Microsoft BizTalk Server Customer Solution Case Study

HP Streamlines Online Storefronts by Using Service-Oriented Architecture

Overview
Country or Region: United States Industry: ManufacturingComputing Customer Profile HP is one of the worlds largest IT companies. Based in Palo Alto, California, the Fortune 500 company employs about 150,000 people and reported net revenues of U.S.$91.7 billion for fiscal year 2006. Business Situation HP had a large number of Internet-based storefronts, but a lack of integrated tools for managing them created operational complexities and an inability to efficiently capture more revenues. Solution HP implemented a service-oriented architecture by using integrated Microsoft software, including Microsoft BizTalk Server 2006, Microsoft SQL Server 2005, and Windows Server 2003 Enterprise Edition. Benefits Improves customer service Helps increase revenues from online channels Enhances operational efficiency and regulatory compliance

The solution that weve created using the Microsoft software provides a responsiveness and flexibility that lets us adapt quickly to changing business requirements.
Reza Wajih, Manager of Web Services, eCommerce Services, HP

HP is a global provider of IT products and services, with sales channels that include online storefronts available to customers in many different countries. Over the past few years, the rapid expansion of the Internet-based business created operational complexity that was difficult for HP to manage. To streamline its Internet-based sales outlets, HP implemented a new serviceoriented architecture by using Microsoft software, including Microsoft BizTalk Server 2006, Microsoft SQL Server 2005, and Windows Server 2003. The technology is helping HP consolidate its online storefront presence. It is also helping the company capture more revenue per order; the company estimates that the new solution has increased revenues on logistical services by about 14 percent per order. Customer service is also streamlined through the changes to real-world business processes.

Situation
HP is one of the worlds largest information technology manufacturers. An early pioneer of Californias Silicon Valley, HP today has more than 1 billion customers in 170 countries on six continents, with about 150,000 employees providing a broad range of computer products, solutions, and services. The Fortune 500 organization, which is headquartered in Palo Alto, California, reported net revenues of U.S. $91.7 billion in fiscal year 2006. A major channel for HP revenue is the Internet. HP has developed different Internetbased storefronts to serve major market segments, including home and home-office computer equipment users; small and midsize businesses; corporate enterprise customers; and a variety of vertical markets such as government, healthcare, and education. Its online storefronts are available to customers in many different countries and languages worldwide. As these markets have grown, the challenges to HP have increased. The combination of the array of vertical industries, the different market sizes, and the geographical segmentation led HP to operate more than 85 different Internet-based storefronts simultaneously. The complexity of managing these storefronts and the network operations that support them created a number of issues for HP. For example, HP did not have tools for easy visibility of its supply chain to get a clear picture of the availability of parts for products. This situation made it difficult to communicate to its customers when the products they ordered would be shipped. Unexpected backorder situations developed with suppliers, affecting the companys ability to predict when products would ship to customers. This, in turn, made it difficult to

keep customers informed about their purchases. Also, the backorder situation made it harder for HP to predict cash flow because the company does not submit invoices to its customers until the customers' orders have shipped. Rodney Turpin, Product Manager for eCommerce Services for HP at its Houston, Texas, offices, says the fragmentation of its Internet businesses also made it difficult to establish set rates for shipping services and to efficiently and cost effectively add logistical services to customer orders. Logistical services could be as complex as arranging for forklifts to unload dozens or even hundreds of PCs at a corporate customer site or as simple as establishing rates for consumer package deliveries. In this case, the difficulty of adding logistical services led us to build a generic cost for logistical services into the product price, says Turpin. So when comparing our prices to the competition, it made us look like the more expensive option, which hurt our competitiveness. It also meant that customers did not have the flexibility to pick the logistical services that worked best for their situation. There were other problems as well. The disparate storefronts made it difficult to assess taxes and regulatory fees. In the United States, for example, every state has its own sales tax rate, and some states, such as California, assess fees for computer components to offset environmental disposal costs. It was also hard to implement internal process changes that resulted from changes in business rules or corporate directives. It was clear that we needed to streamline our storefront infrastructure so we could provide a better customer experience by gaining more accurate information, improve our internal processes, and improve financial

It was clear that we needed to streamline our storefront infrastructure so we could provide a better customer experience."
Rodney Turpin, Product Manager for eCommerce Services, HP

performance through increased revenue and margins, Turpin says.

Solution
Under the direction of its chief information officer, HP embarked on a course of IT transformation that included data center consolidation, support reduction, and highly available solutions. The development team adopted a service-oriented architecture (SOA) by using integrated Microsoft server software. The solution includes Microsoft BizTalk Server 2006, a business process management server, with BizTalk Server adapters for integrating with disparate systems. Other software used in the solution includes Microsoft SQL Server 2005 database software with SQL Server 2005 Integration Services (SSIS) and SQL Server 2005 Analysis Services, and Microsoft Operations Manager 2005, which is used for monitoring the solution proactively. These products run on the Windows Server 2003 Enterprise Edition operating system. The solution also uses the extensive collection of BizTalk Server adapters to move information between the different assets in the ecommerce environment. BizTalk Server 2006 is key to the SOA solution. HP chose to use BizTalk Server 2006 as a core component of its SOA solution for several of the new and enhanced features in this version. These include 23 application and technology adapters for connecting older IT systems and line-ofbusiness applications, such as the SAP enterprise resource planning software used by HP. The ability of BizTalk Server 2006 to integrate tightly with SAP provides new capabilities for storefront managers to understand the HP supply chain to better serve Internet storefront customers. HP is also using BizTalk Server 2006 Business Activity Monitoring (BAM). With BAM, HP administrators can select a

particular instance of a business process to monitor and then choose a specific BAM view into the process to get a perspective on the key performance indicators of a particular storefront. Enhanced Business Activity Monitoring capabilities in BizTalk Server 2006 also include new Web service functionality that can be used by HP to expose and aggregate data from storefronts. With the solution, HP has streamlined and consolidated its storefronts into three primary segmentsconsumers, small and midsize businesses, and corporate enterprises. Business rules, which can be easily modified through the use of Web services, handle regional requirements within those segments and are managed by BizTalk Server. The solution runs on HP ProLiant DL380 64bit servers. An initial rollout to the HP corporate enterprise storefront began in early 2007. HP anticipates that its remaining storefronts will be using the solution by the third quarter of 2007.

