I’ll bet you didn’t know my laptop (a Dell Latitude E6510) could have been ordered in exactly 4,777,574,399 different combinations than the one I have now, did you?!
“Five billion different combinations for a single laptop?!” you say? And how many Dell employees does it take to make a laptop, much less screw in a compact fluorescent light bulb?! Enter B2B eCommerce…
Experiencing Technical Difficulties
“Occupational specialization continues within multinational supply chain.” It’s a headline you’re liable to see in any business publication within the past two decades, whether discussing Dell’s process for building computers or Kraft’s approach to food and beverage manufacturing and distribution. Business-to-business (B2B) eCommerce transactions are no exception, with purchase orders, invoices and payments rolled-up into an automated solution.
Where B2B has business-to-consumer (B2C) beat in terms of complexity, though, is in supplier’s negotiation ability, the natural outcome of volume aggregation cost savings associated with channel, rather than customer, management. Don’t you expect a discount when you’re purchasing hundreds of units rather than a single item? Aside from order volume, wouldn’t you expect a B2B eCommerce solution to track purchase frequency, account settings, product-level pricing based on customer contracts, inventory location and availability, and have advanced specialized shipping and freight settings? Assuming so, how are the lines blurred between B2B eCommerce and a full-fledged Customer Relationship Management (CRM), or even Enterprise Resource Planning (ERP) solution?
Technical configuration considerations include the process complexity of tying multiple customers, each with the potential to have multiple accounts, locations, and contracts, to multiple suppliers, each with the potential to have multiple products, locations, and prices. If that conundrum doesn’t get the database dude named Erwin and his fancy diagrams fired up, I don’t know what will.
Throw on top data integrity standards, governance issues and master data management considerations and the complexities exponentially increase.
For purposes of defining scope, we will limit the role of B2B eCommerce to solutions with a more traditional eCommerce (online shopping cart-esque) flavor, but retrofitted with advanced supplier management tools and better back-end integration, including CRM and ERP integration. While there are B2B eCommerce solutions that uniquely focus on Electronic Data Interchange (EDI) applications (better called B2B Integration solutions), for the purposes of our discussion, a B2B eCommerce system discussed herein would support EDI (and XML) translation, but not be centered around the translation.
Analyst Brian Walker of Forrester has even identified the following “range of models” (read: favorite new acronyms) in the B2B eCommerce world. He notes these models are at times supported by a single solution. Most of the acronyms, though, like most tech talk, leave executives wondering “so what?!”
B2C – .com site
B2B – large wholesale account site to dealer
B2B2b – dealer to distributor portal to small parts dealer
B2b2C – product extranet to distributor portal to dealer B2C shop to consumer
B2E – sales support intranet to support materials
B2C/B2B – call center
B2B2C – B2B2C platform to .com retailer site
Besides, at the end of the day, do you really need to know if your B2B system offers A2A interfaces for CRM and ERP integration through EAI? Not to mention whether your CSR has CTI through your CRM so the ACD/PBX can pass-thru what came through the IVR?!
Quarter Ton Monkeys
Now that we’ve completed the B2B eCommerce vs. B2B Integration solutions discussion, effectively setting aside such offerings as IBM’s WebSphere and Oracle’s Fusion solutions, then who are some of the 500 lb. gorillas in the space? Glad you asked!
On the supplier side, Ariba is a clear leader, with impressive website collateral stating their Supplier Network includes 300 buying organizations purchasing from 150,000 suppliers, clearing over $8B per month across 66 currencies and 115 countries. The online environment allows a new supplier to become ‘Ariba Ready’ by incorporating Ariba’s web standards and therefore have immediate access to the buying organizations. Not to miss out on the capitalization of strategic sourcing, contract management, spend analysis and supplier management services (and by services, I mean deployed in a Software as a Service, or SaaS model), Ariba acquired Procuri, further developing the buyer-side of the B2B equation.
Speaking of M&A activity, then, I’d be remiss if I didn’t mention the pending GXS and Inovis merger. Purporting to have a combined 6M trading partner relationships and 10B annual transactions with over 40,000 customers and 2,500 employees all exclusively focused on B2B eCommerce and integration, it would be safe to say this ape’s going to be eating a lot of bananas. Though much of the product offerings do hinge on the B2B integration solution, there are core B2B eCommerce plays here as well.
Finally, NetSuite has an interesting offer in the deployment of (as their website states) “full-featured financials, CRM, inventory and eCommerce software – all in a single system.” ERP, CRM and eCommerce all together?! I thought they were supposed to be sold separate by the likes of SAP, Oracle and Microsoft!
Though not a comprehensive list, you at least now have a broad market overview and starting point for looking at the technical and functional considerations for your organization.
Because You’re Mine, I Walk the Line
As an example of growing your corporation’s top line through broadened reach or bottom line through decreased transaction costs, consider the healthcare sector in the States. According to Steve Keifer, VP of Industry and Product Marketing at GXS, US healthcare providers process between 8B- 18B transactions annually. With only 30-50% of payer transactions being electronic, you can do the math! There is plenty of room to grow.
NetSuite even compiled a white paper on Cartridge World, touting bottom line impact of $200,000 in annual IT and administrative costs removed, and a staggering $320M top line growth enablement.
The most significant bottom-line impact, regardless of industry affiliation, is widely regarded to be environments where:
a) The supply chain is highly fragmented
b) Suffering exists in the area of inventory management
c) The business’ suppliers are willing to collaborate using the web
Because of these obvious cost-benefit ratios, back in Y2K, research firms Forrester and Gartner were predicting close to a $4 trillion B2B eCommerce industry by 2003. No, the number was not hit. Yes, much of the reason was the sunk investments and lack of integration between traditional B2B platforms already deployed. The systems were integral to businesses and also lacked easily configurable integration engines (producing the gi-normous B2B Integration space).
The End of the Beginning
Back to Dell. The cornerstone example of the just-in-time (or lean) manufacturing space, Dell was able to revolutionize the custom computer order experience both at the customer and business level. They electronically tied in their supply chain, highlighted by a five to seven-day build and deliver process*:
Though the Dell model is not new, the overall benefits are widely lacking within the industries Dell does not operate. Industry verticals such as Healthcare, Utility, Education, Transportation, and Retail (to name a few), have significant room for waste reduction and productivity improvements.
Focusing on efficiency and effectiveness, then, is the measuring stick for effective B2B eCommerce in 2010 and going forward. Just as Peter Drucker penned, “Efficiency is doing things right; effectiveness is doing the right things.”
We, Credera, can partner with you to “do things right” and to help ensure you are “doing the right things” by:
Assessing and rationalizing your corporations’ eCommerce Solutions across the complex B2B spectrum
Engaging in a Software Selection ensuring fit and value across the varied and growing range of B2B eCommerce suppliers
Equipping your business through Business Process Reengineering for the best results possible with your B2B eCommerce deployment, and/or
Implementing the right B2B solution for your organization
Though many businesses have yet to unearth the transformational promise touted by B2B eCommerce in the wake of supplier integration complexities and dubious cost-benefit analysis, the results are in. B2B eCommmerce has proven its value, as varied as the applications are, and is here to stay.
*Dell example based on Lucas, Henry C., Jr. (2005). Information Technology: Strategic decision making for managers. New York: John Wiley and Sons. Page 53.