Why B2B Integration Maturity is Not a Bridge Too Far

Posted by Brooke Lester on Jul 20, 2017 8:04 AM

B2B integration

If you have heard the term “B2B integration maturity” bandied about, but are not sure what it means, you are not alone. Researchers and industry thought leaders have spent years examining this issue and the impact B2B integration maturity has on the enterprise. 

For those businesses that are familiar with the concept of B2B integration maturity, yet do not think it is a realistic goal, that is not the case at all. B2B integration maturity is indeed attainable. Read on to learn what it is, why it matters to your business, and how to progress along the B2B integration maturity spectrum.

B2B Integration Maturity: A Definition

To understand B2B integration maturity, it is important to review what B2B integration is. 

Over the years, the term “B2B integration” has been co-opted by a number of marketing campaigns, so there has been a great deal of confusion surrounding it. However, the easiest way to explain B2B integration is that it is the flow of data across corporate firewalls. It enables people from different companies to send each other information automatically

B2B integration is the flow of data across corporate firewalls, which enables people from different companies to send each other data automatically.

So, what then is B2B integration maturity? The term refers to how far along the B2B integration journey an organization has gone. To understand how far along you have gone, you need to know what is involved in embarking upon such a journey and how to measure your progress. 

What Is Involved in the B2B Integration Process?

Simply put, B2B integration involves bringing all of the information that is stored in various repositories around your organization together into one place. 

Although it sounds like it should be simple, it requires knowledge of what data is stored where as well as conversion of it into a standard format so that it is easily accessible. Though it seems like a process that is internally directed, you must also be aware of any steps your business partners have taken or solutions they have implemented so that when you send each other automated communications, everyone receives them as intended.

There is a very human element of B2B integration as well.

While the B2B integration process might sound as though it is purely technical, that is not the case. There is a very human element at play as well. The people within your organization are accustomed to manual processes. Some of them might not feel comfortable utilizing technology, even though it transforms how your company operates. 

A successful B2B integration takes these issues into account. It includes the technical aspect (identifying all data sources, converting them into a standard format, and being aware of your business partners’ B2B integration readiness) and the human aspect (obtaining buy-in, change management, and education). 

How to Measure B2B Integration Maturity

German researchers Norbert Frick and Petra Schubert, both of the University of Koblenz-Landau, have developed a model of B2B integration maturity. They have identified three components of maturity: technical, organizational, and institutional. 

Technical maturity refers to how a firm processes and shares information electronically on an internal and external basis. The highest level of this aspect of maturity is electronically-supported communication methods; they eliminate manual data entry, prevent errors and redundancies, and save money and time. 

The highest level of technical maturity is electronically-supported communication methods, which eliminate manual data entry and save time and money.

Organizational maturity means that a company has structures and processes that enhance the supply chain’s effectiveness and efficiency. This type of maturity requires a set of consistently employed procedures. For example, employees do not enter data manually when they feel like it, and other times they capture information electronically. Rather, they must use the electronic method all of the time in order for the company to realize efficiency gains. 

Frick and Schubert define institutional maturity as the existence of formal and informal agreements that govern inter-organizational relationships. For instance, if you have agreements with business partners to share digital information in an automated manner, that would mean you have achieved a higher level of B2B integration maturity. 

B2B integration

Why Does B2B Integration Maturity Matter?

When it comes to implementing any kind of change at a company, the first question you will hear is, “How are we going to benefit?” If a new technology solution has been proposed, the question becomes even more urgent.

The best way to answer that question is to ask another query. How would you like to save time and money while boosting your profits? B2B integration can do that, and the further along you are on the maturity continuum, the more benefits you reap.

How would you like to save time and money while boosting your profits? B2B integration can do that.

In a survey carried out at the end of 2016 by SCM World, respondents at the highest level of B2B integration maturity reported some very impressive results. Seventy two percent of those surveyed reduced their transaction processing costs by 20 percent or more. Over two-thirds of companies at this level increased their inventory turnaround to more than twice a month, when it had previously been once per month or less. Almost 80 percent of respondents decreased their days sales outstanding to less than 60 days. 

Imagine this scenario. Instead of sitting with inventory for weeks on end, it could be on its way to your customers faster. Are you still waiting for that purchase order to be filled? B2B integration enables companies to transmit documents such as POs to one another instantly, meaning your order is fulfilled in less time. 

Seventy two percent of those surveyed reduced their transaction processing costs by 20 percent or more.

Many businesses struggle with becoming efficient and competitive. B2B integration is a vital component of staying efficient in an uncertain, rapidly changing business environment. 

How Do You Increase Your B2B Integration Maturity Level?

Some corporate decision makers firmly believe that it is impossible to increase their B2B integration maturity level. “We just don’t have the resources,” they say. “It’s not a realistic goal for us.” Are they correct? Is it unrealistic to expect every firm to achieve high levels of B2B integration maturity? 

No, it is not, and these naysayers are wrong. B2B integration maturity is an achievable goal. Moreover, it is a goal your own firm can reach. There are three things that affect B2B integration maturity: people, processes, and technology. 

Are they correct? Is it unrealistic to expect every firm to achieve high levels of B2B integration maturity? The answer is a resounding "no."

In a report published by SCM World in 2016, researchers discovered that companies that were at the highest level of B2B integration maturity had a comprehensive multi-enterprise decision alignment; that is to say, they make decisions based upon other trading partners across the supply chain. In addition, these firms justified B2B integration by citing the collaborative business growth it would generate between business partners. In contrast, less than a quarter of companies at the lower stage of maturity indicated that was their justification. 

The SCM World report also examined processes. A significant number of respondents with high levels of B2B integration maturity reported that they had shifted towards real-time reporting and transaction processing. These companies have automated their processes; procedures that once took hours or even days have been dramatically shortened. As a result, operations run smoother and faster, and firms are more profitable. 

Respondents with high levels of B2B integration maturity shifted towards real-time reporting and transaction processing.

One of the most noticeable differences between businesses at the highest end of the maturity spectrum and those at the lower end was the technological component. Almost two-thirds of companies with high levels of B2B integration maturity stated that they utilized comprehensive multi-enterprise data integration (collecting information from their business partners), whereas just 8 percent of firms at the second highest stage of maturity could make that claim. 

Another technological aspect that set some companies apart was their use of predictive analytics. A quarter of companies with the highest levels of B2B integration maturity responded that they used predictive analytics that spanned a multi-tier demand and supply network. Their use of predictive analytics enabled them to detect problems before they spun out of control and identify new business opportunities or markets. 

Almost two-thirds of companies with high levels of maturity utilized comprehensive multi-enterprise data integration.

Firms that have reached the highest levels of B2B integration maturity did not get there by accident. Nor did they reach that milestone overnight. Their success was the result of a commitment to collaborating with business partners, putting consistent, repeatable processes into place, and choosing the right kind of technology.  

B2B integration maturity is within the reach of every company, including yours. Reaching that goal is realistic; it is something for which you should actively strive. B2B integration maturity leads to greater efficiency, which in turn yields savings as well as higher profits. 

B2B integration maturity is within the reach of every company.

The journey toward higher levels of B2B integration maturity does not have to be undertaken alone. Choosing the right partner to guide you through the process makes it smooth and hassle-free. To learn more about achieving B2B integration maturity, contact us.