Synchronize to Survive

AMR: Data synchronization provides critical foundation for B2B initiatives

Boston — April 29, 2003 — Data synchronization must be the top priority over all other projects involving B2B collaboration or interoperability because it provides a crucial foundation for these initiatives, and companies that embark on B2B projects without the necessary data synchronization platform in place are likely to waste billions of dollars, argued a new report from technology consultancy AMR Research.

As trade promotions have become more closely scrutinized due to the new Financial Accounting Standards Board (FASB) regulations and the Sarbanes-Oxley Act, the pressure has increased for tighter synchronization as a first step in improving the relationship between retailers and their suppliers, according to AMR.

The consultancy believes that data synchronization provides the first step towards building a consumer-connected supply network and boasts several benefits, including the potential streamlining of the entire consumer packaged goods (CPG) supply chain and the reduction of current invoice errors by more than 40 percent.

Data synchronization also acts as an enabler for true collaboration and emerging technologies like the electronic product code (ePC) and radio-frequency identification (RFID), and synchronization can serve as the foundation layer for any successful product lifecycle management (PLM) initiative because it produces clean product data and results in better direct materials sourcing, AMR said.

Moreover, ignoring synchronization could prove to be a costly mistake, with the consultancy asserting that companies embarking on various B2B projects without the necessary data synchronization platform in place will waste $2.1 billion by 2008.

"Those who take a more proactive approach [toward implementing data synchronization] will gain a competitive advantage over those who wait for their business partners to drive them to participate," said Kara Romanow, senior research analyst at AMR Research. "The fact that other industries have been synchronizing data between trading partners for many years also helps justify the investment."

Romanow noted that Wal-Mart has been leading the pack by mandating that all its suppliers send item data electronically through UCCnet by January 2004, and she said that many others in the CPG and pharmaceutical industries will soon follow suit.

Elsewhere in its study, entitled "Data Synchronization Has Simply Become a Cost of Doing Business," AMR reported that the average money spent on internal preparation for data synchronization will be four times the amount spent on external connectivity efforts. Most companies have underestimated the amount of internal effort required for suppliers to cleanse the data and for retailers to build the capabilities to use the data, the consultancy found.

In addition, AMR advises that a large factor to consider when planning a data synchronization project is time. Most projects start with a six-month estimate and continue well past the year checkpoint. Companies must proactively take on these challenges of time and internal effort and plan accordingly, the consultants say.

As for the solution providers in this space, AMR highlights three categories of vendors with data synchronization offerings: exchanges and data pools (including Transora, WWRE and EAN country-specific data pools), data repository vendors (such as Velosel, HAHT Commerce and Trigo) and connectivity vendors (including Sterling Commerce, Commerce One, IBM WebSphere and Invois).