As the pace of business accelerates, momentum for B2B networks continues to build. And with good reason: by automating order and invoice processes, business networks provide the transaction efficiency companies need to stay competitive. What’s more, the many-to-one-to-many structure of B2B networks offers an effective way to manage multiple relationships through a single connection point.
Yet the value B2B networks deliver can vary widely—along with the costs. And the bigger your company gets, the more networks your customers ask you to join. So how do you choose which networks to invest in? The following insights can help.
- Understand your options. The multiplicity of network services, options, and fee structures may seem overwhelming, but a growing body of research makes it easier to sort out those that will work best for your business. For example, a recent Forrester paper by Andrew Bartels titled “Vendor Landscape: B2B Business Networks” offers a detailed overview of the types of networks available and what each has to offer.[i] Links to supplemental resources can help you delve even deeper.
- Capitalize on competition. “The old divisions between EDI-based networks, PO/invoice networks, and vertical industry networks are collapsing, creating increased competition between network models that each have their own strengths and weaknesses,” Andrew notes.[ii] This means good news for you, because:
- In an effort to woo new customers, many network providers are shifting away from a buyer-centric focus and paying closer attention to supplier needs, giving you greater leverage to assert your preferences.
- As basic PO and invoice delivery becomes commoditized, more networks are introducing higher-value collaborative applications that you can use to strengthen customer relationships and work more strategically.
- Consolidation among competitors is likely to narrow the field and increase interoperability among some networks, lessening pressures you may face now to join many networks so you can do business with various customers.
- Look at value, not just price. When it comes to business networks, the old adage “you get what you pay for” rings especially true. Paid networks—especially those that align fees with services you’ll use and benefit from—are often more cost-effective than free networks that fail to deliver functionality you need. Instead of basing your decisions on fees, consider how well a particular network will help you build value, including both bottom- and top-line gains. For example, you can save significant time and money through: Consider top-line benefits as well: does the network provide resources to help you find qualified leads, market your company, and obtain new business? What about collaborative capabilities that make it easy to interact with a broad ecosystem of customers, partners, and resources so you can build relationships and drive innovation?By tallying the savings and income you’ll realize and then subtracting any fees, you’ll get a true picture of the network’s price/performance ratio. Some providers offer tools to help; for example, you can determine your potential Ariba® Network ROI by going to http://www.ariba.com/suppliers/ariba-network-for-suppliers and clicking “Launch Seller Value Calculator.”
- Catalogs and services that enable fast, accurate order processing
- The ability to flip POs into invoices, eliminating manual re-entry and reducing errors
- Automated billing and payment tools that enable you to get paid on time, decrease DSO, and manage cash more effectively
- Consider whether the network meshes with your business vision. The best business partners share and support your goals, and your networks should as well. Educate yourself on where the network is headed, including services and capabilities on the drawing board, to assess its relevance and value for your business. On the flip side, you can draw inspiration from networks to expand your business vision. For example, if you’re a smaller supplier still using a mix of paper-based and online processes, the idea of paying to join networks that support real-time data, document, and process collaboration may seem far-fetched. But if your goals include landing bigger customers and driving rapid business growth, it’s time to reconsider. In today’s increasingly interactive marketplace, networks that help you connect directly with customers, make decisions based on current data, and deliver the customized service buyers want can give you a crucial competitive advantage going forward.
- Scrutinize solution depth and breadth. As networks scramble to boost profits and market share by adding new services, “caveat emptor” should become your watchwords. Don’t be fooled by window dressing; solutions perfected over years of development and market testing generally offer more value than those just introduced. To suss out “lite” networks from those that deliver the full Monty, you can:
- Ask network providers detailed questions about the functionality, features, longevity, and performance of solutions and capabilities they offer
- Take advantage of demonstrations and trial offers so you can see firsthand how well specific capabilities really work
- Talk to other suppliers using the network to get direct feedback on their experience
- Be strategic. While circumstances may compel you to join a particular network—for example, when a large customer requires that you do so to retain their business—you can still exercise control over the level to which you engage. For example, you could do just the minimum to meet the customer’s demands, or selectively invest extra time and resources to leverage additional network services that promise a significant payback.
- Evaluate critical mass, growth trajectory, and scalability. The number and types of buyers using a network—and whether they represent your company’s sweet spot for potential leads and new business—should weigh heavily in your choice. Beyond that, assess how fast participation is growing; accelerating adoption across industries and geographies suggests a rising tide that floats all boats. Scalability is also key. Look for networks that make it easy to automate transactions and collaboration with many buyers, so you can drive higher efficiency and sales in a broad range of B2B relationships.
- Seek superior support. “Business networks have the most value when they benefit both suppliers and buyers,” says Andrew.[iii] By paying fees, you earn the right to be treated as a customer—which includes support to help you use the network’s products and services, especially those more technically complex to implement. If you have to spend excessive staff time to launch or manage “free” network accounts, they become a liability, not a bargain.
- Weigh the network’s financial viability for the long term. Gaining network proficiency can absorb significant time and resources, so make sure those you invest in will stick around for the long haul. Just like any business, networks must stay profitable in order to survive. Look for those with “a diversified revenue stream with income from buyers and suppliers, an established and scalable technology platform that can handle growth, and discipline in their offerings to keeps costs in line,” Andrew advises.[iv]
- Exert your influence. Though your choice of networks may be primarily buyer driven, you can still steer your customers—especially strategic ones—to the networks you prefer. Point out how specific value-added services and support will benefit you and them. You can even ask other suppliers to lobby your shared customers, since you’ll both reap the rewards without affecting your ability to compete.[v]
[i] Andrew Bartels, “Vendor Landscape: B2B Business Networks—Supplier Networks and EDI-Based Networks Start to Evolve to Support Supplier-Buyer Collaboration,” Forrester Research, Inc., September 2015.
[ii] Bartels, “Vendor Landscape,” introduction.
[iii] Bartels, “Vendor Landscape,” p. 22.
[iv] Bartels, “Vendor Landscape,” p. 22.
[v] Bartels, “Vendor Landscape,” p. 24.