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The networked economy has revolutionized the
ways of conducting business and has brought with it a plethora of new
opportunities and challenges for companies. All established companies not only
face competition from traditional powerhouses but also from new emerging
companies, and must continue to channelize their efforts in maximizing revenue
opportunities and increasing process efficiencies. According to the
Gartner Group the total volume of B2B transactions will exceed $7 trillion by
2004 -- a sustained annual growth rate of 120%.
In the networked economy companies largely depend on strategic alliances with
their suppliers and partners to create value chains, which will provide them
with process-level integration among their commerce chain partners and enable
new value models for their company. In effect today companies realize the value
in conducting virtual, real time collaboration and trade with their commerce
chain over the web. Traditional ways of doing business, such as email, faxes and
voice mail introduce numerous delays and require data to be reentered into
multiple systems, multiple times. Hence, the need for dynamic
business-to-business (B2B) integration, which can automate business processes
that encompass a diverse range of packaged products, custom applications, legacy
applications and systems within the corporation and among partners.
The ability to develop viable B2B relationships and realize their potential
value in the shortest possible time is critical to the long-term success of the
enterprise. Indeed, no company can afford not to investigate how to efficiently
automate business processes with trading partners, lest they fall behind to new
competitors who can wield increased efficiency to improve margins or cut costs.
So, companies find great value in outsourcing their IT functions so they can
focus on their core competencies. By using the outsourcing model, companies are
able to leverage the experience and expertise of their technology partner to
their advantage, which results in developing a better product, faster and more
efficiently while maintaining economies of scale.
At the same time, companies continue to forge deeper relationships with their
customers. Customers expect to be informed every step along the way from contact
to completion of transaction. Rather than adding the costly human resources that
would traditionally be required for such service levels, companies now invite
customers to interact directly with their information systems via automated
email systems, self-service web sites and information portals. Customers not
only expect their interaction to be real time but also to be personalized,
presenting information that represents their specific history with the company.
In order to meet these demands businesses must be able to automate business
processes that span the entire extended enterprise. In effect, they must be able
to integrate their information systems and applications with those of their
suppliers, partners and customers reliably, securely, and in real time.
The Business-to-Business Integration
Not surprisingly, this has led to a tremendous growth in B2B integration as
companies look for ways to automate and accelerate their business processes and
become e-businesses, responding to customer demands immediately and making
changes to their business dynamically as market opportunities shift.
Although businesses have operated EDI (Electronic Data Exchange) networks to
share data with partners for years, EDI has not become widespread because of the
limited functionality, complexity and high cost of implementation. Today, with
the widespread adoption of the Internet, there are newer technologies which are
enabling companies to more quickly accomplish the objectives of B2B integration.
By using open standards such as CORBA, COM, Java, XML and HTTP, the speed and
cost of implementation can be greatly reduced. This is important not only for
obvious economic reasons but because it encourages the so-called "network
effect" whereby more partners and suppliers will adopt B2B integration
technology, thereby increasing the value to all partners. All of the modern
approaches to integration use Internet technologies, though they differ in their
speed of implementation, support for standards, security, reliability and
scalability. Choosing the right e-business integration platform will have major
implications for a company's long-term competitive abilities.
Exchange of information between companies has to be based on a standard
protocol. Each company has interactions with many other companies and it would
not be practical to have to agree on a different protocol for each. XML (eXtensible
Markup Language) has become the de facto standard for defining business
documents that can be exchanged with partners. There are several groups, such as
RosettaNet, Electronic Business XML and BizTalk which are defining standard XML
documents and processes for specific industries. Your business partners will
need a standard and inexpensive way to participate in B2B integration for it to
be effective. In many cases, trading partners may have their own investments in
enterprise and B2B integration so you will need to make sure that the solution
you use is fully compatible with XML standards and does not have proprietary
extensions that would restrict your ability to integrate with partners.
B2B integration significantly improves organizational performance by supporting
the key principles of business success:
Faster to market with new products and services
Improved customer service
Shorter sales cycle and streamlined sales process
Reduced operational costs
Reduced production costs
Lower inventory costs
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