SAP Users are Outsourcing EDI/B2B to Crossgate

Last week I spent some time onsite with a large SAP customer discussing their plans for EDI and B2B. They, like everyone else, have had to reduce their IT staff and slow down their IT plans and ambitions over the past year. They were, however, very interested in looking at the new model for supporting EDI and B2B requirements that is being promoted by SAP and Crossgate. Why? They have an increasing number of EDI relationships that need to be implemented and supported, but less budget and staff to dedicate to it.

This model, that SAP often calls "Business Network Transformation" utilizes Netweaver (when available) or IDocs and/or tRFC to connect with Crossgate's EDI and B2B Hub that also utilizes Netweaver. Crossgate then takes care of all EDI and B2B mapping, integration, trading partner implementations, operations and support for a simple one time set-up fee and then low monthly support fees. This managed service frees up the IT staff to focus on core SAP related projects while Crossgate manages all external trading partner communications.



********************************************************
EDI, B2B Strategies http://b2b-bpo.blogspot.com/
********************************************************

Business Process Improvements vs. Product Purchases

I had lunch with a team last week that worked for a large commercial truck manufacturer. They said they have been focusing their IT efforts on business process improvements, rather than purchasing new products and services. He said many business process issues had been ignored in favor of throwing more technology and solutions at the problem in the past, however, in today's climate they are looking at actually improving the processes.

This was an interesting discussion and got me thinking. Not every problem needs a new layer in the technology stack to fix it. Many companies that I have been working with lately are looking to consolidate on less technology, not more.

Today I spoke with a company with multiple ERPs and multiple EDI systems. Again, many of their process problems were the result of trying to support too many different complex technology environments. Their goals for 2009 and 2010 were to standardize, simplify and consolidate IT environments and technology stacks.

SAP customers who are looking to consolidate on an SAP instance, often contact SAP to ask how to additionally consolidate B2B and EDI systems and processes at the same time. The following 2 articles discuss this topic.

• SAP-centric EDI/B2B - http://b2b-bpo.blogspot.com/2009/03/what-does-it-mean-to-have-sap-centric.html
• SAP Netweaver Approach to EDI - http://b2b-bpo.blogspot.com/2009/04/new-edi-approach-for-sap-netweaver.html

********************************************************
EDI, B2B Strategies http://b2b-bpo.blogspot.com/
********************************************************

New EDI Approach for SAP NetWeaver® Process Integration Users

This is a very interesting article that describes SAP's new strategy for supporting EDI and B2B requirements in a NetWeaver-centric manner through their investment in Crossgate, an EDI and B2B exchange that SAP now co-owns. This network approach and adoption of cloud computing strategies brings a new twist to traditional EDI.

Atlanta, Georgia, April 7, 2009 –Crossgate Inc., the global expert in business-to-business integration (B2B), continues to grow its customer base by offering an alternative deployment strategy through a fixed-cost EDI and B2B managed service.

In light of recent economic uncertainties around the world, many companies are keeping a closer eye on operating expenses and trimming budgets by finding ways to consolidate business processes. For SAP customers, the clear answer to integrating internal and external processes is SAP NetWeaver Process Integration (SAP NetWeaver PI).

More than 3,000 organizations have decided to use the SAP NetWeaver PI offering as their business-oriented SOA middleware to perform application-to-application (A2A) and business-to-business (EDI and B2B) integration across a business network. It includes an Enterprise Services Repository, an enterprise services bus, pre-packaged integration templates, and technical and application adaptors to support end-to-end process integration.

SAP NetWeaver PI goes beyond a pure technology focus with pre-packaged business integration templates such as integration scenarios, process components, interface description and global data types…etc. to reduce organizations’ integration TCO, enabling customers to focus on the integrated business results.

By leveraging SAP’s existing co-ownership and Business Process Outsourcing (BPO) relationship with Crossgate, SAP NetWeaver PI customers can also choose an on demand EDI approach for B2B integration that does not require additional investments in building mappings, software, servers or hiring staff to maintain trading partner connectivity.

Crossgate B2B360 Services Powered by SAP® opens the door to more than 40,000 business partners that are pre-integrated in Crossgate’s Business-Ready Network. For customers dealing with global customer and government requests, this EDI managed service provides the perfect complement to address line of business initiatives while operating under tighter budgets and hiring restrictions.

Most IT executives are tasked with ‘doing more with less.’ This alternative approach to EDI maintains an SAP-compliant strategy while reducing the current and ongoing costs of supporting ever-changing B2B requirements. Crossgate B2B360 Services Powered by SAP addresses the key issues found with traditional in-house EDI and B2B integration development.

Instead of providing only generic B2B data standards such as ANSI X12 and EDIFACT, along with mapping toolsets, this managed services approach to EDI includes partner-specific mappings, communications, and business processes. More importantly, the interface with Crossgate is fully aligned with SAP NetWeaver and Service-oriented Architecture. And unlike in-house B2B solutions where time and materials costs can quickly skyrocket out of control, Crossgate’s business model offers fixed-price predictability.

B2B360 Services Powered by SAP also provides turnkey service extensions for SAP ERP, SAP Business All-In-One, SAP Business ByDesign, SAP Supply Network Collaboration, SAP Transportation Management, and a variety of other SAP solutions. Crossgate’s fully integrated, fixed-cost solution will help customers improve productivity, address global e-business mandates, and increase organizational agility so they can meet business challenges both now and in the future.

To date, 47 customers in various industries and geographical locations have contracted for Crossgate’s B2B360 Services Powered by SAP, and that number continues to grow. “2.7 new customers every working day choose SAP NetWeaver PI to help them integrate their processes across application and business partner network without being mired in technical integration hurdles,” says Ken Tsai, Director, Enterprise Solution Marketing, SAP NetWeaver PI. “With SAP’s relationship with Crossgate (SAP is a co-owner), customers can continue to enjoy the same benefit of business-oriented integration through a managed services approach to EDI that allows them to simplify partner on-boarding and enablementprocess.”

If you would like to discuss any of these subjects in more detail please email me.
********************************************************
EDI, B2B Strategies http://www.blogger.com/b2b-bpo.blogspot.com/
********************************************************

Crossgate, a B2B and EDI Managed Services Provider for SAP, More Than Triples International Business in One Year

Crossgate UK Limited, the global expert in business-to-business integration (B2B and EDI), more than tripled its international customer base in 2008.

Today's global economic uncertainty has led companies to keep a closer eye on budgets, staff resources, process efficiency, and profitability. Because of financial concerns, many companies have been forced to reduce staff and cut back on operating expenses. In order to compete and remain successful, companies must find a way to meet their business objectives with fewer employees. And they must do this at a time when global regulatory compliance is becoming more challenging and costly.

Crossgate has risen to the challenge of helping customers weather economic storms by providing complex value-added B2B services for companies keeping a close eye on their bottom line. Crossgate's growing reputation as a proven industry leader has resulted in the company's international customer base increasing by more than 300% between 2007 and 2008. This rapid growth includes winning key accounts across the United States, United Kingdom, Finland, Italy and France.

Crossgate's Business-Ready Network offers the largest central B2B transaction repository of ready-to-run B2B processes, greatly reducing partner implementation time and expense for companies wanting to expand globally. The company's experience with international B2B requirements, regulations, and standards reduces the time and expense necessary for complex multi-country rollouts, providing companies with a business gateway to the entire world. B2B 360 Services helps companies address multiple international needs in a timely, cost-effective manner.

Implementing SAP upgrades and new applications can have a major impact on a company's B2B integration program. Crossgate's experience and strong partnership with SAP (SAP is a co-owner of Crossgate), along with our joint development efforts, reduces risk and offers stability while saving money for customers.

Crossgate offers the world's first Business-Ready Network, guaranteeing 100% integration of business partners, clients and suppliers. A single connection to the Network means electronic data exchange with any business partner regardless of their technical capability. In addition, Crossgate's B2B-360° Services powered by SAP provide clients direct access to all integrated business partners in the B2B transaction network via their SAP systems. With its legally compliant e-Invoicing Services, Crossgate also provides an innovative and 100% secure solution to cover the entire process of incoming and outgoing invoices, including signatures, global compliance monitoring, and secure automated long-term archiving. More than 40,000 business partners, representing over 10 industries, currently exchange documents and data via the Business-Ready Network.

