When B2B exchanges threatened to obscure Kimberly-Clark Heathcare's products in a sea of competitors, the company decided it was time to upgrade KCHealthcare.com

February 12, 2002
URL:http://www.drdobbs.com/web-development/building-an-online-exchange/184413225

Over the past three years, new Web-based business models in the medical industry have caused a domino effect, touching every organization from distributor to manufacturer. An upsurge of digital exchanges promised to make product purchasing more efficient by providing an alternate means for pairing products with customers.

When the exchanges started living up to their promises, one of the industry's largest business-to-business health care manufacturers, Kimberly-Clark (KC), resolved to take advantage of the new Web marketplaces. Kimberly-Clark Healthcare is part of the business-to-business sector of KC, a $14 billion company. Healthcare makes up $1 billion in sales, 90 percent of which comes from distributors. KC Healthcare has significant market share in the products it sells—95 percent in sterilization wrap, for example.

Rob Hoctor, director of e-business for the healthcare sector of Kimberly-Clark explains that, as public exchanges formed, KC felt pressure to join them. "All the research we looked into shows that people buy brands on the Web," says Hoctor. "We wanted a way to control our branding, and we wanted a system to be able to present all of this rich content we have." The time had come for KC Healthcare to tie its back-end catalog data to a global site. "Everybody started to realize the basis for everything is an electronic product catalog," added Hoctor.

Build Your Own

In healthcare, most products are sold through a contract with a group purchasing organization (GPO). The GPO combines the buying power of its members and the contract for given products, and charges the manufacturer a fee for the service. When GPOs began to demand that companies conduct business via online exchanges, Kimberly-Clark's e-business sector had no choice but to integrate this new business model into its plans.

Rather than compete in an uncertain exchange, KC decided to create a new site at www.kchealthcare.com (see Figure 1) to help purchasers find and buy their products. "We wanted users to be able to punch out of the exchange site onto ours—right to the catalog information they're looking at," says Hoctor. Once on the KC site, business customers could "decide whether to buy [the product] based on the rich content on our site, and then add it right to the shopping cart." The shopping cart then takes buyers right back to the original exchange. Kimberly-Clark Healthcare has filed the paperwork for a Business Methods patent on this process.

FIGURE 1: KCHealthcare.com gives hospitals an easy way to order new supplies.

Conservative in business, KC opted to spend a year researching the subject, as the dot-com business models kept changing around them. KC spent that year defining its goals and learning about the various products it would need to integrate. The e-business group joined an internal committee of twelve corporate directors from MIS and other sectors. The committee agreed that it first wanted to consolidate the company's myriad data stores of product information, and to jettison the inefficiency of batch processing changes to each catalog.

Hoctor wouldn't comment on which vendors the company considered, but notes that the committee initially made a hasty purchase. When the KC Healthcare e-business group assessed the viability of a Toronto-based catalog company, the committee took this interest as a cue to buy. "They didn't even tell us and went out and bought that software," says Hoctor.

It turned out that Requisite, the chosen vendor, didn't fit the bill for the healthcare project. Requisite's catalog software, now used in SAP procurement software, was originally designed as a procurement tool and didn't allow for rich branding, or for document attachments at the code level. The software also wasn't flexible enough to let developers update the out-of-the-box templates with KC's own look and feel.

SAP to the rescue

Ultimately, Kimberly-Clark's corporate office decided to use SAP for a global content management solution. It was only by coincidence that KC Healthcare found the answers to its own catalog problems with an SAP subsidiary known as SAP Markets. SAP Markets was formed in June 2000 to provide SAP customers with software applications for building public and private exchanges. The SAP subsidiary developed Internet Sales, an application now bundled with an SAP product called mySAP CRM. Together, this package provided the Internet sales application and order management system (for sales orders, fulfillment, and invoicing) that KCHealthcare.com needed.

