EDI

What Apple’s Lightning Connector Can Teach Us About Interoperability

The big news last week was Apple’s new iPhone 5. Although the new phone is lacking in revolutionary features like Siri that premiered in earlier versions, it does come with a new connector. Called Lightning, the new connector replaces Apple’s proprietary 30-pin adapter that debuted with the original iPod. A better name for the new connector might have been Tornado as the change has created mass chaos in the $7 billion aftermarket for iPhone accessories. Manufacturers of devices with physical docks must now redesign their products to interoperate with the Lightning connector. The most heavily impacted are manufacturers of speaker systems, clock radios and workout equipment.

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Ten Reasons Why Cloud B2B Integration Helps With International Expansion Projects

Global expansion has been undertaken by many companies over the past decade, whether it is simply to get a foothold in a new market or to take advantage of low cost labour in countries such as China or India. However there is an interesting new trend developing which I highlighted in a recent article over on automotiveworld.com.  Increasing wage costs in China combined with the high value of the Japanese Yen is causing many companies to think about their investments in the Far East.  In some cases western companies are relocating production back to their home country, this process is referred to as ‘near shoring’ or ‘reverse globalisation’. Don’t get me wrong, many western companies will continue to invest in new plants in the Far East but this will probably be to manufacture products for those particular markets rather than for export. Manufacturing  products in the Far East, for sale back in North America or Europe is likely to reduce slightly over the coming years and my article on automotiveworld.com highlighted some companies who were moving back to the U.S for example. Even as recent as last week, the manufacturer of the world’s cheapest PC, designed to help school children learn to program, announced they would be moving production of their PC from China back to a Sony plant in the UK. So will the rate of globalisation begin to decline? May be, but we are starting to see globalisation coming from Far Eastern based companies who are looking to exploit new markets such as Brazil, India and Russia.  So I believe we are in a new cycle of globalisation where countries such as China will take the lead in globalising their operations and we can expect to see many acquisitions in North America  and Europe as Chinese companies look to expand their footprint around the world. Even though I believe we will see Far Eastern companies globalise their operations over the coming years, you can guarantee that even this momentum will slow down at some point. So in summary, for a manufacturing operation to be profitable they must adopt a ‘manufacture/source anywhere’ type of policy so that they can take advantage of changing market conditions as and when required.  If companies therefore setup production lines in multiple locations around the world, they will need to get access to their business information and connect with trading partners anywhere in the world. This clearly builds a strong case to deploy a cloud based B2B infrastructure that can be both flexible and scalable to meet the changing requirements of a business. Irrespective of whether you are a Western or Far Eastern based company looking to build a manufacturing plant in a new location, a cloud based B2B integration platform can offer a number of significant benefits.  In an earlier blog entry I highlighted how Gartner proposed that cloud based environments could offer a silver lining to many of today’s IT departments, you can read the blog HERE. So could cloud based B2B integration platforms provide the truly flexible business platform that so many companies are striving after? In an earlier blog entry I discussed the infrastructure related issues of expanding into a new market, for example ensuring that the utilities and telecommunications infrastructures are suitable for supporting a business.  However given that installing a hard wired telecommunications infrastructure is difficult in many emerging markets, many countries are looking to establish high speed mobile and wireless networks instead as they are quicker to setup.  This new trend will drive increased adoption of mobile devices in these regions, encourage more users to take their devices into their work place and finally Corporate IT departments will be asked to connect these mobile users to enterprise systems.  We have seen the BYOD (Bring Your Own Device) trend increase rapidly in western economies, I believe we will start to see an increase in BYOD in the emerging markets as well.  This will also contribute to a need to deploy more cloud based platforms in these particular countries. Cloud based B2B integration helps with international expansion projects by: Simplifying Connectivity: It doesn’t matter where trading partners are based, connectivity via the cloud provides ‘manufacture/source’ anywhere capabilities Improving Maintainability: Cloud based platforms allow new solutions or updates to be rolled out to a community of users from a centralised location, thus simplifying the management of B2B applications for users with relatively low or no IT skills Offering Regional Support: Whether supporting specific regional B2B standards or business processes, the cloud allows mediation between any document or communication standard. For example, quite often Chinese manufacturers are unaware of how to work with or deploy international B2B communication or document standards Centralising Contact Management: One of the big challenges faced by companies working in the emerging markets is ensuring that trading partner contact information is up to date and more importantly accurate. The cloud simplifies the management of contact information and helps to encourage more regular trading partner communications Increasing Security: Centralised authentication of all users allows role based environments to be established. This effectively presents only the information to the ‘cloud consumer’ that they need to do their day to day work. Improving Collaboration: Once you have all your trading partners connected to a cloud based platform it can significantly simplify how you work with long distance trading partners on a daily basis Distributing B2B Resources: The recent natural disasters in the Far East highlighted a major problem with companies hosting their business information through single data centres located in these regions.  By connecting to a cloud platform, if supply chain disruption occurs then companies can continue working with their trading partner community by utilising alternative data centres located in other regions around the world. Ensuring Trading Partner Participation: One of the challenges of working with trading partners in the emerging markets is ensuring that they can trade electronically with you. Connecting trading partners to a cloud based B2B platform allows long distance trading partners to get access to a centrally hosted suite of feature rich SaaS applications. All they need is access to a web browser and connection to the internet and they are able to participate in exchanging  B2B documents. Offering Local Language Support: Hosted applications can be delivered in local language thus further increasing participation levels from global trading partners. In addition, centralised helpdesk support can address business issues with ease and ensure that trading partners, no matter where they may be located, are supported 24×7. Improving Long Distance Shipment Visibility: Manufacturing or sourcing parts from remote locations requires increased levels of visibility across a supply chain. By connecting trading partners, 3PL providers and border control agencies to a single cloud B2B platform allows shipments to be tracked anywhere in the world. It also allows companies to monitor in transit inventory levels across multi-modal logistics providers. I will provide more details on this subject area via a webinar that I will be hosting in two months time.  I will update this blog over the next few weeks with details on how to register for this particular webinar. In the meantime if you are keen to learn more about the basics of cloud computing then you can find more information via an earlier blog entry HERE.      

