Microsoft's Manufacturing Vision: The Digital Nervous System

Source: OSI Software, Inc.
OSI Software,>By J. Patrick Kennedy, OSI Software, Inc.

After the PDC (Professional Developers Conference) in Denver last month where all of the techies were brought up to date on the new technologies, Microsoft arranged the Microsoft Manufacturing Summit (Redmond, WA; Nov. 11-12) as an executive follow-up for principals of their partners and IS managers. This was also a follow-up to the CEO summit where Bill Gates explained his vision of the Digital Nervous System and Digital Internet Network Architecture.

How was the meeting? It was an interesting confirmation that when Microsoft has a vision, they are able to muster a fair amount of loyalty to that vision. We heard about many different developments, including SQL Server 7, Windows 2000 (NT 5), Office 2000, Windows CE, and more. We heard about partner programs and example after example of successful implementation of DNA by various users including Saturn, Boeing, and others in manufacturing. The talks were all interesting and totally focused on the technology that made DNA and the Digital Nervous System possible—this could be why I simply could not understand what they were trying to tell us. I heard all the news, but not the message. OSI Software,>Contents
Microsoft and their SAP R/3 Implementation
Microsoft's Example
Digital Nervous System


The terms DNA and DNS have been used by Microsoft for over a year to describe their overall philosophy. Applications that support business processes are the essence of the new generation company. These business processes are not comprised of just data, they look at many different kinds of information, support requests and data input from users, implement work flow logic to insure that the overall goal is achieved, and do this is a reliable and robust fashion.

A Digital Nervous System categorizes these into four parts:

  • the basic business operations
  • strategic thinking (responding to planned events)
  • business reflexes (responding to unplanned events)
  • and customer interaction.

This is complex software, particularly when the existing business is populated with many vertical or stovepipe applications doing specific things. The DNS is built on top of intelligent desktops (PC's), a reliable e-mail system, office suite, database, and business applications.

The Intranet affords the user the opportunity to create an environment where casual users do see or care much about the complex system that sits underneath the Websites that support each business task or business process. The DNA (Digital Internet Application Architecture) is the development tools to allow businesses to wrap their vertical applications, but still control the overall work flow to enhance their business. Tools like IIS (Intranet Information Server), MTS (Microsoft Transaction Server), Visual Interdev (Web development) and many more are provided to the developers for this daunting task. OSI Software,>Back to the Top


It really took a talk from a real user to communicate the message and the excitement of that message. Microsoft themselves are a manufacturer and quite a large one. Bob Herbolt, COO, gave the one out-of-sync talk and the one that actually communicated the message to me. Bob discussed Microsoft's implementation of SAP R/3. I could relate directly to his experiences. OSI Software is, after all, not only a partner of Microsoft but also a software manufacturer. We have all the same problems of taking orders, shipping, accounting and the rest of the issues that were addressed.

I have to say that in the industrial space, many of our customers are implementing or trying to implement SAP R/3—some even from a lot of experience with SAP R/2. OSI Software produces a gateway to SAP R/3 and participates in the annual SAP Sapphire conference. At last August's Sapphire meeting, we heard many of the same technical presentations that we heard at Microsoft. I must report, however, that until Bob Herbolt spoke, I did not think that manufacturers were getting the promised benefits from R/3, reengineering or whatever else you call it. Many companies have had problems justifying, installing, and even running their ERP and Supply Chain applications because they were big, expensive to implement, and often the interface was foreign to what the people wanted to see, e.g. a Web Browser.

That is now all different. I am firmly convinced (to the extent of opening discussion with SAP for our own business) that the vision is right—it is the implementation that has been flawed. Microsoft and SAP have collaborated to demonstrate the model of the new Internet/intranet-based business that is destined to rule over the obsolete products of the manufacturing revolution. I came to this conference expecting it to only be a slightly boring get-away, but all the pieces of the puzzle have clicked, the future is here. OSI Software,>Back to the Top

Microsoft and their SAP R/3 Implementation

Microsoft has several papers on their SAP implementation, but frankly I have not read them—but I will now. Bob Herbolt, who has a manufacturing background, stated: "Think of the intranet as the ultimate reengineering tool," and I believe that is the user vision that was missing. For two years, Microsoft has been publishing the technology of using the intranet to reengineer legacy computer systems, but it was not clear how that affected us. To try and describe this conference, let me summarize the SAP R/3 implementation at Microsoft.