Crossgate is represented at four sites in Germany, with operations in Atlanta, London, Milan, Paris, and AsiaPac. For more information, visit http://www.crossgate.com./
********************************************************
EDI, B2B Strategies http://b2b-bpo.blogspot.com/
********************************************************

What Does it Mean to Have an SAP-Centric EDI and B2B Environment?

SAP's strategy and new paradigm for EDI and B2B is called Business Network Transformation. SAP's solutions like SNC (Supplier Network Collaboration) and TMS (Transportation Management System) are dependent on successful communications with large numbers of trading partners. The B2B communication component becomes a critical part of the success and ROI of these solutions and is best served by being tightly integrated with the rest of SAP's products and strategies.

SAP's Business Network Transformation strategy is an interesting and different paradigm because it takes an SAP-centric approach to EDI and B2B. What does EDI and B2B look like from an SAP-centric view? It starts with the following:

• In 2008, SAP made a significant investment in a rapidly growing company that owns and operates Europe's largest managed EDI and B2B services HUB called Crossgate.
• Crossgate's services are developed and operated on SAP's Netweaver platform. This is now SAP's recommended EDI and B2B managed services (BPO) solution globally today.
• SAP/Crossgate are now developing multi-year roadmaps for EDI and B2B integration solutions for all SAP components that consume and produce EDI and B2B messages
• Pre-configured EDI and B2B services are being uploaded and published to SAP's ESR (Enterprise Services Repository) for reusability and customization.
• SAP users can use and implement new business processes and associated EDI and B2B services in an on-demand SaaS or IaaS model by simply requesting the SAP/Crossgate service and designating messages and trading partners to activate.
• SAP's Global Data Types are being used to normalize the semantics and syntax of data across the SAP environment and they are also being incorporated into the SAP/Crossgate EDI and B2B Automated Business Exchange.
• As new software applications and upgrades are released by SAP, the SAP/Crossgate EDI/B2B services will be released to support them. For example, Transportation Management (TMS) and Supplier Network Collaboration (SNC) have full SAP/Crossgate EDI/B2B message roadmaps. These defined EDI and B2B messages will be available for TMS and SNC customers on-demand in the ESR.
• Part of SAP's strategy may be influenced by their "best run businesses" motto. SAP is designing ways to enable the implementation and management of EDI/B2B to be far simplier, less costly and easier for SAP customers than users of other ERPs.
• SAP/Crossgate customers will benefit from the EDI/B2B connections made by other SAP users on the network. Each new trading partner connection added to the SAP/Crossgate network will then be available for reuse by other SAP users connected to the network. The benefits and economies of scale presented by this model are fun to watch.
• Many traditional EDI vendors and EDI hubs have chosen to compete with SAP in the areas of supply chain management, transportation management and a growing list of business process areas. SAP is not only defending their territory but aggressively supporting new and more effective implementation strategies and SaaS and IaaS models for EDI and B2B that leverage their Netweaver platforms and future product architectures and roadmaps.

SAP customers committed to consolidating and simplifying their IT environments around SAP solutions will want to carefully consider the Business Network Transformation strategy articulated by Jim Hagemann Snabe, member, SAP Executive Board at last years Sapphire and in 2009.

SAP will not be passive and let traditional EDI vendors and industry EDI Hubs take business away from them. Communicating with external business networks (trading partners) is critical to the success of SAP's SNC, TMS, orders-to-cash and procure-to-pay business processes. SAP seems to view these communications and B2B infrastructures now as critical components to both their success and their customers'.

If you would like to discuss this topic in more detail please email me.

**********************************************
EDI, B2B, Cloud Computing and Business Process Automation - http://b2b-bpo.blogspot.com/
**********************************************

Implementing SAP e-Invoicing

In these times of economic uncertainty, there are still many reasons a company may want to implement e-Invoicing processes, both inbound and outbound, with their SAP system. Let's start out discussing why a company might want to consider implementing e-Invoices.

• Reduced paper costs
• Reduced printing costs
• Reduced handling costs
• Reduced postal costs
• Reduced DSO - (days sales outstanding) outbound e-Invoicing
• More environmentally friendly (Go Green)
• Compliance with regional tax authorities
• Reduced payment processing costs
• Reduced data entry costs (entering payment information from paper)
• Reduced data entry errors
• Reduced billing disputes
• Reduced paper storage
  

How does a company implement e-Invoicing with their customers? Let's lay-out a plan:

1. The company must notify their customers that they want to implement an electronic invoice process and get their agreement. This is typically done via a letter and/or email sent to the accounts payable department of your customer.
2. The notice should request that the customer read and agree to the terms of the online agreement form, and then register to participate.
3. Once the online form is completed and the customer agrees to accept invoices electronically, the agreement should be automatically emailed to the customer for printing and safe keeping.
4. The online registration form often includes a survey of the customer's EDI (electronic data interchange) or B2B capabilities. Can your customer exchange EDI or other B2B data formats, or do they want to exchange invoice information only via email or a web portal?
5. Once your customer is ready an email should be sent to them with a link to a secure website where they can login and view current and past archived invoices. This reduces the customer support and accounts payable workload. This portal should allow the company to see when the invoice was read and/or downloaded. Unread invoices should be flagged and the company alerted that more customer training may be necessary.
6. e-Invoices often involve a digital signature that is compliant with tax authority regulations and it must be archived. The length of time that electronic invoices must be archived differs widely depending on local regulations. It is often from 5-10 years.
7. If your customer is a high volume customer and can support EDI or other B2B data exchanges then the portal may be useful to check on the status of invoices, but a fully automated B2B process may be more efficient.
8. The portal should provide both you and your customers the ability to verify the integrity of the digital signature. This linked blog article highlights some of the costs and benefits, but let's address some of the issues here.

Large companies often receive tens of thousands of paper invoices monthly. These must be received in a mail room, opened, organized and moved to the appropriate processing centers where the invoices are manually read and the data entered into the accounting system. Many large companies receive invoices in dozens of different locations where this process is repeated. The manual processing of invoices can be a huge expense. The range of costs can be from $18/invoice to $2/invoice dependent on the level of automation and optimization.

• Unprocessed paper invoices prevent management visibility into the true state of liabilities.
• The longer it takes to process an invoice, the more customer service and accounts payable issues arise.
• Unprocessed or slow processing of supplier invoices may prevent companies from realizing early payment discounts that may be offered by suppliers. This article details business process challenges that often need to be corrected before the full value of electronic invoices and accounts payable optimization measures can be realized.

There are several key areas that I would suggest looking at when considering how to optimize the accounts payable processes in a large company:

• Consider the consolidation of disparate software systems into one ERP
• Define and implement formal invoice approval work flows. Preferably automated work flows.
• Consolidate management of invoice receipt into shared service centers
• Implement a scanning/OCR solution to lift data from paper invoices quicker and more accurately, or outsource to a invoice processing managed service provider.
• Implement an automated invoice approval work flow engine
• Convert paper invoices to electronic invoices by implementing EDI, Supplier Web Portals or other B2B strategies.
• Implement an electronic payment system

SAP has recently announced an agreement with Open Text to resell their Vendor Invoice Management work flow and archiving software. Companies like BancTec provide OCR/Scanning and AP Master work flow software as a managed service.

