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Who has the Largest B2B Integration Network?

Since IBM’s acquisition of Sterling Commerce in May there has been a lot of discussion about the consolidation of B2B networks (and what it means for the industry).  One of the topics discussed amongst B2B integration professionals is – Who has the largest B2B network?  Numerous analysts and thought leaders declared GXS to be the largest following the successful acquisition of Inovis in June.

However, I am not convinced that GXS really is the biggest.  Amongst the traditional supply chain oriented EDI networks, GXS earns top ranking for network-based revenues, annual transaction volumes and number of companies connected.  However, if you were to consider other types of similar B2B networks in adjacent industries such as financial services or health care, then the #1 position is not as clear.

For purposes of this analysis, I consider a B2B network to be a vendor providing a private cloud specifically designed for the purposes of exchanging standardized messages to automate cross-enterprise business processes.  Many of these types of networks exist to support different business processes ranging from supply chain to financial services to health care.  Below are five, in addition to GXS, of the largest that I am aware of:

Ariba – describes its Supplier Network as “the largest transacting network in the world.”  Ariba’s network boasts over 300,000 suppliers which process over $120B in annual spend in 70 currencies across 130 countries.  Buyers and suppliers leverage Ariba’s network to exchange product/service catalog data; purchase orders and commercial invoices.  Over 23M purchase orders and 11.5M invoices are processed annually.  Ariba supports a diverse range of standards including cXML, EDI, CIF and punch out.  The company reported $339M in annual revenues for 2009.  Ariba embeds its Supplier Network within its various spend management, e-procurement and e-sourcing applications making it challenging to derive what percentage of revenue comes specifically from the network.

Emdeon – is the largest player in the Health Care Revenue Lifecycle Management segment (formerly referred to as HIPAA clearinghouse).  Emdeon states that its’ clearinghouse “has connections to more payers, providers and vendors than any other healthcare business in the marketplace.”  Emdeon’s network connects to 340,000 health care providers; 81,000 dentists; 55,000 pharmacies; 5000 hospitals; and 1200 government or commercial payers (e.g. Medicare, Medicaid, HMOs, PPOs).

One out of every two commercial health care claims delivered electronically in the US was processed by Emdeon.  In total, Emdeon processed 5.3B health-care related transactions in 2009 resulting in $900M+ in revenues.  The most common transactions include eligibility verifications, referral authorizations, claims submissions and remittance advices, which are typically in the HIPAA EDI standard formats.

SWIFT – is a co-operative organization that is owned by a consortium of financial institutions around the world.  SWIFT has arguably the largest B2B network in both the banking and capital markets segments.  Over 9000 financial institutions representing over 200 countries utilize SWIFT’s network to exchange payment instructions, account statements, letter-of-credit documents and securities holdings reports.  SWIFT supports both its own set of standards (FIN/MT messages) and numerous third-party standards such as ISO 15022, ISO 20022 XML, FPML and FIX.  In 2009, SWIFT processed 3.76B messages, approximately 49% of which were payment-related and 43.9% were securities-related.  SWIFT generated €596M of revenue in 2009 of which €360M was from traffic.

NYSE Technologies (NYFIX) – There are a number of large FIX networks.  Each of these networks operates as a product line within a much larger IT or financial services firm, which makes comparative analysis challenging.  For example, NYSE Technologies acquired the largest remaining independent vendor NYFIX in 2009.  Pre-acquisition, NYFIX reported over $70M from 1000 firms in 2008 revenues from FIX-related products.  Sungard’s Global Network is considerably large as well, but the only information publicly available is the number of connections – 2500 financial institutions.  Thomson’s TradeWeb Routing Network is another large FIX network with 2000 institutional customers trading $1.2B shares representing $280B daily.  Thomson claims to process 12-15% of daily NYSE and NASDAQ volumes, but like Sungard provides no information about revenues generated from the service.

Omgeo – is a joint venture between Thomson Financial and the Depository Trust Corporation (DTC).  Omgeo provides a network to facilitate securities clearing transactions (middle-office) between investment managers, broker/dealers, and custodian banks.  The primary transactions exchanged include allocations, confirmations, affirmations and post-trade matching reports (see end of post for clarification).  Omgeo provides services to 6000 clients representing 2400 different financial institutions.  The joint venture does not report revenues publicly, but a 2006 press release stated that Omgeo generated an impressive $250M annually.

GXS – is the largest player in the traditional EDI network space.  GXS focuses primarily on supply chain transactions to support the retail, automotive, high tech and manufacturing value chains.  The highest volume transactions processed on the Trading Grid include purchase orders, shipment statuses, commercial invoices, payment instructions and product catalogs.  While EDI remains the most popular choice amongst its customers, GXS also supports a wide range of XML and vendor-specific file formats (e.g. SAP IDOC).

GXS claims 40,000 direct customers and 150,000 connected trading partners.  The company maintains direct operations (employees and offices) in 20 countries throughout the world.  In the most recent SEC filing, GXS reported that its 2009 revenues combined with Inovis were $487M (pro-forma, unaudited), the majority of which were from network-based services.

There are numerous other vendors in the B2B integration sector that I did not list above.  In a future post, I will provide more details on the other large networks.  But of those that I did list above, which do you think should earn the title the largest B2B integration network?  Of course, the answer depends upon how you measure “largest.”  Multiple different metrics could potentially be used such as

  • Annual revenues generated
  • Number of customers (or connections)
  • Annual transaction volumes
  • Number of countries serviced

If you were to rank based upon publicly available revenue reports then Emdeon would clearly place #1 even thought it only focuses on the US market.  SWIFT, which operates around the world in multiple financial sub-verticals would rank  #2.  GXS, following its Inovis merger, would be #3.  There would be some competition for #4 between Ariba, Sterling Commerce, Omgeo, NYSE Technologies (NYFIX) and others.  That is my perspective, but comment below to let me know what you think.

Note that the securities transactions processed on FIX networks are trade-related (front office) which precede the stage of the lifecycle in which Omego is involved.  And the securities transactions processed on the SWIFT network typically are later in the lifecycle (settlement or asset servicing) than Omgeo. 

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