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by Stephanie Neil, MA Editorial Staff   | Abstract: | Next-generation B2B networks are built as SaaS e-business hubs that share applications across the partner network, manage processes, and provide critical visibility. |
| Keywords: | B2B networks, share applications across the partner network |
Perhaps it's time to throw out the term, "supply chain." It contains an inherent flaw: One slipup in the sequence of events — a break in the chain — brings the whole business-to-business (B2B) system to a screeching halt. Manufacturers can't afford that.
Even the B2B platforms introduced in the 1990s, which use electronic data interchange (EDI) as a standard method of communication, are similarly marred. Those networks are based on a link-to-link messaging model that requires integration with multiple ERP applications. Same problem: One broken link, and the system comes to a halt. And perhaps more important, somewhere along the line, a small supplier might still be using spreadsheets and faxing documents, making it cumbersome to include the information in the electronic loop.
In the traditional B2B model, there is no control because there is no collaboration, no synchronization of data among disparate systems, and limited visibility.
In the B2B models now emerging, metrics and business processes are shared in a data hub that operates independently of the ERP or procurement systems of the participants. So, the definition of B2B has changed: B2B is no longer a supply chain; rather, it's a partner network.
"The foundation of this whole thing is the concept of a network and the idea that companies can share a transactional backbone to pass messages back and forth between each other and possibly share applications and workflow," says John Fontanella, vice president of research at AMR Research. "And how that is delivered is really going to be up to the company."
Fontanella is referring to the managed service models emerging from traditional EDI value-added networks (VANs) that have typically functioned only as messaging services. Many VANs are morphing into shared e-business hubs that support a range of communication methods — e-mail, Web, EDI, XML, and even fax — to meet the different needs and capabilities of trading partners. These hubs will operate much like a business process outsourcing model, enabling partner companies to view information, regardless of who owns it.
But there are different degrees of managed service emerging. According to AMR Research, at the most basic level, traditional EDI VAN vendors, such as GXS and Inovis, are building in the ability to translate transactions from any communication format. Other companies, such as Kinaxis, Sterling Commerce, i2, and E2open, take things a step further, adding a sophisticated application layer on top of the e-business data hub. Most of these vendors are also moving to a software-as-a-service (SaaS) framework that manages the process in a secure network and even measures performance.
"When people think of B2B collaboration, they focus on system-to-system, which is transaction-oriented," says Randy Littleson, vice president of marketing at Kinaxis. "We still have that system-to-system [approach], but more importantly, we are about people-to-people collaboration."
The idea is to get a group of companies working as one virtual company to go after a particular market opportunity. It is what AMR Research calls the performance-driven business network (PBN), the next phase beyond demand-driven supply networks where management of business processes is added into the mix. PBN unites business strategy, organizational principles, and enterprise architecture, not only internally, but also across the partner network.
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