**********************************************
EDI, B2B, Cloud Computing and Business Process Automation - http://b2b-bpo.blogspot.com/
**********************************************

The Changing World of EDI, B2B and Extended Supply Chains

The world of business, and as a result EDI, is rapidly changing today. Solutions and methods that worked 5 years ago may not support the new reality of the market. Companies are seeking greater consolidation, standardization, efficiencies and cost reductions. Management is evaluating every service to identify if it is a core service that is required to be provided internally, or is a candidate for outsourcing. The following changes in the market are impacting EDI and B2B operations:

1. The rapid adoption of multi-enterprise supply chains add huge numbers of mappings, integrations and communications to a traditional trading partner community.
2. These emerging requirements will require significant increases in the size and expense of the EDI/B2B department.
3. Mergers and acquisitions are to be expected as the norm – IT staff and infrastructures must be preparted for many integrations and systems consolidation projects.
4. Supply chains, logistics, customers, vendors, government regulation, markets and product lines are changing weekly and IT must be flexible enough to effectively support these changes.
5. The traditional methods of on-boarding or rolling out new EDI and B2B trading partners are far too slow and labor intensive to keep up with the demand.
6. EDI/B2B departments must recreate themselves to meet the NEW demands of this NEW reality.
7. A NEW scalable, fast, flexible and available on-demand EDI/B2B paradigm needs to be adopted.
8. Standardized integration methodologies and technologies must be implemented to enable rapid on-boarding of EDI and B2B trading partners.
9. Data and system harmonization must be accomplished. The semantics and syntax of data must be harmonized and normalized across the enterprise to enable rapid and accurate data integration projects.

Here is an example of changing government regulations:

• In May 2009 the Mexican government will change the way companies can send paper invoices to customers. The new regulations require that companies using paper invoicing will now be required to obtain pre-printed invoice forms certified by the Servicio de Administracion Tributaria (SAT) or adopt a solution to send digitally signed invoices electronically to domestic and international customers.

The two excerpts below describe some of the many changes in the world of EDI and B2B:

• Brown Forman had a steadily increasing backlog of EDI project requests, with each transaction requiring multiple weeks of internal effort, and increasing complexity associated with integrating trading partners in locations around the world. “Hiring new employees or training existing ones to include new global EDI requirements would have been cost-prohibitive for us because it would have been so resource-intensive,” said Kathy Pramik, Brown Forman’s AVP & Director of Enterprise Systems.
• Due to recent acquisitions of various businesses, Nemak’s operations around the world have more than doubled. As a result of this rapid expansion, the complexity and volume of EDI and B2B transactions has also increased. The company had various ERP solutions in place and multiple EDI and B2B platforms, teams and locations to support, with no centralization of EDI or B2B integration management.

Traditional EDI is hard work and takes a lot of time, focus and effort. Today companies are often choosing between doing the EDI/B2B work internally with their own resources or using an on-demand EDI and B2B managed services provider. Some of these on-demand services have tens of thousands of companies already on the service and can easily add thousands of new EDI trading partners efficiently on behalf of their subscribers. It is an interesting debate. Companies need to considers the past performances and cost of their internal EDI teams and systems against the efficiencies and low relative costs of using the large scale EDI service providers. Has their internal EDI team been able to quickly and efficiently on-board the majority of their trading partner community, or did they get stuck at only 10-15% of them.

Is EDI a core service that needs to be operated internally, or is it suited to being subscribed to like a phone or electrical utility? Only the management of the company can make that call, but more and more companies are asking those questions today.

SAP is listening to this debate and has taken steps to address the changing market for EDI and B2B. They are standardizing integration methodologies around Netweaver PI, Enterprise Services Repositories, Global Data Types, eSOA and an investment in a SAP Netweaver PI based managed B2B and EDI services company.

e-Invoicing Requirements for Mexico

Crossgate and SAP are collaborating to help customers meet new Mexican government regulations by providing an integrated e-invoicing service that is certified by the Servicio de Administracion Tributaria (SAT).

In May 2009 the Mexican government will change the way companies can send paper invoices to customers. Current regulations allow paper invoicing using government-issued invoices or customer-generated invoices. But with the new regulations, instead of being able to print their own invoices, companies using paper invoicing will now be required to obtain pre-printed invoice forms certified by the Servicio de Administracion Tributaria (SAT) or adopt a solution to send digitally signed invoices electronically to domestic and international customers.

Crossgate's electronic invoicing solution can help companies meet these changing requirements while helping them streamline their financial supply chains. Manually sending paper invoices is slow and expensive, and processes are not integrated among business partners. These problems result in inefficient financial supply chains with large amounts of aging and uncollected receivables. So for organizations that are still using paper invoicing, the upcoming regulatory changes will actually be beneficial rather than restrictive.

By improving cash management processes and reducing days sales outstanding (DSO) through e-invoicing, companies have more cash available to repurchase stock, expand business operations, and reduce debt, all of which have a positive effect on stock price. The benefits of e-invoicing also spread to community markets, contributing to Crossgate's green supply chain initiative to save paper and help the environment.

Crossgate's e-invoicing service supports the SAP NetWeaver(R) technology platform, providing seamless integration and easy expansion to other processes. By replacing paper invoices with electronic data exchange, companies can realize huge savings in time and staffing expenses. And companies that have been printing their own invoices will not be faced with the cost of purchasing invoices from the SAT.

For companies that are already using electronic invoicing, the Crossgate solution can make it easy for them to ensure compliance with the new regulations. The new rules for e-invoicing will require issuers to use the Firma Electronica Avanzada (FIEL), an advanced electronic signature authorized by the SAT. Crossgate provides an on-demand service that uses the FIEL and meets the technical specifications and standards determined by the SAT. The specific information that must be contained in each invoice will already be configured, and monthly reports will be provided to the SAT as required by the new regulations.

Regulatory compliance efforts are often seen as being time-consuming and difficult, but Crossgate's e-invoicing solution will make it easy for organizations with customers in Mexico to transition to an invoicing process that complies with the new government standards.

Please email me if you would like more information on these e-Invoicing rules and requirements.

Crossgate and SAP Collaborate to Provide EDI and e-Invoicing for Global Spirits and Wine Company

This is an interesting announcement of a company moving to a managed service model for their global EDI, B2B and e-Invoicing because of the following reasons:

• large backlog of customers and suppliers needing EDI implementations
• complexity of supporting EDI globally
• high cost of employing global EDI experts
• high costs of supporting global EDI systems
• need to be compliant with global e-Invoicing regulations
• desire to focus internal employees on core business processes, not global EDI compliance

Crossgate Inc., the global expert in business-to-business integration (B2B), has been chosen by the largest American-owned spirits and wine company to address the company’s unique global EDI and E-Invoicing needs.

Brown Forman owns and markets some of the most well known liquor and wine brands in the world and sells its 35 brands in more than 135 countries across the globe.

Brown Forman had a steadily increasing backlog of EDI project requests, with each transaction requiring multiple weeks of internal effort, and increasing complexity associated with integrating trading partners in locations around the world. “Hiring new employees or training existing ones to include new global EDI requirements would have been cost-prohibitive for us because it would have been so resource-intensive,” said Kathy Pramik, Brown Forman’s AVP & Director of Enterprise Systems. “We want to keep our internal resources focused on value-added strategic business activities, so outsourcing our B2B enablement was the perfect solution."

Ensuring regulatory compliance was another pressing concern for Brown-Forman. “Many countries we work with have created their own requirements for eBusiness processes, like Mexico’s Tax Authority E-Invoicing mandate,” explained Kathy Pramik, Brown Forman’s AVP & Director of Enterprise Systems. “Some of these regulations are very complex such as requirements for mandatory digital signatures and archiving. We can’t afford to overlook any details when we go to enable a new business partner, or everything grinds to a halt while we work out the compliance issues.”

Brown Forman selected Crossgate because they could provide professional B2B methodology and experience in addition to a well-developed repository of ready-to-run B2B mappings, a strong SAP relationship, and 24/7/365 first-level support. In the spring, Crossgate will complete replacement of Brown Forman’s existing business model with B2B 360 Services Powered by SAP, providing Brown Forman with a platform that enables rapid scalability to meet current and future business EDI enablement needs. The Crossgate solution will allow Brown Forman to leverage their resourcing model to scale easily to meet business timeline and/or project needs as the company continues to grow and expand their offerings around the world.

