| Issue 3, 2011 |
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When it comes to IT modernization, modernizing B2B systems are sometime an afterthought. The belief is—why fix what’s not broken. But today’s business priorities demand a modern B2B integration infrastructure that can transform supplier and customer-centric processes. In this article we will discuss when it becomes extremely important to consider B2B modernization as you modernize the rest of your legacy IT applications based on COBOL, Natural, etc.
IT Modernization is critical for several reasons—increasing efficiencies, enhancing productivity and reducing costs. Almost every company embarking on an IT Modernization journey adopts a different approach. However, the majority of modernization initiatives still remain focused on technology with the ultimate goal being one of replacing or upgrading a specific area of technology.
While B2B plays a critical role in any business and is often the key to transforming supplier and customer centric processes, many decision-makers ignore the importance of B2B when launching an IT modernization effort. However, an in-depth review and assessment of B2B capabilities should be a requirement for any IT modernization effort; despite the fact that B2B systems often fly under the radar. In most
instances, the absence of a standard evaluation of these systems and processes is a result of the belief that these systems are “working fine”.
The B2B world is complex. With numerous files and various types of translations involved, developers often prefer to deal with inefficiencies rather than run the risk of breaking something even if the benefit of change is substantial. As a result of this fear, progress too often stagnates.
B2B in a typical IT landscape
Most organizations today use multiple systems for B2B. This fact is a result of the historical decisions that required organizations to add multiple B2B systems to handle different protocols and standards over time. Another reason that organizations frequently end up with multiple B2B systems is that they have a ‘project centric’ approach and procure different B2B systems for each project/IT silo ending up with multiple solutions. This fragmented B2B landscape becomes even more complex when companies acquire or merge with another company.
- Legacy EDI Translators
- Value Added Networks (VAN) Connections
- One or more FTP/HTTP/AS2 servers for document exchange
Should I modernize?
The decision to modernize will depend on where you are today and whether the state of your B2B systems is impacting your current and/or future plans for innovation. Before you begin to modernize, you should consider the following:
- How critical is the data/document you are exchanging with your Trading Partners (suppliers, customers, dealer, service providers, etc.) to your business?
- How much of your spend is on B2B? What is your monthly VAN bill? Do you want to reduce your B2B spend?
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Is your current system giving you the security that you need and helping you meet all of your compliance needs?
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Are you still running EDI Translators that the vendor stopped enhancing many years ago?
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Is your B2B more or less black box i.e. a system that performs a function without any visibility into what’s going on?
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Do you often hear, “we are waiting for our B2B process to finish up?”
If you answered “yes” to one or more questions above, it may be time to re-visit your B2B strategy.
Benefits of B2B Modernization
Over the last decade, the supply chain arena has transformed itself from a business enabler to a key differentiator. Companies not only use sophisticated supply chains to reduce cost and improve efficiency but also to offer improved products and services. One such example is “buy online and pick up from store” within “15 to 20 minutes”. A capability like this one is a testament to the accuracy and sophistication of modern supply chains offered by several large-scale retailers today. Another example of today’s sophisticated supply chains is the ability of an online retailer to allow customers to build a personalized product online (i.e. design your own shoes or customize your laptop) and then to have the website not only capture your instructions but to accurately predict when your item will be produced and shipped. These capabilities and offerings did not exist a decade ago but today are considered the norm in the industry.
“Solutions—in the form of modern multi-enterprise/B2B gateway software or as IaaS from modern integration service providers—can help companies consolidate their B2B IT infrastructures and better meet the requirements established in a multienterprise strategy.”
- Gartner | Market Trends: Multienterprise/B2B Infrastructure
Market, Worldwide, 2010-2015, 1Q11 Update | 10 February 2011
One of the biggest benefits of B2B modernization is that it can give organizations the tools required to build a foundation which can power state-of-the-art business processes. If you are embarking
on a business process re-engineering mission or an IT modernization drive, some of the primary reasons to also consider modernizing your B2B landscape at the same time are:
- To improve the foundation of the supply chain to enable it to handle the demands of contemporary business. As the business processes evolve, typically the supplier and customer centric processes change; with a modern and agile B2B system you will be ready to meet the ever changing business needs.
