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Supply chain collaboration technology is evolving at a pace faster today than ever before. When DiCentral started in 2000, supply chain organizations that embraced cloud-based B2Bi were considered cutting-edge. Today, the Internet-of-things, customizable dashboards, visibility and business rule management and monitoring are driving advancements and creating new paradigms in supply chain collaboration. In 2016, supply chains have already reaped the benefits of connecting with third party vendors to help them manage these complexities.
"Digital innovation has led the way for digital integration, and the organizations that are quick to embrace it, will successfully stay ahead of the rapidly evolving market curve"
A recent study conducted by the University of Tennessee found that of the organizations that outsourced their EDI requirements to cloud-based B2Bi providers:
• 94 percent saw significant improvement in their electronic connectivity capabilities
• 68 percent reported that their clients said they were easier to do business with
• 69 percent said they could respond more quickly to changes in their clients’ environments
Yet, there is still plenty of room for improvement: a mere 30 percent of the organizations surveyed are using B2Bi managed services—a good start.
So what can we expect for 2017?
The number of organizations doing EDI in house will drop dramatically. Cloud-based B2B integration will continue to be a growth market for the next several years, while traditional B2Bi software sales for the do-it-yourself users will continue to see a decline. Clients will continue to embrace cloud-based B2B integration to increase agility, reduce capital expenditures, improve service levels, reduce overall costs and accelerate the adoption of B2Bi. Retirement of legacy hardware and software running mission critical B2Bi in-house is also setting the pace for driving this change.
The EDI coordinator role will evolve into a higher paying, managerial-type role. In 2016, the average EDI coordinator earned $48,000 a year, with the role historically focused on enablement, mapping, testing and issue resolution. As clients continue to outsource their internal B2Bi programs to cloud-based B2Bi providers, the role of the EDI coordinator will focus on technical collaboration, data architecture and community coordinating. The new role will work closer with business users, customers and vendors and will be perceived by management as a higher valued employee.
Retailers and consumer product goods (CPG) companies will start to consolidate supply chain processes, infrastructure and solutions to integrate drop shipment programs within their traditional replenishment processes. With e-commerce sales in the U.S. growing by double-digits each year (nearly 15 percent growth in 2015), drop shipment is no longer a sideline activity and will be more fully incorporated into the core of the business. Amazon’s forward-looking, dropship commerce strategy (which employs many individual orders rather than infrequent bulk shipments) has enabled the company to quickly outpace its competitors. In 2017, senior executives will be singled out to drive drop ship programs, with a focus on productivity to ensure that this side of the business has scalability.
The B2B integration industry will continue to see a consolidation of traditional EDI players. Smaller providers with less than $5M in revenue will be more likely to struggle to sustain value creation as new complexities in supply chain processes (such as omni-channel and drop-shipping) emerge. Larger providers with greater than $25M in revenue will pick up the smaller players to round out customers, technology and industry knowledge.
Pure-play B2Bi providers will grow market share at the expense of legacy market leaders. For example, two market leaders (IBM and OpenText) continue to diversify their portfolios with countless acquisitions of products and services that bear little to no correlation to B2B integration. The attention to line extension is more focused on margin expansion and on-the-meter service models, than creating solutions to address the complexities of today’s market challenges. This will only complicate the go-to-market strategies, sales compensation, rewards, internal processes, R&D and operational capabilities. Look for disenfranchised clients to “break out” at contract renewal in favor of providers that continue to invest in innovative solutions that focus on tackling their individual challenges.
Digital innovation has led the way for digital integration, and the organizations that are quick to embrace it, will successfully stay ahead of the rapidly evolving market curve.