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Reconsider Your B2B Strategy – Reason 2: Customer Integration

Every company wants to increase customer satisfaction in order to increase sales and enhance profitability. A good B2B strategy, especially where both parties integrate their B2B systems, will help your company to be more responsive to customers, while eliminating the errors that can damage your relationship. The Challenge To respond effectively to customer requests, a truly integrated supply chain is required, with data available and visible in real-time. Your B2B solution must be able to address your customer€™s business processes and have the flexibility to accommodate changes as they occur. This provides you with the foundation to automate entire supply chain processes, such as a customer order immediately trigging inventory replenishment from a supplier. 3 Key Areas to Review in Your Company (click on the links to learn more): Removing barriers to trade Increasing customer satisfaction From supply to demand driven The Role of B2B Managed Services B2B Managed Services helps you to reduce and control the cost and complexity of integrating with your customer€™s business processes. The key benefit is that it allows you to concentrate on the customer relationship rather than the technology. As you seek to increase customer satisfaction or move to a more demand-driven approach, you can concentrate on your business strategy in the knowledge that you have access to a global network of trading partners,allowing you to quickly onboard new trading partners with end-to-end visibility of the supply chain. Look out for the third blog in my 8 Reasons to Reconsider Your B2B Strategy series soon, which will focus on how to enter new markets and adapt to new channels.

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ISO 20022 for Securities Industry Gaining Traction

Two major global banks, JPMorgan Chase and BNY Mellon, have recently gone live on the Depository Trust & Clearing Corporation’s (DTCC) new ISO 20022 corporate actions messaging solution over the SWIFT network. The DTCC solution is part of a broader initiative, the Issuer to Investor (I2I): Corporate Actions project launched in May 2009 by SWIFT, DTCC and XBRL US in cooperation with ISO. The U.S. I2I project uses eXtensible Business Reporting Language (XBRL) technology to enable ISO 20022 financial standard data elements to be tagged in corporate actions and shareholders’ meetings announcements.  XBRL is an XML-based computer language for the electronic transmission of business and financial data. In the United States, the Securities and Exchange Commission (SEC) mandates that public companies submit financial statement information using XBRL, enabling that information to be “computer readable.” When used for the reporting of financial information, XBRL makes the process of creating, distributing, reporting and analyzing data more efficient and effective. According to the Issuer to Investor: Corporate Actions Community on SWIFTCommunity.net, the I2I project is linked to several other initiatives: – Implementation of the Official Reference unique identifier for corporate actions, – The adoption of ISO 20022 for corporate actions, – Co-existence between ISO 15022 and 20022 messages for corporate actions, – Proxy voting messages in ISO 20022, – DTCC’s reengineering project and adoption of ISO 20022, – The Issuers Agent messages in ISO 20022 for registrar to (I)CSD communications. ISO 20022 is quickly becoming the new standard for the Securities industry, enabling greater straight-through-processing, helping to reduce costs and improving internal processes. Industry initiatives that benefit buy-side firms, such as the adoption of ISO 20022 for corporate actions, will help broaden ISO 20022 adoption.  To support these initiatives, institutions need to build or acquire the necessary expertise to support an ISO 20022-based securities support infrastructure. In the meantime, firms must still support older standards such as ISO 15022 along with proprietary formats, as both old and new formats must co-exist in the short term. Much like the migration from ISO 7775 to ISO 15022 in the late 1990s, investment managers will be slow to make the move to ISO 20022. The effort of migrating to new standards while supporting old formats is mitigated by access to a strong team of connectivity experts. To augment internal IT capabilities, many organizations have partnered with messaging specialists that employ hundreds of mapping and integration experts to quickly and cost effectively transform data from one format to another. Using this approach can effectively neutralize the issue of standards.

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Clash of the SEPA Titans

There’s around 18 months remaining until the End Date, and SEPA is seen as a huge market opportunity for providers to win SEPA-related business from corporates. This SEPA-related business encompasses all possible aspects of consultancy and technology. For banks, this is both good and bad news. The market is getting educated, aligned around new processes and technology requirements, but, as I have mentioned in previous blogs, this may result in client retention issues for the banks. The ultimate customer relationship is founded on a bank providing the role of trusted adviser, so that the corporate client feels they are in a partnership together, helping the customer to achieve its business goals. Letting a third party vendor, a consultant or even Google search results into this relationship could be adding risk. In the world of SEPA, I see this could take the form of: A large company which decides on new business and/or technical requirements that don’t match with the bank’s existing capabilities. The corporate’s options are to either insist that the bank finds a way to meet their business and/or technical needs or to seek a different bank that does with a Request For Proposal A mid-size company without internal IT capabilities, which will seek a cheap, tactical SEPA migration solution from day one. They are likely to do a Google search to look for open-source and online banking options, or may perhaps seek help from a small consultancy firm So, with this in mind, I have created my own personal list of the success criteria for banks who wish to achieve the optimum thought leadership and trusted advisor status with their clients on SEPA. It’s August, and with the Olympics still in everyone’s minds I thought I would use a familiar theme. My winners are: Gold Medal – the ultimate, attractive SEPA thought leaders who spell out in detail how their customers can become compliant and achieve business benefits, communicated in a range of ways: Dedicated SEPA microsite covering all customer market segments (e.g. consumer, retail, SMB, corporates) Bite-size educational information for both the business and technical audiences Bank thought leadership in the form of best practices for companies and implementation advice Presence at events on SEPA, helping to resolve issues for various audiences, often featuring panel discussions. These include Corporate Treasury Events (pan-European and domestic), Payments and Cash Management Events. Also, recorded webinars, for those not able to make events Thought leadership articles in the Corporate Treasury, FS industry and CFO publications Presence within Social Media channels Pro-active SEPA strategy meetings with key corporate clients Branch managers aware of what SEPA is and the bank’s SEPA services and options Example of banks who deserve Gold would, for me, include ING, ABN AMRO and Deutsche Bank for their rich content, thought leadership and specific explanations on how to comply with SEPA through them. Silver & Bronze Medals – SEPA thought leading banks who could spell out more specific information and details on the “how”, rather than relying on a broad or “one size fits all” message: Dedicated SEPA page or tab within the bank’s web portal Bank thought leadership on SEPA through presence at industry events Thought leadership articles in Corporate Treasury and FS publications My Silver winners include HSBC, BNP Paribas and Societe Generale. The list of Bronze winners starts to get too long to list here! Did Not Qualify – the “me too” SEPA thought leadership approach that makes it appear as if SEPA isn’t on the bank’s strategic agenda: Listing generic SEPA benefits with no clear differentiation or added value from the bank Web links to official EPC rulebooks, implementation guidelines, ISO 20022 specifications Marketing limited to SEPA compliance, no mention of the benefits of using the bank’s very own SEPA services So, in conclusion, I believe the next eighteen months will be very interesting. In particular, it will be interesting to see how banks conduct their SEPA marketing campaigns with small and medium companies. Most of the large corporates are executing their SEPA programme now, but the mid-market represents a large number of organisations with fairly low volumes, and I forecast this is likely to generate an unprecedented situation for banks with the need to migrate hundreds of thousands of clients onto new business processes and within a short timescale. I know if I were a bank, I would want to make sure that these customers are well informed and know their next steps as early as possible, and before another bank gets in first to win that gold medal ahead of me!

