The value of the network is greater than the sum of the parts
“As we move along a path of digital transformation it is becoming more and more important to integrate and automate all participants of the value chain. Whether this is customers, suppliers, resellers or logistics partners.”
Proagrica’s CTO, Jeff Bradshaw, talks about the value of a supply chain network versus point-to-point integration.
When looking at this integration effort, we are often asked to compare the cost of using a network with point-to-point solutions delivered by in-house IT staff. In order to evaluate your approach to B2B it is a good idea to look at the total cost of ownership and anticipated growth of your partner base to benefit from being more connected.
What is point-to-point integration?
Point-to-point integration is the term broadly used when you connect to each partner directly from your backend system. When considering point-to-point integration there are a number of considerations such as communications protocols, security and finally and most importantly the data formats and maintenance of the connection.
On the face of it point-to-point connections offer seductive, short-term savings. It is easy to budget connecting to a partner based on IT cost of configuring network communications to deliver the messages. I have heard many times of how fast and low cost it is to configure an SFTP link with a partner. The cost increases in line with the complexity of the protocol and also things like certificate management which are recurring events.
The larger cost is the data integration and the transformation of data into the desired format, this is something that is done with an integration product, these products can be open source components but do have a cost in terms of support and management. Data transformation can be helped by standards, and the EDI world is rich with standards, unfortunately standards evolve and much like the English language there are many varieties and dialects. The key here is even with a standard, there is still a dialog with each connection about how they actually use the standard and what data items go where in the message. This dialog increases the cost, and means that the support of that connection over a lifetime is something that needs to be factored in to calculations.
Finally, the total cost of ownership of point-to-point solutions grow linearly, with each connection costing $x, it is a fairly simple calculation of x*n to give an idea of the cost to connect n partners.
In summary, point-to-point connections offer:
+ Fast and efficient: With a low number of partners and standards it is one of the fastest ways to integrate partners.
+ Simple: Each implementation is isolated and deals only with its functional connection.
– Maintenance: High cost of maintenance if you change your backend system or process, or upgrade to a new version of a data standard requires a significant amount of reworking, testing and co-ordination with trading partners.
– Complex Support: When there is a problem somewhere in the process the mean-time to resolution can be high, you need to understand which interface is impacted and work back to un-pick. This is very demanding on the IT department. Consider the annual expiration of a digital certificate and the testing/changes for every partner. This is assuming that it is a planned support activity.
It is also quite a challenge to provide real-time analytics and data visualisation across a number of point-to-point connections. This means that the business are often flying blind until the order hits their ERP system for example.
Introducing the Network – a different approach to integration
The Proagrica network is an analyst recognised cloud platform which allows our customers to focus on what makes their business special.
This ecosystem is a highly connected network of agribusinesses using the Proagrica service to ensure rapid connections to their trading partners using standards.
As discussed earlier, if you need to connect to multiple trading partners (your customers, suppliers and delivery partners) there is a tipping point where point-to-point integration becomes cost prohibitive to implement and maintain.
This is something that we have seen with our global customer base repeatedly. I often ask people “how many partners have you connected with” during meetings and rarely find the answer is in double figures. If you then drill down and ask why the common thread is cost, complexity and strain on IT.
Why use a Network for integration?
Consider the approach to joining a network. You connect once to the network and can work with any connected trading partner.
There are many iterations of B2B Networks, older Value Added Networks (VANs) added limited value by simply acting as communication protocol multiplexors. The mantra of connect to us using a single communication protocol reduced this component of cost of the IT team, but doesn’t actually solve the underlying cost of the data integration and comes itself with a cost. This is analogous to installing a telephone connected to the telephone network – a single connection but then phoning a supplier in Spain and expecting them to speak English.
We have worked to ensure that our network also encapsulates the data integration. When a customer is on-boarded to our network we ensure that their data transformation into our standard XML dialect is done as part of the initial on-boarding. This means that utilizing other services and trading equally with any partner connected to the network is much less complex.
Compared to the point-to-point approach, you now have a single connection to manage for both data and communications. So rather than costing the same for each integration the cost to ramp up and trade with 100% of your partners is much lower, regardless of the partners capability.
It is important to note that joining a network allows partners to trade on an even playing field regardless of their capabilities, so trading with partners who can only send in an OCR order is possible – and best of all, you don’t need to make any changes to your backend integration to the network once it is in place.
Furthermore, we are able to offer customers on our network and their partners a single business oriented view of the messages in real-time. The IT team can now relax and actually let the business users who are interested in a particular order check at the network level.
By being part of the network your connection is proactively monitored, your business users are happy and best of all your cost isn’t linear to add in more partners regardless of capability of that partner.
At Proagrica we have delivered a next generation B2B network in the cloud for global Agribusiness. Our network enables our customers and their customers, suppliers and logistics partners to seamlessly connect and trade efficiently, regardless of their technology capability.
Find out how to improve the speed and ease of doing business using our supply chain connectivity solutions.