“Outsourcing our B2B enablement to a proven industry leader such as Crossgate will help us deliver EDI projects more efficiently and cost-effectively,” said Kathy Pramik, Brown Forman’s AVP & Director of Enterprise Systems. “Crossgate EDI and E-Invoicing Services are exactly the solution we need to support our global business requirements both now and in the future.”

About Crossgate, Inc.

Crossgate offers the world's first Business-Ready Network, guaranteeing 100% integration of business partners, clients and suppliers. A single connection to the Network means electronic data exchange with any business partner regardless of their technical capability. In addition, Crossgate's B2B-360° Services powered by SAP provide clients direct access to all integrated business partners in the B2B transaction network via their SAP systems. With its legally compliant e-Invoicing Services, Crossgate also provides an innovative and 100% secure solution to cover the entire process of incoming and outgoing invoices, including signatures, global compliance monitoring, and secure automated long-term archiving. More than 40,000 business partners, representing over 10 industries, currently exchange documents and data via the Business-Ready Network.

Crossgate is represented at four sites in Germany, with operations in Atlanta, London, Milan, Paris, and AsiaPac. For more information, visit http://www.crossgate.com

SAP Invests and Becomes a Co-Owner of Crossgate an e-Invoicing, EDI and B2B Exchange for SAP Users

SAP recently announced they have invested and become a co-owner of the EDI and B2B exchange called Crossgate. Crossgate is Europe's largest EDI exchange by transaction volume, and is rapidly growing in the Americas. This announcement, made at SAP's TechEd Berlin, caught many industry folks by surprise. Prior to this announcement SAP had left EDI and B2B issues up to their customers and third party EDI vendors to resolve. This announcement unveils a new strategy and paradigm for EDI and B2B connectivity for SAP users.

The SAP investment also included a strategic position on Crossgate's board, and an aggressive joint development and roadmap strategy between SAP and Crossgate to simplify and lower the costs of EDI and B2B implementations and support.

Paolo Malinverno, an analyst from Gartner, stood up at a press conference in TechEd and asked Leo Apotheker, CEO of SAP, about their investment in Crossgate and the potential next steps. Leo answered, "Our decision to invest in Crossgate is a very important step towards Business Network Transformation and this is our strategy."

Gartner's Malinverno followed up the announcement at TechEd with a paper called, SAP Steps Into the Growing B2B Services Market Via Crossgate and called this investment, "...a decisive move into the business-to-business infrastructure market." He explained SAP's strategy as follows, "The declared objective of this transaction is to keep the strategies of the two companies aligned. However, the main effects will be for SAP to have an out-of-the-box B2B (EDI) services connectivity solution... Access to Crossgate B2B (EDI) services will ship as a built-in service within SAP Enhancement packages, which minimizes the need for application integration...”

SAP's solutions have always required EDI and B2B connectivity through third party EDI vendors, so how is this announcement different? Malinverno describes it this way, "SAP is finally making a more decisive move into the B2B infrastructure market, compared with prior B2B alliances, which were only focused on reselling third-party technology. SAP will likely drive much of Crossgate’s strategy in the future."

In another paper by analysts Maureen Fleming and Jeff Silverstein from IDC called, SAP-Centric EDI Standardization and Low Total Cost of Ownership Move Customers to Crossgate, IDC writes, "Crossgate is fast becoming a disruptive vendor in the business-to-business (B2B) market. In essence, B2B 360 is the default choice (of SAP)." They listed the following key points as reasons SAP customers were using Crossgate's EDI and B2B managed services:

• Strong integration with SAP is well aligned with customers’ initiatives to standardize versions of SAP across regions or globally. Many SAP customers, for example, are engaged in multi-year initiatives to update their many instances of SAP to a single standard, or template, across a region or globally. As part of this effort, many are standardizing EDI communications and have road maps to consolidate to a single B2B vendor.
• Managed services offering are well aligned with customers’ plans to outsource mission-critical, nonstrategic software infrastructure

Geoffrey Moore, author of “Crossing the Chasm” and managing director at TCG Advisors said the following about SAP's investment in Crossgate, “In a world where business networks are emerging as a new unit of industry competition, the gating item has been business network-enabling systems. This latest announcement of a partnership between SAP’s worldwide enterprise capabilities and Crossgate’s existing network of enablement hubs goes a long way to fill that need, allowing business network transformation to become a growth accelerator instead of a roadblock. Crossgate is providing a service extension that facilitates operational excellence regardless of process, global region or trading-partner capability.”

Jim Hagemann Snabe, member, SAP Executive Board explained SAP's investment in Crossgate with these words, “We are providing companies with solutions that are key enablers for business network transformation, allowing them to increase their flexibility to capitalize on market changes and opportunities."

SAP Co-Founder and investor in Crossgate, Dietmar Hopp gave the following statement about the investment, "Our engagement at Crossgate is focused on supporting the international growth in the market for electronic data exchange (EDI). The business model is convincing: A central platform for B2B Data Exchange rather than redundant individual communication and integration platforms. Similar developments have taken place in the utility and telecommunication sector.”

Many of SAP's applications are dependent upon the exchange of electronic data with their business networks (trading partner communities). SAP is embedding Crossgate's B2B 360 services into its upcoming Business ByDesign offering. In addition, B2B 360 services will be available to Business Suite, ECC, Supply Network Collaboration, Transportation Management, All-In-One, and BusinessOne customers via SAP’s Enterprise Service Repository.

It is not a surprise that SAP recognizes how important EDI and B2B are to their applications' and customers' success. However, it is quite interesting to ponder the roadmaps for EDI and B2B within SAP environments. With the eSOA, Enterprise Services Repository, Global Data Types and Netweaver PI pieces all coming together with the Crossgate B2B Automated Exchange investment to deliver a new and much more efficient low cost method of implementing EDI and B2B for SAP customers.

SAP and Crossgate recently collaborated on a webinar called, Cost Control - The ROI of Managed EDI and B2B Integration Services which details some of the benchmark numbers and business cases for implementing EDI and B2B using SAP's Netweaver and Crossgate's Netweaver-based automated exchange.

If you have any questions or would like to discuss this subject in more detail please email me.

Related articles:

• Crossgate and SAP Collaborate to Provide EDI and e-Invoicing for Global Spirits and Wine Company
• Consolidating on SAP ERP and EDI and B2B Managed Services to Reduce Costs
• SAP Users - Negotiating EDI and B2B Formats
• Cost Reductions in the World of SAP, EDI and B2B Integration Services

Inovis Launches Social Network for Supply Chain EDI & B2B Collaboration - Is this the Right Strategy?

Inovis recently announced the launch of a social network site for retailers and suppliers involved in EDI and B2B exchanges to communicate and exchange organizational and contact information as the press release excerpt below describes. I have been pontificating the virtues of a database system to manage trading partner contact information and other meta data such as integration maps, XML schemas, EDI guidelines, etc, for over a decade, but have never got off of my soap box to do anything about it. Why do I agree with Inovis that this kind of data is important to manage? The articles below highlight the challenges and importance of managing trading partner information effectively. Any Professional EDI or B2B Manager will recognize and appreciate the need to effectively solve the issues listed below if they want to implement EDI or B2B with dozens, hundreds or even thousands of trading partners.

1. http://b2b-bpo.blogspot.com/2008/12/edi-message-implementation-information.html
2. http://b2b-bpo.blogspot.com/2009/02/relationship-management-for-edi-b2b-and.html
3. http://b2b-bpo.blogspot.com/2009/01/business-network-enablement-challenge.html
4. http://b2b-bpo.blogspot.com/2008/12/uddi-and-business-network.html
5. http://b2b-bpo.blogspot.com/2008/12/edib2b-messages-can-not-be-implemented.html

Inovis excerpt:

Atlanta, GA — February 10, 2009 — Inovis, a provider of business community management services, today announced general availability of a social networking service for supply chains modeled after popular consumer websites such as Facebook and LinkedIn. The Inovis Social Network creates secure online communities for retailers and suppliers to communicate and exchange organization and contact information.

