What s Missing From Your B2B E-Commerce Strategy

Transcription

1 What s Missing From Your B2B E-Commerce Strategy

2 1 Overview Common Business Issues Operational Inefficiency Expectations of the Web Cultured Buyer Non-optimized Customer Relationships Missed Revenue Growth/Market Share Opportunities Business Value Operational Efficiency Gains Enable the Web Cultured Buyer Build Customer Intimacy Drive Growth and Market Share B2B E-Commerce Landscape Organizational Readiness Costly and Complex Projects Multiple Business Models and Channels Going Global Numerous Changing Business Objectives Diverse Buyer Capabilities and Requirements The Unique Business Value of Intershop Experience Matters B2B as First Class citizen Driving Sales Sales Partners Customers Consumers Suppliers Business Administration Multisite Architecture Component Architecture Designed for Global Commerce Progressive Technologies for Personalization and Recommendation Conclusions

3 B2B Alignment B2B e-commerce programs are quite unique in that they significantly drive top line revenue while simultaneously reducing operational costs. The business case includes a compelling ROI that is easily mapped to company strategy. 1 Overview Today, B2B sales are most often supported by legacy selling tools and processes. Business buyers are rarely afforded the rich online experiences found in the online B2C world. Companies still rely on cumbersome spreadsheets and rigid enterprise software systems to price, quote and process orders. Over the years, there have been many examples of sophisticated Multi-enterprise B2B Integration between business partners. Indeed, there is an abundant availability of software (B2B Gateways, B2B enabled platforms, web services, SOA) and services (EDI VANs, Integration as a Service (IaaS) vendors) to link business processes of external companies. These technologies make sense where advanced supply chain management techniques and/or transaction volumes justify the expense. Too often, sellers make it difficult for customers to place orders that today s B2B e-commerce platforms could handle with greater efficiency for both supplier and buyer. Organizations typically fall into one of three camps relative to B2B e-commerce: The opportunity to leverage the online world is well known and being addressed with active B2B e-commerce programs Selling process pain points and inefficiency are recognized, but the business case and awareness of the reasonable solutions are missing Process inefficiencies are not identified and the status quo persists. This paper considers common business issues and the value of executing on a B2B e- commerce program. The landscape of the B2B e-commerce marketplace solutions is discussed along with a summation of the unique value proposition offered by Intershop s e- commerce platform. 3

4 Sales W h a t s M i s s i n g F r o m Y o u r B 2 B E - C o m m e r c e S t r a t e g y 2 Common Business Issues Common selling issues persist across most industries many are addressable by B2B e-commerce solutions. 2.1 Operational Inefficiency The global economic climate has placed great pressure on businesses to reduce costs and become more efficient wherever possible. For sales and customer service, manual laborintensive order processing activities represent low hanging fruit for reinvention with automated solutions. Operational inefficiencies often include: Elongated quote to cash processes caused by Disconnect between processes and systems for pricing, quoting, proposal creation, negotiation, contract management, order processing and invoicing Complexity of each process, especially pricing and configuration, which multiplies when repeated order after order Manual ordering with operations via phone, fax, , hard copy, clunky ERP interfaces and home grown order entry tools Quoting and configuration processes that rely on: Hard copy or electronic price books/catalogues exchange of text, PDF s and spreadsheets Stand-alone quote and configuration tools Manual approval processes Lack of standard processes and language causing incorrect purchasing terms and conditions via added or unidentified customer commitments resulting in: Incremental costs to correct Reduced profitability due to overly favorable terms for some customers like non-standard criteria, extended warranty provisions or commitment to provide free products or services Increased liability caused by inconsistent contracting Customer service departments that: Lack ability to respond to customers instantly May not be available 24x7 Provide an inconsistent experience to customers Have high turnover Contribute significant costs to operations and customer service organizations that lack the ability to place orders behalf of customers. 4

