Earlier this week we were fortunate to have Ken Vollmer of Forrester Research visit GXS headquarters.  The purpose of the meeting was to give Ken an update on our plans for 2008, but also to hear Forrester’s perspectives on the market.  One of the new concepts Forrester has introduced is the idea of “B2B Detachment” which Ken defines in his recently released report B2B Integration Trends: B2B Modernization as:

“The situation that exists when enterprises and their business partners rely on a sub-optimal solution for their electronic information exchanges.” 

In a nutshell, Forrester is describing the consequences that many large multi-national corporations are experiencing as a result of under-investing in their B2B programs over the past decade.  

 In the B2B Modernization report, Forrester identifies seven “Symptoms of B2B Detachment” 

1.       Inability to rapidly on-board new partners

2.       Inability to quickly roll out new/modify existing transactions

3.       Lack of support for ad hoc/unstructured B2B exchanges

4.       Difficulty in retaining qualified B2B support staff

5.       Difficulty in maintaining electronic links to large number of internal entities

6.       Inability to easily include B2B activity in process improvement efforts

7.       Inability of current system to take advantage of SOA 

I thought I would add my perspective on B2B Detachment as I found the Forrester list to be highly consistent with the challenges we see many of our customers experiencing.  And it explains the surge in the number of RFPs we have seen from large multi-national corporations seeking B2B outsourcing solutions over the past 36 months.  Value chains continue to evolve putting greater pressure on B2B organizations: 

·         Customer Demands - Consolidation through mergers and acquisitions continues to concentrate buying power into larger channel masters.  These large hubs are demanding highly customized, complex integration from suppliers to their ERP systems.   The common customer viewpoint is “Use B2B standards, but implement them my way.”

·         Supplier Visibility - Manufacturing, logistics, design and field service activities continue to be outsourced to third parties.  Brand owners are starting to build what Cap Gemini refers to as “Control Towers” to gain better visibility to their supply chain activities being executed by third parties.  Success requires tight B2B integration with these outsourcing partners.

·         Enterprise IT – CIOs continue to push aggressive enterprise resource planning projects.  Many enterprises are adding new supply chain modules to cope with the customer demands and supplier visibility issues outlined above.  Others are simply rationalizing and consolidating disparate ERP systems.  Both types of projects simply exacerbate B2B integration challenges as they require updating the maps which link ERP to external business partners.

A stagnant B2B integration platform will not withstand the mounting pressures of today’s highly globalized, largely outsourced value chains.  Challenged by skills shortages, capacity constraints and inflexible platforms, more large enterprises will be seeking relief from B2B integration by outsourcing to third party specialists.

Steve Keifer

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