Future of Business Networks
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The document summarizes a presentation about business networks from the perspectives of an analyst and a supplier. It discusses how business networks have evolved from EDI networks for document exchange to platforms for collaboration between buyers and suppliers. It notes that while EDI networks still handle most POs and invoices, other networks have strengths in specific industries or functions. Finally, it emphasizes that the future of business networks lies in facilitating broader collaboration between partners on issues like forecasting, logistics, and payments.
Future of Business Networks
- 1. #AribaLIVE @ariba Future of Business Networks Andrew H. Bartels; Forrester Research Barry Eisenberg; B&H Photo Moderator: Jeanne Trinh; Ariba, an SAP Company © 2015 Ariba – an SAP company. All rights reserved.
- 2. #AribaLIVE @ariba Today’s Expert Presenters • Andrew Bartels Vice President, Principal Analyst, Forrester Research • Barry Eisenberg B2B Contracts & eProcurement Manager, B&H Photo © 2015 Ariba – an SAP company. All rights reserved.2
- 3. #AribaLIVE @ariba FORRESTER RESEARCH Andrew H. Bartels, Vice President & Principal Analyst 3 AN ANALYST PERSPECTIVE… © 2015 Ariba – an SAP company. All rights reserved.
- 4. #AribaLIVE @ariba What are Business Networks? • Business networks are the evolution of supplier networks and EDI networks • They will still play a role in the delivery of business documents and data between buyers and suppliers • But increasingly they will be the venue for collaboration between buyers and suppliers on issues of supply chain coordination, purchasing value maximization, and finance • As a result, business networks will be more and more important to suppliers 4 © 2015 Ariba – an SAP company. All rights reserved.
- 5. #AribaLIVE @ariba Business Networks Are Where Buy-side Meets Sell-side Company A buy-side process Company B sell-side process B2B buyers have many points of interaction with B2B sellers Invoice receipt Order receipt Procurement Contracting Sourcing Supplier assessment Spend analysis Invoicing Order fulfillment Order management Contracting Bid/proposal Prospect qualification Market analysis 5 © 2015 Ariba – an SAP company. All rights reserved. Advance payment notice Supplier scorecards RFx/tender Bid/proposal Draft contract Purchase order Response, ASN Receipt Invoice
- 6. #AribaLIVE @ariba The Logic of Business Networks – Avoid the Spaghetti of Multiple One-to-one Connections vs. 6 © 2015 Ariba – an SAP company. All rights reserved. Buyer #1 Office Furniture Manufacturing Manufacturing Office Furniture Buyer #N Office Furniture Manufacturing Manufacturing Office Furniture Buyer #2 Office Furniture Manufacturing Manufacturing Office Furniture Office Furniture Manufacturing Office Furniture Buyer #2 Buyer #1 Buyer #N Manufacturing
- 7. #AribaLIVE @ariba Three Tiers of Business Networks Type Examples Characteristics EDI-based OpenText GXS, IBM Sterling EDI and XML standards, direct between buyers and suppliers, high reliability, high security, any documents through pipe, starting to gain visibility into messages and offering data transformation and error-checking; focus on direct materials PO and/or invoice based Ariba XML standards, standard security and reliability, POs and/or invoices and related documents, have visibility into documents and routinely do data transformation and error- checking; focus on indirect materials Industry-based E2open, Elemica,SupplyOn XML standards, handle POs and invoices, but concentrate on supply-chain documents, data synchronization, and collaboration for specific industries; focus on both indirect and direct materials 7 © 2015 Ariba – an SAP company. All rights reserved.
- 8. #AribaLIVE @ariba EDI Networks Still Carry Most POs and Invoices, but Other Networks Have their Own Areas of Strength Business network metrics, 2014 Total number of buyer organizations Average number of active suppliers Total transactions in millions Total POs in millions Total invoices in millions EDI-based networks 269,139 35,992 24,878 8,707 6,220 General PO and invoice networks 6,022 116,046 296 99 186 Vertical industry networks 13,890 19,683 655 86 53 8 © 2015 Ariba – an SAP company. All rights reserved.
- 9. #AribaLIVE @ariba Buyer Adoption of Supplier Networks Is Starting to Match eProcurement Usage 0 5 10 15 20 25 2010 2011 2012 2013 2014 2015* 2016* 2017* Numberofclientsin thousands © 2015 Ariba – an SAP company. All rights reserved.9 * Forrester forecast Supplier network buyer clients eProcurement clients
- 10. #AribaLIVE @ariba Ariba Has About One-third of PO/Invoice Supplier and Vertical Industry Network Services $223 $347 $399 $444 $613 $744 $903 $351 $315 $353 $379 $427 $479 $533 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2010 2011 2012 2013 2014 2015* 2016* PO and invoice networks Vertical industry networks Network Revenues, US$ millions * Forrester forecast 9% 22% 26% 26% 31% 30% 31% 28% 28% 25% 26% 26% 29% 30% 63% 50% 49% 48% 43% 41% 39% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2011 2012 2013 2014 2015* 2016* Vertical industry networks Other horizontal networks SAP/Ariba Percent of total 10 © 2015 Ariba – an SAP company. All rights reserved.
