When your company exchanges business documents electronically with your trading partners – your customers, suppliers, logistics providers and/or banks – one of the decisions you need to make is what type of communications you will need to connect to each one.
What are the four basic B2B models that help connect your trading partner community?
- Direct Connection B2B Model
In the direct model your business connects directly to each of your trading partners for sending and receiving electronic documents. Your IT organization is responsible for all mapping, translation, technical support and tracking documents. As long as everyone agrees on a single connectivity protocol, e.g. FTP over VPN, RosettaNet, OFTP, AS2, and the community size remains relatively small (generally less than 100) this approach works well. This is how B2B was handled in the in the early days of EDI.But, as the size of your community grows, you need more resources to implement and support each new trading partner. You need to continually monitor communications, manage trading partner calls and resolve issues quickly. Quick issue resolution is critical since the documents being exchanged (e.g. orders, invoices, ship notices) are frequently the lifeblood of your business.
Adding to the complexity, trading partners frequently insist on using different protocols, particularly if they are also trading with other enterprises. Now you must support multiple protocols, requiring more resources.
The graphic below illustrates the direct B2B scenario. Your business is represented as the “Enterprise” connecting with six trading partners who are trading other partners as well.
This model is sometimes called the “spaghetti model,” or the “spider model” because of its complexity. Very few businesses today connect directly with all their trading partners because of the support issues.
- Network B2B Model
To avoid the complexity of the direct model, many companies decide to work exclusively through a B2B Service Provider, which, in the days prior to the internet, was referred to as a Value-Added Network (VAN). In this model, you have a single connection to the Service Provider using whatever protocol you prefer – e.g. AS2, SFTP, FTPS, FTP over VPN, RosettaNet.Likewise, your trading partners connect to the Service Provider, each selecting the connectivity protocol that best meets its company’s requirements. In this way, each trading partner makes an independent decision regarding its preferred connectivity protocol and relies on the Service Provider to mediate the differences between the protocols as needed.
The Service Provider facilitates the exchange of electronic documents via its network. The Service Provider also relieves all community members of the resource-intensive responsibilities for supporting all communications issues; ensures data security and non-repudiation; and provides audit information, reporting, backup and recovery. The Service Provider charges transactions fees for these services. Your business is still responsible for all mapping and translation as well as some reporting and translation-related technical support.
The graphic below illustrates the network model of B2B. Your business is represented as the “Enterprise” connecting with the Service using a single communications protocol. Likewise, each trading partner is connected to the Service Provider as well using their varying preferred protocols.
Use of the network model for 100% of a B2B trading community was extremely popular before the rise of the commercial use of the internet and large trading networks. Today, while it’s still used by many companies, it’s much less common to have 100% of the community on the network.
- Hybrid B2B Model
The hybrid approach to B2B is a combination of the direct and network models. Typically, businesses will connect directly via the internet to their trading partners with whom they do the highest volume of transactions, using one or two preferred protocols, in order to save on Service Provider transaction fees. The business continues to leverage the Service Provider for trading with the large number of lower-volume trading partners as well as for those that require a protocol other than the one or two that are used to connect directly.The graphic below illustrates the hybrid model of B2B. Your business is represented as the “Enterprise” connecting directly with the two partners in green. You also have a connection to the Service Provider for trading with your partners in blue.
- Managed B2B Model
In the managed model, the business outsources the entire B2B process to an external Service Provider. This greatly reduces resource requirements, expenses and complexityThe Service Provider receives your business documents directly from your ERP system (SAP, Oracle, etc.) and then assumes responsibility for all the mapping, translation, technical support, data center operations and document tracking. Once documents are ready for delivery to your trading partners, the service provider delivers them either directly to the partners or via the network, depending on the individual trading partner requirements.
The graphic below illustrates the managed model. Your business is represented as the “Enterprise” that connects to the Service Provider. The Service Provider connects you directly with the two partners in green. It also connects you with the rest of your partners.
Companies are increasingly outsourcing their entire B2B process to avoid purchasing and managing complex, expensive B2B mapping, translation, and communications software.