First he repeated the same message that we got from every other speaker:

  • Digital Nervous System
  • Basic Operations
  • Execute Planned Events
  • Respond To Unplanned Events
  • Maintain Customer Focus

Consider that most software that you buy is really the automation of one or more business tasks. Until your business model is added, it does not actually perform any function, e.g. when you accept an order, do you want to send an e-mail-based acknowledgment? Thus with every company system upgrade project, it is the combination of the application and business model that achieves the goal. The Digital Nervous System is a high-level business model that tries to make companies think beyond the basic operations and incorporate flexibility into the system to allow the company to adapt. The method of doing this is the Intranet.

These business goals are based on a set of axioms that most automation experts should agree on:

  • Bad News Travels Fast
  • Internet Changes Everything
  • Customers are at the Center
  • Every Worker is a Knowledge Worker.
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Microsoft's Example

Herbolt then related these management principles and axioms to his area of responsibility. He wants speed to market, lower cost, new market entry, customer data, improved customer response and access to the data by everyone. In Microsoft, all employees and all partners have access to the basic information (with minor exceptions). If an employee in LA wants to compare Microsoft Germany to Microsoft Italy and write Bill Gates an e-mail as to how to improve, the system allows that.

With these goals, which I heard in many ways, the key was how to implement such a strategy. It was in his examples that the vision cleared. First he described the way Microsoft employees get signed up for their 401(K). After 6 months on the job, they get an e-mail that they can now sign up and are instructed to get to the corporate web and do so. They put in their employee number and are allowed to peruse the prospectus for each of the available plans. They then fill out a form and are signed in. This is the ONLY way someone can enroll in a 401(K). They are looking at the SAP R/3 HR module, but with access through Microsoft's own browser.

Note: There are no people involved and there is no group to handle the employees that do not want to use the system.

Then he showed how to order things (MS Market) and how to pay (MS Invoice). These are the apps that people use to order materials or pay invoices. The MS Invoice application took four people six months to write, but has dropped the head count in payables from 44 to 22 in the first year. Herbolt fully expects this to be seven people by next year.

Here is the answer. Do not build vertical applications—you do not have the domain knowledge—buy them. Then, use DNA to make it interact with the people and other programs in such a way as to achieve the goals. However, do not expect those applications to serve any more than a few, unless you configure them appropriately, and provide them to users in the most essential way. Vertical apps are designed to serve only a few (<100) but any business process has casts of 1,000's, which is the domain of the Intranet. There is an intimate tie between these. (Side note: The GUI of R/3 could only be loved by an accountant.)

He also advised:

  1. Make your intranet the ONLY way to do a particular task (On this point, it is worth noting that last year Microsoft took $3.5 billion in orders across the Web).
  2. Get rid of the old way, systems and people, or it will reappear.

In the Microsoft accounting function described above, it's not just that the headcount went from 44 to seven. It is also that those seven are Web builders, not bookkeepers. If you leave the old systems in place or allow people to chose between the old way and new ways, the old system attempts to perpetuate itself. OSI Software,>Back to the Top

Digital Nervous System

Now all the different programs make sense: Go for the vertical applications relevant to your business, but use Microsoft tools and DNA to make the applications accessible to your workforce:

  1. Internet Explorer—the GUI for the masses
  2. Internet Information Server—the engine behind the intranet architecture
  3. SQL Server 7 and Universal Data Access—the wrapper of all legacy information and cross platform query engine
  4. Windows CE—opening up the proprietary embedded system to DNA
  5. Transaction Server—tool for supporting the masses
  6. DHTML/XML—the scripting for an intelligent, browser-based intranet
  7. COM+—the object model that works and supports this
  8. VBA—the glue that puts all the applications together

…and so on. I would maintain that only Microsoft has the integrated range of proven tools to make this possible. You can have your cake (vertical applications) and eat it, too.

Everyone should get the DVD from the 1998 Professional Developers Conference and go back through with the perspective of building a Digital Nervous System. There is little question that this is in fact the future. Microsoft has scored another victory before the others knew there was a war. We can fight religious battles of objects and operating systems, but most manufactures should be fighting the battle to make their products better, more cheaply and more profitable using Microsoft technology to build an internet based company.

J. Patrick Kennedy is founder and president of <%=company%> OSI Software,>Back to the Top