Users sign into the web site to access a secure view of their colleagues at trading partners and update their contact details and their company's trading profile, ensuring their latest data is available to their business community. When a supply chain manager finds an error or problem in a purchase order or shipment, they can use the Inovis Social Network application to identify and contact the right person at the supplier, third-party logistics (3PL) provider or contract manufacturer who can best resolve them before it causes delays and errors in the supply chain.

I am now going to climb back on my soap box and issue a proposal - EDI and B2B managed services hubs are now all starting to develop repositories to manage trading partner and EDI message related information. It would be in the best interest of the global EDI community to insist that EDI hubs, EDI software vendors and anyone else managing EDI services create a standard for sharing trading partner information across the industry. If not, EDI users will find themselves constantly needing to re-enter this kind of information in all the EDI hubs and B2B business networks used by their partners. Inovis has a repository, but what about market leaders like Crossgate, Sterling Commerce, Seeburger, Tie Commerce, GXS and all the rest?

The repository of EDI related contact and organizational information should really be held in a secure database by an objective third party that is managed by an EDI standards body like ANSI X12, GS1 or EDIFACT. The work of UCCnet and GS1 showed that repositories can be created and shared to provide a global benefit.

Another thought to ponder - Does it make more sense to manage your trading partner network from an EDI vendor centric view like Inovis, or from an ERP centric view? Where are your business processes, supply chains, customers and accounting system and processes managed? It seems to me that the ERP centric view makes more sense. You already have your trading partner's information in the ERP, now you just need to add-on all the EDI and B2B related information. So perhaps it is the ERP vendors that need to create a standard for exchanging EDI and B2B related information. I know that SAP is working on this strategy now with their Business Network Transformation initiatives.

Consolidating on SAP ERP and EDI and B2B Managed Services Across the Globe to Reduce Costs

This recent announcement about Nemak's consolidation of multiple ERPs onto one centralized SAP ERP and the consolidation of multiple EDI and B2B platforms is especially relevant in these days of cost cutting.

Nemak is a subsidiary of ALFA, a Mexico-based global manufacturing company that has more than 48,000 employees and operates 75 production facilities located in 17 countries. Due to recent acquisitions of various businesses, Nemak’s operations around the world have more than doubled. As a result of this rapid expansion, the complexity and volume of EDI and B2B transactions has also increased. The company had various ERP solutions in place and multiple EDI and B2B platforms, teams and locations to support, with no centralization of EDI or B2B integration management.

“Electronic data exchange is vital to the success of business processes in the automotive industry, and we work with over 100 business partners,” said Christian Fischer, Nemak IT Director Nemak Europe & China.

Christian went on to describe his evaluation process of SAP's BPO partner companies that could provide centralized B2B and EDI managed services that were integrated with SAP. Nemak chose SAP's BPO partner for EDI and B2B managed services. This BPO partner operates on an SAP Netweaver infrastructure so the integration between Nemak and the manage services could be an SAP-to-SAP SAP integration.

Prior to implementing SAP ERP, Nemak’s EDI operations were costly and time-consuming. “With so many B2B platforms to manage, our IT staff was overwhelmed,” Fischer noted. “Two of our most pressing concerns were controlling IT costs and ensuring regulatory compliance for each location. SAP's BPO partner helped us consolidate our B2B platforms in alignment with a centralized SAP ERP solution that gave us flexibility to continue expanding our network in a more efficient, cost-effective way.”

SAP's BPO partner will help Nemak’s SAP rollout by migrating the company’s EDI partners to the B2B managed services network prior to the SAP go-live. As a result of implementing EDI Managed Services, Nemak will gain reuse and economies of scale while being able to reposition IT staff to core SAP functions.

The inital rollout project in Nemak’s U.S. and European offices has already been completed successfully. The second rollout is currently underway in a cluster of locations in Europe and the United States. The projected timeline calls for all 28 rollouts on three continents to be completed by the end of 2009 by deploying parallel clusters in Europe and the United States. The project calls for a wide variety of data formats like ANSI X12, VDA and EDIFACT as well as a number of communication protocols including AS2, oFTP,VAN, HTTPs and others.

Relationship Management for EDI, B2B, and XML Integration

It is important to understand how critical certain information is to the EDI and B2B processes when you are automating the extended suppy chain. Automated B2B processes are more than the exchange of standardized transactions through EDI, B2B or XML. It's about developing strong business relationships prior to the EDI transactions and then managing the relationship and B2B exchanges on an ongoing basis. It's about a complex set of collaborations and communications between the various parties and the coordination of their activities to accomplish a successful B2B exchange. It's about supporting these complex relationships and exchanges by the tens of thousands reliably so that business continues to move at the speed of the Internet. Did I use enough buzz words to make Dilbert proud of me?

The following list identifies some of the most important intellectual assets (high value data) that relates to your business network or trading partner communities. These knowledge assets need to be identified, documented, aggregated, organized, stored and managed in order to successfully implement, manage and support B2B and EDI exchanges.

1. Document the internally preferred industry B2B and EDI standards (X12, Edifact or Edifice using AS2, VANS, etc.), EDI implementation guides, XML schemas and web service interfaces by business process and trading partner
2. Document the associated business process and work flow
3. Document vendor and service provider contact and account information
4. Document the employees, consultant’s and/or contractor’s that were involved in this specific implementations and their contact information.
5. Document your trading partner’s EDI or B2B transaction set(s) or XML schemas
6. Collect and store your trading partner’s business documents including trading partner agreements, project schedules, security requirements, relevant business agreements, NDAs, etc.
7. Create, maintain and publish to a collaboration website a task list (specific to each trading partner’s implementation)
8. Document internal problem escalation processes
9. Document vendor information and contact information for supporting EDI and B2B solutions. What is their helpdesk number, email and what is your account number and issue number?
10. Identify and document related servers, hardware and networks
11. Document the owner(s) of the business process on both ends
12. Document the name and contact information of the security and communication personnel in the IT department. Will you be using X12 over a secure VAN or AS2?

All of these unique pieces of information need to be gathered and stored in one location, a secure collaboration site, that allows your EDI and B2B team access. This information is the life blood of EDI and B2B exchanges and departments. Most companies have no centralized repository for this information and it is dispersed on various spreadsheets, databases, paper documents, emails and the laptops of employees, contractors and consultants - chaos reigns! No wonder the EDI and B2B teams in so many companies can't seem to implement more than 10-15% of their trading partners.

Effective EDI and B2B managers will not only have a centralized repository of all of this information and data, but live and manage by it.

Google sites is one option, and can easily be created for secure collaboration and the price is right, free.

EDI Standards Persist in the Face of XML and Web Services

I was asked this question today:

Why is EDI still the standard way companies transact between each other even as the internet has been adopted by most people? Technologies like the internet, XML and WWW have now been around for a while, and yet companies still are transacting via EDI. EDI is not cheap, and smaller companies are reluctant to participate. Does that mean the internet has not really penetrated the corporate world in terms of its back office functions? Is it because of cost of changing technologies? A worry about security? What is holding the embrace of technology in this area?

My Answer:

EDI is not just a technology and format. EDI is the accumulated intellectual assets of 30 years worth of thinking through very difficult business issues. I remember sitting in an EDI standards committee meeting as they debated how to identify the different kinds of sun roofs on a rental car for EDI purposes. Each segment, element and code in the EDI standards represents years of thinking and debating by business experts around the world. EDI is a library of the world's best business data semantics and syntax thinking. Technologies and formats will change every few years, but this intellectual asset will be worth more each year.

Cloud Computing Comes to SAP, Mobile Handheld PDAs and EDI, B2B Users

Google has just announced they will be offering synchronization and support for Cloud computing for mobile and wireless handheld PDAs and smartphones users including those using the:

iPhone
BlackBerry
Nokia S60
Nokia standard
Sony Ericsson
Windows Mobile

Why is this important? It demonstrates a trend that people are moving away from the view that their desktops or laptops are the center of the universe, to a view that Cloud Computing - their online Google or Yahoo Accounts are the center.

