IEN: How are manufacturers using existing technologies in new ways?

Ranguin: One key feature of the Ariba Sourcing Solution is the ability for the buyers to easily include drawings within the Request For Quote (RFQ) process.

Many manufactured parts do not come from a catalog, but are created based on individual customer requirements. When ordering these parts, an RFQ communicates the details between the buyer and the supplier. Communicating dimensions, shapes, and other specifications for a built-to-order part involves pictures, drawings, and diagrams. RFQs often contain several additional documents to help manufacturers assess manufacturing costs and create accurate quotes.

Moving this process online poses a significant challenge. While virtually all drawings are created electronically, there is not a single format spanning MS Paint/PowerPoint, AutoCAD, Visio, SolidWorks, Pro/Engineer, etc. To solve the translation problem, the buyer often relies on a time proven method: the FAX.

Ariba Sourcing supports accurate communication between buyers and suppliers using the format of their choice. The buyer can upload diagrams through an easy-to-use online interface. Customers are appreciative of the value and innovation this solution provides, since there is no special software required, which translates into time and cost savings for both buyers and suppliers. The buyer simply includes the diagrams, drawings, and pictures as part of creating an RFQ. To support the myriad of formats, Ariba Sourcing has built-in conversion engines to move any diagram or document into an online viewable format. Image files can be from CAD/CAM packages, such as SolidEdge, Pro/ENGINEER, SolidWorks, AutoCAD, CATIA, I-DEAS, or any software that can save as a .dwg, .dxf, .hpgl, or .hpgl2. MS Word (.doc) and Excel (.xls), as well as Adobe Acrobat (.pdf) formats, are also natively supported. When a supplier views an RFQ, the diagram is immediately available with no special software or plug-in required. View, zoom in/out, rotate, and print functions are provided. These capabilities provide tremendous flexibility with no investment in software or technology other than a modern Internet browser.

Simplicity is key to the success of Ariba Sourcing operation. As customers learn about the diagram service, they often join purely for the immediate productivity offered by easy document translation.

The Ariba Sourcing RFQBuilder technology provides a streamlined method for communicating details between the buyer and the supplier. As an RFQ description is being created, CAD drawings can be uploaded to Ariba Sourcing, viewable to all suppliers selected to bid for the contract.

IEN: What are the major concerns facing the design/OEM sector in the next few years?

Ranguin: Security for the data contained in private marketplaces.

IEN: Is it more appropriate to take an holistic approach to security or a final layer approach?

Ranguin: Definitely, an holistic approach is appropriate when you're discussing the amount of mission-critical information involved in purchasing data. Security needs more than routers...there needs to be degrees of security and granularity. These are best achieved through Access Control. With Ariba Sourcing, we've designed the access controls into three categories:

1. group (the company)
2. role (the division or location)
3. user (the purchasing manager or buyer).

The entire session is encrypted, thereby eliminating such worries as URL poking. We actually employ a servlet that manages the URL through access control layers. And as such, all drawings are limited, all RFQs are limited, all discussion boards, etc. are limited to access control.

IEN: What about open screens for the janitor to hop onto a session?

Ranguin: Not only are there User Name and Password monitors, but every byte is SSL encrypted. We've introduced a system of automatic log-outs -- a session times out at thirty minutes.

IEN: What about your demoing your site?

Ranguin: We've built two separate systems so that production data is never compromised. Our demo site and our production site share the same codeset, but no actual customer data. This means that our field marketing and sales organization can demo the site and all its functionality in real time, but never touch customer data.

We've architected the system so that we have three network environments: test/demo, office, and productions. We've isolated these network environments into sub-networks that are managed by routers.

IEN: What about your servers? Do you dedicate one server per customer?

Ranguin: There would be no scalability if we dedicated one server to each customer. We share servers, but we segregate data into three layers:

1. firewall
2. routers
3. Web server/Application server.

Each of these layers is on its own switch, or sub-network. Even if a particular layer is compromised there is no automatic access to the other layers. Furthermore, the database architecture segments the data by exchange/company/division/account.

Ariba Sourcing's architecture was designed from the ground up to provide superior performance through a scalable and flexible architecture for access to its marketplace. The site is designed to support concurrent access to its members with no apparent degradation in performance. The site can also be easily extended to support a larger number of users as the membership base increases in the future.

The marketplace uses a distributed object model and a parallel server database scheme to provide optimal access path as well as the ability to distribute functional site areas across multiple web and database servers. The Ariba Sourcing site architecture is designed to provide fail over and redundancy at all levels. Finally, privacy is assured using HTTPS (SSL). The architecture provides for the use of both hardware- or software-based encryption schemes.

