BizReport: Edifecs CEO on "Breaking the B2B Bottleneck"
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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)
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?