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How B2B Integration Automates the Procure-to-Pay Cycle for Manufacturing Companies

Large companies in the aerospace, automotive, high tech and industrial manufacturing sector purchase trillions of dollars of goods every year.  Most of the purchases consist of raw materials, component parts or finished goods which they take into their manufacturing plants to create products.  It would not be uncommon for a $5 billion manufacturing company to issue several hundred thousand purchase orders during a single calendar year.  There is a tremendous amount of overhead associated with managing each of these orders throughout its lifecycle as they are acknowledged, changed, acknowledged again, received, invoiced and paid.  Integration technology eliminates many of the manually intensive processes associated with purchase order lifecycles.

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Reconsider Your B2B Strategy – Reason 1: Reduce Costs

Whatever the economic conditions, it makes good commercial sense to drive cost from your business processes by identifying inefficiencies and taking action to reduce or eliminate their impacts. Your current B2B solutions have the potential to do more for you, increasing productivity, providing the opportunity to extend your business network and introducing new practises. The Challenge It is likely your B2B solutions started small with a single process, such as orders, and then extended into different processes and document types. At the same time, the technologies available, such as communications protocols, are continually being enhanced. The end result is that your trading partners all use different document types, industry standards, communications protocols and technology infrastructures that you must seamlessly accommodate into your business network. That requires manpower. 3 Key Areas to Address (click on the links to learn more): Maintaining an up-to-date infrastructure Reacting to business needs Internal resource The Role of B2B Managed Services B2B Managed Services should allow you to eliminate, or, at least, control, two major sources of ongoing investment. Firstly, you are outsourcing technical capabilities, enabling you to connect with partners regardless of document type, communications protocol or industry B2B standard. Secondly, you have access to all the skills you need, including 24 hour support, to implement, change, extend and manage a B2B infrastructure that can encompass your entire trading community. This has two major benefits: you remove B2B as a capital expenditure from your balance sheet and gain greater control over your B2B costs on a monthly transaction basis, enabling you to utilise your B2B budgets better. Look out for the second blog in my 8 Reasons to Reconsider Your B2B Strategy series soon, which will focus on the challenges in integrating with your customers.

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It’s hybrid, but not as we know it

One thing I know for sure is, hybrid B2B solutions are here to stay. Over my last couple of blogs we’ve discussed the pros and cons of it, and tried to identify the optimal B2B solution set. Of course, what we always want is the best of all worlds – if you recall my car analogy in a previous blog, we wanted quiet electric power with the flexibility of a petrol engine and without making too many compromises! Traditional EDI and B2B, even in a managed services mode, was characterised as being good at some things and cloud based services good at others. Nothing new, information technology has always been like this. In recent months I’ve concluded that these hybrid solutions have been around much longer than you might suppose. In fact, the more I talked about it, the more I’m convinced that the cloud is driving a fundamental shift but it’s a different shift than we might think. You might assume that when it comes to traditional B2B e-commerce, it has always been a simple decision. Either we do it on premise, or we buy B2B as a service. If you like, it’s a “make” or “buy” decision. But it is apparent that many companies are in fact “making and buying”, and at the same time. These are, if you will, our hybrid B2B solutions. Let me explain further. This is fundamentally a debate on the pros and cons of different technologies, whether it is battery power or petrol power, software or service. For example, EDI network providers are good at reliably moving highly structured and compact data. They are designed for small packets of data and usually charged for on a volume related basis. As newer data standards, such as XML, have been introduced, the volume of data being moved in messages has increased by perhaps a factor of ten. Some companies implemented on-premise gateways with direct AS2 connections to handle these new data structures and to try to avoid EDI network charges. And conveniently these solutions could be used as on premise integrators linking the various ERPs. But, they then incurred software costs, on-going upgrade and maintenance costs. In high technology, retail, construction and other industries, solutions involving the co-existence of on-premise software, direct connections and EDI network trading partners have been around for years now. To me, this is hybrid B2B. But is it also a compromise. Do you, I wonder, get the best of either worlds or the worst? If you have on-premise software, even for just a small part of your B2B needs, it brings a range of additional costs. There are the purchase, upgrade and maintenance charges I mentioned earlier as well as the hosting costs, the on-going training, and the people costs. And in a hybrid approach, the managed service set up, initiation and volume charges as well are only being defrayed across part of your B2B implementation, thus making the unit cost expensive. So maybe you get all the hassle of running your own software and fail to reap the true economies of a managed service as well. So here’s the rub. The debate around hybrid is currently centred on how to maximise the attributes of different B2B services, be they legacy or cloud-based. Yet many are already operating a hybrid approach of on-premise and service in B2B. Many accept that a B2B managed service can provide a robust solution for high volume transactions. Others are becoming committed to the cloud for their low volume collaborative activity. Indeed the best solutions allow cloud users to see and amend EDI network generated transactions. Is this the best of both worlds? Perhaps the real answer is now three worlds. On-premise, managed service and cloud. Maybe what we really need to do is persuade on- premise software users to move to a managed service or the cloud? I wonder if B2B integration is now a stepping stone to full blown cloud based Enterprise integration? Would people risk it I wonder? I may not have the answers to all the questions, but I do have final question to leave you with – the first thing to do when you start discussing a hybrid approach in your business is to ask “What exactly do you mean?