5 2.2 Expectations of the Web Cultured Buyer By not offering B2B buyers the same rich experience of today s online consumer sites, B2B sellers are missing the opportunity to leverage the knowhow and science of the online B2C world. In particular, sellers are operating in an environment where: The buyer s experience is highly manual and driven by policies, procedures and system limitations of the seller s company Customer relationship that rely heavily on sales representatives who inconsistently execute cross selling and up selling campaigns Buyers searching for an online purchase are not found Outbound marketing campaigns are not able to seamlessly convert to a sale Customers are lost to competitors providing online selling sites. 2.3 Non-optimized Customer Relationships Business leaders are always looking for opportunities to strengthen relationships and build loyalty with customers. For many companies, challenges persist around: Targeted marketing which is limited and does not fully leverage all known information about the customer Risk that a customer may leave with a departing sales person Distributors own the client relationship, creating disconnect in the direct customer relationship Customers are not able to easily place repeat orders Offers to customers may not be relevant to actual purchase history Customers who require recurring parts and supply orders are often not proactively reminded of the need to re-order Manual warranty and return processing which is expensive and potentially a source of frustration for customers 2.4 Missed Revenue Growth/Market Share Opportunities B2B e-commerce ability impacts revenue growth and market share. Missed opportunities occur because: New customers may not be found because they desire an online purchasing experience Limited touch-points cause missed cross-sell and up-sell opportunities; customers using multiple channels have greater value Existing customers may leave to more innovative. 5

6 3 Business Value B2B e-commerce business value is derived by addressing common issues described in the previous section. 3.1 Operational Efficiency Gains Most B2B e-commerce projects are justified with hard dollar benefits through automation of manual processes. Benefits are provided via: Reduced quote to cash cycle time by: Improved DSO by: Automating complex workflows that often require tribal knowledge and many manual steps More efficiently handling peak sales volumes Automating intricate product pricing and configuration processes Integrating disparate systems, applications and organizational boundaries. Reducing errors that cause payment delays Creating higher customer satisfaction via streamlined processes that in turn cause customers to make timely payments. Automating manually intensive ordering procedures, thus reducing costs of taking orders via phone, fax, , hard copy, etc. Reducing reliance on clunky ERP interfaces and home grown order entry tools efficient and intuitive e-commerce interfaces can be used by customers, sales representatives and customer service representatives Leverage automated quoting and configuration tools included or integrated with a modern e-commerce platform reducing use of: Hard copy or electronic price books and catalogues Stand-alone quote and configuration tools exchange of text, PDF s and spreadsheets Manual approval processes. Enforce standard policy and procedure via standardized documentation and pre-defined workflows/approval chains that insure correct terms and conditions resulting in: Lower costs to rework incorrect documentation and re-book incorrectly executed transactions Control over favorable terms for some customers like non-standard order acceptance criteria, extended warranty provisions or commitment to provide free products or services Reduced company liability from agreements that do not comply with company policy. 6

7 Reduce costs associated with customer service operations by allowing customer selfservice for purchasing related activities. 3.2 Enable the Web Cultured Buyer B2B buyers expect the same rich experience of today s online consumer sites. By offering these experiences, companies can: Provide a rich buying experience centered on the needs of the buyer Abstract the buyer from the policies, procedures and system limitations of the sellers company Reduce dependency on sale reps and customer service Allow buyers searching for an online purchase to find the seller via Search Engine Optimization (SEO) techniques Enable outbound marketing campaigns like and Search Engine Marketing (SEM) to drive traffic to the B2B store front and seamlessly convert to a sale. 3.3 Build Customer Intimacy B2B e-commerce provides an ideal mechanism to strengthen relationships with customers by enabling: The ability to reach buyers with timely targeted offers and pricing, leveraging the same personalization and recommendation science that are so successful in the B2C world A rich set of tools that allow marketing and merchandising experts to develop programs and campaigns that: Consider extensive customer attributes and purchase history Cross sell and up sell Enable quantity-based promotions Allowing customers to easily place recurring orders The ability to proactively remind customers to order replenishment supplies Simplifying parts and accessory purchasing by leveraging knowledge of products owned and in use by customer Automating warranty and return processing Customer service capabilities that provide: Instant availability and response 24x7 availability Consistent rich experiences 7

