B2B e-Commerce - Critical Technology Infrastructure for the Global Economy
B2B e-Commerce is one the technologies that powers the infrastructure of our modern world. Forrester Research stated in a July 2007 report that EDI (B2B) transactions represent more than 1/3 of US Gross Domestic Product. Retailers depend upon e-Commerce to purchase merchandise from their suppliers. Automakers rely on B2B to operate their manufacturing plants. Computer OEMs use e-Commerce to manage their supply chains. Hospitals depend upon B2B for running lab tests and ordering supplies. Banks rely on B2B to transfer funds, make payments and trade stocks. Without B2B e-Commerce the modern economy would be significantly less efficient than it is today.
Table of Contents
- Carp EDI em
- Seize the Day
- B2B and You - Six Degrees of Separation
- Six Degrees to B2B Integration
- B2B e-Commerce in the Automotive Industry
- How B2B E-Commerce can help with Current Events?
- Electronic Health Records
- Should the US appoint a Cabinet Member for B2B e-Commerce?
- B2B e-Commerce is Critical to US Health Care Reform
- What is Your Opinion about a B2B e-Commerce Czar?
- Obstacles Preventing Greater Adoption of B2B e-Commerce
- Long Tail of B2B Standards
- Historical Perspective
- Start Your Own Marketplace
- The Big Challenge in 2010
- Internet Protocol over Avian Carrier
- EDInomics
- EDInomics - The Blog
- How to the Economic Recession is Impacting B2B
- B2B Transactions and the Supply Chain
Carp EDI em
What's in the name
According to Wikipedia is:
Carpe diem is a phrase from a Latin poem by Horace. It is popularly translated as "seize the day". The general definition of carpe is "pick, pluck, pluck off, gather" as in plucking, although Horace uses the word in the sense of "enjoy, make use of, seize."
Is it a coincidence that the center of this word spells "EDI," the world's most popular B2B e-Commerce standard? I think not. B2B is one of the most powerful technologies ever invented. And B2B is a technology that can enable businesses to seize the day no matter what their ambitions are.
And, yes, I know that the URL for this lens is spelled incorrectly, but someone had already grabbed the URL with the correct spelling.
Seize the Day
My Mission
B2B technologies have been in existence since the 1970s and are widely deployed throughout vertical industries on six different continents. But we only begun to capitalize upon the potential that B2B e-Commerce can provide. Only 50% of the transactions that could be automated with e-Commerce are using the technology today. As a result, businesses must contend with parallel business processes - half paper-based and half digital. This is not only bad for the manufacturers, retailers, banks and hospitals who have not been able to fully optimize their business processes, but it is bad for all of us consumers who purchase goods and services from these companies. When automation can occur to maximize efficiency not only do costs decline, but customer service improves and product innovation accelerates.
My mission in this lens is to promote the broader use of B2B e-Commerce amongst businesses worldwide. I am hoping you will join me in this quest.
My mission in this lens is to promote the broader use of B2B e-Commerce amongst businesses worldwide. I am hoping you will join me in this quest.
B2B and You - Six Degrees of Separation
Just like movie actors and Kevin Bacon, all of your daily activities are fewer than six degrees from a B2B e-Commerce process.
Six Degrees to B2B Integration
How B2B Affects the Activities in your Everyday Life
Every activity in your life is no more than six degrees away from a process that is supported by B2B integration. For example, I flew on an airplane recently from Chicago to Washington DC, which was secured in part by the use of EDI transmissions from the airliner to TSA. The laptop I am typing on was assembled by Lenovo who ordered the hard drive, memory, microprocessor and other components using B2B e-Commerce. The Diet Pepsi I am drinking was purchased by a merchandising manager responsible for replenishing the Costco stores in Northern Virginia. The electricity and broadband connections I am using to power my laptop are provided by utility and telecommunications companies that use B2B technologies to operate their networks.
- B2B and Your Last Doctor's Appointment
- Have you been to the doctor lately? If so, then chances are high that you were fewer than six degrees of separation from B2B e-Commerce.
- B2B and Your New Car Purchase
- Have you purchased a new car recently? If so then chances are high that you were fewer than six degrees of separation from B2B e-Commerce technologies.