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How EDI enables the Retail Supply Chain

Suppose a company such as Walmart, Carrefour or Metro needed to place an order for $1 million from a clothing supplier. Perhaps the order consists of an assortment of “basics” such as black socks and white t-shirts for the men’s departments of its stores in the US.  The merchandising team at the retailer first analyzes the various brands, colors, sizes, styles, prices, and packaging to select an appropriate assortment for their stores.

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Hybrid B2B: A help or a hindrance?

In my last blog we were debating the pros and cons of hybrid B2B solutions. The main thread to our discussion wrestled with the pros and cons of “on-premise” or” in cloud” and proved to be a difficult and a more strategic decision than you may have thought. In the end we had consensus that this was a good and timely debate to have and the goal of a hybrid approach was to achieve the best of both worlds while avoiding too many compromises A great contribution to this debate has arrived from Stefan Reid at the analyst firm Forrester, who seems gets asked these sorts of questions a lot. The link to his article is at the bottom of this blog.  Briefly, his views are as follows: Cloud is a disrupting technology because it can provide traditional on-premise and B2B integration solutions. Most companies have internal integration between multiple ERPs or other applications and B2B is typically on-premise or a managed service. Cloud can cover both internal and B2B so you need to assess its role more widely. As such, as we had already concluded, it becomes a strategic decision. Strategically, Stefan points out that cloud is good at standardisation and self- service and is considered to be an operating cost. This makes is suitable for certain parts of your B2B operation, such as where there is a volatile supply base, for small suppliers, where there is infrequent use and for online collaboration. Legacy B2B solutions are usually a capital cost and functionally good at different things. Managed services are good at transporting transactional standards-based documents that require active translating and reporting. So Stefan’s view is to look at your integration requirements in two dimensions. Given the characteristics mentioned above he suggests thinking in terms of volume of transactions on one axis and the degree of change on the other. So B2B managed services are good for high volume, stable business requirements and cloud for a low volume, frequently changing supplier base. In the top right hand side of the classic matrix, would be hybrid. Stefan recommends that you consider carefully the dynamics of trading partner volume and the degree of change in that community before settling on your exact hybrid approach. So, as we said at the beginning it’s clearly a worthwhile debate to have. I’ve got some more to add to the discussion, with some other dimensions that I think you should consider. But that’s for next time. For now, here’s the link I mentioned and which I recommend to you. http://blogs.forrester.com/stefan_ried/12-07-23-b2b_meets_cloud_based_integration_cbi?cm_mmc=RSS-_-IT-_-71-_-blog_1882

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Five Reasons Why Manufacturers in Japan are Starting to Embrace Cloud B2B Environments