8 3.4 Drive Growth and Market Share B2B e-commerce provides an additional method to drive revenue growth and market share. Capabilities include: The ability to acquire new customers who are looking to purchase via electronic means Adding another touch point to interact with customers which: Enables cross selling and up-selling across channels Increased value of customers using multiple channels. Prevention of losing customers to innovative competitors offering a preferred purchasing channel Reduction of profit leakage due to: Penalties occurring for non-compliance with contractual terms Inconsistent pricing Transactional errors that may cause cancellations and customer departures Providing non-contracted terms like free shipping or approval of unearned discounts B2B e-commerce Landscape 8

9 4 B2B E-Commerce Landscape A broad landscape of considerations must be looked at as companies look to establish an online B2B program that can drive efficiency, better serve customers and increase revenue. 4.1 Organizational Readiness A B2B e-commerce project s success depends first and foremost on companywide commitment and clear ties to strategic objectives as defined by the senior management team. The business case is built on inputs from the company s as-is operations and assumptions derived from other enterprises who have been successful with similar programs. Additionally, future state business processes can be modeled and proof of concepts conducted to provide more concise projections on specific benefits that could be realized. The e-business team must be closely aligned with IT. IT commitment is vital to selection and implementation of an e-commerce platform that satisfies business needs. For on-premise solutions, IT will be heavily involved implementing and supporting the platform and underlying infrastructure. For both hosted and on-premise solutions, IT will be critical to establishing integration to existing systems and applications. Finally, senior management must take an active role in the project due the number of process changes that must occur across organizational boundaries. 4.2 Costly and Complex Projects Most B2B e-commerce platforms require extensive software development and systems integration for initial implementation and ongoing maintenance. Projects tend to be long in duration and highly dependent on expensive IT resources. Tradeoffs are often made such that business capabilities are not delivered in a timely manor or go unmet due to cost constraints. The net result is a lack of agility to meet changing business needs. 4.3 Multiple Business Models and Channels Most e-commerce platforms were purpose built to meet the needs of the B2C world. Likewise many B2B capabilities have been addressed with various B2B centric software solutions like B2B Gateways, B2B enabled platforms (SAP/Oracle) and web services/soa infrastructure technologies. There have also been many third party B2B related services like EDI VANs and Integration as a Service (IaaS) vendors. The reality is that most companies have many varied business models with multiple channel requirements. A single company often will have requirements that include: 9

10 Consumer web sites Business to business web sites Business to distributors/resellers sites Micro Sites to support distributors/resellers selling to consumers Micro Sites to support distributors/resellers selling businesses Micros Sites to support distributors/resellers selling to distributors/resellers with Micro Sites to consumers or businesses Sites to support internal call centers/sales teams Many more layered combinations of the above may be required. The complexities are exacerbated by the fact that more permutations may be required to support multiple branded sites, each with its own unique mix of multi-channel B2C, B2B and partner business models. 4.4 Going Global As if multiple business models and channels were not enough, companies are faced with even more complexity when it comes to expansion into global markets. Global requirements reach far beyond the need accommodate new languages and currencies. As new markets are brought online, there must be additional considerations for: Workflows and processes to address various localized laws and regulations Additional accommodations and interfaces to support new distributors, resellers, agents and partners Integrations to support: New fulfillment partners Localized payment gateways Shipping and logistical systems Internal applications and systems that may vary internationally. 4.5 Numerous Changing Business Objectives Personalization and recommendation engines for B2C e-commerce sites are built to achieve a limited set of focused objectives. This includes driving behavior to increase total revenue and items in a shopping cart. While these objectives are important and beneficial, today s e- commerce executive must find ever my more creative ways to help achieve an ever shifting set of targets. Changing businesses objectives that should be addressed by an e-commerce platform typically include: Use of dynamic pricing to increase conversation rates with particular customers or product categories Acquiring a new customer regardless of order size Growing market share in a particular category or product line 10

