B2B Payments

The B2B Document Exchange Is Changing Face

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In the latter half of last year, Forrester Research released the findings of a study examining B2B networks in an effort to assess the role of technology in promoting effective buyer-supplier relationships.

Now, that research has been made available following the news this week that procure-to-pay firm Basware was named by Forrester researchers as one of the market’s most extensive B2B supplier networks.

“The open networks, such as Basware’s, are significant enablers for the entire B2B commerce,” said Basware CEO Esa Tihilä in a statement on Tuesday (Jan. 12). “Getting connected and networked has become a competitive requirement for today’s leading organizations.”

According to Forrester’s report, “Vendor Landscape: B2B Business Networks,” key to getting connected is efficient and seamless document exchange between players in the supply chain. This connectivity can be achieved in one of three ways, analysts said: supplier networks that focus on purchase order and invoice exchange, industry-specific networks and electronic data exchange networks.

Today, Forrester estimates, 40 percent of B2B commerce activity in the U.S., and 20 percent worldwide, is conducted electronically.

While a significant portion of this commerce is straightforward sales — for instance, a single employee purchasing goods from a supplier website — these deals are also largely complex, so-called many-to-one-to-many transactions that require robust communication between corporate buyers and suppliers.

[bctt tweet=”Document exchange is key in more complex B2B transactions.”]

Document exchange is key in these more complex transactions for the transfer of funds to take place, Forrester found.

Shifting Strategy

Traditionally, the mechanism to exchange documents, like purchase orders and invoices, was created in-house by the buy-side organization. That meant that their supplier partners had to pay to access that portal, and buyers dictated the mechanics of how these documents were submitted and processed.

Today, the rise of online portals operated by third-party developers has shifted this dynamic to focus on benefits for suppliers, too.

But a rise in eCommerce means the market is changing, and it’s forcing the operators of these networks to take new approaches to the game. These networks are now offering a broader range of services to enhance buyer-supplier connectivity in response to the shift towards real-time buyer-supplier communication, analysts concluded, meaning these three distinct types of document exchanges are now blending together.

Deeper Insights

Forrester pointed to the volume and variety of documents that change hands in a B2B transaction as a driving force behind the shaping of these eDoc exchanges.

In addition to purchase orders and invoices, businesses also need confirmation documents, like invoice acknowledgement and advance payment notices. Further, businesses today are also making purchases based on forecasts and often will need additional documentation, such as inventory levels, demand forecasts and logistics preparations, Forrester said.

These electronic papers are not just required to carry out a purchase, analysts added. They are also a means of legal confirmation and liability. “Put another way,” the report concluded, “B2B commerce is not just electronic data exchange — it is electronic document exchange and coordination.”

B2B commerce is not only turning electronic but is approaching real-time transacting. This direction has significant implications for document exchange portals.

“Forrester believes the spreading adoption of Software-as-a-Service (SaaS) applications will lead to new models of business networks, in which buyers and suppliers execute key business tasks jointly in the cloud, rather than separately in each other’s systems,” the report declared, adding that this cloud-based collaboration will impact the sharing of data, like supplier information, document collaboration, like logistics schedules and demand forecast reports, as well as process collaboration, like invoice validation.

At present, electronic data exchange networks handle the greatest volume of invoices and purchase orders. Looking ahead, however, vertical industry networks are growing and, today, handle the greatest volume of supply chain documents, while general purchase order and invoice networks have the greatest number of active suppliers on their portals.

As competition between these three types of portals mounts and as the lines that differentiate these three types of portals continues to blur, Forrester pointed to several key areas in which these portal operators, like Basware and Ariba, will focus.

Scaling to the point of having a large enough network of suppliers and buyers will be key to ensuring companies want to join the community, for example; Forrester also found that suppliers will need to be treated as customer — and that means charging them as such — to ensure the benefit of these networks lands on both the buyer and supplier.

For companies using these networks, this means strategically choosing which network provider can meet their needs.

“CIOs and their business partners on the buy side and the sell side will need to match their current B2B network needs with the right supplier network providers for electronic document delivery and synchronization, while looking to the future for which vendors will be best positioned to be their business network services providers,” the report concluded.

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