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

© Copyright 2007 GXS, Inc.  All Rights Reserved.

There is an increasing trend in B2B towards business partners sharing higher volumes of data.  Not only are they sharing new and different types of data, but the information is being packaged into much larger files.  Historically, the e most commonly exchanged transactions have been invoices and purchase orders, which are only a few kilobytes in size.  However, over the past 24 months, there has been a substantial increase in the exchange of larger files – on the order of are megabytes and gigabytes in size.   The phenomenon is occurring in nearly every industry sector. 

Examples include:

·         Check image files in banking

·         Call detail records in telecommunications

·         Satellite images in logistics

·         CAD diagrams in manufacturing

·         Point-of-sale, market basket and loyalty card data in retail

Large File Transfer in C2C 

The trend towards larger file transmission really should not be very surprising given the growth in file sizes that we have seen in the consumer segment.   For over five years now consumers have been downloading and sharing large audio and video files for home entertainment.  With the dramatic decreases in the cost of storage and networking, it is only logical that this trend would extend to business communications as well.  In fact, demand for large file transfer in the workplace has increased steadily in recent years.  Do you give a second thought to sending a 5MB e-mail attachment to a colleague at one of your business partners? 

Technology for Large File Transfer 

So which Internet protocols do B2B practitioners use for large file transfer?  The obvious choice would be AS3 or one of the secure variants of FTP.  While these protocols can facilitate the exchange of very large files they lack critical features such as checkpoint/restart.    Depending upon the size of the file, a transmission could take 15 minutes, 30 minutes or several hours.  What happens if a router hiccups or the server on either end loses connectivity half way through the transmission?  Without a feature like checkpoint/restart, the entire file transfer process may need to be restarted.  The problem is not limited to AS3 and FTP.  Other HTTP, SMTP and open standards protocols lack these large file handling features. 

Managed File Transfer Products 

So what do companies that need to transmit large files do?  Historically, they have been forced into buying a license from a vendor with proprietary “Managed File Transfer” (MFT) software.   Some of the MFT packages are based upon Internet standards, but with customizations designed to support larger file sizes.  Sounds good, but here is the catch. The technology only works if the trading partner you are sending the information to uses the same proprietary software product.  This is a great model for the vendor as it creates a viral effect that leads to high “stickiness” with a community of end-users.   However, it is bad for the customer who is now locked into a vendor’s proprietary software product. Owners of these proprietary software products have little negotiating leverage with the vendor.  If you talk to companies with MFT software they will tell you that their annual maintenance fees are about as painful as an adjustable rate mortgage.  

2008 Predictions 

What will happen with large file transfer in 2008?  I think we will see a continuing surge in large file transfer throughout 2008, which will put pressure on vendors and standards organizations to find better technology solutions.   It is too early to predict exactly what the outcome will be.  But one thing is for sure, with customer demand rising quickly, large file transfer is becoming a mainstream B2B function need rather than a niche technology. 

Steve Keifer

© Copyright 2007 GXS, Inc.  All Rights Reserved.