Electronic trading dogged by information issues

By Dale Vile

How many suppliers and customers do you trade with in the average month? If your organisation is one of those that analysts affectionately refer to as a ‘medium-sized business’, then it’s probably hundreds. If you work in more of a large corporate environment, then it’s almost certainly thousands.

These sorts of numbers were confirmed in a recent study conducted by Freeform Dynamics. Sponsored by Liaison Technologies, the underlying research was based on telephone interviews with 201 senior IT and business professionals from across the UK and Netherlands. Included were representatives from both mid-sized and large organisations, with employee counts of 200 to 5,000 and greater than 5,000 respectively.

In addition to looking at scale of operations, the research threw up some findings that might raise an eyebrow among those not intimately involved with the mechanics of how businesses communicate and transact with each other. Despite all of the developments in Web-based communications, internet standards, and technologies that allow systems and data to be integrated across organisational boundaries, the reality is that full business-to-business (B2B) electronic hook-up is still the exception rather than the rule.

In specific terms, while some organisations have invested in electronic hook-ups with their higher volume or more important ‘trading partners’, most transactions between organisations still require some kind of manual transcription or data input, e.g. keying in details of purchase orders, goods received notes, invoices and other key documents either from paper or from one system to another. And this type of manual activity is just an indicator of a lack of integration and electronic data exchange in general, which is evident to one degree or another across the board, but particularly acute in relation to the ‘long tail’ of customers, agents, resellers, suppliers and so on.

So why this B2B automation gap?

One of the contributing factors is inertia. In this respect, common impediments to progress include other pressing priorities, more politically glamorous projects taking precedent (e.g. cloud or big data) and the avoidance of disruption (processes work, even if not that efficiently). Sometimes though, lack of progress is down to people simply not even considering that there might be a better way to do things. Whether it’s some or all of these, the upshot is that B2B integration initiatives often never make it onto the agenda.

That is, of course, until a major customer or supplier mandates some new way of transacting, or requires an additional level of visibility into your operations. Then questions come up like “Can our systems integrate in that way?”, “What databases are involved?” and “Is our information clean enough, accurate enough, consistent enough and complete enough?”

It is at these times that deficiencies in your internal systems and information landscape come to the fore. It’s also occasions like this that prompt the next bespoke integration project to work around those deficiencies and prevent your dirty data being potentially exposed to your customers and suppliers. And any custom development you do to extract, merge, stage, map and transform data to deal with the immediate problem at hand just adds to the fragmentation and disjoints that are at the root of most integration challenges in the first place.

Of course some organisations are in better shape than others, and the research revealed a spectrum of capability and readiness. But it’s no coincidence that organisations citing better B2B performance in terms of flexibility, responsiveness and ability to collaborate, as well as operational efficiency, were generally building on a firm foundation of well integrated and managed internal systems and information.

Two information related imperatives fall out of this analysis for CIOs. The first is to take B2B integration into account when scoping broader information management related initiatives, which could strengthen business cases and create additional payback from investments in areas like Master Data Management (MDM), integration middleware and data cleansing/integration efforts.

The second imperative is to always pay attention to the integrity of your internal systems landscape and the quality and completeness of your internal data as a critical part of any B2B improvement initiative that does happen to make it through the funding and prioritisation process. The last thing anyone needs is to uncover an expensive-to-fix information-related ‘gotcha’ part way through a key customer integration project with a deadline looming.

As a final note on the question of prioritisation, we encourage you to download the full research report entitled “Effective B2B Integration” from here. In addition to more detail on the matters discussed above, it provides some real world insights into the way B2B integration technology, services and best practices have evolved in recent years, and the kind of benefits you can expect from investing more proactively in this area.

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Dale Vile

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Dale is a co-founder of Freeform Dynamics, and today runs the company. As part of this, he oversees the organisation’s industry coverage and research agenda, which tracks technology trends and developments, along with IT-related buying behaviour among mainstream enterprises, SMBs and public sector organisations.