IEN: What about your internal policies?

Ranguin: Our Network Operations Group have produced an opps manual with procedures for accessing production data. These policies have been audited by an independent security agency. The Production Network operates in isolation and automatically creates logs for any access.

IEN: What about physical security?

Ranguin: Our production network is hosted at Exodus Communications, which has its own system of full redundancies with armed guards and palm-print security access. We maintain a point-to-point connection to Exodus.

IEN: What about vulnerabilities?

Ranguin: A hacker might exploit system vulnerabilities by using techniques such as a buffer overflow attack, but by using Solaris we are able to minimize these issues relative to an NT environment. By utilizing entire Sun Solaris servers and Unix systems, we have a huge security advantage over NT. For instance,

• we have no "re-built" servers


• all patches are applied immediately


• no backdoor -- we only maintain three services...email, HTTP, and HTTPS.

After 25 years of production, UNIX has proven itself to be the most secure option. The only way to be more secure would be to provide a point-to-point connection between the Enterprise and Ariba Sourcing through a T1 line. From a data security standpoint, the Enterprise has to weigh its risk assessment and determine what is most practical for its business.

IEN: Is there an adequate perception of risk out there?

Ranguin: There is a lot of misinformation. For example, an enterprise level security expert will take projects out the nth degree but ignore obvious security holes likes users taping their passwords to their monitors. If you're evaluating the various hosted procurement solutions on the market, my advice would be to ask each one to produce the results of a security audit. At Ariba Sourcing, we've undergone a complete independent security audit and a follow-up re-check to validate our security efforts. Additionally, we have an ex-NSA employee who's more diligent than any audit.

IEN: What about integrated solutions? Isn't there a propagation of risk?

Ranguin: There are only two ways to access our site:

1. through a web browser
2. through our XML integration server

The XML integration server is set up such that all ERP or MRP systems must use our XML integration toolkit. The integration toolkit and XML integration server are both built upon RSA Security libraries. By using our own toolkit, it's

• the same as accessing through the web server (port 80)


• full authentication (meaning everyone has to use digital certificates to get in through public key exchanges)


• if the user experiences inactivity, the whole ERP has to re-authenticate.

And, of course, we have programs watching for bizarre patterns. So, in case there's any type of suspicious activity, we, the networks opps team, are automatically paged.

IEN: So what's safer, a hosted site or a system that operates behind the enterprise firewall?

Ranguin: After a thorough evaluation of our security policies and our own security audit and an audit of procedures at Exodus Communications, it makes much more sense to look at a hosted site. But, the enterprise must ask us to describe our security policy in excruciating detail. Once you understand our security protocols, you'll realize that outsourcing is the practical solution. After all, we have complete systems set up to handle security every day for every customer.

IEN: What about data portability should a customer choose to cancel service?

Ranguin: We would run an automated extraction of that company's data and send it to them in an encrypted file package. But what's important to point out here is that the enterprise "owns" their data -- not Ariba Sourcing. All reporting tools and report data are the property of the enterprise.

Participants need only one desktop computer (IBM compatible or Macintosh) with a connection to the Internet and a Browser. The connection may be through a network T1 line, DSL, cable, or modem. We suggest that the modem speed be at least 28.8K bps. Your operating platform may be Windows, Unix, or Linux. The browser may be Internet Explorer, Netscape, AOL, or other familiar browser. There is absolutely no software to install -- the auction and all its components is browser-based.

Since our technology is Web-based, there is no need to distinguish between operating systems. Because Ariba Sourcing is a "nothing but net" solution, there is absolutely no software to buy, no program to learn, no IT costs whatsoever. We're running Sun Solaris 4500 clusters with Oracle parallel servers sharing 8i under a load balancer, firewall, and a Cisco 7200 dual router. Our servers are hosted at Exodus Communications, Inc. Except for the supplier search utility that runs on Oracle InterMedia, we built everything in-house.

Ariba Sourcing is built on an open architecture that connects buyers with thousands of suppliers worldwide to conduct an unlimited number of transactions through a single, easy-to-use interface. The underlying technology is hosted by Ariba, providing proven security and scalability to support rapid growth in the user base. Centralized user access control ensures secure and efficient site usage. Optional ERP integration connects Ariba Sourcing to existing ERP systems to create a complete end-to-end procurement solution.

