There are many reasons for moving IT services to the cloud inevitability of service, optimization of IT resource and so on (I won’t list them all here). But on top of the usual arguments for cloud services, there are a number of forceful arguments why B2B integration is particularly well suited to cloud delivery. Here, in no particular order, are seven of the best:
In B2B services, smaller suppliers are often mandated to integrate to a particular exchange or network, and they set up a PC in the corner of the office to manage the order flow, and then just leave it churning through orders. As time goes by, the original IT resources that set up this system move on, and the continuing function of the “black box” is a huge risk to the business – if it does fail, the cost to fix this piece of proprietary kit can be huge. Companies can find themselves tied jump by legacy hardware. The cloud provides an opportunity to throw away this out-of-date kit and connect over a secure web connection from whatever device the company likes – PC, Mac, tablet or iPad.
The other drawback of the one-off connection forced on lesser players in a supply chain is it provides a lack of flexibility and scalability. The supplier connects a single pipe out to its trading partner, and is stuck with this point to point arrangement. With the connection hosted in the cloud through a middleware layer, the supplier has all its interfaces in one place and has the flexibility to add different connections as and when required. If it’s a small supplier doing business worldwide, this flexibility as its business grows means it can add further connections for the exchange of additional documents, or to join entirely new trading exchanges.
In addition, if any of the partners connected to the cloud hub service want to change anything at the back-end, such as changing their order management system, they can plug this in and out simply by adding a different connector to the hub. The logic of the integration and transformation of messages is completely abstracted from the supplier connected to it.
It’s often been noted that in an old-fashioned VAN, or EAI hub, the word value in “value-added network” is almost redundant these hubs provide connectivity, but they give no further insight into the messages passing through them. The modern cloud-based hub, by contrast, can provide intellect on the masses of data flowing through it. Whether this is just substantiation that an order has been received or data back that an invoice will be paid on a particular date, this is real-time information that can supply insights into orders and returns, data that is traditionally spread around the business in multiple places.
The cloud service provider can provide this visibility to the business, in real-time, meaning that the person in accounts receivable can see their position without running overnight batch reports from their back-end system. This allows them to concentrate their efforts on providing the maximum value to the business.
This type of intelligence gives a business the ability to manage by exception – throwing out an exception report if an order to cash transaction is incomplete, for example if a supplier has invoiced but the goods have not been received. The data also becomes location independent – you no longer need to comb through incoherent logs in an antiquated DOS system to be able to see the orders being received, and more importantly, invoices being paid.
Discovering and fixing exceptions can be a big cost to the business – but process abstraction also provides a mediation layer to protect against these problems. What if orders aren’t received or the process flow is such that elements get out of sequence? Some back-office systems, such as SAP, enforce rigid process restrictions on B2B workflow, so they will not expect to receive an invoice until they have a corresponding goods received notice. However, in a real-time order-taking environment, this sequence can sometimes be disrupted, such as when a delivery service in a remote location holds onto a proof-of-delivery note until the end of a week.
Such a delay in the workflow could appear to result in a breach of SLAs, and of course if the backend system is unable to receipt an invoice without proof of delivery, a delay in the payment cycle. Process mediation resynchronizes these processes, holding up the invoice in the cloud until the corresponding proof of delivery has been issued.
Once you have a layer of process mediation it is possible to trigger human interactions in the process. In the above example where an invoice cannot be receipted without the proof of delivery, a customer services agent could call the carrier and that action could trigger the proof of delivery – hence streamlining the process and ultimately getting paid quicker.
Once a business has intelligence on its data in motion, it fatefully also has visibility into its order flow in real time. Traditionally, reporting of sales data in manufacturers is only completed monthly, quarterly or even annually, so by the time it reaches decision makers, it’s out of date and not actionable. With seasonable business trends, manufacturers need to know what is selling right now, so they can put in place promotions or move supplies to the right environmental location.
Intelligence on data in motion provide opportunities to react to new business opportunities that arise in a narrow window of time, such as the physical build-up of stock in a supply chain, and putting in place a promotion to clear it.
Similarly, reducing the location dependence of integration can enable the mobile workforce in new ways. One of our insurance company clients has doubled the number of claims their assessors can fulfill by eliminating the need for them to physically go into the office to create paperwork. Using a standard iPad with 3G connectivity, all the real-time information they need to assess a claim – which is held in various places in the cloud – is downloaded to their device. They can even evaluate replacement goods after a theft or refer jobs that need the input of a lead assessor, in real-time, electronically.
A final reason to use the cloud for B2B integration is the hub’s ability to integrate between different cloud services. Some data might reside in Salesforce.com, some in Amazon EC3. An integration hub can reconcile these different sources of truth, to present a consistent response to the customer. It can even be used to enrich information that is sitting in the cloud or in back-office systems, for example using a look-up service to update a product code, entirely flawlessly to the customer.
This means that a customer can derive real value from both data held locally in the “heritage” business systems, and also the data which resides in the cloud. In effect, treating the cloud services as they should be treated – as an extension to the company’s own IT real-estate.