Google has now enabled synchronization directly through any wireless connection to your online account(s). Your contacts and calendars and other Google Apps no longer must be synchronized through a desktop, iTunes account or laptop. This is big news! This functionality permits the concept of a truly untethered mobile computing environment for handheld PDAs and smartphones. The home or work desktop is no longer the anchor weighing you down. You are free to move around the world and have access to your valuable content and applications.

I can't emphasize enough what a monumental change this is for mobile users. The advent of the iPhone and other convergent multi-media mobile handhelds along with synchronization to the Cloud where hundreds of Google Apps exists changes everything.

How does this announcement relate to Cloud computing in the context of EDI and B2B? A similar revolution is happening in the world of EDI and B2B e-commerce. Companies like SAP are untethering the mapping scripts and methodologies traditionally used by EDI translator vendors. This year SAP is delivering new technologies and strategies for EDI and B2B. They are delivering new integration options via SOA (service oriented architectures) models and enterprise services repositories on their Netweaver XI and PI solutions. These technologies will enable SAP users to use external managed services in the Cloud much easier.

SAP's industry components such as SNC (supplier network collaboration), TMS (transportation management systems) and many more are going to be released with pre-built connections into the world of cloud computing. This will allow the complexity and complication of EDI standards, formats and mappings to be uncoupled from the SAP system and placed in the cloud environment where economies of scale and the network effect can be maximized for cost savings and efficiency. This is actually a very interesting study!

SAP's BPO (business process outsourcing) organization is currently working with an SAP BPO partner to utilize these Cloud computing models and strategies to enable SAP users to connect to external EDI and B2B managed services through Netweaver PI connections when it is determined that the TCO (total cost of ownership) for operating an internal EDI operation is too high.

Reducing Errors and Improving SAP Supply Chain Accuracy with EDI and B2B E-Commerce

Over the last couple of years Dow Chemical has significantly increased the amount of automated EDI and B2B E-Commerce transactions they have implemented between their SAP system and key suppliers using a managed EDI services provider. What were Dow Chemical's goals for this effort?

• increase business process efficiency
• improving data quality
• reducing human error
• to identify and eliminate system and process errors
• proactively notifying customers regarding exceptions
• enabling users to meet customer expectations and increase overall satisfaction
• gain better control over their procurement process
• eliminate transactional barriers
• empower their staff to focus on business issues, rather than order processing

It is interesting to note how many of their goals were simply to reduce errors and problems with the quality of their processes. Often these issues were the result of errors introduced into the system by bad data and human error. The more data validations upfront, and the reduced "human touch" on the data once it is in the system, the less errors. Once the data is good, all kinds of filters, alerts and exception monitoring can be implemented. None of these features work correctly if the data is bad, or can be made bad somewhere in the process.

Dow is migrating hundreds of key suppliers to an EDI managed services provider. It is interesting to note that Dow Chemical's has had a mature internal EDI department for many years now. Their stated reason for migrating to an EDI managed services provider are the following:

• to centralize global purchasing operations (consolidation of P2P)
• to standardize global purchasing operations (standardize and simplify)
• allows Dow to quickly add new trading partners
• simplifies maintenance by standardizing on a single platform
• simplifies ERP upgrades - a single connection, through the managed service provider, to external trade partners eliminates complexity and paves the way to an easy SAP upgrade path

Not stated by Dow, but common to a good professional EDI managed services provider is the ability to reuse EDI connections that have already been used by other companies on the services. This can simplify roll-out efforts and reduce costs.

Top Priorities for Companies Today and the Growing Need for EDI and B2B E-Commerce

In the course of my job over the past few weeks I have spoken with a good number of large companies and IT departments many of them using the ERP from SAP. As a result of these conversations I have compiled a list of what companies have been sharing with me about their rapidly changing priorities in Q1. Here is my list:

1. Reducing the TCOs (total cost of ownership) of assets
2. Reducing operational costs (consolidating functions into Shared Services Centers)
3. Consolidating and simplifying IT assets (reducing and consolidating the number of ERP instances, different redundant software solutions and B2B and EDI systems)
4. Developing agile systems that can change quickly based upon changing markets and economic conditions.
5. Achieve the benefits that SOA (service oriented architectures) promised
6. Conversion of manual processes (that require more FTEs) and automating them
7. Converting paper documents to electronic file exchanges (e.g. paper invoices to electronic invoices)
8. Optimize accounts payable processes to reduce processing costs and to realize more early payment discounts
9. Implement e-Invoicing with customers to reduce processing, mailing and customer service costs
10. Working capital optimization - exploring options in the financial supply chain to find and preserve more working capital

It is interesting to recognize that most of these priorities can be positively impacted by efficient business process automation and effective EDI/B2B E-Commerce enablement. The vision of EDI/B2B has long been to replace manual and paper based document exchanges with electronic and automated exchanges of data. The trouble was, it took too much time and effort to achieve the vision using traditional EDI implementation methodologies. Today there is reason to be optimistic.

Service Oriented Architectures, enterprise services repositories, web services, secure Internet communication protocols, matured EDI and B2B standards, and the advent of EDI/B2B managed services hubs are reducing the costs and greatly simplifying the ways business process automation and EDI/B2B implementations can be accomplished.

EDI and B2B managed services companies, like Crossgate, are taking advantages of relationships they have established with large ERP vendors like SAP, to develop solutions that remove integration barriers, extend existing work flows and business processes beyond the 4 walls, and make implementations much faster and less expensive. The economies of scale that can be achieved by large EDI and B2B managed services hubs with tens of thousands of connected companies make them a very compelling alternative for companies. Traditional models of self-funding a complete EDI infrastructure and team internally and implementing multi-year EDI roll-outs is hard to justify in today's climate if there are better and less costly alternatives.

The more that companies embrace and implement SOAs, the easier it is to benefit from the economies of scale and expertise of low cost managed service options that are increasingly in demand in this economic climate.

For more EDI and B2B E-Commerce related blog articles please visit: http://b2b-bpo.blogspot.com/

SAP, the Total Cost of Ownership and Business Agility in the World of EDI and B2B

Today the concept of Total Cost of Ownership (TCO) is on every one's mind. Costs must be reduced and the complete costs associated with a project or solution over a given period of time must be carefully analyzed. If the software solution has a license cost of $250,000, but the implementation and support services for the first year is $1.2 million, then the TCO is $1.45 million. What about the second and third year? How do upgrades of other connected software components impact the TCO?

There is depth of thought in this statement from Gartner - Systems that are "built to change" are more valuable than systems that are "built to last." What does Gartner mean by this? Here are my interpretations:

1. Design and develop IT models and systems that allow for reuse, like you would find in a services oriented architecture model. Services can be added, published queried upon and consumed without the complete rewriting of your IT systems. Services can be reused by others and costs and time can be saved.
2. Design and publish end-to-end workflows and automated business processes. Make this information available to a wider audience so reuse and so full knowledge of the processes can be shared, debated and improved.
3. Replace hard coded and undocumented customized code (coded but not documented by someone who left in the late 70s). Standardize on exposed and documented services that can be improved, reused and understood by all in IT and at the helpdesk. It makes revisions and improvements fast, inexpensive and possible.
4. Simplify and standardize on business processes and a service oriented architecture that allows manageable improvements to separate components without impacting the entire IT infrastructure. Standardization of processes can simplify the entire system and reduce maintenance and support costs (TCO).
5. Consider the TCO - total cost of ownership. Yes, one programming guru may be able to code a custom solution in three weeks and save some time on this one project, but the total cost of ownership may be enormous over time to support this undocumented and custom code. Standardized and simplified environments have lower TCOs and allow for rapid improvements.
6. Consolidate systems and simplify - a well designed relational database model, optimizes the speed and performance of a database application - it is a beautiful piece of art. IT systems should practice the same art. Reduce the number of databases, redundant applications and multiple instances of the sames application. Simplify, simplify, simplify.

I have seen companies that have had eight different EDI systems, staff, integration technologies and EDI tool sets within the organization. The costs associated with these redundant systems was huge!