- B2B and Your Personal Finances
- Do you get direct deposit at work? Do you own mutual funds in an investment account? Have you purchased a stock lately? Is your home or car insured? If so, then chances are high that you were fewer than six degrees of separation from B2B e-Commerce.
- B2B helps keep you Safe
- Have you flown on an airplane, used prescription drugs or made a purchase with a credit card recently? If so, then chances are high that you were fewer than six degrees of separation from B2B e-Commerce technologies which helped protect your safety, health or identify.
- B2B and Your Latest Airplane Trip
- Have you flown on an airplane lately? If so, then chances are high that you were fewer than six degrees of separation from B2B e-Commerce technologies.
- B2B and Your Latest Shopping Trip - e-Book in PDF
- Have you purchased office supplies, clothing, furniture or electronics from a retail store? If so, then chances are high that you were fewer than six degrees of separation from B2B e-Commerce. The first link explains how B2B enables the sourcing, purchasing, financing and insuring processes in the retail supply chain.
B2B e-Commerce in the Automotive Industry
Six Degrees of Separation
Automotive vehicle manufacturers, parts suppliers, dealers, aftermarket retailers, financial institutions, property & casualty insurers and government agencies all depend upon B2B e-Commerce technologies to support their every day activities.
How B2B E-Commerce can help with Current Events?
From Pandemics to Government Bailouts
Expanded use of B2B e-Commerce technologies could play a role in long-term challenges such as homeland security, environmental policy and health care costs. B2B can also help with more recent issues such as flu pandemics, food contamination and the financial crisis.
- B2B could help with Pandemics such as the H1N1 Swine Flu
- State laws require providers and laboratories to report cases of certain diseases to local and state public health departments. Nationally "notifiable" diseases are forwarded by the state agencies onto the Centers for Disease Control and Prevention (CDC). Connections between the states and the CDC are electronic and highly automated. However, the first mile between the providers and the local and state agencies is highly manual.
- B2B helps with Airline Safety and Homeland Security
- In January of this year, the TSA began the first phase of implementation for its Secure Flight program. Secure Flight is one of the many homeland security recommendations put forth by the 9/11 Commission. The program calls for airline operators to transfer responsibility for watch list monitoring and passenger screening to the US Federal government, specifically TSA. The process starts by airline operators submitting a file for each scheduled flight that includes the names of all passengers as well as their date of birth, gender and full itinerary.
- B2B could help accelerate Repayment of TARP Funds
- Every major financial institution in the US has implemented B2B integration to improve the efficiency of processes such as securities trading, insurance distribution and corporate purchasing. However, many of these financial institutions have only achieved successful automation of a subset of their business processes and only with a minority of their business partners.
- B2B and Contamination of the Food Supply Chain - Peanut Butter
- Peanut Corporation of America (PCA), the now bankrupt salmonella source, offers an excellent illustration of how complex the food supply chain has become. To eradicate the threat of food contamination, manufacturers must identify all of the machinery in manufacturing plants and all of the packaged products delivered to grocery stores. However, the most challenging aspect might be locating the impacted products already in consumer households.
Electronic Health Records
Could Accelerate Information Flow for Public Health Reporting
Should the US appoint a Cabinet Member for B2B e-Commerce?
B2B could improve Environment, Manufacturing, Health Care and Homeland Security
B2B e-Commerce has become such a critical force in the global economy that in January 2009, I proposed that the new Obama-Biden administration should consider appointing a cabinet member to focus on B2B e-Commerce.
- Introducing the Proposal
- President Barack Obama's technology plan includes an ambitious list of projects to reform the patent registration system for entrepreneurs; upgrade computer systems in our schools and fund various R&D programs for innovation. There are a number of altruistic initiatives to promote further expanding broadband connections to inner cities, safeguarding personal privacy from corporate abuse and engaging citizens online during policy development. However, noticeably absent from the President's technology platform was a deliberate strategy to encourage further adoption of e-commerce.
