metaphor I've been providing is, you unpack the Comergent software, the sort of virtual box, and plop it down. There's a wiring harness sticking out the back, with a bunch of plugs labeled things like order status, or place order, or change order, or import product data.

InfoWorld: So as you move forward with integration, you are talking about exposing business processes with handles on them that people can call? And in some ways, the app becomes a kind of business process management tool for this activity?

York: There's a lot of what I consider hype around this idea that applications are sort of going to dissolve into a set of component Web services and then be reformed by IT people who fire up a business process editor [and reform them]. But I think that there's a role for what I call "higher value orchestration" around specific, known business processes. What we're fundamentally bringing to the market is a set of pre-packaged business process.

InfoWorld: So how does the technology cope with the reality of these business processes?

York: It starts with analysis of the business problems. Wherever possible, we want to actually not fall back on how great our architecture is and how you can go in and change the flow in your controller so that it does another page next. But rather, that you do that at a higher level in the domain-specific administrative environment. So an example might be one of the things we call an Adviser. It's basically guided selling to help you do needs analysis on your customer to get them to the right part of your overall solution set to meet those needs. So you start with what I call the "lifestyle" questions, [or] "What are you going to use this for?" All of that is completely in control and no line of code or line of HTML needs to be touched to completely change the flow, the look, the price that comes up at the end.

InfoWorld: Do I have to deploy any software at the partner's site?

York: It depends. For the tight Web services linkages, people obviously, at a minimum, have to at least implement XML messages. We deliver the core platform level of our overall product as a separable module so that they can have a platform to build on just to do the XML parsing, the authentication, the security, and integration.

InfoWorld: So the goal being, at a large company I don't have to go out to 15,000 distributors and deploy software on each one of their sites and then update and manage that?

York: Actually that's a good point. We do that now. We've never been in or wanted to be in the fundamental ASP-like model. We've always [operated under] a software licensing model. But as an adjunct service to our customers who buy our software, we now have a thing called the Comergent Network. And it provides two main values for our customers. One is essentially just a messaging routing hub so they can get over the headaches of every time a trading partners changes the IP address of his server they have a service outage. So we do monitor and guarantee the uptime and we know whom to call if something goes down. The other part is it contains an instance of our hosted solution for trading partners, which will also sell as a module if manufacturers want to host their own reseller storefront or dealer enablement or whatever they want to call it. Well, we'll also run that as a service for them, and what it allows the technologically weaker partners to do is, with nothing more than a Web browser and maybe an Excel spreadsheet, come and upload their product set and their pricing and the number they have in stock. And then from the point of view of a customer who's at the manufacturer's site, these [pricing or stock] requests get sent out as XML transactions. If they're sent out to big boys they go right into their back-end systems and pull the real-time inventory level out. If they're sent to this lower tier, then it goes into this hosted environment and pulls out whatever data they've uploaded, however fresh they're maintaining it, and serves that back.

InfoWorld: There's a lot of talk about the role of portals. What's your perspective?

Kovacs: There are internal portals for your employees and there are external portals for your customers, your partners. We will be rolling out in the next 30 days a new concept of a customer portal and a partner portal, where you can come in and do order management, partner relationship management, or go through a catalog. There seems to be a big wave that's coming out of this whole concept of a portal -- which is not the technology portal, it's the use of applications. Customers who have invested in a horizontal portal technology platform have found it very easy to integrate our application functionality within. And they see the portal as this unified window into these business applications. So if you look at what we call the PRM pyramid, it really is about assisting your partners with the selection of their products, providing lead flow to them. But it all culminates in the order. So leads without the ability to take orders is not that strong of an ability.

InfoWorld: So it's PRM plus business intelligence on top?

Kovacs: Yes. And we believe this is really going to shake up the traditional PRM market space. Gartner has now come out and said they believe PRM is the ability to take orders, too. Unless you have the ability to take orders, just doing leads isn't that valuable. So they've changed the definition.

York: And we have the ability, unlike other PRM vendors, to actually carry that process all the way through to consummation, through consummation, through a multichannel distribution process. So when VARs are willing to buy on behalf of the customer, they can in turn order from the manufacturer and be fulfilled by the distributor.

Kovacs: I think there's going to be a huge shake-up in the PRM market, because I think the classic PRM guys cannot even touch this. They don't have the concept of business transactions.

Copyright © 2002 IDG Communications, Inc.

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