Our customers now have a clearer idea of the value they are getting in a purchase, which helps us when we are competing against other IT suppliers.
Rodney Turpin, Product Manager, eCommerce Services, HP

Benefits
By moving its storefront architecture to a service-oriented architecture based on integrated Microsoft software, HP has significantly improved the overall performance and value of its Internet-based channels. The company now can obtain more accurate information about its supply chain situation, making it possible for HP to turn insight into action, helping to improve both customer service and revenues. SOA has helped HP increase operational efficiency by eliminating manual processes and providing automated processes that can assist customers. HP has also been able to improve its regulatory compliance through business rules that it created in BizTalk Server.

Improves Customer Service Reza Wajih, Manager of Web Services in the HP eCommerce Services department, says the new solution has helped HP integrate its information much more seamlessly with parts and logistics suppliers. This, in turn, gives HP the ability to gain a detailed view of supply chain activity so it can give customers better service with clearer expectations. One of the biggest benefits has been our ability to improve our logistical services for customers. Essentially, weve been able to create a framework for meeting requirements that help us deliver on our promises, says Wajih, explaining that the SOA solution has helped HP create a very tight level of integration with logistics suppliers. This is due in large part to the integration capabilities of BizTalk Server 2006. We now have common communication and service codes that are shared between HP and our suppliers, without any need for human intervention, Wajih says. This greatly simplifies logistics. Say, for example, that a forklift will be needed on a particular order. Instead of finding out later what the cost is and not being able to add it to the orderwe can confirm the cost quickly, inform the customer, and easily pass the information on to the supplier. Helps Increase Online Revenues The solution has also helped HP increase revenues per order because customers have more detailed information to use when making decisions. For logistical services, weve seen an average increase of about 14 percent per order, says Wajih. Keep in mind that our corporate customers are procurement representatives who need to adhere to requisition plans. But when they see the options that we now have available for logistical services, they have information

such as delivery times and other options that help them make decisions that are in the best interests of their organizations. So when online orders are now finalized, we are getting more higher-value orders. Turpin says the flexibility and better customer service also makes HP more competitive. In the past, we embedded certain costs such as logistics in our pricing, but now we have the flexibility to let the customers decide what they want, he says. Our customers now have a clearer idea of the value they are getting in a purchase, which helps us when we are competing against other IT suppliers. Enhances Operational Efficiency and Regulatory Compliance The SOA solution has also helped HP increase internal operational efficiency while improving its ability to comply with various regulations. Turpin says this goes beyond the obvious benefit of consolidating the dozens of online storefronts that existed in the past. For example, the eCommerce Services team has created dashboards for senior executives, who can now monitor activity in the online storefronts as well as critical metrics such as compliance with service level agreements. The increased flexibility is also helping HP customer service centers in many different regions. We have many different selling centers in different countries, he says. They all provide various types of services. Depending on the product, we can now create a globalized number for a particular service with a specific cost associated with it. Instead of having to manually set up and quote a service, the selling centers can simply use that predefined information. It is much faster and more efficient. HP now has the ability to adjust to specific local regulations, such as tax rates and environmental regulations. For instance,

When online orders are now finalized, we are getting more highervalue orders.
Reza Wajih, Manager of Web Services, eCommerce Services, HP

For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 4269400. In Canada, call the Microsoft Canada Information Centre at (877) 5682495. Customers who are deaf or hard-ofhearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to: www.microsoft.com For more information about HP products and services, call (650) 857-1501 or visit the Web site at: www.hp.com

when a customer places an order, our system performs a very quick look-up to see if there are any regulatory or recycling fees for that area, says Turpin. If there are, we quickly return that cost to the storefront so the customer knows what it is. We now have the flexibility to build in different criteria in different countries or states. Wajih notes that the Web services capabilities of the Microsoft-based IT solution helps HP advance its business; HP can implement new services easily because of the flexibility in making changes and modifications through Web services. We have a lot of discussions around potential opportunities, he says. Even before a good idea leaves the room, I can send Rodney [Turpin] a quick e-mail asking for a new Web service. If its viable, he can begin work immediately. The Microsoft technology gives us the confidence that were able to quickly deliver a new service or solution, he says. The solution that weve created using the Microsoft software provides a responsiveness and flexibility that lets us adapt quickly to changing business requirements.

Microsoft Server Product Portfolio

For more information about the Microsoft server product portfolio, go to: http://www.microsoft.com/servers

Software and Services

Microsoft Server Product Portfolio Windows Server 2003 Enterprise Edition Microsoft BizTalk Server 2006 Microsoft Operations Manager 2005 Microsoft SQL Server 2005 Technologies SQL Server Analysis Services SQL Server Integration Services Web services

This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published June 2007

Hardware

HP ProLiant DL380 64-bit servers