- B2B e-Commerce could save $75B in Health Care Costs annually
- Details on how B2B e-Commerce could enable health care reform in four primary areas - 1) Electronic Health Records; 2) Electronic Prescrptions; 3) E-Pedigree and 4) Health Care Administration
- Five Ways B2B e-Commerce could Reduce Industry's Carbon Footprint
- 1) Electronic marketplace for cap-and-trade system; 2) Curtailing commercial building energy use; 3) Green procurement and sourcing; 4) Eliminating excess consumer products inventory and 5) Removing paper from the supply chain.
- B2B E-Commerce could help to Automate Homeland Security
- Further adoption of B2B could help with government regulations for supply chain security such as 10+2, C-TPAT and the Advanced Manifest Rule.
- B2B could help to improve the competitiveness of the US Economy
- By enabling new business models such as demand driven supply chains and supply chain finance, B2B e-Commerce could improve the competitiveness of US manufacturers especially small businesses.
- Help Wanted: Federal B2B e-Commerce Czar
- Manufacturing Business Technology printed this story on the idea of a Federal EDI czar.
- Will Sarah Palin be the next Federal E-Commerce Czar?
- Did Sarah Palin resign her post as the Governor of Alaska to seek appointment as the Obama Administration's Federal E-Commerce Czar? Highly unlikely. Read my analysis of Palin's candidacy for the role.
B2B e-Commerce is Critical to US Health Care Reform
Interoperability forms the critical foundation for Electronic Health Records and Reduced Administrative Costs
To lower the costs of health care and improve the quality of care, B2B e-Commerce technologies must be more fully embraced by private health insurers, Medicare, Medicaid, hospitals, physicians, pharmacies, group purchasing organizations, product distributors, pharmaceutical, medical devices and medical and surgical suppliers.
What is Your Opinion about a B2B e-Commerce Czar?
Vote!
Would a B2B e-Commerce Czar lead to too much federal government intervention in private industry? Or is the right catalyst to accelerate adoption of B2B e-Commerce technologies that can improve the environment, health care and the supply chain?
Obstacles Preventing Greater Adoption of B2B e-Commerce
Conflicting Interests
With all the benefits that businesses stand to gain from using B2B e-Commerce, you may be wondering why more companies aren't using it. There are a number of obstacles that prevent greater adoption. Most of these have to do with the conflicting objectives of various different standards groups and market influencers. Read about the top issues in B2B e-Commerce below:
- Too Many Standards!
- In the early days of B2B e-Commerce there was only one standard, EDI. Today there are at least 50 different B2B standards in popular use. The result is that integration between companies is more complex than ever before. I coined the phrase "Long Tail of B2B e-Commerce Standards" to describe the growing proliferation of industry-specific XML formats.
- Does the Green Coffee Bean industry really need its own B2B standard?
- An excellent example of the Long Tail of B2B e-Commerce Standards is Green Coffee XML. The importers and exporters of Green Coffee have developed their own standards to support the unique business processes associated with the product specifications, contract terms and invoicing processes in their industry. Read about the pros and cons of such an approach.
- Portals Create Information Latency
- Many large buying organizations have introduced supplier portals which allow for electronic information sharing. These portals provide a low-cost, easy-to-use alternative to EDI and XML for small businesses. However, many buying organizations are forcing all suppliers, large and small, to use their portals. Consequently, large suppliers are being asked to move backwards from fully automated EDI transactions to manual keying of data.
- Legacy Communications Standards Create Information Latency
- One of the challenges B2B practitioners face in optimizing their e-Commerce initiatives is the widespread use of legacy dial-up and telco standards still in use today. Private industry has been trying to encourage users of these outdated protocols to upgrade for years without success. Is government regulation the answer?
- Inexperienced Technology Vendors Confuse the B2B Marketplace
- A number of new vendors have emerged in the B2B market in recent years with offerings they refer to as "Supplier Networks." While they are these vendors have become the darlings of analysts in short order, there is little distinguishing these companies from the 1980s VAN providers other than some clever marketing. These vendors are a negative influence on the market as they only support a short list of standards, offer few options for small businesses and refuse to provide interoperability with other networks.