Ariba Sourcing is delivered as a fully-hosted network service for buyer organizations that want to automate the RFQ process, enabling rapid deployment without infrastructure investments by the buyer or its suppliers. The Private Exchange requires little ongoing maintenance for buyers because Ariba is responsible for system upgrades and for ensuring reliability, availability, and scalability.

IEN: What innovations are in store for users?

Ranguin: Collaboration!

A typical RFQ lifecycle, from request through delivery, involves many steps and information dependencies. This process, which can sometimes take months, can be reduced to a few short days through Ariba Sourcing. The RFQBuilderSM technology streamlines the RFQ construction process. Templates prompt for information on specific buyer needs. RFQ content can be copied from archived RFQs to save time and effort. The RFQBuilder allows for detailed RFQ descriptions, as well as attachment of CAD drawings, Excel spreadsheets and other documentation. Buyers are also able to create multi-line RFQs, so suppliers can place bids for a single component or the entire contract. Buyers receive all bids at one sitting, which enables them to assemble the best possible supply base for the contract beyond the economies of price.

Ariba Sourcing provides a total end-to-end sourcing solution for customers to help automate and streamline the quote-based sourcing process for their direct and indirect materials, services, and asset purchases. The Ariba Sourcing Platform is applicable for 100% of RFQ-based procurement. Sourcing includes negotiated purchase of goods and services as well as multiple collaborative processes such as analyzing purchases across commodity categories and business units, researching suppliers and supply markets, estimating savings opportunities, preparing RFQs, and staging competitive events to negotiate the final purchase price and terms. Ariba Sourcing not only provides sourcing software functionality, but also an extensive set of services to ensure supply base liquidity and auction success. Customizable Ariba Sourcing technology automates the entire sourcing process, significantly reducing procurement costs and cycle times. Current data indicates process savings (streamlined RFQ distribution and symmetrical RFQ information flows) of 30-50% per RFQ. Cost savings are averaging 13% across all industries.

IEN: How are software, equipment, and materials being integrated in today's design world?

Ranguin: Because of the increasing complexity of today's products and drastically shortened time-to-market, companies are increasingly outsourcing the manufacture of built to order parts. The benefits of this approach are numerous, including faster turnaround, the use of skilled, specialized suppliers, and lower costs.

But there is a downside. Often, to make the process work, the design engineer who created the built to order component has to don an unfamiliar and uncomfortable hat -- that of a purchasing manager. The company's purchasing people do not have the engineering and technical skills necessary to source these complex components. The design engineer must therefore assume the burden of finding qualified suppliers (frequently by scouring the Internet), generating and issuing RFQs accompanied by a raft of CAD drawings, and finally, evaluating the bids. The creative design work that the engineer was hired to do -- the work that he or she enjoys and has spent years perfecting -- gets put on hold.

Adding to the problem is the fact that the procurement process can often be painful. Procurement turnaround times suffer due to a lack of software compatibility between buyers and suppliers. Creating and distributing the RFQs is a complex and time-consuming activity. Identifying new suppliers eats up money and time and frequently the manufacturer has only a limited network of qualified suppliers on hand. The price quotation process, the culmination of the procurement, can be even more time consuming due to insufficient communications channels between buyer and seller and the protracted negotiations that must take place to determine the final price. These are problems that can try the patience of a seasoned procurement professional, let alone a design engineer who has been thrust into that unfamiliar role.

IEN: Are we entering a new era of e-manufacturing?

Ranguin: In today's world, putting an "e" in front of something is often meant to denote a move into the brave new virtual world -- one where the Internet in particular plays a large role. Interestingly, though, manufacturing will always be grounded in the physical world: parts still need to be stamped, forged, and molded. You can't e-mail a steel bracket to a customer. But technology can significantly improve the communication of requirements, specifications, capabilities, and price involved in every manufacturing process. So, to us, e-manufacturing refers to the use of technology to take inefficiencies out of the process and make communications easier.

E-commerce is changing business in two distinct ways. First, it is taking many of the inefficiencies out of the supply chain. There are many areas in the supply chain that are built around antiquated processes. There have been studies that show most manufacturers/distributors are doing 90% of their business within 50 miles of their plant. This figure was probably the same 50 years ago, when transportation was much less efficient than it is today. Electronic commerce is reducing these inefficiencies by streamlining knowledge in the supply chain and causing people to rationalize their current business practices. Second, e-commerce is causing some of the economies of scale created by large manufacturers to erode. E-commerce allows for cheaper ways to transact for any business, causing the business process software of large companies to become more available to the small to mid-sized enterprise.