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Research from analyst Freeform Dynamics has given a “could do better” verdict to business-to-business data integration...
in the UK and the Netherlands.
Freeform Dynamics' research reveals British and Dutch companies still rely too heavily on manual processes.
Organisations' overuse of manual process is highlighted in the areas of getting new trading partners on board; exchanging information on products and services; routine transaction handling; and getting a clear and automated view on how suppliers are performing.
Dale Vile – research director at Freeform Dynamics and author of the report Effective B2B Integration – said that, while glamour boys big data and advanced analytics are hogging the limelight, B2B data integration is the unsung Cinderella of information management.
“Information management is about much more than big data," said Vile.
"The fundamentals of the discipline are not as glamorous as big data but if you don't get them right your business performance will suffer.”
Vile said the top B2B integration performers are doing well financially, growing significantly, diversifying their products and services, and penetrating new markets.
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But those the research defined as middle- and bottom-tier are lagging.
“Admittedly, we have not quantified that difference in business growth objectively, but it is a reasonable proxy,” said Vile.
“We also suspected that the scope and practical considerations in play in this area exceeded just putting technology in place, and the research confirmed that.”
Freeform Dynamics interviewed 201 business and IT executives in August 2012. Large and mid-sized organisations from five industries in the UK and the Netherlands were polled. Sixty per cent were from the UK and 40% from the Netherlands. There was a 50/50 split on business and IT and 36% worked in B2B trading on a daily basis.
Freeform Dynamics interviewed medium to senior managers: “They tended to be middle managers in large organisations and IT directors and Finance directors in smaller ones,” said Vile.
“But what was really interesting was the lack of distance between business and IT in this area.
"We got a more coherent and consistent picture here than we do in other areas. This is such a business-centric issue and the IT support for it is direct.
"You don’t get the same issue of IT not being aware of aspects of the business, which can happen elsewhere.”
"The less good have more been leaned-upon to trade electronically by their more powerful partners, and then ignore the long tail of smaller partners – but that is where you get a load of cost.”
Dale Vile, Freeform Dynamics
In the UK tranche of companies interviewed, 41% believed the disruption and cost of changing underperforming B2B integration suppliers is usually more trouble than it is worth. Almost as many (37%) cite internal complacency and inertia as reasons why they never get around to improving their B2B systems and processes.
Of the UK cohort, less than a tenth (9%) of UK companies had integrated more than 75% of their B2B transactions without the need for some kind of manual intervention such as re-keying data.
Meanwhile, over two-thirds (68.2%) of UK companies admit they have to manually re-key some aspect of data in over half of all business transactions.
Nevertheless, respondents did show a clear understanding of how well or badly they were performing in this area. Less than 10% of the bottom tier performers strongly agreed or agreed that they were satisfied with their B2B integration capability.
So, why are they doing so little about it? Vile said: “Many just don’t have a good starting point – they have many inadequacies in their internal systems. A lot of the mid-sized companies have ageing ERP systems.
“There is also lack of clear ownership in these underperformers. So, you get confusion about which department should fund a B2B integration automation programme."
Almost half (48%) of the UK respondents claimed to be dissatisfied with their current B2B integration capabilities. Meanwhile, just 40% felt that past projects and initiatives to improve B2B performance have generally met expectations.
There was no real difference between British and Dutch respondents. “There is nothing to report there,” said Vile.
Nor was there much difference across the sectors. Only engineering and construction emerged as a laggard, but that could be because of its reliance on subcontract-based fulfillment and the project-based nature of the sector, he said.
Among the top performers, the value chain at the supplier and customer end is as automatic as makes sense throughout the whole B2B lifecycle, said Vile.
Those who have a platform approach – as opposed to a custom point-to-point integration – do best.
“The better companies have thought about the problem proactively," he said.
"The less good have more been leaned-upon to trade electronically by their more powerful partners, and then ignore the long tail of smaller partners.
"But that is where you get a load of cost.”
One of Freeform Dynamics' respondents, from a midsized distributor, said: “It is quite straightforward to establish B2B links with the main customers and suppliers who are pushing this along. However, they represent a large percentage of our value, but a small percentage in terms of the volume of transactions.
"It is our small customers and suppliers who are the key to success in this area.”
"You can’t say supply chains are being excellently managed in one country of the EU compared with the others"
Mikko Soirola, Liaison Technologies
Top performers and companies that have made more recent investments tend to experience an incidental business intelligence benefit, said Vile.
“It is easier to analyse data that you have captured in an automated manner," he said.
"You also have more visibility into a greater proportion of your partner base. Companies are okay being able to analyse one or two partners, but they struggle beyond that.
"It is harder to see who are the better performing suppliers and which customers bring in the best quality of business.”
Currently, respondents were doing B2B integration in house, but that is changing.
"The better performers are moving from bespoke to platform and will make more use of hosting in the future," Vile said.
Large outsourcers emerged as unpopular in Freeform Dynamics' research.
One respondent from a midsized retailer said: “The reason to use an external supplier is to remove the burden on internal resources, but this is not always what happens.”
Another from a midsized distributor said: “They do the easy bits well and the not-so-easy bits badly.”
A respondent from a large retailer commented: “Costly fees can be a problem in that you are offered a low-cost software package, but have to pay high on-going fees and charges.”
So, are the large outsourcing firms more difficult to work with in this area?
“It takes two to tango,” said Vile.
“It’s more about matching. Some customers are idealistic about, say, data quality or the quality of the personnel they have."
As for the bigger outsourcers, they have their fixed ways of doing things, and that can lead to mis-matching. They have shortcomings, such as lack of imagination and flexibility and failing to see how unready their clients are in terms of their internal systems, he said.
Mikko Soirola, vice-president of Liaison Technologies, which sponsored the research, said: “There is much room for improvement across all of Europe. You can’t say supply chains are being excellently managed in one country of the EU compared with the others.
"But if you proactively manage your supply chain you’ll run your business better.”