Manual processing is slow, inefficient and prone to error. In our digital and connected world, this is no longer sustainable. B2B (Business-to-business) integration began as a way to electronically exchange business documents with suppliers and customers. This saved time and money and improved the level of service you could deliver. Modern B2B integration solutions have evolved to provide the foundation for ecosystems of trading partners to work and collaborate effectively together.
A simple B2B integration definition would be: ‘the digital integration, automation and optimization of key business processes that extend outside the four walls of your organization’. In effect, B2B integration provides a technology architecture to improve every aspect of how you work with customers, suppliers and other partners.
Beyond the cost, speed and productivity improvements of conducting digital transactions, the major benefits of B2B integration revolve around enabling the collaborative relationships and entirely new work practises that drive modern supply chains.
For example, today’s car manufacturers rely on their suppliers to typically produce up to 85% of parts in their vehicles. In addition, as vehicles become more connected, the types of partnerships that auto manufacturers create is changing– in China, a total of 98 carmakers, universities and institutes have joined a strategic alliance to develop the country’s intelligent and connected vehicle industry and to transfer new technologies into mass production.
To support these new business process requires a B2B integration platform that can allow for the fast and secure sharing of digital information between all parties involved in this supply chain ecosystem. In fact, According to IDC Manufacturing Insights, by 2020, over 60% of companies will rely on digital platforms ‘that enhance their investments in ecosystems and experiences and support as much as 30% of their overall revenue’.
The types of B2B Integration
There are two different types of B2B integration:
- Data-level integration: This is the process of moving from paper to digital documents and involves the automating of document exchange between trading partners. Electronic Data Interchange (EDI) can be thought of as the first generation of this type of B2B Integration.
- People-level integration: This enables effective communication and collaboration between trading partners to conduct end-to-end business processes. This will involve features such as partner onboarding and community management.
The best B2B integration platforms provide a wide range of capabilities to address both types of integration.
What’s the difference between B2B Integration and EDI?
EDI systems automate and simplify the process of exchanging key business documents – such as invoices, purchase orders and shipping notices – with your trading partners. Early EDI B2B integration solutions focused on replacing manual processes with automated alternatives.
Once organizations started trading electronically, it become clear that business processes could be further enhanced by introducing collaboration and community management features to the same B2B integration solution. While EDI remains a bedrock of B2B integration technologies, there are an additional range of features that you should expect, including:
Electronic Data Exchange
The first step towards B2B integration is the automation of key business documents–such as purchase orders, invoices, advanced shipping notices, etc.–that replaces paper documents with real time exchange of digital files.
Global Partner Enablement and Management
Key to every modern B2B integration solution is comprehensive community management. This involves tools that allow you to automate connections with your partners–customers, suppliers, logistics providers, financial institutions–to securely and effectively share and collaborate on business information. This begins with rapid partner on-boarding and touches all parts of your operations from new product development to supply chain management to marketing and sales.
Business Process Management
Business process management involves the use of rules and profiles to improve the quality of the data that drives key business processes–such as matching delivery quantities provided in an invoice to the goods received or shipping notice. This allows you to automate end-to-end processes between you and your partners to increase efficiency and productivity.
Enterprise Application Integration
The best B2B solutions enable data to flow directly from your business systems into that of your customers and suppliers–for example, SAP B2B integration allows your chosen ERP data to pass through your network. The B2B integration platform automatically translates your data into a format that the enterprise applications of your partners can accept. More than this, the platform you choose should be able to act as ‘quarantine’ as it passes between back-end systems. One of the key B2B integration best practices is its ability to establish business rules that check data quality and alert you immediately if an exception occurs.
Business Activity Monitoring
This facility provides applications, typically delivered online, that monitor the real time status of B2B Integration operations and reports the performance of your system over a given time period. Real time alerts help you quickly identify and address process breakdowns while reports show B2B integration patterns and trends to improve system performance over time.
Often the only way to gain complete end-to-end visibility of a B2B transaction is as it passes through your network. B2B integration tools have access to a great deal of valuable business information that would be difficult to capture using other sources. This makes it an invaluable resource for deriving insight into the actual performance of many parts of your business. Today’s B2B integration platforms can provide advanced analytics embedded into the solution–increasingly involving artificial intelligence and machine learning known as AI-assisted analytics – to improve decision-making and understand how you can better work with your trading partners.
What are the benefits of B2B Integration?
Working with companies external to your organization is fundamental for every business and B2B integration represents the digital transformation of these external relationships. A fully integrated end-to-end B2B integration solution delivers a host of benefits, many of which were simply not possible before, including:
- Reduce time and cost associated with manual processing
- Reduce errors involved in processing business documents
- Improve business efficiency by automating key processes such as order-to-cash and procure-to-pay
- Increase productivity and reduce inventory through increased supply chain automation
- Gain visibility of all activities and transactions within your supply chain
- Enhance collaboration within your trading partner community
- Improve the management of trading partner performance
- Encourage innovation through closer trading partner relationships
- Gain control and visibility of all your B2B data to deliver actionable insights to improve decision-making
You will be able to read a more in-depth discussion of the benefits of B2B integration in our next blog (coming soon).
What are the challenges of B2B Integration?
The major challenge around implementing this technology is around what is termed ‘100% trading partner enablement’. The more of your trading partners that you are able to connect with electronically, the more efficient your business and the more benefits you will realize. However, the traditional business model has seen organizations focus on the 20% of partners that generate 80% of revenue. As business is increasingly digital, the 80/20 rule is less and less appropriate and organizations must find ways to work closely with all their partners.