- New Standards such as AS3 Fail to Achieve Market Adoption
- AS2 was arguably the most disruptive technology the B2B e-Commerce market has witnessed throughout its lifecycle. The follow up standard to AS2, called AS3, has been an abyssmal failure receiving almost no adoption. Did the creators misjudge the market opportunity or was this a conspiracy by software vendors to protect revenue streams from proprietary file transfer protocols?
Long Tail of B2B Standards
The Proliferation of Standards Complicates B2B Integration
A few e-Commerce standards such as EDI and SWIFT FIN represent the majority of use (the short head). However, there are countless other standards designed for specific industries, business processes and geographic regions which represent the long tail.
Historical Perspective
B2B e-Marketplaces
Some call it the Golden Age of B2B e-Commerce. Others call it the height of insanity. Regardless of your perspective, it is difficult to argue that there will ever be another time like it in the world of B2B e-commerce. The marketplace era witnessed an unparalleled infusion of capital and an unparalleled appetite for risk as entrepreneurs around the world engaged in widespread supply chain innovation and experimentation. And although there remains a general level of disappointment and remorse with the e-marketplaces, we should remember that these organizations were catalysts for a number of high value supply chain technologies still in use today - e-procurement, reverse auctions, supplier portals, data synchronization (e-catalogs), collaborative demand planning and sell-side order management.
- B2B e-Marketplaces - A Look Back 10 Years Later
- B2B e-Marketplaces, or sometimes called exchanges, facilitated the real time transfer of information, money and goods using newfound Internet technologies. E-marketplaces supported a wide range of business processes. Some facilitated the introduction of new buyers and sellers on the Internet for the purposes of developing new relationships. Others specialized in e-procurement models such as "reverse auctions."
- Ten Reasons Why the B2B e-Marketplaces Failed
- After reading my earlier post on B2B e-Marketplaces, someone asked me - Why write about the B2B e-Marketplaces? It was a long time ago and most of them failed. So who cares? I think George Santayana's famous quotation is applicable here "Those who cannot learn from history are doomed to repeat it.
Start Your Own Marketplace
This was the book that started the revolution, Internet Marketplaces for Dummies. It explained how any startup with just a few million dollars could launch a B2B auction site with the power to fundamentally alter the dynamics of a supply chain. The book was particularly appealing to the hundreds of executives and venture capitalists which had no experience in procurement or buyer-seller relationships in the value chain. It was a bestseller for six months as thousands of readers seeking to generate "Billions in Profits" read it cover-to-cover.
The Big Challenge in 2010
Large File Transfer
Most of the infrastructure through which B2B transmissions occur was designed for payloads on the order of kilobytes. However, today it is not uncommon to see file transfers on the orders of multi-gigabytes. These large file transfers in the business- to-business context create significant issues, particularly if the receiving entities are not expecting such large payloads. For example, suppose a company is hosting a general-purpose B2B gateway to exchange XML and EDI documents with its trading partners. However, one day a key customer decides to consolidate a large batch of messages into one file along with associated images attachments. This multi-gigabyte file transfer can wreak havoc with a company's B2B integration infrastructure if it was not appropriately designed.
- Large File Transfer in B2B - Choking with a Risk of Asphyxiation
- Declining storage prices and nearly ubiquitous broadband connections have continued to enable better performance and capacity for large file transfer in the consumer segment - think music and video downloads. Interestingly, however, this file sharing phenomenon has not developed as rapidly in the business community. In fact, I would argue that the corporate world is 10 years behind consumers in its ability to share large files
- Technology Challenges with Large File Transfers
- Today, companies employ multiple different techniques to exchange large files - e-mail, B2B integration gateways and specialized Managed File Transfer (MFT) software. But none of these three are the ideal model for the growing volume of large file exchanges. Take e-mail, for example - Simple Mail Transfer Protocol (SMTP) and popular e-mail servers such as Microsoft Exchange are not designed to manage high volumes of gigabyte-sized file transfers.
- We Need a Napster-like Service for B2B File Transfers
- Corporations have yet to achieve a simple, open, universal file sharing model comparable to what consumers enjoyed with the original Napster in 1999. Broadband connectivity has become nearly ubiquitous in most developed countries. For example, Verizon FiOS offers an Internet package that allows home users to buy Internet connectivity at speeds up to 50Mbps. Furthermore storage costs continue to decline rapidly. Grocery stores now sell 16GB USB memory sticks in the check out aisles for $20. Despite these advances in networking and storage technologies, the corporate world continues to struggling with large file transfer.
