By Robert Pease
Companies across a variety of industries continue to invest in and struggle with e-business initiatives aimed at building meaningful, automated and efficient connections with their trading partners. While resolving these challenges can drive revenue, supply and demand chain executives are simply not equipped to overcome B2B integration hurdles.
Unlocking the true potential of B2B can meet e-business goals while developing tighter relationships with customers and suppliers. While much progress has been made, significant challenges remain before organizations can fully realize the true potential of integration with customers and suppliers.
Going Beyond the Four Walls
For up to 90 percent of enterprises, IT is the designated owner of e-business and B2B integration. Surprisingly, IT's perception of its integration responsibilities often do not extend beyond the company's four walls. Things that can be controlled by IT, such as company-specific systems, are easily owned by IT. Things outside of IT's control, such as trading partners' systems, are viewed as an external issue.
IT may be responsible for transmitting data, but not for the data actually being received on the other end. Incompatible systems, data and processes are usually identified as a major challenge, but IT's responsibility is to only make the initial connection. Once an order is successfully sent, how it is received, processed and fulfilled is not seen as the buying organization's problem because it has already left the company's four walls.
Consequently, a majority of IT managers don't cite integration challenges as a top priority. After all, the complexity in e-business comes from taking two or more different companies' internal systems and connecting them to share information. This fundamental misalignment of business needs and functional ownership creates a gap between e-business strategy and execution.
Manual Intervention — Often the Solution but Never the Answer
Although manual workarounds are prevalent, most companies accept the practice as a way of conducting business and do not look further into alternatives, such as automated solutions. If the process is critical enough, a manual workaround is put in place to address exceptions, creating an expensive Band-Aid instead of a true solution. Because of information flows, the business end of the enterprise is satisfied and usually not aware of the inefficient and expensive manual workarounds put into place.
Business heads often fail to realize that this problem that extends beyond IT's four walls can yield lasting opportunity costs. Manual workarounds can be a budget and resource draw, extracting IT personnel from other activities that more directly generate revenue.
On average, 14 percent of all information exchanged between companies requires some type of manual intervention due to errors, exceptions or broken processes, according to industry estimates. In some cases, manual workarounds can be required for as much as 60 percent of exchanged data, studies show. That leaves a considerable amount of revenue delayed and profit on the table as manual steps taken to process data reduce margins along the way. For example, a 14 percent manual exception rate means that a $250 million company will potentially experience $35 million in delayed revenue.
Saying Yes to Business Partners and Customers
Market surveys surrounding e-business are interesting snapshots into B2B integration issues. When asked, most e-business executives answer without hesitation that their company is easy to work with and a good business partner. However, a majority of companies continually experience failed data exchanges and ongoing integration issues.
The disparity between failed data exchanges and internal business perception underscores a significant opportunity that most organizations are not pursuing. Most companies are not placing a priority on reducing manual intervention, and they have come to accept that a high level of manual processing is part of the job. Addressing these issues creates a competitive advantage, taking integration off the table and allowing businesses to say "yes" to customers and partners.
The Need for True Business Connections
In order to address and improve e-business practices within the enterprise, companies need to charter projects to address broader issues related to B2B integration. Specifically, if IT is responsible for e-business, it needs to take responsibility for integrated relationships within the supply and demand chains. In order to do this, IT could, for example, utilize on-demand integration services that provide both technology and capabilities to manage and operate both ends of the exchange to unlock the true potential of B2B.
IT is ultimately responsible for B2B integration deployment and ongoing operations within most enterprises. By implementing processes and technologies to enable deeper integration with customers and suppliers, IT can close the gap between e-business strategy and execution, thereby helping their companies increase revenue and develop a competitive advantage.
About the Author: Robert Pease is vice president of marketing for Hubspan, a B2B integration services provider. For more information, visit www.hubspan.com.