I recently stumbled upon an article published by Supply & Demand Chain Executive last summer on why customer-facing integration demands a better approach that claimed to provide a helpful guide to IaaS (Integration-as-a-Service) … and the last part in particular caught my attention. I’m a big fan of SaaS (Software-as-a-Service) because of it’s instant deployment nature in a manner that keeps the IT headaches with the provider (instead of transferring them to the customer who might not be very technically inclined), and I definitely think the -as-a-service paradigm is the way to go for many businesses who need to focus on their expertise and leave the rest to external experts. But is Integration-as-a-Service really achievable? There are many service companies that specialize in, and sometimes only do, integration … but given that every project is unique, can you really box it up? You can box the tools and the methodology but there’s still a custom configuration component that’s pretty hard to productize because it requires expertise and experience that only exists in a human head. So I read the article … and I was disappointed.
The article, which claimed that demand-side customer integration is much harder than supply-side because customer count can exceed supplier count by a factor of more than 50:1, especially in Fortune 500 companies, is essentially repackaging the marketplace concept, updating it to use a Service Oriented Architecture (SOA), and calling it the wave-of-the-future and a strategic enabler. While I believe that CI will deliver the returns that the author is claiming — 29% revenue increase, 10% margin premium, and 99%+ order accuracy — the marketplace methodology being proposed still has many of the drawbacks that caused them to fail the first time around because it is still stuck in the B2B 2.0 world.
Those of you who have taken the time to download and read the B2B 3.0 Illuminations know that B2B 1.0 solutions failed because of high bandwidth, high integration, high network-access costs, and the extraordinarily high data maintenance costs and that B2B 2.0 solutions, that ushered in the first marketplace boom, failed because of dynamic content limitations, limited search, relatively high access fees, and limited connectivity to your supplier or customer base due to network specialization. It’s true that SOA reduces platform construction and maintenance costs, which should theoretically reduce access fees, that SOA allows for significantly better search capability, and that SOA allows for near-real time catalog updates under a push-model, but it doesn’t help with initial integration because a potential user still has to connect their systems and map their internal data formats to the hub, and it certainly doesn’t do anything about the inherent network restriction to “like” member companies. This means that a company may still have large up-front integration costs, will have to develop and monitor scripts to “push” their updated content onto the network or still update their content manually, and will have to be on multiple networks if it wants to reach the majority of its customers, since many customers, especially in retail spaces where margins are slim, won’t be able to afford to be on many networks. In other words, it’s FAIL all over again because SOA doesn’t fix the primary issues that caused marketplaces to fail the first time around.
Thus, although I think the concept of Integration-as-a-Service — interpreted to mean that you use a Software-as-a-Service vendor who specializes in integration platforms and integration projects to create a virtual network for you to do business with your suppliers, customers, and other trading partners — is a great idea, because an IaaS vendor will have the up-to-date tools, methodologies, and expertise required to quickly, efficiently, and cost-effectively connect each of the systems used by the trading partners you connect with, I definitely don’t think a relaunch of the B2B 2.0 marketplaces is the way to go. I’d look at someone like Vinimaya (recently reviewed by the Sourcing Maniacs), with their B2B 3.0 platform that specializes in enterprise search and content management, for my content management and transaction needs; or someone like Integration Point (also reviewed by the Sourcing Maniacs), with their wealth of experience in integrating disparate (legacy) systems into their SaaS globvl trade visibility platform, for my trade documentation and trade management needs. Done right, IaaS is certainly a logical extension to SaaS, and achievable in the respect that a third party will do it for you, but it has to be B2B 3.0.
To find out more about B2B 3.0, check out the inaugural Sourcing Innovation Illuminations, now available for quick and easy download with No Registration Required!