11 Emphasizing higher margin products over total revenue Reducing surplus and aging inventories Driving new products introductions Reducing fraudulent transactions 4.6 Diverse Buyer Capabilities and Requirements The previous topics in this section focus on the seller s business model. However, when considering a B2B strategy, there must be due consideration to the fact that buying organizations will have highly varied capabilities and requirements. Key considerations include the following: Accommodating widely varied policies and process such as: What can be purchased Pre-approved budgets Authorization levels, approval chains and escalation Management of customer s organization structure Compliance with contractual terms and conditions that will vary by customer Support for a integration with systems and applications that range from: Customized store fronts Stand-alone web purchasing portal with no integration Punch-out to customer s procurement system Product information synchronization with a partners B2B or B2C e-commerce system Support for EDI transactions that supplement web store front B2B infrastructure software and services connections Customer specific catalogues, categories and views Complex pricing models with variable discount levels and product bundles Order processing flows that consider variations around quoting, negotiation, fulfillment, shipment, tracking, payment, etc. 11

12 5 The Unique Business Value of Intershop Intershop brings a very unique value proposition to companies considering B2B e- commerce. 5.1 Experience Matters Founded in 1992, Intershop developed the world s first commercially viable e-commerce platform saw the unveiling of Enfinity, a platform based on Java and XML aimed at enterprise customers. Enfinity Suite was introduced in 2004 as the first integrated multichannel global e-commerce platform designed from the ground up to handle B2C, B2B, Partner and Supplier channels Intershop launched a new, revolutionary, generation of e-commerce software Intershop 7. With thousands of successful projects completed, Intershop is uniquely prepared to help companies define B2B initiatives which align with overall business strategy. Intershop s engagement model begins with an e-commerce Value Assessment that delivers a detailed business case for a B2B e-commerce project. The assessment first uses a detailed discovery process of the as-is B2B selling environment and organizational structure. The outputs of discovery are input to models that project potential benefits. These models are built based on Intershop s experiences with hundreds of customers. Intershop will also conduct proof of concept scenarios to further assure the value projected by the benefit model. A rigorous implementation plan is developed to assure that all parties know their respective responsibilities and timelines are understood. A detailed proposal is provided that includes overall cost of ownership projections. These costs are combined with the benefit analysis to define an ROI that specifically aligns with overall company objectives. Successful project execution is assured via Intershop s business model of providing both software and professional services. This model entails that consultants have a direct relationship with product development to quickly resolve technical issues that may arise. This approach is differentiated from vendors who rely on 3 rd party partners for implementation and the often encountered finger pointing that can occur. Intershop consultants are experienced e-commerce experts and have the ability to keep projects on time and on budget. 5.2 B2B as First Class citizen Intershop brings to market the only e-commerce platform architected from the ground up to support B2B as a first class citizen. Most other e-commerce platforms have been developed to address B2C needs first with B2B functionality added as an afterthought. Intershop s e-commerce Suite is unsurpassed in terms of out of box functionality to support today s opportunities for online B2B selling. This rich functionality means that implementation costs are typically 25% of any viable competitor. The main difference comes down to configuration vs. customization. Intershop projects are characterized by 12

13 configuration of pre-built components to meet business process and integration needs. Other vendors are heavy on customized software development projects which drives costs, complexity and risk. At a high level, Intershop s B2B capabilities are designed to: Allow companies to sell goods and services over the Internet to their direct customers with personalized storefronts and customer-specific catalogs Provide e-commerce capabilities for distributors/resellers/agents who are not able to offer these services on their own Enable a portal to host suppliers in order to aggregate products from supplier catalogs Easily integrate with systems and applications of customers and partners. 5.3 Driving Sales The sales team is typically the primary owner of an e-commerce system and is responsible for a company s multi-channel sales strategies. For the purposes of this document, sales is defined as the broader set of selling functions including sales, customer service, merchandising, marketing, product/brand management, etc. Intershop is able to support an unlimited number of sales channels covering any type of e-commerce related business model Sales Sales typically oversees the demand chain, publishes content and manages orders. Intershop allows B2B sales personnel to: Manage the internal structure of a sales organization, such as departments, users and roles Create and manage channels for partners, customers, consumers and suppliers Manage catalogs and categories and publish them to sales channels Manage content assets and product data Sell goods and services to consumer, businesses and partners Receive orders that can be fulfilled internally, routed to external systems and/or suppliers Partners Partners represent organizations such as distributors, resellers, agents or even retailers who sell on behalf of company. Partners are able to establish their own branded presence on a selling company s instance of Intershop. Additionally, partners may in turn have their own subordinate partners who can also be enabled on the same instance in a multi-level demand chain. Intershop allows partner organizations to: Manage the internal structure of the sales organization, such as departments, users and roles Syndicate products and other content assets from the parent organization syndication allows the product attributes to be transformed to meet the needs of the partner organization Create and manage channels for consumers, businesses, partners and suppliers Manage catalogs and categories and publish them to sales channels. 13

