Dec. 18, 2006

In today's B2B segment, vendors of products and services that deliver solutions look upon buyers and suppliers as their customers. But what is it exactly that they mean by this?

In its most simplistic fashion, a buyer implementing eProcurement or eInvoicing will need to engage specific suppliers. This usually results in requirements expected from a supplier to create and publish electronic content and generate an electronic invoice. This whole process comes at a cost to the supplier.

As is usually the case, in the private sector the buyer usually expects the supplier to meet any cost as a cost of doing business. But there are sometimes exceptions.

On the other hand, in the public sector (at least in the U.K.) the buyer usually meets the cost and that is to ensure that no supplier is disadvantaged from competing for contracts.

The Zanzibar Marketplace exemplifies this approach. Among vendors there is no consensus with pricing options where the buyer pays, supplier pays or both pay.

There are examples of buyers achieving eCompliance with all their suppliers but in the mainstream it is typical that a buyer will target their top suppliers with the 80/20 rule. Many of those top suppliers will be sitting on multiple requests to get involved in the "eSegment" of their customers, each having their own unique requirements.

The supplier is now burdened with the complexity of the business case and its various IT implications for each customer. This is not going to change soon and the number of requests is increasing dramatically.

The supplier's dilemma is often not evident to the buyer who blissfully assumes they have a supplier's attention and compliance which is why those that have implemented B2B processes describe supplier enablement as challenging.

As a whole, many suppliers have customers in the public sector and the private sector and both are in fact negotiating down the cost of purchased goods and services. So in the eyes of a supplier, they already get a good deal. If the deal included B2B processes as a condition of business, then the supplier went in eyes open.

But suppliers are receiving requests for B2B processes from pre-existing business and worry about what to do, not knowing how that might affect their business. The cost to the supplier is important as it erodes margins but it is meeting the differing requirements of various customers that injects complexity in terms of process and IT requirements that suppliers want to avoid.

If you look on the buyer's side, they typically implement a single interface between the business and the supplier base. In the supplier base, a piecemeal approach is more common as a result of reacting to customers' B2B processes and that results in cost and complexity for the supplier.

As suppliers get better at this, they recognize the need for a solution that will accommodate all of their customers' B2B requirements. They are also looking at the opportunities from having XML orders available to them rather than paper documents to reduce the clerical costs of processing orders.

As a result of all this, they are now implementing a single interface between the business and the customer base, a one-on-one solution, and the first vendor through the door is in a strong position.

But the reality is that the overwhelming number of U.K. businesses are untouched by B2B processes and that is simply because wherever possible, they have avoided engaging with B2B customers in a wait and see approach and to forestall incurring additional costs.

Source: Line 56