This is a challenge for B2B integration because:
- There are a vast number of business document types to exchange
- There are a significant number of B2B standards–such ANSI, EDIFACT and XML–that need to be supported with working with a large number of trading partners
- Each trading partner is likely to interpret the B2B standard differently
- There are a wide range of communications protocols to support
- Smaller trading partners can lack the budget, internal resource and business requirement to implement a large B2B integration solution
- Smaller trading partners can be resistant to changing how the work
- Partner onboarding can be slow and complex leading to backlogs that affect business efficiency
You will be able to read a more in-depth discussion of the challenges of B2B integration in our next blog (coming soon).
How mature is B2B Integration today?
B2B integration software and solutions have been around for some time. In fact, as early as 2005, the Yankee Group estimated that over 90% of Fortune 500 companies were involved in B2B integration and trading community activities. In research conducted in 2013, Stanford Business and OpenText showed that half of all global respondents invested more than $1 million annually in B2B integration technologies, including close to 7% of companies with an annual B2B budget of more than $20 million. This figure has grown significantly since then as organizations understand that the line between B2B and B2C transactions is blurring – 80% of B2B companies believe that customer expectations have changed due to their B2C experiences.
However, research from SCM World and OpenText™ shows that there is still some way to go in terms of the maturity of the actual B2B integration solutions deployed within companies.
SCM World has developed a five-stage path to B2B integration maturity that includes:
- Transactional This stage involves the tactical execution of siloed, reactive processes using manual technology.
- Informative In the next stage, key trading partners engage together in foundational business processes, but with limited digital visibility.
- Analytical Collaborative insight across the supply chain is now possible through the aggregation and analysis of connected digital demand and supply data.
- Relational A responsive B2B integration network enables integration and collaboration with most trading partners across multi-tier demand and supply networks.
- Generative In the final stage, profitable growth cycles are driven by end-to-end digital integration throughout the entire end-to-end value chain.
Of the global companies surveyed, average B2B integration maturity was 2.8 out of 5. That means that most companies are still within the analytics stage and have yet to properly digitally enable their trading partner communities. More worryingly, 14% rated their B2B integration capabilities below 2 and only 2% thought that they had reached the final stage of the path to maturity.
What’s the future for B2B Integration?
SCM World concluded that the reason for struggle to achieve B2B integration maturity was that: ‘management of the supply chain has evolved into orchestration of an extended value chain. The ability to connect systems and processes across multiple tiers of supply and demand networks promises to unlock exponential value. This challenge is no easy task’.
In response to these business needs, B2B integration software and solutions are developing in three different ways:
The development of B2B integration services
The days of the simple data exchange have long since passed and now companies require a range of B2B integration services that allow them to maximize their trading partner relationships. This involves areas such as community management where advanced identity, access and information management capabilities are required enable trading partners to collaborate directly on documents, systems, and processes.
B2B integration can also not be seen as a standalone application but your B2B integration platform must provide services to manage the relationships with not just your trading partners but also their systems and, increasingly, the things that are connected to their networks. For example, a retail supplier may require access to the IoT devices connected to their logistics supplier’s truck to ensure their products are transported under the optimum environmental conditions.
The transition to B2B Managed Services
As the complexity and diversity of global supply chains grow so does the cost and complexity of managing your B2B integration solutions. It can very quick become extremely difficult for companies–especially with increasingly global business–to take care of their B2B capabilities internally. As well as the requirement to meet all the different data formats and communication protocol requirement of different trading partners, it is expensive and resource consuming to keep up to data with the latest B2B integration technologies as well as ensuring compliance with all global regulation and industry standards. More and more companies are moving to an outsourced model where they work with a trusted third party to deliver their B2B integration requirements. In its study ‘Digital Transformation Drives Supply Chain Imperative’, IDC found that 66% of organizations were considering B2B Managed Services to ensure they had all the capabilities they required. Many executives see B2B Managed Services as a means to free scarce internal resources for other parts of their digital transformation programs.
The evolution of hybrid integration
One of the major roadblocks to digital transformation–which comes up frequently in the cloud adoption–is the integration of cloud and on-premise applications. Hybrid integration has developed to overcome this challenge. Previously, integration has been separated into different disciplines–such as B2B integration, application-to-application (A2A) integration, managed file transfer (MFT), and extract, transfer and load (ETL). Hybrid integration brings all these different integration types together on a single enterprise-wide integration platform–including the leading ALLOY Platform from OpenText Liaison. The hybrid integration platform market is growing rapidly and estimated to reach $33.6 billion by 2022 – more than doubling from 2017.
Why choose OpenText for B2B integration?
OpenText is a recognized as the world leader in B2B integration and B2B Managed Services. Each day, more than 600,000 trading partners rely on our B2B integration platform to quickly and securely exchange business documents. The platform handles more than 24 billion transactions each year–accounting for $8 trillion in global commerce. Today, OpenText Business Network powers 23 of Gartner’s 25 top supply chains. This has led to the following industry recognition:
- Forrester names OpenText as a leader in B2B Business Networks 2017 to 2018
- IDC named OpenText as a leader in the ‘Worldwide Multi-Enterprise Supply Chain Commerce Network’ market in 2018
- Gartner places OpenText in the top five companies able to execute a multi-enterprise supply chain network business in 2018
- Ovum places OpenText as a leader in B2B Integration Managed Services in 2017
In our next blog, we’ll look in more depth at the key benefits and challenges involved when implementing a B2B integration solution.