I was an EDI Manager of a large electronics company in the past. In meeting after meeting I would hear reasons systems could not be changed or improved because to change one part, would destroy the integrity of the entire mess. The result was often to employ more people and more manual processes in order to avoid touching the "mess." This increased costs, errors, time delays and prevented improvements. The opportunity costs of not touching the mess increased every month and every quarter.

The "mess" can destroy the entire company. The "mess" prevents improvements and new business models. The "mess" can become such a barrier that the entire company can be pulled down by it.

EDI and B2B systems are no different. I have seen many SAP environments where the large number of customized IDocs and custom integration scripts became the "mess." The many different database applications that needed to be integrated with the EDI system created a complex series of interwoven custom maps, scripts, APIs, databases and triggers.

I have heard of entire SAP upgrades being postponed or delayed because the upgrade would break the EDI "mess." The "mess" began to dictate to the business how things would be done. Improvements, cost savings and efficiencies began to suffer.

There are many more stories we can all tell. The vision of SOA, SAP's Netweaver PI and the vision of SAP's Business Network Transformation for EDI and B2B is intended to address many of these pains. We just need to figure out how to rid ourselves of all of the old baggage before it destroys us.

****************************************
Kevin Benedict
EDI/B2B Blog - http://b2b-bpo.blogspot.com/
http://www.linkedin.com/in/kevinbenedict

Cloud Computing, SAP and Data Integration for EDI and B2B

In the blog article by David Linthicum titled, The Importance of Data Integration in the Era of Cloud Computing, he describes some of the issues that companies face when trying to outsource key business processes to the cloud.

"...many enterprises are not accounting for the costs and complexities of doing data integration between the clouds and the enterprise, and since they are typically moving to cloud computing providers for the cost savings, you need to consider that as well. In some instances, moving to a cloud provider could actually cost more, when considering the data integration costs."

I agree with David. In the context of outsourcing EDI and B2B to a cloud (managed service provider) there needs to be a very efficient way of connecting to the cloud if you want to save money. Crossgate has developed their B2B managed services offering on SAP's Netweaver PI infrastructure. Why? Crossgate (as a company that SAP has invested in) focuses on providing managed B2B and EDI services to SAP users. Therefore, Crossgate can simplify the integration between SAP users and the Cloud by pre-establishing Netweaver PI to Netweaver PI integration.

The Economy and Outsourced Manufacturing, B2B, EDI and Complexity

It is common now days for manufacturing companies to be researching the merits of outsourcing more of their manufacturing to contract manufacturers. Part of this research is understanding how to actually exchange data, in real time, with contract manufacturers. Adding more fax machines, administrative staff and spreadsheets is not a good way to reduce costs and ensure quality and efficiency. Let's discuss some of the challenges with contracting manufacturing to distant shores:

• Distance
• Time zones
• Languages
• Cultures
• Holiday schedules
• Visibility
• Quality
• Currency exchange rates
• Different international B2B and EDI standards
• Work ethic
• Political environments
• Security
• Lack of business process automation
• Lack of EDI/B2B capabilities

It is critical that companies that use contract manufacturing automate the exchange of data as much as possible to avoid the introduction of more human errors that are the results of data entry mistakes and language misunderstandings. There are enough challenges already without adding more complexity.

When manufacturing was down the corridor or across the parking lot, the sales team could meet directly with the operations, procurement, supply chain and logistics teams in a conference room and plan production. If the production is on the other side of the world, these discussions need to be in the form of automated machine-to-machine data exchanges (i.e. EDI/B2B messages) that precisely communicate all requirements.

In addition to accurate communications, the manufacturer must have visibility into the extended supply chain of the contract/outsourced manufacturer. Can the contractor get all the parts, at the right time, to fulfill the order? Can all the logistics be arranged to deliver the products in the right place at the right time?

With all of this complexity it is mandatory that good supply chain systems like SAP's Supplier Network Collaboration be in place to manage it. It is also necessary to have a very good and solid EDI and B2B system in place to manage the data exchanges with your business network or trading partner community. Don't underestimate this challenge. If a manufacturer asked their EDI Manager what it would take to support the communications with contact manufacturers they would likely answer like this:

• I need more EDI staff
• I need more training
• I need more servers
• I need more customer service
• I need more help desk folks
• I need more testers
• I need more EDI mappers
• I need to rewrite many of our integration scripts to make them more reliable
• I need more DBAs to help with integration
• I need more communications and security staff
• etc

The idea of contract manufacturing is to find ways to reduce manufacturing expenses. Greatly expanding your IT and EDI staff is not helpful to this cause.

There are new paradigms of delivering B2B services that SAP is working on today. SAP's BPO (business process outsourcing) organization also has some recommendations as do the SAP Netweaver PI team. In order to recognize the benefits of contract manufacturing and extended supply chains there needs to be a different strategy and cost model than traditional EDI implementations afforded.

Automotive Industry Suppliers are Investing in IT and EDI Process Improvements

Paralyzing economic conditions and budgetary restraints are motivating some automotive industry suppliers to act now rather than later. Nemak, a subsidiary of ALFA, a Mexico-based global manufacturing company that has more than 48,000 employees and operates 75 production facilities located in 17 countries is an example. Due to recent acquisitions of various businesses, Nemak’s operations around the world have more than doubled. As a result of this rapid expansion, the complexity and volume of EDI transactions has also increased. The company had various ERP solutions in place and multiple B2B platforms to support, with no way to centralize EDI coordination and management. The result of these inefficiencies was duplication of work and unnecessary expenses.

Nemak chose Crossgate, the global experts in business-to-business integration (B2B) for SAP, to assist in the consolidation of its B2B operations to reduce complexity and expenses. “Electronic data exchange is vital to the success of business processes in the automotive industry, and we work with over 100 business partners,” said Christian Fischer, Nemak IT Director Nemak Europe & China. “We needed a strong, reliable, competent, and experienced SAP partner to help us implement a fully outsourced global B2B integration service.” After evaluating five potential vendors, Nemak selected Crossgate because they could provide professional B2B methodology and experience as well as a well-developed repository of ready-to-run B2B mappings, a strong SAP relationship, and 24/7/365 support.

Prior to implementing SAP ERP, Nemak’s EDI operations were costly and time-consuming. “With so many B2B platforms to manage, our IT staff was overwhelmed,” Fischer noted. “Two of our most pressing concerns were controlling IT costs and ensuring regulatory compliance for each location. Crossgate helped us consolidate our B2B platforms in alignment with a centralized SAP ERP solution that gave us flexibility to continue expanding our network in a more efficient, cost-effective way.”

Crossgate’s B2B 360 Services will complement Nemak’s SAP rollout by migrating the company’s EDI partners to the Crossgate network prior to the SAP go-live. As a result of implementing EDI Managed Services, Nemak will gain reuse and economies of scale while being able to reposition IT staff to core SAP functions.

The initial rollout project in Nemak’s U.S. and European offices has already been completed successfully. The second rollout is currently underway in a cluster of locations in Europe and the United States. The projected timeline calls for all 28 rollouts on three continents to be completed by the end of 2009 by deploying parallel clusters in Europe and the United States. The project calls for a wide variety of data formats like ANSI X.12, VDA and EDIFACT as well as a number of communication protocols including AS2, oFTP,VAN, HTTPs and others.

“Crossgate is performing very professional project management and implementation work,” Fischer said. “Until now our business sites were all using different B2B solutions without central coordination or involvement. The advantages of using the EDI Managed Services provided by Crossgate will be a tremendous benefit to all Nemak sites worldwide."

****************************************
Kevin Benedict
EDI/B2B Blog - http://b2b-bpo.blogspot.com/
http://www.linkedin.com/in/kevinbenedict

EDI, B2B and Electronic Invoices are Not Always the Answer for Accounts Payable Optimization

I spent much of today working with a large SAP customer who had accounts payable challenges. They were receiving more paper invoices than they could manage. I (being an EDI/B2B guy) immediately thought that converting the paper invoices into EDI or other B2B formats for electronic invoices might be the easy answer. I was wrong. The primary problem was not the numbers of paper invoices, it was a problem of what to do with the data on the invoices.