The adoption of cloud based B2B environments continues its relentless march around the world and the latest country to start deploying cloud solutions is Japan.  The Japanese manufacturing industry has traditionally used behind the firewall based software solutions and many enterprise systems such as ERP platforms have been developed as bespoke platforms to meet the needs of a particular company. In addition to relying on behind the firewall software environments, many of the larger manufacturing companies, particularly in the automotive and high tech sectors, have built up extensive global IT resources and network infrastructures just to service the needs of their own businesses.  (In some cases the internal IT departments are almost as large as some of the IT services companies in the world). If a Japanese company wanted to setup a new plant in another country then they would simply extend their internal network into that particular country using their internal IT resources. This network expansion process has been going on for many years now but there have been a number of macro-economic events recently which have impacted these ‘home grown’ IT infrastructures. The Earthquake in Japan and the floods in Thailand last year are now driving interest in Cloud based B2B environments. So I thought it would be worth while highlighting what I would regard as the top 5 reasons why Cloud based B2B environments are now starting to be embraced by manufacturers in Japan. 1. Introduce Flexibility: Japanese manufacturers need to scale production as seamlessly as possible to ensure they can meet varying consumer and market demand levels. The problem that Japanese companies are now facing has been brought on by two factors, continuing changing consumer demand for innovative products and the supply chain disruptions that hampered nearly every Japanese manufacturing company in 2011.  Japanese companies are effectively looking to ramp up production anytime, anyplace and anywhere using internal manufacturing resources. However changing consumer demand and pressures to enter new markets has led to many Japanese manufacturers needing to form partnerships with other manufacturers around the world.  In an earlier blog post I highlighted how Toyota had formed numerous partnerships over the past few years and if they wanted these partnerships to be successful then they would need a flexible B2B platform that would allow new suppliers or joint venture partners to be added with ease. Given the ‘fixed’ nature of many Japanese IT infrastructures, manufacturers are now having to make expensive changes in order to connect new business partners or ramp up production at another plant. By moving a B2B environment to the cloud, it allows companies to build flexibility into their supply chain as required by the needs of the business and the Cloud also offers a secure, ‘neutral’ environment into which key suppliers or business partners can be connected. 2. Implement Modernisation: Japanese manufacturers have relied on bespoke, behind the fire wall software solutions to manage their global production facilities Many Japanese manufacturing companies have been using behind the firewall software environments for many years.  When Just-in-Time production techniques were introduced to the automotive industry, off the shelf materials ordering and supplier management software simply did not exist so the car manufacturers developed their own software.  Over the years this software has become entrenched within many Japanese manufacturing companies and almost acts as the ‘IT DNA’ running through the whole company.  So changing something that is so tightly weaved into every department within a manufacturing department is never going to be easy.  Today however the internet has taken over, mobile devices are starting to be introduced to the enterprise and Japanese companies are desperately trying to modernise their IT infrastructures to support these new ways of working. The cloud offers a way for Japanese companies to modernise their IT and particularly their B2B infrastructure with ease. Can you imagine the time and effort that would be saved by connecting a trading partner to a Cloud based B2B environment rather than have to install software on a remote PC and ensure they have the required connectivity in place to be able to exchange transactions electronically? The Cloud is going to driving a revolution in how IT environments are managed and maintained on an on-going basis and IT resources can be re-deployed on to other IT projects within the business. 3. Initiate Consolidation:  Japanese manufacturers have expanded their production facilities all over the world, building out extensive internal networks and deploying multiple B2B hubs One area that we are currently seeing significant interest in is network and B2B hub consolidation.  As I mentioned earlier, many companies have expanded their production capacity around the world through extending IT networks and introducing more and more B2B hubs.  Over time these B2B hubs have become increasingly difficult to manage, especially when going through some form of upgrade process so anything that can simplify this particular process will be of immense benefit to a company. In recent years B2B network consolidation has been a key driver of Managed Services business deals at GXS and we are now seeing a significant increase in requests from Japanese companies to help consolidate their B2B networks and hubs on to one common platform that can serve their entire global operations. Cloud based B2B environments, such as GXS Trading Grid, are helping Japanese companies to consolidate their global B2B hubs and networks and at the same time contribute some way towards future proofing their B2B platform moving forwards. 4. Improve Collaboration: Japanese manufacturers are now embracing collaboration and co-opetition in order to respond to changing consumer and market demands As I mentioned earlier in this blog entry, many Japanese companies are forming more and more strategic partnerships and so there becomes a need to introduce a B2B platform that helps to encourage collaboration across the respective supply chains of the partnering companies. These partnerships tend to run on a project by project basis and so the Software-as-a-Service business model is ideal for this type of situation as you can effectively use the hosted software for the duration of the project.  However companies will typically continue paying for this software on an on-going basis so that they can work on new projects with their respective partners. Therefore Cloud environments utilising feature rich, web based applications that can be accessed anywhere across the business help to encourage collaboration between two or more partnering companies and their respective supply chains.  In addition they offer companies improved predictability and visibility of long term costs associated with running Cloud based B2B platforms 5. Increase Resilience: Japanese manufacturers are having to build stronger resilience into their global operations in order to minimise future supply chain disruption 2011 was a turnaround year for the Japanese manufacturing industry, almost the entire automotive and high tech supply chains, both in Japan and around the world were impacted in some way.  This was an unprecedented event and one that Japanese companies do not want to see repeated any time soon.  Following the earthquake, Japanese companies were very quick to restructure their supply chains by introducing dual sourcing strategies, mapping out their supply chains, moving production to other countries and essentially trying to spread the ‘manufacturing risk’ to other plants around the world in order to build increased resilience across their supply chain. In addition, companies started to pay closer attention to where they located their data centres.  If an Earthquake takes place then having your global production operations connected into a single data centre in Japan will cause problems. Moving forwards the adoption of multi-region data centres with the ability to fail across should a data centre go offline, will become the normal mode of operation moving forwards. Cloud environments help to foster collaboration amongst trading partners around the world and more importantly helps to speed up communications out to a trading partner community during a time of crisis.  For more information on how GXS RollStream can help to increase supply chain resilience then you may like to review an earlier blog entry of mine which discussed this subject. In another earlier blog of mine I described how GXS Trading Grid may be considered as  Cloud Service Brokerage, a single platform that can provide integration services to multiple cloud based enteprise systems.  If you would like to learn more about how Cloud Service Brokerages work then please read my colleague Leo Yeung’s blog entry which was posted earlier this week., you can read it by CLICKING HERE

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Hybrid isn’t just for cars. Why not in B2B?

We’ve been discussing a hybrid approach to B2B integration strategies here recently. The official definition of hybrid is a something containing mixed elements (or for the animal lovers amongst you, a “cross breed”). The reason for choosing a hybrid approach, in my mind, is to get the best of each of these mixed elements. If we consider the car example, if I buy a hybrid car should I get two power units, an electric and a petrol one? The quiet and smoothness of an electric motor combined with the flexibility offered by a traditional, but perhaps smaller, petrol engine seems to be the real benefit. Yet, the conclusion on the discussions here seems to agree that a hybrid approach always brings with it compromise, and often controversy. After all, back to the car example, the weight of the batteries reduces fuel consumption and hybrid cars are pretty expensive. So do you and the environment really benefit from driving a Prius? I think the answer is… it depends. This got me thinking on B2B. Could a hybrid approach fuel not just our cars but also the world of B2B integration? Where is the value in a hybrid approach to B2B? Well, let’s look at it – if we think of a combination of “on-premise” (software) and “cloud” (service), that’s just the battery and petrol engine argument again. On-premise and cloud are merely the power units or delivery mechanisms. Where do we get the B2B equivalent of quiet, smooth and flexible? At a generic level, I guess most people in B2B would want something like this. Speed, security, reliability, ease of implementation, resilience, robustness, accuracy, best of breed, industry proven and, cheap, now please! So, as you’re probably realising, finding the best hybrid B2B solution set (in the real world) is a little more complicated, with compromise and likely controversy along the way. If a hybrid B2B strategy is your chosen path, via the different worlds of “on-premise” and “cloud or managed service”, what does this really mean? My initial thought was to list the B2B characteristics outlined above, such as speed and security and score each for “on premise” or “cloud”. But the more I discussed and debated this with colleagues, the harder it became. Can it really be faster to develop an on-premise solution versus Software as a Service? Is “on-premise” more resilient than “cloud”? And is “best of breed” better behind the firewall or outside it? What is for sure is everyone has an opinion – we all had examples of slow, insecure, and unreliable that we could quote, as well as fast and secure to suit our stance. And then, it dawned on us. This wasn’t just about our attempts to rationalise the pros and cons of the different elements of a hybrid B2B strategy. The interesting thing was the fact that we were actually having the debate. And, what was becoming clear in our debate was that a hybrid B2B approach has great potential, offers choices and flexibility, and depending on your B2B integration needs it can be deployed in different ways. So, we managed to agree on something. A hybrid approach is a meaningful solution for B2B and should be considered. Clearly, this isn’t enough of a conclusion for you, so in my next blog I will put some more fat on the bones of this debate. But, in the meantime, please chip in with your comments and experiences?

