Application program interface (API) technology had a standout year in 2019 as a critical component to enabling the open banking business model, unlocking financial data from silos, as well as facilitating seamless data integration and connectivity, to power a range of financial services platforms.
However, open banking is far from the only context in which APIs have enabled data sharing. As open banking spreads to new markets without regulatory mandates, the value of data sharing is also finding its footing within new B2B use cases.
As the B2B eCommerce market grows (driven by corporate buyers' need for efficient and online procurement experiences), vendors are tasked with not only embracing the online sales model, but, in many cases, with overhauling their entire sales strategies in the midst of digital disruption. For the manufacturing space, that's a tall order, considering the widespread reliance on the status quo, according to Znode CEO Rupesh Agrawal.
"Many manufacturers and distributors have been doing business the same way for many, many years," Agrawal recently told PYMNTS. Yet, with more manufacturers becoming comfortable with digitization as part of their overall modernization efforts, Agrawal explained, APIs present an opportunity for these businesses to migrate their sales operations online and to the cloud with less pain and friction.
The Pain Of Digital Transformation
Enterprises' digital transformation initiatives are opening up opportunities for greater efficiency, cost savings and revenue generation, regardless of industry, company size or location. Yet, transformation rarely occurs without growing pains. For the manufacturing sector, those challenges have held businesses back, said Agrawal, who noted that the majority of manufacturers are "behind in digital transformation" compared to the rest of the business landscape.
That's not to say that manufacturers have ignored modernization. According to Agrawal, their digital investment strategies have gone toward content management systems, as well as branded product information and content. However, when it comes to actually migrating their sales initiatives — and accepting orders — online, manufacturers can come up short.
"Manufacturers struggle with channel conflict," he explained. "They have historically sold through distributors and channels, and now need to consider also selling direct, as, in many cases, this is what the buyer desires."
Whether an order is fulfilled via distributor or channel, or directly by the manufacturer, many businesses lack the ability to accept an order online, added Agrawal. For this industry to embrace that drive for the Amazon-like buying experience, though, manufacturers will have to realign their digital investment strategies to enable the online selling experience that corporates want.
APIs' B2B eCommerce Play
Once a manufacturer has committed to embracing the B2B eCommerce migration, challenges still remain.
For one, Agrawal pointed to the hurdles in supporting complex pricing models and payment terms, practices that have been in use for decades before the eCommerce migration, and won't likely go away soon. This "continues to be the biggest friction we see regarding payments" in B2B eCommerce today, he said.
Manufacturers are also demanding that eCommerce solutions are able to coexist with the rest of their back-office functions. Such was the motivation behind Znode's recent integration with PunchOut2Go, a tie-up that allows Znode users to access PunchOut's Catalog capability, order automation and other features from directly within the Znode platform, while also integrating with spend management solutions like SAP Ariba and Jaggaer.
APIs are a focal point for Znode, with Agrawal highlighting the technology's ability to round out a manufacturer's online sales strategy with value-added features and back-office connectivity, "without the need for expensive, custom-integration work" — a key barrier to manufacturers' online sales-migration journeys.
"Many manufacturers and distributors have traditionally invested in suites of products from big-name software platforms, regardless [of] if the platform offered the best solution upon their specific use case," he said. "API platforms can more easily integrate into existing infrastructure, and generally offer increased speed to market, allow for more agile business models and have a lower total cost of ownership."
While the ability to sell and accept orders online is becoming a basic requirement for B2B businesses to find success today, manufacturers lagging in digital transformation have a long path ahead to meet corporate buyers' quickly evolving eCommerce and eProcurement needs. Yet, while manufacturers play catch-up, they must also bear in mind the inevitable future changes in buying, selling and B2B eCommerce. According to Agrawal, API technology can not only enable manufacturers to meet buyers' current eCommerce needs, but support the flexibility required to adjust to future changes with seamless integration of value-added features.
"Agility is a huge benefit, as the economy and markets are constantly changing," he said. "The companies that invest in digital transformation will be the winners in the coming years, as all purchasing is moving online."