Ten Steps to Deeper Business Connections
Robert Pease -- Supply Chain Management Review, 7/28/2008
In flush times, it is easy to look the other way when faced with challenges pertaining to customer and partner integration. However, times have changed. It is no longer an option for any company to miss revenue opportunities or cost savings because integrating with customers or suppliers was “too difficult” in the past.
Sound familiar?
When exceptions, errors, and manual workarounds slow the ability to process orders, get status updates, or realize new revenue, it is time for IT departments to commit to improving existing operations. By better aligning business processes and systems through better integration with business partners, companies can realize lost revenue and create true connections to unlock the real potential of business integration.
The following ten items outline key business integration steps critical to building deeper connections with customers and trading partners. The result creates a competitive advantage, improved customer satisfaction and retention, increased operational efficiency and decreased operational costs. The initiatives also help clear sales revenue previously stuck in the pipeline, and help sales teams realize new lead opportunities, reduce delayed revenue streams, and minimize manual exceptions.
1. Say “yes” to customer requirements
Effective integration enables businesses to get closer to customers, creating the “stickiness” needed to build loyalty. It is imperative for businesses to make it easier for customers to conduct business, or risk losing sales opportunities to competitors. Integration makes “YES” the only answer when customers request support for procurement system requirements.
Make it easier for customers to make purchases. Integrating directly into customer back-end ordering systems facilitates purchase orders and leads to more transactions at less cost for longer periods.
2. Remove manual workarounds to increase revenue and reduce associated costs
IT departments can have a direct impact on the corporate bottom line by taking action to remove errors that occur within a company’s value chain. Operational departments can become crippled dealing with manual exceptions from inter-company processes. On average, 10 to 25 percent of orders received require some form of manual intervention. This drives personnel costs higher, delays the ability to book new revenue, and results in poor customer service.
Taken in context, a 10 percent average failure rate significantly delays important documents like incoming orders and outgoing invoices. This delay directly impacts revenue, increases costs, and reduces profits due to the effort required to address the exceptions. For example, a $250 million company experiencing a 14 percent failure rate could experience $25 million in delayed order revenue or invoice payments, not to mention the resource costs incurred to address them.
3. Link incompatible business processes
Companies operate differently by definition. This includes business processes, data formats and transaction languages. True integration links infrastructures to ensure seamless information exchange despite disparate processes and IT systems, aligning IT with sales initiatives for an immediate impact.
4. Know when EDI is not enough
A challenging business environment is the perfect time to shed the “good enough” mentality rampant among enterprise IT departments. When IT departments are no longer investing in their infrastructure, it is time to streamline and get more out of existing systems. EDI is a perfect example.
Does the need exist for real-time, or near-time, information exchange? Do batch transactions deliver the flexibility needed? Then it is time to look beyond EDI for a platform that better aligns business processes with integration. By constructing complete transactions that flow through back-end order management systems and customer back-end procurement systems, it is possible to achieve a streamlined flow of information for real-time transaction processing.
5. Make e-business a priority
Everyone is responsible for e-business. It is not the sole responsibility of IT. Making e-business a priority means connecting and sharing information with customers and suppliers regardless of data format or infrastructure. Managed integration services ensure seamless e-business compatibility and processing, showing customers and trading partners that e-business integration is a priority.
6. Extend the ERP system to trading partners
If plans call for ERP upgrades, increase the return on existing infrastructure investments by extending the system outside of corporate firewalls to include business partners. The result delivers true integration and tighter relationships. Enabling secure and efficient delivery of communications across the entire value chain defines businesses as an invaluable partner.
7. Stop dwelling on cost reduction and start thinking increased sales and margins
Difficult economic conditions mean going the extra mile to keep existing customers happy and retaining them. In order to improve customer service metrics, ask what customers truly want. The answer usually includes faster responses to pricing, order status, ship date and availability. To implement deeper integration with customers for faster access and delivery of information, think about what customers want up front in order to create tighter back-end integration to improve the entire demand chain.
Begin to think strategically by augmenting cost takeout initiatives with revenue and projects focused on profitability. Deeper integration with customers and sales partners delivers top-line and bottom-line results, which increases margins and profits.
8. Reduce Days Sales Outstanding (DSO) by integrating invoice delivery and receipt
Leveraging best-practice approaches to integration deployment and management not only improves operational results, but financial results as well. Electronic invoicing simplifies the sourcing reconciliation process and allows customers to pay for goods and services up to 30 days faster than manual means. Consequently, accounts receivable reconciliation becomes easier and cash flow into the organization materially improves.
This positions the IT department to impact quarterly financial results by accelerating the delivery, receipt and payment of invoices – something CFOs always appreciate. Direct integration to customer accounts payable systems reduces the time an invoice takes to process, and provides true visibility within the revenue stream.
9. Stabilize budget unpredictability by blending managed and self-service offerings
Another approach to making a meaningful impact on financial results is to support budget stability during tough times. Eliminate variable transaction/volume costs by taking a managed service approach with fixed pricing. A fixed pricing cost structure is predictable and provides less risk during uncertain times.
10. Future-proof systems to ensure they meet growing business needs
Successful companies grow despite difficult economic conditions. Obtain insurance against unpredictable budget cuts by ensuring benefits from system upgrades and new integration practices. Legacy systems such as EDI and flat file transfer are no longer enough in today’s ultra-competitive environment. Smart networks that incorporate diverse integration functionality, including real-time or near real-time communication and translations provide companies with closer connections to streamline business processes and deliver tangible benefits to the enterprise.
Putting it All Together
Whether companies fully or partially adopt these recommendations, the ten items serve as a roadmap to navigate tough waters during these difficult times of budget cuts. As IT departments weigh priorities when considering budgets, it is important to consider the above points when charting a successful path to the future. At a minimum, adopting practices and services that streamline business processes, improve information flow, and make it easier for customers to do business results in more revenue and greater profits.
Robert Pease is vice president of marketing at Hubspan, a leading provider of B2B integration services. Hubspan simplifies B2B integration, delivering true connections delivered as a service. Fore more information, visit http://www.hubspan.com.
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