Features: February 8th, 2013

2013 is set to be the year that data integration grabs attention of the boardroom and one particular area of focus will be business to business (B2B) data integration says Mikko Soirola, director for Liaison Technologies. Here he discusses the impact on the public sector and provides advice on the steps to consider when looking to implement a B2B data integration strategy.

The public sector is transforming the way its services are being delivered and technology plays a key role in this. Tackling the cost of public services is a priority for the coalition government, but during the current economic climate, this poses the need for improved services at a reduced cost. As a new year begins this growing quest for improvement continues, and issues such as increased level of process automation, improved connectivity and business visibility, both internally and across the supply chain, are attracting attention as means to reduce costs and increase efficiencies. One of the latest trends to develop in the public sector is a focus on data integration and specifically business to business (B2B) integration.

Rubbish in rubbish out

However in many organisations data is treated with scant regard and the term ‘rubbish in rubbish out’ is particularly pertinent. There are few organisations in the public sector which have a dedicated position of corporate data manager and while some degree of data management may occur at a departmental level, it is not enough. After all if no one has strategic responsibility or ownership how can it improve?

Despite falling storage costs allowing organisations to capture every single piece of transactional data, only a select few are using it to benefit the organisation. This is particularly relevant in the supply chain where speed and accuracy are paramount. The sad fact is that if you have poor data to work with from the start, you will never maximise your return or achieve best practice.

Why integrate data in the first place?

A decade of cut-backs, the proliferation of legacy systems and increasing numbers of suppliers has led to the need to process large numbers of diverse data forms and document types – both internal and external. Many organisations in the public sector still use very basic methods of data transaction processing which can vary from manual input to simple emailing. It all means poor efficiency and accuracy. Automation leads to the minimisation of manual input and improves the speed and accuracy of transactions. A professional B2B integration specialist will map out data from internal and external systems speeding transactions through the organisation’s system. This will have tangible benefits in terms of reduced overheads and lower cost of inventory. Information gathered via properly automated and integrated processes can then be monitored and analysed to improve operational visibility. It can then provide insights that may be used to optimise performance.

If managed well, this information provides an edge in the drive for efficiency, improves visibility of integrated supplier performance and ultimately delivers cost savings. Automation eliminates manual input errors and increases the speed and accuracy of both supply chain transactions and stock control.

Integrating the way a ‘business’ connects, communicates and transacts across extensive supply and demand chains can have a massive impact on the overall cost of doing business. It can also make and break deals. The recent high profile attempted acquisition of RBS branches by Santander failed because of ‘integration shortcomings’. And it isn’t just the damage to the bottom line through legislative fines, there is the cost of a damaged reputation too.

A recent report published by analyst house Freeform Dynamics into Effective B2B Integration, indicated that the top tier of B2B performers, i.e. those with the best level of integration with their trading partners, are three times more likely to be doing well financially than the bottom tier, and four times as likely to be growing.

The report based on in-depth interviews with senior managers in 120 mid-to-large sized UK companies, revealed that nearly half were dissatisfied with their current integration capabilities. Most of them believe addressing the problem was too much trouble and over a third of them cited internal complacency and inertia as reasons why they never get around to improving their systems and processes. Surprisingly many are still reliant on email based communication and paper based documents to facilitate B2B transactions.

The risk of high profile failure means this has to change, making 2013 the year of B2B data integration. But what is the best way achieving this? The best advice is to seek out and work with a data integration specialist which can advise on the most appropriate strategy for the organisation. A good integrator will be flexible, knowledgeable and work to understand the organisation. It will identify the priorities and its proposals will address those needs. Whether it is on-premises or in the cloud, bespoke or off-the-shelf solutions, expert advice will pay dividends in the long run.

For those who want to explore the advantages B2B data integration can offer, Freeform Dynamics have reviewed the research report findings and developed five key steps that the public sector should be considering if looking to benefit from the efficiencies and cost-savings that optimising its B2B data integration can deliver:

1. Evaluate and understand the business case – The lesson here is to look beyond the obvious and think through the full impact of an optimised B2B integration environment and the improved operational visibility that comes with it. This includes hard cost savings as a result of headcount being freed up or inventory being lowered, more informed business decision making and an ability to act on decisions more quickly, flexibly and mitigate risks.
2. Maintain an inclusive mind-set and collaborative strategy – From the outset, try and achieve harmonious integration with as many trading partners as possible. The broader the scope of your B2B integration activity, the more you can drive efficiency, responsiveness, flexibility and visibility.
3. Lay adequate internal foundations – It is no good trying to automate across the whole order, pick, despatch, receipt, invoice and payment cycle if your internal systems are not open enough. The fundamentals of effective B2B integration boil down to moving information and documents around in an automated and properly tracked manner. The ultimate sources and/or destinations for electronic documents, transaction records and product/service data are the internal applications you use to run your organisation. These include CRM, ERP, SCM and other core business systems, along with their associated databases and information stores.
4. Assess the appropriate resource and funding levels – Integration is often driven by pressure and incentives from key partners, however, the danger here is that reactive, piecemeal and inefficient investment often leads to some of the systems and information being disjointed. The way to get around this is to ensure that the ownership of B2B performance is well defined, ensure and adequate level of internal skills and knowledge exist and to allocate an appropriate level of resource and funding.
5. Strike the right balance between in-house vs service provider – The roots of B2B integration lie in custom developments to enable electronic hook up with key customers or suppliers. Whilst this kind of proprietary point-to-point approach can be valuable in the context of a single relationship it is often impractical across the whole of the supplier base. Often the smartest approach is using in-house managed B2B platforms combined with service provider managed platforms, to reduce re-inventing the wheel. Both internal integration points are dealt with in a more consistent and streamlined manner with differences between systems managed via metadata enabled mapping of information sets and rules-based workflow. Look for data integration specialists rather than generalist IT suppliers to maximise your return on investment.

Anyone involved at the ‘sharp end’ of getting data chains hooked up electronically will know it’s not just about industry standards, middleware, marketplace and new cloud options. As with any New Year Resolution, achieving it depends on setting the right goals, laying the best foundations and making sure you and the board are truly committed.

And for those of you who haven’t considered improved B2B data integration, have a look at the report and see how you measure up. If you are under pressure from your councillors to reduce costs while increase efficiencies, it could be time well spent.