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SWIFT Latin American Regional Conference: Globalization, Modernization & Interoperability

I recently attended the inaugural SWIFT Latin American Regional Conference (LARC) held in Rio de Janeiro, Brazil. Almost 300 delegates representing central banks, market infrastructures, clearing systems, payment networks, financial services firms, corporate treasuries and technology providers attended the two-day conference sponsored by SWIFT.  The conference theme “Going for growth in a borderless world,” explored how Latin American financial services organizations are adapting to challenging global economic conditions, numerous regulatory changes and the need to interoperate across the region. I apologize in advance for the number of new acronyms introduced here. I learned a lot about the various Latin American payment networks, clearing systems and regulatory agencies while attending the conference and am introducing some of them below. Attending the plenary and work sessions, globalization was certainly the primary theme, but I came away with a key secondary theme, interoperability. Panelists in the opening plenary “Market Infrastructures in Latin America’s Emerging Markets” talked about the rapid evolution of payment and securities systems, especially in Brazil, in the face of runaway inflation (6821% in April 1990) and 230% credit card interest. Market infrastructures such as CIP (Brazil’s interbank funds transfer system), Combanc (Chile’s high-value payments systems), and ACH Colombia discussed projects underway to modernize their systems. For example, several Latin American countries signed a letter of intent to form a cross-border ACH association, removing barriers to clearing low-value payments. To bring its systems up to industry standards, ACH Colombia is seeking ISO 20071 information security certification. The Latin America ACHs are looking at moving toward SWIFT MT and ISO 20022 compliant payments. One example is the SWIFT User Group at FEBRABAN, the Brazilian Federation of Bank Associations, working with SWIFT to map domestic payment formats into the SWIFT MT 101 format.  There is also work underway to create IBAN (international bank account number) codes for the Brazilian market. In a work session titled “Market Infrastructure Integration”, representatives from BNP Paribas Securities Services, DCV (Chile’s central securities depository) and SWIFT discussed their efforts to make Latin America securities market infrastructures more competitive on a global scale. One project, likened to the beginnings of Euronext, was the creation of the Integrated Latin America Market (MILA), integrating exchanges from Chile, Colombia and Peru. Through a FIX protocol messaging service, brokers in the three countries can trade shares through agreements with local brokers within the markets. The end goal is to have a fully integrated market infrastructure encompassing the four steps of the value chain: trading, clearing, settlement and cash. Another securities session, “Impact of regulation and new principles on financial markets”, discussed the implications of the FSB (Financial Stability Board) and updated principles of the CPSS-IOSCO (Committee on the Payment and Settlement Systems and International Organization of Securities Commissions). An executive from CETIP, Brazil’s largest central depository for custody, trading and settlement of private and OTC securities, outlined the need for updated regulations for issuers, depositories and custodians. The Brazilian securities sector is also trying to increase interoperability between CETIP, Selic (central depository of securities issued by the National Treasury and the Banco Central do Brasil), and BM&FBOVESPA (the Brazilian securities, commodities and futures exchange. Making interoperability more difficult is the plethora of global standards bodies–BCBS, CPSS, IASB, IAIS and IOSCO (Basel Committee on Banking Supervision, Committee on Payment and Settlement Systems, International Accounting Standards Board, and International Association of Insurance Supervisors.) Last but not least, SWIFT for Corporates was highlighted in a presentation called “Corporates are a catalyst for change in the financial sector.” There were two key takeaways in this session. The first is that global corporates doing business in Brazil are demanding the same level of transparency that they currently have worldwide.  The second is that Brazilian corporates are going global and want straight-through-processing for their international payments and receivables, improving working capital management. There are still a number of barriers to overcome for corporates in Brazil such as overcoming cash pooling barriers, foreign exchange controls, restrictions and a high corporate tax burden, but that is not stopping corporates from improving their treasury processes. At the end of the two-day conference, I am convinced that there are significant opportunities in Latin America for technology providers to help banks, corporates and securities firms to globalize, modernize and interoperate across the region and worldwide.  In fact, I had conversations with treasury staff from a Brazilian conglomerate, a global diversified high tech company headquartered in North America, and a global energy and petrochemical firm headquartered in The Netherlands. All of the conversations centered on challenges with efficiently getting information and data from their banks.

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Benefits of using ASNs (Advanced Shipment Notices)

I continue to be surprised by at how many companies are still not requiring Advanced Shipment Notices (ASNs) from their suppliers.  Advanced shipment notices provide details on the timing, contents and packaging of forthcoming deliveries.  Although ASNs have been around for decades the benefits of these EDI documents are still not widely understood.  In this post, I will examine the benefits to a retailer’s distribution center operations.

