Electronic Cash News @

Collaboration is an interesting word. The thesaurus notes that the word, “collaboration”, has a positive connotation except in wartime (ex. working with the enemy). With that note, how do you define business collaboration? Is strategic business collaboration essential to have an optimized supply chain? Can businesses be competitors, but still collaborate to optimize their supply chain? How does Business-to-Business (B2B) system integration relate to business collaboration? Paul Cousins has created an interesting business collaboration model that can be used to define the full spectrum of B2B relationships. In this 2D model all levels of business collaboration can be defined by the degree of dependency (Y-axis) in the business relationship and the degree of certainty (X-axis) in the relationship.

Cousins’ Business Collaboration Model - degree of Dependency and Certainty in a Business Relationship

Below are the four quadrants of the business collaboration model:

Traditional (Independent / uncertain relationship) - Lower Left Quadrant. A traditional-type of B2B relationship is weak. Both businesses are highly independent and they have no on-going relationship with each other. From a supply chain perspective, this is a transactional type of relationship. Examples of this is any type of auction like eBay auction, reverse auctions, and commodity-type markets. There is no value-add to the relationship except for the life of the transaction. From a B2B perspective, there is no motivation to do system-to-system interfaces to exchange electronic documents except through a third-party service provider that provides the electronic marketplace or auction.

Opportunistic (Dependent / Uncertain) - Upper Left Quadrant. An opportunistic-type of B2B relationship is weak, but there are select opportunities to do business together, and may be more opportunities in the future. Example of this could be a seasonal supplier or a supplier that is attempting to establish a long-term relationship with a retailer or manufacturer. From a B2B perspective, the “cost of admission” may be very high for a supplier. The large retailer or manufacturer may require several Electronic Data Interchange (EDI) interfaces (purchase order, advance ship notice, invoice, and so on) just for the supplier to do occasional business with a large business customer.

Tactical Collaboration (Independent / Certain) - Lower Right Quadrant. A tactical-type of B2B relationship in many ways may be a missed opportunity or an opportunity waiting to happen. Example of this is when two businesses are regularly doing businesses together, but at least one of the businesses has not realize the extent of the relationship. There may be millions of dollars and thousands of purchase transactions being exchanged, but both businesses are not collaborating strategically to optimize the relationship. From a B2B perspective, this current relationship is more than likely costly in terms of business transaction costs (transactions like purchase orders, ship status, payments, and so on). In this type of B2B relationship, all or most business transactions exchanged between the businesses are probably manual and / or the business customer may be paying premium pricing for the supplier’s goods or services (example: paying publish rates for shipping versus contract rates). This is where one or both businesses need to evaluate the relationship and either distance themselves from the relationship or develop a strategic relationship to reduce costs and improve the overall value-add to the relationship.

Strategic Collaboration (Dependent / Certain) - Higher Right Quadrant. A strategic-type of B2B relationship is where both businesses keep their business relationships optimized to minimize cost and to maximize value to the end-customer. Many International and large businesses as well as their suppliers seek this type of relationship. Strategic business collaboration is key in such industries as the automotive and electronics industries where all the businesses in the supply chain are dependent on each other and they have a long-term relationship with each other. From a B2B integration perspective, these businesses may exchange any where from three to 50 different EDI-transactions between their systems to minimize costs, maximize speed-to-market, and optimize value-add to the end-customer.

See JanHusdal’s posting, Biting the hand that feeds. Or why all firms are snakes, for more discussion on Paul Cousins’ business collaboration mode.

Business-2-Business (B2B) eCommerce has gone through a lot of transitions in the last decade. My question is has B2B eCommerce just been a big train wreck of late? Has there really been any real progress in realizing the dream of true electronic document exchange between businesses. Until the last decade, B2B eCommerce, which started with Electronic Data Interchange (EDI) in the 60’s, was adopted by businesses very slowly and with not much fanfare. Suddenly with the advent of the internet and the breakaway from the traditional Value Added Networks (VAN), B2B eCommerce exploded. All of a sudden there were dozens of “killer” integration applications, and new standards such as XML that were to revolutionize the way we do business. Now after a decade, is B2B eCommerce any further along? There are now so many EDI-type standards and so many proprietary integration applications that many businesses are locked into proprietary EDI / B2B solutions or they are so confused about B2B eCommerce that they do not know what to do.

B2B eCommerce - Order Out of Chaos?

It would be nice if a supreme authority would come along and clean up this B2B eCommerce mess. In my heart, an overall authority, even a Government agency, that would “lay down the law” would be wonderful. From my past experience, I do not believe that there will ever be a supreme authority over global data standards and data exchange.

Standards committees act too slow, and there are too many “800 lb. gorillas” that will disrupt any attempt at global data standards and data exchange standards. These “800 lb. gorillas” include Fortune 500 companies like large retailers, manufacturers, and service providers that have immediate real-world issues that need an EDI-type solution now. Other “800 lb. gorillas” are large EDI / integration / software vendors that are either protecting their existing turf or are attempting to expand market share by offering a new, proprietary “silver bullet” that will solve all B2B integration problems.

B2B eCommerce is important and businesses really do need a solution to electronically exchange their business documents with their suppliers and customers. B2B eCommerce saves money, improves supply chains, and speeds procurement cycles. One of the biggest challenges with B2B eCommerce is that the person that holds the purse string knows little about EDI. His or her most trusted advisors in most cases know nothing about B2B eCommerce and EDI solutions. Are the subjects of B2B eCommerce and Electronic Data Exchange even taught in college and universities? How is the business sponsor for a B2B eCommerce project to know who can implement a good B2B solution and what is a bad B2B solution? I have seen too many B2B solutions that were too overpriced to implement and maintain or did not meet the business objectives. Also, there are too many businesses out there that have not implemented any serious B2B solutions. Many businesses just do not see the value of standardizing the electronic exchange of business documents between their suppliers and customers.

It use to be that Business-To-Business (B2B) eCommerce had all the exciting technologies. There was RFID, EDI, internet (yes internet started with Government and businesses), broadband, fiber optics, electronic payments, cloud computing, wireless, and so on. This was neat stuff. Now it seems that person-to-person (P2P) communications is using all the neat technologies. Things like cell phones, wireless internet, YouTube, social networks, Twitter, and so on.

B2B eCommerce

Most businesses seem to be still caught in the Dot.com bubble of 2001. Web sites still look about the same as in 2001. Seems like most companies print more paper per employee than a decade ago. Businesses have limited information on their customers and what they should be selling them. Companies have limited B2B ecommerce and integration with most of their trading partners. Many companies have spent too much on technology with nothing to show for it. Other companies have spent too little on technology as they are unsure how to us it.

Hopefully soon, we will breakout of this B2B logjam. Technology integrators need to do a better job of selling B2B ecommerce solutions that add value to the businesses. Businesses need to do a better job of understanding B2B ecommerce technology and how they can use it to provide superior products and services. Seems like both IT and businesses have focused too much on the “shiny, new” technology instead of figuring out what works for a given business. P2P ecommerce and information exchange has rapidly outdistanced anything going on in B2B ecommerce.

See Scobleizer posting, What are the tech bloggers missing? Your business! on how tech bloggers get too focused on the “shiny, new” technology instead of communicating the value the technology can provide to a business.