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To reduce the risk of security breaches as the modern B2B systems offer state-of-the-art security features to keep your information secure as it moves through your supply chain.
Whether its PCI compliance or a meeting a HIPAA mandate, modern B2B systems make security and compliance easy. - To increase efficiency and reliability with modern B2B systems which are designed for 24X7 operations. In a global economy, it also gives your partners who are sitting across the pond, a larger window of time to exchange information with you.
- To gain operational visibility into your supply chain to understand supplier and customer behavior/patterns. This will allow you to anticipate disruptions in advance and give you more time to develop a mitigation strategy. Several large organizations today treat supply chain visibility a critical factor and use it not only to monitor the supply chain but also to continuously improve supplier and buyer side processes.
- To lower the operational cost of B2B by moving to open standards and getting rid of monthly VAN charges and proprietary protocols. Today, open protocols provide security, reliability and scalability leaving no need to pay the monthly VAN bill or use proprietary protocols for B2B.
Risks of not Modernizing
Simply put, B2B systems enable your business to do more. The risks of not having a modernization plan for B2B are far too many. Some of the key risks mitigated by having a modernization plan include:
- Security and Compliance – Adopting secure and modern B2B techniques will keep hackers at bay and your compliance officer happy. It will also make adhering to regulations such as PCI, SOX and HIPAA much easier.
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Standards – B2B Standards such as AS2, Rosettanet etc. can be complex and adoption can be challenging. The risk of not keeping up to speed with standards is very high as your
customers and suppliers will soon be asking you to support modern B2B standards. Modernizing and adopting a B2B Gateway such as webMethods will not only speed up your
standards adoption and but also keep you in sync as the standards evolve. - Cost/Vendor Risks – If you chose not to modernize your B2B and decide to go with a Value Added Network (VAN) or Managed Services provider to handle your B2B traffic, you will notice the cost going up significantly in a few years as the volumes and number of partners increase. A few other disadvantages are lack of control, lack of visibility, security risks and vendor lock-in.
Real World Examples
Bossini, a leading retailer in Asia Pacific, operates 1000 stores in 30 countries. They embarked on a modernization journey for a various reasons. Modernizing integration and B2B helped them
achieve a number of key business and IT goals. They we able to reduce partner on-boarding time, reduce factory allocation time to 1 day and reduce finance month end closing from 25 to 7 days. In
addition, they were able to add new business capabilities such as late shipments and visibility into stock-on-hand for all markets.
Lafarge, a global leader in cement and construction materials, decided to modernize integration platform and adopted webMethods. As a result they were able to standardize the integration processes and consolidate them into one integration product leading to repeatable and reusable components. This lead to significant improvements in processes related to partner on-boarding and on-going B2B maintenance, reducing the on-boarding time from weeks to days and the time to change a B2B document from days to hours. Additionally, Lafarge now has the tools to integrate new plants, partners and acquisitions going forward—a key business advantage.
Why Software AG ?
Software AG’s webMethods Trading Networks is a scalable, easy-to-manage gateway for doing business electronically with customers, distributors and trading partners worldwide. This market leader in the B2B gateway market is built on the webMethods Integration Server, our Enterprise Service Bus, and automates your B2B transactions such as purchase requisitions, orders and invoices. webMethods is credited with launching the first B2B Gateway in late 90s. Over the years, this market leading B2B Gateway has acquired a large and a highly
satisfied customer base and earned highest ratings from various industry analysts. In addition it supports a wide range of B2B standards and is built on a true services oriented platform.
Conclusion
B2B plays a critical role in any business and is a key to transforming supplier and customer-centric processes. Any IT modernization effort demands an in-depth review and assessment of B2B capabilities to determine if B2B modernization is needed. The days when B2B systems ran on proprietary protocols, behaved like a block box just translating files and did not provide any visibility whatsoever, are over. Modern B2B leverages open standards and
is built on an SOA foundation, provides visibility into supply-chain and supports your BPM and/or simple modernization initiatives. Take charge and start by counting the systems you use for B2B today, we bet you are in for a surprise.