Most SAP customers build their data stores with Oracle, but KC Healthcare used its existing IBM DB2 for OS390 system. The company runs SAP's application server, R/3, from Windows NT boxes. R/3 comes with several modules for order management, financials, production, and so on, which made it easy for the team to build the catalog application. The mySAP CRM system was written in a proprietary language called ABAP/4 (the acronym simply stands for Advanced Business Application Program). KC used SAP's Business APIs to retrieve and organize product information, which it then served via the Internet Transaction Server (ITS).

ITS acts as a gateway between the HTTP server and R/3. It forms an intermediate layer between the presentation layer on the Web browser side and the application layer on the R/3 side. Instead of using the standard R/3 front-end, the ITS uses a Web browser to display R/3 transactions, function modules, or simple reports.

As for presenting the data, KC Healthcare turned to Symetri, a 36-person firm based in North Carolina. Symetri develops applications and interfaces for e-business projects.

Dan Nielsen, chief application engineer and technical lead on the KC project, says Symetri dedicated a 10-person team of application engineers, information architects, visual designers, and strategists to the project. Most of the application engineers at Symetri develop in ASP, but learned several SAP-related languages for the project, including ABAP/4, Business HTML, and Flow Logic.

"In a lot of respects they were learning new skills for this project," Nielsen says. "The basic Web tools can be customized, but where SAP really shines is the GUI it provides for managing all of the data."

Teamwork

Working with consultants from SAP and the internal Kimberly-Clark MIS group, the Symetri team spent nearly seven months working toward a preliminary launch in July 2001. They spent another three months before launching the final site in October. "We housed them together, right in the middle of a marketing floor so everybody could see these people working," says Hoctor. Typically, to put three separate business units at work on a single goal is to flirt with disaster. But in this case, the team approach turned out to be exemplary of the collaborative environment. So exemplary, in fact, says Hoctor, that "Kimberly-Clark is using it as an example of how putting teams on a project can get things done."

Representatives from each of the three teams met on a weekly basis to check in on the project's specifications and make adjustments to the plans as needed—A very important aspect of implementing a package like mySAP's CRM, says Neilsen. "We made sure that all along the way, there were plenty of touch points involved for the parties to get together."

Success as Hoctor defines it is getting closer. "The success of our project is when everything becomes a Web environment for purchasing, and that is happening," he says. "On most products in healthcare, the transaction is through EDI. It's one mainframe talking to another, done through a batch process.

The new thing now is to do an EDI-type transaction, but over the Web. Being able to transfer our catalog information to distributors and have transactions conducted this way is when we know we're successful." Site visits in November reached over 25,000 compared with 7,000 in the previous month. "Keep in mind that our customer base is only about 5,000 hospitals in the U.S." says Hoctor.

Today, KC Healthcare is poised to move into the next phase of its e-business initiative. It plans to implement the customer relationship management (CRM) element of the site. "The truer CRM portion of it—doing Internet sales and customer contact kind of stuff—we will be doing shortly," says Hoctor. "The sales force automation piece becomes fuzzy math. What's the real efficiency? It's hard to define. All corporations are struggling with that."

In an IDC survey of large and midsize Canadian companies, CEOs make up more than 20 percent of the executives rallying for CRM solutions. But none seem to know yet how to measure the success of an integration project of this scale. CRM solutions call for a shift in the corporate mindset toward what analysts call "customer-centricity." According to IDC analyst Fenella Potter, making this shift "is an iterative process of configuring every facet of the organization, every link in the customer value chain, to optimize value delivered to and derived from each individual customer relationship." Hoctor and his team face a challenging task that may not be solved by technology alone.

Meanwhile, as the healthcare standards war rages and with its new infrastructure in place, KC Healthcare is buttressed and ready for the next wave to hit. "What's unique about us is that Kimberly-Clark is known to be a very conservative company," says Hoctor. "Typically, we don't step out and lead. In the healthcare arena, we did. We're out there, ready to go, and a lot of people are still trying to catch up."

Jennie Rose is a freelance technology writer and former Web developer. She welcomes your feedback at [email protected].

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