- Dilbert Does Managed File Transfer
- There are a number of new cloud-style vendors which have emerged to offer large file exchange services similar to the concept I proposed. A few of these new services - YouSendIt and LeapFILE were even included in the Gartner Magic Quadrant for MFT. However, one that is not receiving as much attention in the media and user community, but in my opinion should be, is DilbertFiles.com. You may be surprised to learn that Dilbert now offers cloud computing services, but this is no joke.
- Should we use Carrier Pigeons for B2B Large File Transfers?
- On September 9th, 2009 (09/09/09 an IT company in South Africa introduced a new disruptive technology that could alter the dynamics of B2B integration forever. The company, Unlimited IT, proved that it was faster to transmit data using a carrier pigeon than to use one of South Africa's leading Internet Service Providers. An 11-month old pigeon, named Winston, was dispatched carrying a 4GB microSD card from Unlimited's offices near Pietermaritzberg to a destination 80km away.
Internet Protocol over Avian Carrier
Alternative Model for Large File Transfer
In April 2001, a group of Linux enthusiasts in Norway transmitted data using the Carrier Pigeon Internet Protocol (CPIP). The group transmitted data by attaching a printout to the pigeon's feet. The hard copy data was then converted to digital format at the destination using optical character recognition. Unfortunately, the 55% packet loss experienced during the Norwegian experiment (only 4 out of 9 pigeons returned) proved that the technology was not yet commercially viable. CPIP was one of the first real-world implementations of the Internet Engineering Task Force (IETF) RFC 2549 released almost 20 years ago outlining the specifications for IPoAC.
EDInomics
The Study of how B2B e-Commerce Technologies are impacting the World
EDInomics, which is a newly invented term I create for the study of how B2B e-Commerce technologies are impacting the world.
EDInomics - E D I nom ics [e-di-nom-iks] - Noun
1. A study of how Electronic Data Interchange (EDI) and related Business-to-Business (B2B) e-commerce technologies can be used to improve business performance by reducing administrative costs and accelerating revenue growth.
2. A study of the market dynamics of vendors, technologies and regulations in the business-to-business electronic commerce market
3. A study of how everyday life activities are enabled by B2B e-commerce technologies.
EDInomics - The Blog
Recent Posts from my Blog
As you probably determined by clicking on the links above, I manage a blog entitled EDInomics, which discusses news and trends in the world of B2B e-Commerce. This is one of the many tools I use to evangelize the impact that B2B is having on the economy and the world.
Fetching RSS feed... please stand byHow to the Economic Recession is Impacting B2B
Trending Transaction Volumes against Major Events
As the economy grows more digital there is a close correlation between macroeconomic events and B2B e-Commerce. Examples of how B2B has been impacted by the collapse of the financial markets and by changes in the supply chain are illustrated below.
- Financial Markets during 2008
- In SWIFT's annual report published in May 2009, they providing a chart linking activity on SWIFTnet with the major macroeconomic events occurring around the world. The SWIFT network carries a variety of transaction types related to foreign exchange, trade finance, securities and payments. There are a number of interesting correlations between B2B transaction volumes and the collapse of major financial institutions such as Lehman Brothers and government intervention into accounts such as Merrill Lynch.
- Supply Chains during 2008
- I performed my own analysis relating B2B transaction volumes in the retail and industrial supply chains. I charted EDI and XML messages against recent macroeconomic events such as rising oil prices, swine flu outbreak, food safety scandals and automaker bankruptcies. I also identified correlations between the Christmas holiday season, Beijing Olympics and US presidential election and B2B.
B2B Transactions and the Supply Chain
June 2008 - May 2009
Here is a diagram of how B2B transaction volumes varied as major events of the economic recession unfolded between June 2008 and May 2009.
by stevekeifer
stevekeifer
I am a marketing professional in the IT services industry. I currently work for GXS, a B2B e-Commerce provider, as the Vice President of Industry and... more »
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