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3 Considerations when Upgrading Your B2B Software — A Software-based Approach versus a Managed Services Model

Are you considering another update or version of your B2B integration software?  Is an important customer demanding a new business process that your current software does not support?  If so, it may be time to pause and reevaluate your overall approach to B2B integration. Should you continue with your current software-based approach or should you change to a managed service model? Below are three factors you need to consider when making that business-critical decision. 1.       Cost Software-Based Approach One of the first factors is to assess the scope of your software update. Are you considering switching to a new software solution from a new vendor?  Even if you€™re not, the new version of your current vendor€™s software can be the equivalent of buying a totally new system requiring a new software license, new hardware and additional personnel with new, specialized skill sets.  Many companies struggle with the one-time expenses associated with an upgrade, including: The need to outlay significant CAPEX for the acquisition of software licenses, server hardware and storage devices. The need to staff up the team to perform the migration from the old platform to the new platform.  They€™ll need to redevelop the maps, test the new environment, onboard the trading partners and add new functionality. The risk is all with the customer.  Whether successful or not, the vendor gets paid. The risk is even higher if the migration is in conjunction with an ERP upgrade, data center move or other IT initiative. There are also ongoing operational costs to consider, including the personnel to do map maintenance for current trading partners, new trading partner setup, communications monitoring, help desk support, reporting and analysis. You must also consider the cost of ensuring enough resource availability to deal with ever-changing technology requirements, such as  new communications protocols or standards versions,  and new demands  from trading partners  to implement new business processes, such as electronic invoicing or cross-docking in their distribution centers.  Managed Services Model With a managed services solution, you offload all the day-to-day operations of your B2B integration program to a third party, including map maintenance, new trading partner setup, communications monitoring, help desk support, reporting and analysis. Typically you pay an up-front implementation fee and then an ongoing monthly fee that is aligned with your usage of the application.  Moreover, when the managed services provider adds new system capabilities or implements an updated version it is usually at no additional cost and is often transparent to your processing. You reap the benefits without interruption to your business processing.   In addition, you can redeploy the personnel currently assigned to the B2B program to support your other resource-intensive initiatives Research indicates that when considering the total cost of ownership, companies typically save between 20 and 40% when using a managed services approach.  But it is not all about cost. 2.       Customer Demands With a software-based solution that you manage in-house, you will need to have to have enough staff with expertise in the ever-changing and complex standards, communications and technology capabilities your customers may require.  The managed services provider is responsible for remaining current with the latest technology changes and can provide the skilled staff to quickly respond to your customers€™ demands for new documents, new document formats and new protocols as well as other requirements, such as data encryption, compression or other special technical capabilities.  3.       Visibility and Data Quality Typically, standard B2B software provides basic transaction monitoring and error alerting.  Staff must be assigned to continual monitoring activities and procedures must be in place to resolve all ongoing issues. A managed services provider typically provides end-to-end visibility into the lifecycle of all your transactions. The provider not only monitors transactions, but also proactively troubleshoots errors and resolves problems.  To ensure data quality, some providers enable you to proactively track €œin-flight€ transactions and processes against business and compliance rules to prevent errors before they impact your business.

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Top 10 B2B e-Commerce Announcements in the First Half of 2012

Although we are only half way through 2012, it has already been a big year for B2B.  There has been more activity in the B2B e-commerce sector in the past six months than there has in the last six years.  There have been two new standards introduced for the automotive and high tech sectors.  Two B2B e-marketplaces and dot com survivors have announced intentions for IPOs.  And two of the larger B2B vendors – Ariba and EasyLink – have been acquired.  Below are the top 10 announcements in the B2B e-commerce sector so far this year.

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Top 10 EDInomics Posts for the 1st Half of 2012

Having just passed the halfway point for 2012, I thought I would provide a recap of the top EDInomics posts I have written this year.  The ranking is based upon information gathered from Google Analytics about end-user visits to new posts published in 2012. 

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CIAB FEBRABAN: More Differences than Similarities in Brazilian Banking Technology?

I recently attended CIAB FEBRABAN (roughly translated as Congress and Expo of Information Technology) sponsored by FEBRABAN, the Brazilian Federation of Bank Associations, in Sao Paulo Brazil. The theme for the 22nd edition of the conference was “The Connected Society.” Like many conferences, the event consisted of educational sessions along with an exhibition hall. As I can barely say “good morning” (bon dia) and “thank you” (for a woman, obrigada) in Brazil’s national language, Portuguese, I did not attend any of the educational sessions. But the session themes were similar to those from recent US financial services events—innovation, cloud computing, information security, mobile technologies, social media and big data. Just about every technology solution used by commercial banks was represented in the exhibit hall. Hardware vendors displayed ATMs, cash counting machines, card readers, image capture scanners, data centers “in a box” and security devices. Software providers presented integration services, core banking systems, mobile online banking, ATM driving software, business intelligence and payment hubs. Service providers discussed business process outsourcing (BPO), data center operations, application development and call center outsourcing. Many of the vendors were leading global providers such as IBM, Microsoft, HP, EMC, SAS, SAP and GXS. But in talking with Brazilian bankers and service providers, they stress the uniqueness of the Brazilian financial services landscape. Looking across the solution set, I believe there are more technology similarities than differences. One example is integration services. When GXS expanded its presence in Brazil with the 2009 acquisition of Interchange Serviços S.A., GXS already had a market presence with its business-to-business (B2B) e-commerce solutions. Interchange was one of the largest in-country providers of electronic data interchange (EDI) services and its customers included more than 50 banks. GXS Brazil banking clients use the same types of managed integration solutions that GXS provides to more than 250 financial services firms around the globe. The technology differences in Brazil evolved from a period of hyperinflation driving improvements in transaction processing speed, standardization of consumer invoicing (Boleto Bancário) and payment processing, and a need to support social welfare programs. In response, companies like GXS developed financial portals that manage collections, payment receipts and payment file validation for corporate clients. We were also a pioneer in the development of a “Correspondente Bancário” (CORBAN) solution for capturing, processing, authorizing and managing consumer payments made at banks, merchants and post offices. The key take-away from attending my second CIAB FEBRABAN conference is that the Brazilian financial services sector is well-served by established hardware, software and services offerings from global providers. However, providers also need to take into consideration some of the unique characteristics of the Brazilian financial system when developing solutions for this increasingly important geographic region.