- 11. #AribaLIVE @ariba Buyers Have Driven B2B E-Commerce; Now It’s Suppliers’ Turn • Buyers have had more incentive to automate buying processes • Buyers have had clear goal of cutting costs • In a low-inflation, slow-growth environment, buyers have had more leverage to negotiate prices and set terms of commerce • So buy-side technologies have gained more adoption than sell-side technologies • However, sellers are becoming more active in trying to influence the terms of trade Sell-side technologies like e-commerce servers and sell-side CLM are starting to gain ground • So, suppliers are asking more from business networks 11 © 2015 Ariba – an SAP company. All rights reserved.
- 12. #AribaLIVE @ariba New Project Spending Is Tilting More Toward Sell-side Projects over Buy-side Percentage of new project budget devoted to buy-side projects Percentage of new project budget devoted to sell-side projects 14.3 % 15.0 % 2013 2014 Source: Forrester’s Business Technographics® 2014 Global Budget Survey, and Forrsights Budgets And Priorities Survey, Q4 2013 10.9 % 10.3 % 2013 2014 N = 1,979 for 2013, 2,917 for 2014 15.0% 14.3% 10.3% 10.9% 12 © 2015 Ariba – an SAP company. All rights reserved.
- 13. #AribaLIVE @ariba Catalog enablement and management Discovery of customers Master data management coordination Payables factoring and dynamic discounting Business Networks Are Becoming More Supplier Focused Some vendors in all types of business networks are offering: 13 © 2015 Ariba – an SAP company. All rights reserved.
- 14. #AribaLIVE @ariba Business Networks Are for Collaboration, Not Just Document Exchanges The future of business networks lies in collaboration Aligning supply and demand forecasts Coordinating shipping and logistics schedules Arranging payables factoring and dynamic discounting Facilitating timing and tracking of payments Managing inventory levels and replenishment Updating catalog content and product master data Advance payment notice Supplier scorecards RFx/tender Bid/proposal Draft contract Purchase order Response, ASN Receipt Invoice 14 © 2015 Ariba – an SAP company. All rights reserved.
- 15. #AribaLIVE @ariba Three Archetypes of Business Network Collaboration Source: April 24, 2012, “The Changing Cloud Agenda” Forrester report 15 © 2015 Ariba – an SAP company. All rights reserved.
- 16. #AribaLIVE @ariba Summary and Wrap up © 2015 Ariba – an SAP company. All rights reserved.16 Business networks are still evolving – what they will offer tomorrow will be different from what is available today PO and invoice still remain core values of business networks to both suppliers and buyers Suppliers have some unique challenges (such as having to interface with multiple networks) But suppliers are increasingly benefiting from business networks
- 17. #AribaLIVE @ariba © 2015 Ariba – an SAP company. All rights reserved.17 http://www.forrester.com Email: abartels@forrester.com Phone: +1 516.869.0128
- 18. #AribaLIVE @ariba B&H PHOTO Barry Eisenberg, B2B Contracts & eProcurement Manager 18 A SELLER PERSPECTIVE… © 2015 Ariba – an SAP company. All rights reserved.
- 19. #AribaLIVE @ariba Business Networks Are to the Seller’s Benefit • Better service to the customer • Accurate ordering • Faster payment • Cost savings • Customer retention © 2015 Ariba – an SAP company. All rights reserved.19
- 20. #AribaLIVE @ariba What Suppliers Should Look for in a Business Network Solution • A large existing community of your current and potential customers who can send electronic POs and process electronic invoices • Tools and processes for you to get onto this network easily and inexpensively • Fast and easy connections with new customers • Ability to support the XML standards you use • Support for punch-out to your catalog and order management systems, and delivery of your electronic catalog content updates for those clients who maintain their own purchasing catalogs • Offerings or plans to offer payables factoring and dynamic discounting © 2015 Ariba – an SAP company. All rights reserved.20
- 21. #AribaLIVE @ariba Growing Your Business © 2015 Ariba – an SAP company. All rights reserved.21 Ability to find large one off opportunities Ability to help you find new clients
- 22. #AribaLIVE @ariba THANK YOU! © 2015 Ariba – an SAP company. All rights reserved.22