Companies report average cost savings up to 40% annually compared with providing B2B services in-house. Where do these impressive savings come from?
Whatever the economic conditions, it makes good commercial sense to drive down costs with well-designed business processes and best practices. This is mostly achieved by identifying inefficiencies and unproductive practices and taking action to reduce or eliminate any negative impact on your business. B2B managed service solutions have the potential to do more. While increasing productivity, these solutions provide the opportunity to extend your business network, introduce new cost-saving practices and valuable B2B capabilities.
The business challenge is twofold. First, it is likely your B2B solutions will start small with a single process – such as invoicing—and then extend into different processes and document types. At the same time, the technologies available—such as communications protocols – are continually enhanced. The result is that your trading partners all use different document types, industry standards, communications protocols and technology infrastructures that you must seamlessly accommodate into your business network. That requires manpower.
Areas to address: Maintaining an up-to-date infrastructure
Unlike internal systems, your B2B solution is likely to be affected by every technology and communications development—simply because there is a high probability that at least one member of your trading community will implement this development. It is unlikely that any company could respond to every new advance or standard as they appear but, at the same time, can you allow your own technology refresh rates determine when you implement an advance that your partners are beginning to demand? When B2B is often seen as non-core it is not only securing investment for new infrastructure that can prove tricky, the rising maintenance costs associated with increasing transaction volumes within current systems can also be challenging.
Areas to address: Reacting to business needs
You want to select suppliers and win customers regardless of geographical location or technical capabilities. You want to exploit the benefits of a global supply chain and enter new markets in an affordable and timely manner. The complexity of integrating with other B2B systems has made organizations question whether they should progress with new customer orders. Backlogs in onboarding trading partners negatively affect your entire B2B network. Let’s not forget local regulations and compliance issues. Reducing the cost of business involved in cross-border transactions and establishing a smooth global supply chain becomes a critical success factor for every medium and large business.
Areas to address: Internal resource
None of the above can be achieved without a wide range of skills at your disposal—many of which are specialized, such as document mapping. These skills can be at a premium in the marketplace. Recruiting new staff with the correct skill set can be expensive. Retaining the skills internally to support legacy EDI systems can be equally challenging. The reality is that if you have been employing EDI staff for many years you are probably paying them well above market value for their services. Yet, other staff are unlikely to re-skill into an area they think will not enhance their CV. At a time when most organizations are looking to reduce rather than expand head count, internal B2B resources can quickly appear a major drain on resources that could be deployed elsewhere to achieve greater value.
The role of B2B Managed Services
B2B Managed Services should allow you to eliminate—or, at least, control – two major sources of on-going investment. You are outsourcing technical capabilities. Your B2B provider should have a technology upgrade program that means that you can connect with partners regardless of document type, communications protocol or industry B2B standard. In addition, you have access to all the skills you need—including 24 hour local language support – to implement, change, extend and manage a B2B infrastructure that can encompass your entire trading community. This has two major benefits. You remove B2B as a capital expenditure from your balance sheet. You gain much greater control over B2B costs as most managed service charges are based on monthly transaction rate so you can more carefully plan your B2B budgets.
Issues to consider
- Do you have access to all the latest technology and communications?
- How much would you have to invest to ensure you are always up to date?
- Are you planning to expand your B2B capabilities into other business areas?
- Do you have the skills internally to make this happen?
- Do you have the budget available to make this happen?
- How much does it cost to maintain your current B2B solutions?
- What would the maintenance costs be if your transaction rate increased by 10% a year?
- What is the cost to your business of an outage with your B2B solution?