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HMRC Clarify UK e-Invoicing Guidelines

Last week HMRC released a technical note that explains the proposed forthcoming modifications to the existing UK VAT invoicing rules, reflecting the changes introduced by the EU Council Directive 2010/45/EU. Before I give my perspective, perhaps a little paraphrased pre-amble from HMRC will establish their position; “ The changes assist business by removing or largely reducing current VAT obstacles to the use of electronic invoices, simplifying a number of existing VAT invoicing requirements and removing some existing administrative burdens associated with VAT invoices… …The aim is now to have a consistent set of rules that will be uniformly applied across the EU, making things simpler and removing uncertainty for businesses. “ So far, so good. “ …the existing EU rules for electronic invoicing allowed individual member states to impose additional conditions on taxpayers wishing to use electronic invoicing to those imposed on taxpayers using paper invoices. This includes the requirement to use specific technologies such as electronic signatures and Electronic Data Interchange (EDI) as a means of ensuring the authenticity of origin and integrity of content of the invoice… The UK has not opted to impose any of these additional conditions for electronic invoicing of goods or services supplied in the UK…,” Ok, so the new EU rules do not allow the UK to impose a specific method for guaranteeing the authenticity and integrity of an electronic invoice. In truth, the existing UK rules are flexible as they indicate that digital signatures and EDI are two compliant methods and that a third option, ‘any other means’ was also possible; an advanced electronic signature; electronic data interchange (EDI); or any other means for supplies within the UK. What exactly is ‘any other means’? As described by HMRC… “ …the authenticity of the origin and integrity of the invoice data are guaranteed… as long as you are able to impose a satisfactory level of control over the authenticity and integrity of your invoice data… “ OK, I digress. Let us continue. “ …but such a requirement remains a possibility in the case of intra-Community transactions, where another member state may require an electronic signature or EDI as a condition of accepting the invoice. For this reason the current UK law includes the options of electronic signature and EDI…” Well this is smart, as some countries have different thoughts on compliance, and France for example has clear rules for electronic signatures and EDI. “ …The fact that many member states do impose the requirement to use electronic signatures and EDI has the potential to make the use of electronic invoicing less attractive to business and the differing requirements and rules across the EU is a recognised obstacle to the wider use of electronic invoicing…” Maybe – maybe not. Spain, Germany and France (and the UK) all use these methods and seem to be doing ok. The Nordic countries are the most successful, but it is not clear if the liberal tax regulations there have provided impetus for adoption, or government mandates or B2C adoption by banks. “ …Under the new simplified rules individual member states can no longer impose conditions in relation to the use of electronic invoices. Instead, it is for an individual business to determine the method used and the only condition imposed is that the customer must agree to the use of electronic invoicing. In this sense, paper and electronic invoices are now treated equally… ” Great! e-Invoices are now treated the same as paper and business now get to determine which method they want to use (didn’t they already?). This is really going to help increase adoption! Ok, what are the methods from which a company can choose? “ …The method used to ensure the authenticity of origin, the integrity of content and legibility of the invoices is a business choice and can be achieved by any business controls which create a reliable audit trail between an invoice and a supply of goods or services. ‘Authenticity of origin’ of an invoice means the assurance of either the identity of the supplier or the issuer of the invoice. ‘Integrity of content’ of an invoice means that the content required to be shown on an invoice has not been altered… ” Brilliant! What are the common methods for achieving this..!!? “ …UK legislation will be amended to remove the electronic invoicing and EDI requirements and make it clear that the choice is one for business to make… ” Wha..? Hang on a minute… So, to make things clear for businesses HMRC is removing the two most established methods of guaranteeing authenticity and integrity from its guidelines? Ok, Wait a minute, let’s step back a statement or two… how do I now prove authenticity & integrity? “ …any business controls which create a reliable audit trail between an invoice and a supply of goods or services… “ Alright! That seems pretty straightforward… but what are ‘business controls’? I checked through the technical note, only to find a single reference to the word ‘controls’, and that is in the sentence above. Maybe I should check the existing UK regulations and see what they say; “ In order to establish the authenticity and integrity of your electronic invoicing you will need to be able to demonstrate that you have control over the: completeness and accuracy of the invoice data; timeliness of processing; prevention or detection of, possible corruption of data during transmission; prevention of duplication of processing (by the recipient); and prevention of the automatic processing, by the recipient, of certain types of invoice on which VAT may not be recoverable – for example, “margin scheme” invoices. Additionally you must: be able to demonstrate that you have a recovery plan in case of a system failure or loss of data; and maintain an audit trail between your electronic invoicing system(s) and the internal application system(s) that are used to process the electronic invoices. “ Seems pretty straightforward… So, if I am ever audited, what e-Invoicing method can I use that guarantees my company will not be penalised? Well, I can think of two… EDI and electronic signatures… OK, so I am being facetious an perhaps a bit too hard on HMRC as their intentions are honourable, but by removing the two most commonly used methods from the rules, even as examples, they have described less tangible evidence as to what constitutes authenticity and integrity. Section 4.8 of the existing UK rules already referenced HMRC’s desire to not be too overly prescriptive and a preference for ‘good business practice or businesses’ own controls’, so unfortunately, without providing examples of solutions such as EDI that do provide compliance, how are companies ever going to be 100% sure? It seems to me the new changes clarify the UK rules to the point of translucence… …and just to add insult to injury, section 2 of article 233 of the new EU directive states; 2. Other than by way of the type of business controls described in paragraph 1, the following are examples of technologies that ensure the authenticity of the origin and the integrity of the content of an electronic invoice: (a) an advanced electronic signature within the meaning of point (2) of Article 2 of Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures*, based on a qualified certificate and created by a secure signature creation device, within the meaning of points (6) and (10) of Article 2 of Directive 1999/93/EC; (b) electronic data interchange (EDI), as defined in Article 2 of Commission Recommendation 1994/820/EC of 19 October 1994 relating to the legal aspects of electronic data interchange, where the agreement relating to the exchange provides for the use of procedures guaranteeing the authenticity of the origin and integrity of the data.

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Circles for B2B

One of the features I like most about Google+ is the concept of circles.  Unfortunately, although millions of people have joined Google+ the activity levels are still very low as compared to other social networks.  Even though the concept of circles has not been successful in the consumer space, I think there is a great applicability for the concept in the Business-to-Business (B2B) e-commerce sector.  If companies segmented their various business partners into “circles,” it would then be much easier to apply policies to govern the business processes and service levels for each group. 

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