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Tech Industry

Can B2B recover from 1999?

Sterling Commerce's Terry Baker says it can, but IT execs must first learn lessons from the hype-fueled dawn of Net-based e-business, when technology was--unfortunately--unquestioned king.

In the hype-fueled infancy of Internet-based business, technology was king. Vendors hawked a "throw everything out the window and start over with the Internet" philosophy, and many companies bought in--at least initially.

It didn't take long for these businesses to realize this strategy was akin to throwing out the baby with the bathwater.

Now that B2B commerce is once again grounded in business basics, we've learned some important--and painful--lessons that put the potential of the Internet in perspective:

• Technology must be driven by business, not the other way around.

• The true value of any B2B commerce effort is extracted from integration and automation, not simply creating new sales channels.

• Transactions are the currency of B2B commerce; if the transaction flow isn't there, neither is the value.

• Electronic data interchange (EDI) will continue to be the driving force behind electronic B2B transactions for the foreseeable future. The Internet will initially provide a means to extend existing B2B commerce efforts, not replace them.

To be sure, B2B commerce must deliver measurable return on investment for all participating parties. But lessons from the recent past teach just how much more complex and difficult that is than was commonly assumed back in 1999.

Even with the right strategy in place, IT managers still face challenges in the tactical implementation of e-business capabilities.
A strategic approach toward the development of B2B commerce capabilities is the first step toward realizing these efficiencies. And for most companies, integration must be at the foundation of these strategies.

Strategic integration by definition must take into account all aspects of B2B commerce. Within an organization, enterprise applications must first be able to share information. Then these systems must be enabled to share information with suppliers and business partners that are part of an enterprise's business community.

B2B integration also means accommodating a range of electronic business standards, such as EDI, ebXML and EDI-INT, allowing business partners to participate regardless of the technologies used.

Data transformation technologies serve as the central interpreter for these multiple incoming formats, using pre-established rules to transform data into the format required for use at its destination. Workflow and Rules software can then provide additional intelligence to the integrated infrastructure by establishing a framework through which partners can interact with the trading community and enterprise applications.

Businesses must strategically address all these key elements of integration if they are to reap the fruits of e-business. But the reward is worth the effort because we're talking about reduced cycle times, faster flow of information, and more fully automated business processes.

And we now understand that automation--replacing time-consuming, paper-heavy and error-laden manual processes with seamless, paperless electronic ones--is the real value proposition of B2B commerce, Internet or otherwise.

E-business efficiencies and capabilities are enabled by technology but enacted by people.
But the reality is that this isn't easy stuff. Rather, it involves an evolutionary process that companies must implement in steps. That means incorporating existing technology, not replacing it lock, stock and barrel.

Even with the right strategy in place, IT managers still face challenges in the tactical implementation of e-business capabilities. Some of the more common pitfalls include:

Jumping the gun on standards
Core e-business practices should be maintained on a mature standard base, with testing and incubation of new and emerging standards kept at the edge of the commerce environment. Open, industry-developed standards are often the safest bet.

Losing track of the "little picture"
B2B commerce implementations can and should provide an immediate "quick hit" in ROI, even as a business is building toward a larger strategy. In most cases, projects can be prioritized based on immediate need and potential impact to maximize cost-effectiveness.

Taking business partners for granted
Larger companies can no longer depend on "join me or else" tactics in securing B2B community participation from suppliers. Maximum participation requires a value proposition that works both ways and may require direct assistance for smaller business partners.

Focusing on technology over people
E-business efficiencies and capabilities are enabled by technology but enacted by people. Success will depend on changing behaviors throughout the supply chain. A robust community development plan must address the "people factors," from a solid business case for supplier or customer adoption to education components to facilitate the change.

The key to success is smart tactical implementation of a strategic integration plan. Once the "end game" is realized via strategic analysis of a company's B2B commerce needs and goals, solutions can be evaluated and used to meet immediate needs. They also can build toward the ideal end game: the fully integrated, extended enterprise.

For the overburdened IT executive, this type of evolutionary strategy offers a realistic, business-focused path for delivering measurable, bottom-line results while working within down-to-earth budgets. In other words, a strategy that starts with the realities of business and is designed to systematically meet business demands.

Lessons learned.