Many of these invoices were from small service providers and their services were not associated with a purchase order. As a result the Accounts Payable department struggled with the time and effort it took to track down the original person that requested these services. Once found, the person needed to review the details of the invoice and approve it. This process was manual and took huge amounts of time and effort from many different people involved in the AP process. Although the calories burned were a blessing, the problem was real.

The solution to the problem was to implement a "pre-authorization" process so invoices could be associated with a person and approval process. There needed to be a better business process implemented and an automated work flow applied to move the inbound invoices through an approval process efficiently.

The secondary problem was how to handle the large number of vendor inquiries and complaints that resulted from inefficient invoice processing. The solution was to get these suppliers of services on a Supplier Self Service portal where they could monitor the progress and status of their own invoices without overwhelming the Accounts Payable department with calls.

****************************************
Kevin Benedict
EDI/B2B Blog - http://b2b-bpo.blogspot.com/
http://www.linkedin.com/in/kevinbenedict

SAP and Agile EDI for Supply Chain and Logisitics Management

SAP supply chain and logistics EDI and B2B implementations can often take years. An expensive EDI system must be purchased, installed and staff trained. Supply chain and logistic partners must be informed of your desire to implement EDI (electronic data exchange) and agree to support it. Your trading partners must be prioritized, scheduled and tested. If you have a small EDI team and thousands of suppliers and dozens of 3PLs it will take many years to get your supply chain and third party logistics providers automated.

The key question to ask about the above scenario is - does this effort and time frame satisfy the needs of your business? If not, then you must find a better and more agile strategy that does. Often you can find managed EDI and B2B service providers that have already implemented electronic data exchanges with tens of thousands of industry participants. By connecting once to this EDI Hub you can save considerable time and effort and have a much more agile and on-demand EDI and B2B strategy.

By on-demand, I mean the ability to simply request that the managed EDI and B2B service provider implement an electronic data exchange with a specific set of trading partners and within a specific time frame.


****************************************
Kevin Benedict
Blog on EDI/B2B Issues - http://b2b-bpo.blogspot.com/
http://www.linkedin.com/in/kevinbenedict

SAP Users - Negotiating EDI and B2B Formats

In the SAP Insider article entitled, "Is Your Organization Still Focused Only on Labor Costs?" Bernhard Fischer and Steve Sprague discussed how to optimize financial supply chains with electronic data exchanges among other points. They point out that one of the key challenges for organizations is negotiating electronic exchange documents and formats with their suppliers and buyers. Why is this a key issue? Let's discuss:

There is a phrase, "combinatorial explosion" that is relevant here. It refers to the massive chaos that can result if you try to support too many different custom electronic file formats and integration maps in EDI/B2B. You ideally want to receive one standard electronic invoice from all suppliers, and you want to send one standardized electronic invoice to all buyers. This keeps it all simple, efficient and manageable. However, in the real world, you may need to support hundreds of different supply side and buy side electronic invoice formats. This causes huge problems, expenses and impacts your ability to support and grow B2B/EDI connections over time. This reduces you ability to optimize your AP processes and efficiently invoice your customers.

I have seen many cases where companies simply could not afford to continue growing their EDI/B2B because of the "combinatorial explosion" of supporting thousands of custom integration and EDI maps. How can this be avoided? You can be your supplier's biggest customer and demand (i.e. negotiate) to use your standard electronic invoice, and then you can negotiate with your customers and explain how you can give them the best pricing if they agree to accept your electronic invoice format. But again the real world abruptly awakens us from our fantasy.

The point is - it is very important for companies to try to standardize, consolidate and simplify their business processes, services, IT systems, ERPs, EDI systems and supported EDI formats. Many business managers don't realize that agreeing to the use of a suppliers, or a customer's custom EDI formats can lead to complete chaos over time that can negatively impact growth, efficiencies and profits.

SAP's Business Network Transformation strategy is designed to fix these problems and to standardize and simplify EDI and B2B for the SAP supply chain, logistics, orders-to-cash, and procure-to-pay processes and other processes using SAP Netweaver XI.

****************************************
Kevin Benedict
http://b2b-bpo.blogspot.com/
http://www.linkedin.com/in/kevinbenedict

Shared Services Centers, EDI, B2B and Business Network Transformation

Shared Services Centers (SSCs) refers to the provisioning of services in one location that were previously done in multiple locations within an organization. This an interesting trend that often involves a transformation within the organization. Often companies with various divisions, departments and geographical locations would maintain many different Accounts Payable teams (as an example). If a Shared Services Center strategy were implemented, you would see the consolidation of accounts payable services into SSCs. This SSC would provide AP services to the rest of the organization.

The SSCs strategy often involves reengineering and transforming many different parts of the organization. Let's discuss a few of them.

1. When many different Accounts Payable departments and responsibilities are consolidated into one SSC, people will be made redundant.
2. The phone numbers, mailing addresses, contact people etc, may change
3. The AP processes in place in many locations may need to be replaced with scanning and OCR technologies that will permit invoices and other business mail to be scanned at or near the place of delivery (mail room) and forwarded to the SSCs. How do you transfer or forward the mail received in the Atlanta mail room to the SSC in Seattle or Munich? You digitize the data so it can be processed in your ERP anywhere in the world.
4. Scanned/OCR documents need to be processed and entered into an automated work flow that would enable the SSC to have visibility to the information where ever they may be located around the world. Someone needs to design and develop this automated work flow process, data cleansing and data verification process.
5. The different software applications, ERPs and EDI systems that were in place in all the different locations should be consolidated into as few as possible that can be supported by the SSCs. You do not want to simply transfer the existing chaos to the SSCs. Ideally the SSC for Accounts Payable would be working with just one ERP and would be exchanging electronic data with trading partners via one EDI system or B2B platform.
6. Part of the reengineering that needs to take place when implementing an SSC strategy is to move from paper payments to automated electronic payments, and from receiving paper invoices to receiving electronic invoices. This allows the SSC to support large geographical areas quickly and cost effectively via electronic data exchanges with trading partners. SAP's Business Network Transformation strategy is relevant here. It is intended to reduce the number of EDI systems and costs that are required in traditional EDI and to reduce the complexity of support EDI/B2B.
7. e-Invoicing and digital signatures that support the requirements of various tax authorities can be managed centrally in the SSCs and the service provided by the SSC or by professional e-Invoicing managed services providers.

The SSC strategy is intended to reduce the duplication of efforts, save money and reduce complexity. Often the purpose of maintaining multiple accounts payable teams, systems and locations was to support different businesses, processes, tax authorities, accounting systems and geographical requirements. If these inefficiencies are to be reduced, consolidation must take place in many areas. All internal business functions can be reviewed and analyzed to indentify areas of duplication and inefficiencies that may benefit from the implementation of a SSC.

All of these transformational steps require strong leadership. Leadership that can stomach the challenges and resistance that accompanies any major transformation and reengineering effort.

I read a good paper on SSCs from JPMorgan.

****************************************
Kevin Benedict
http://b2b-bpo.blogspot.com/
http://www.linkedin.com/in/kevinbenedict

Microsoft on EDI, B2B and Cloud Computing

I don't know how you feel about Microsoft, but we must admit they have many smart people on staff. Bob Muglia, Microsoft Divisional President has recently shared his thoughts on EDI, B2B and Cloud Computing in this article.

Here are some of his most interesting comments he made on the value of cloud computing.

"The other class that I think is really interesting is anything that involves working in partnership with others: supply chain sorts of applications, business-to-business, Electronic Data Interchange, those sorts of classes of applications in which you need to connect multiple organizations, and you need to deal with authentication, and you need to deal with network connectivity. "

This sounds like SAP's Business Network Transformation strategy and their views on simplifying EDI and B2B via SAP Netweaver PI and cloud computing through EDI managed services provider partners.

****************************************
Kevin Benedict
http://www.linkedin.com/in/kevinbenedict