Companies Rethink B2B Strategies

Rapidly changing vendor relationships and an uncertain economic climate are leading many companies to re-evaluate their business-to-business integration strategies, a new report shows. How are they planning to manage the risks, and will their new approaches prove effective?

Although most professionals engaged in business-to-business (B2B) functions believe the recession has come to an end, many also remain concerned about continued risks in the vendor market and uncertainty throughout the supply chain, which have led companies to rethink their B2B integration strategies. New approaches to mitigating or preventing B2B challenges are likely to gain prevalence until global supply chain conditions improve.

In a survey of B2B professionals from integration solutions firm Sterling Commerce in mid-June, 78 percent of respondents said they believe the recession is over and 85 percent said their companies plan to invest the same amount or more in B2B integration software or services as they did last year.

The survey polled 600 senior IT decision makers working in financial services, manufacturing, distribution, transportation and other private-sector industries in the United States, United Kingdom, France and Germany.

Despite the improved economic outlook, however, 45 percent of respondents also said reductions in their IT budgets are preventing them from developing contingency options in case of a change in their B2B vendor; 41 percent said they are aware of uncertainties and instability in the current B2B vendor landscape.

Among the companies concerned about instability, 53 percent said it could have a direct impact on trading partner integration and 43 percent said it could disrupt their supply chain and have a negative effect on costs.

"Major destabilizing activity, such as mergers between B2B integration vendors, is having an impact on companies who are concerned about the financial stability of their B2B partner and realize they need a new approach to B2B integration to insulate their business from risk," Josh Hardy, the director of product marketing at Sterling Commerce, said in an announcement of the findings.

Many companies involved in B2B activities are now taking preventative measures to try to offset risks. The survey found that 84 percent of respondents are either rethinking or believe they should be rethinking their current B2B integration strategy, while 60 percent are "actively considering" changing their B2B vendor over the next year. Only 7 percent of firms do not have concerns over their B2B integration vendor.

Aside from minimizing supply chain risks, 66 percent of companies said economic uncertainty due to reduced budgets and payrolls is another reason for re-evaluating their B2B strategy, though the uncertainty is a greater concern in the U.S. (70 percent) than in the U.K (46 percent).

When asked what they consider the most important capability in a B2B vendor, 38 percent of companies cited financial stability (also a greater concern in the U.S. than in Europe), while 28 percent cited the ability to "deliver a solution both on premise and as a service."

According to a May report from technology research firm International Data Corporation (IDC), sponsored by Sterling Commerce, "Enterprises begin the process of re-thinking B2B integration when they realize their existing approach is some combination of too expensive, not responsive enough or is an impediment to innovation."

The four key factors involved in a reassessment of B2B vendor relationships, as outlined in the IDC report, are as follows:

  • Better alignment with business initiatives — Meeting changing business needs is crucial during acquisitions that require combining B2B services or when a business expands and needs to upgrade its B2B capabilities.
  • Improvements in customer service — Many companies are asking suppliers to make changes that decrease the cost of doing business and some are keeping a closer eye on service-level agreements, making customer service a priority for B2B vendors.
  • Greater process efficiency — Increasing automation, reducing error rate and similar process efficiency measures are a major part of keeping costs low.
  • Solving staffing problems — Staffing levels, skills shortages and the retirement of experienced employees are posing a challenge to handling work volumes in B2B integration projects.

B2B marketing professionals are also responding to changing market requirements by looking for more comprehensive, client-oriented approaches to their work.

"[T]hese days, successful B2B marketing requires a different, multi-dimensional approach. Demand and lead generation alone are not enough," Forbes.com's MarketShare blog explains. "Instead, you need a solid business strategy that will use both customer retention and new prospects to drive value and growth. That strategy must be market-focused, not just product-focused, and it must be integrated with other core business functions."

Resources

...Financial Uncertainty and a Changing Vendor Landscape are Driving Companies to Rethink Their B2B Strategies

Sterling Commerce, June 16, 2010

Now is the Time to Rethink Your B2B Integration Strategy

by Maureen Fleming

International Data Corporation, May 2010

B2B Marketing is More than Leads

by Lisa Arthur

MarketShare (Forbes.com), June 28, 2010



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