BizReport: Edifecs CEO on "Breaking the B2B Bottleneck"


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One of the many placements following our survey and white paper on B2B e-commerce enablement.

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BizReport: Edifecs CEO on "Breaking the B2B Bottleneck"

  1. 1. | | IT Research Library | Free Magazines | Jobsabout us | ad infoSubscribe to BizReportReceive our email newsletter with breaking news, in-depth reports & interviews: Subscribe Get our RSS feedNews by TopicMarketingAdvertisingSearch MarketingEmail MarketingLoyalty MarketingMobile MarketingSocial MarketingViral MarketingTrends & IdeasInternet Marketing 101Beyond MarketingBlogs & ContentDomain NamesE-commerceInternetLaw & RegulationResearchWhite PapersWebcastsMagazinesJobsBizReport : Internet : December 07, 2000 Interview with Sunny Singh, CEO of EdifecsAs consumer Internet companies continue to endure an excruciating shakeout,pundits are once again focused on B2B markets as the potential savior of e-commerce. Not so fast, says Edifecs, a Bellevue, Wash.-based company that helpsbusinesses get their B2B Internet operations off the Michael Grebb, Special CorrespondentEdifecs CEO Sunny Singh says that while B2B will drive much of future e-commerce growth, businesses face hurdles as they attempt to enable theiroperations for global e-commerce. In fact, a recent study by Edifecs pegs"enablement" (essentially readying operations for B2B e-commerce) to be thebiggest immediate challenge for businesses. (Edifecs, of course, offers enablementservices).
  2. 2. But consider this: Edifecs estimates that the average global 2,000 company canbring 100,000 distinct trading relationships online, while the typical global 10,000company will establish between 500 and 5,000 such relationships each. This meansthat the top 10,000 companies in the world will be faced with the challenge ofenabling hundreds of millions of trading relationships. If the average cost to enablejust one trading relationship is between $5,000 and $50,000, Edifecs argues, thentotal e-commerce enablement costs can run in the hundreds of billions of dollarsworldwide. And that doesnt even include the costs associated with maintainingthose relationships and "tweaking" them as changes in the businesses dictate,which could hit several billion dollars annually. Singh took some time to giveBizReport his take on what companies can do to better enable themselves for e-commerce and what it means for the future of B2B.MG:Whats the big B2B bottleneck? Why does it take so long for companiesto implement their B2B plans?SS:The B2B party has been thrown, but everyones having trouble getting there.Companies are developing major plans for a world in which all business is doneseamlessly and electronically, but a critical element is being overlooked—howtheyre actually going to do the preparation and ramp-up work necessary toimplement dozens of electronic processes and conduct millions of transactionswith thousands of trading partners. We call this process enablement, and B2B e-commerce managers in our just-completed nationwide survey revealed that manualenablement is the single biggest bottleneck to widespread adoption of B2B e-commerce.MG:So whats the best solution--short-term and long-term--for companiesthat want to speed up the process?SS: B2B e-commerce growth will remain compromised unless companies can finda solution to automate their enablement problem. Enablement encompasses somemajor steps that must be completed before a company can begin tradingelectronically, each of which currently requires a significant investment of timeand resources by trading partners:B2B Preparation is the "groundwork" phase that must be done when a companydecides to embrace B2B, and includes activities for defining the business issuessurrounding B2B, both internally and with ones trading partners. B2B Ramp-upconsists of five steps associated with establishing an electronic-tradingarrangement for a single process with one trading partner: 1) Defining the tradingpartner agreement; 2) Setting up internal systems for electronic trading; 3)
  3. 3. Developing the specifications that guide the electronic communications betweenthe companies systems; 4) Testing the systems; and 5) "Going live." Finally,Community Extension involves adding new trading partners to an establishedelectronic-trading community, and analyzing its performance to continuouslyimprove its operations.MG:Are some industries more at risk of hitting this bottleneck than others?SS: Our survey respondents in government, heavy manufacturing, and consumergoods have the most experience with e-business, while managers in consulting/business services and healthcare had the lightest. Regardless of how long theyvebeen engaged in B2B, the vast majority of companies in our research plan todramatically increase their level of B2B participation-not only in terms of numbersof transactions and processes, but also numbers of trading partners.MG:You note in your survey that more than 50 percent of companies conductB2B operations with fewer than one fourth of their trading partner base.Whats behind that?SS: Weve found that tenure in B2B doesnt play a significant role in how muchprogress companies have made in bringing processes online. All companies—whether theyve been engaged in B2B for fewer than three years or more than 15—are equally far, proportionally speaking, from their goals for electronicallyenabling their business processes. Penetration of B2B is particularly limited in thegovernment and healthcare sectors. Despite having a large concentration ofrespondents noting more than 10 years of B2B experience, 71 percent ofgovernment institutions participating in the study execute fewer than five processeselectronically. In the healthcare industry, B2B is even less pervasive—82 percentof respondents said they operate fewer than five processes electronically.MG:So how can companies that are constrained by such laggards light a fireunder their partners to get more online and reach the economies of scaleneeded to make B2B operations a success?SS: Companies must insist on an automated solution to rapidly ramp-up tradingpartners into their B2B exchanges and Net marketplaces.MG: You mention in your study that XML [eXtensible markup language]isnt the savior. What is it about XML that makes people think it will solvetheir B2B problems and how exactly does it fall short?
  4. 4. SS: XML and the Web, which have been touted as the technologies that will finallyresolve the shortcomings of traditional EDI [electronic data interchange]—principally, lack of open, fully supported standards and great expense—can onlygo so far in spurring B2B adoption. As the initial euphoria around the promise ofB2B gives way to more practical matters-namely, "How do we do it?"—itsbecoming increasingly evident that many companies embracing e-commerce areunderestimating the importance of preparing their business operations and those oftheir trading partners for the brave new world of seamless B2B e-commerce.Thats not to say that XML wont take off. But the fact remains that all thosecompanies will still have to complete each of the enablement activities discussedearlier to take advantage of XML. Manual enablement is an inertial force workingagainst B2B in general and adoption of XML in specific. To meet the demand forXML adoption, the manual enablement bottleneck must be eliminated. Once thisinertia is overcome-likely through some sort of automated enablement-XML willliterally explode onto the scene. Virtually overnight every B2B player will have theopportunity to re-enable their trading partners to take advantage of this newtechnology.MG: With that said, do you buy the lofty projections by research firms thatB2B will become a multi-trillion dollar business in a few years? Will it takelonger, considering the hurdles you have outlined in your study?SS: As new technologies and business practices make electronic tradingincreasingly less costly to implement and more beneficial for all parties involved,B2B e-commerce will become the status quo instead of the cutting edge. To realizethis eminently achievable scenario, however, companies must fully understand,confront, and solve the stiff challenge that stands before them-the manualenablement process. Until businesses find a way to dramatically reduce the time,cost, and headaches associated with manual enablement, truly collaborative,widespread B2B e-commerce will remain an unrealized vision defined bymarketing hype machines and spinmeisters.Tags: Edifecs© 1999-2012 BizReport. All Rights Reserved | Privacy Policy | Disclaimer