14 Manage content assets and product data Sell goods and services to consumers, businesses and partners Receive orders that can be fulfilled internally, routed to external systems and/or suppliers Customers Customers are the individuals in the buying organization of companies making purchases from the parent company hosting the e-commerce Suite. Customers can be businesses or partners. Intershop allows users in the customer organization to: Create and manage requisitions. Manage the internal structure of the customer organization, such as departments, users, cost centers, and roles. Use advanced purchasing features defined on the basis of departments and roles, such as approval workflows and budget escalation strategies. Create and manage purchase orders Request quotes/bids and participate in a managed negotiation process Proved a supplier backend tied to the business system of a buying organization via cxml PunchOut. Customer organizations using business systems like Ariba can access catalogs, create requisitions and generate orders Consumers Consumers represent the individual buyers of a sales or partner organization. Intershop provides extensive functionality to the consumer including the ability to: Browse catalogs made available to them Create and manage baskets Create orders Participate in tendering activities, such as live and hidden auctions. Participate in online marketing campaigns Suppliers Intershop allows suppliers to work directly with the selling company s e-commerce site. Capabilities available to suppliers include ability to: Collaborate with sales and/or product organizations Upload products, catalogs and content which can be aggregated into the catalogs of sales and partner organizations Receive orders forwarded by sales and partner organizations 14

15 5.4 Business Administration Intershop s e-commerce Software includes a sophisticated backend business application that allows centralized management of the e-commerce system. These extensive capabilities are enabled by a Rich Internet Application (RIA) interface and allow the e-commerce analyst to accomplish tasks that typically require IT resources on most other platforms. With Intershop, the analyst can: Managing sales organizations Creating new sales channels and store fronts Managing security and access settings Control data replication processes. Managing process flows and templates Extend channels internationally via localization capabilities that manage language, currency and localized business processes Administer system-wide settings for payment, tax and shipping 5.5 Multisite Architecture Intershop s DNA not only includes extensive B2B and Partner capabilities, but from the same platform can support all varying business models. From a single implementation, a company can support any number of sell side consumer, business and partner channels. Intershop also supports multiple supply side channels. The sell side and supply side are brought together by a sophisticated set of product data, content and catalogue management capabilities that are virtually limitless in their ability to meet the needs of the largest and most complex business. Orders coming into the company from any of the sell side channels can be routed to any internal ERP, order management system, external supplier or fulfillment partner. Intershop is capable of splitting out and routing individual line items from single to order to multiple destinations. 5.6 Component Architecture Designed for Global Commerce Intershop software is built using industry standard technologies and a highly engineered component based architecture. An extensive library of pre-built components can be easily configured to meet the most complex global business processes. Furthermore, a logically layered component design allows a company to simultaneously manage both company standard and site specific business processes across limitless B2C, B2B and Partner channels. While Intershop has an elegant mechanism for managing languages and currency, it is the advanced component architecture that allows adapting quickly localized laws, regulations and customs. 15

16 5.7 Progressive Technologies for Personalization and Recommendation Intershop offers the most advanced personalization and recommendation science available in the industry today. This technology can be configured to achieve any business objective desired by a company. Concepts encapsulated by advanced algorithms include: Offline/online learning Exploit/explore Chain optimization Hierarchical learning Similarity based learning Session or complete customer lifecycle Examples of varying businesses objectives that can be addressed by this solution include: Use of dynamic pricing to increase conversation rates with particular customers or product categories Acquiring a new customer regardless of order size Growing market share in a particular category or product line Emphasizing higher margin products over total revenue Reducing surplus and aging inventories Driving new products introductions Reducing fraudulent transactions 16

17 6 Conclusions Business to business sellers should take a close look at how the success of business to consumer internet selling could apply to their operations. The opportunities available through B2B e-commerce are numerous and easily aligned with the strategic objectives of most organizations. The technology is distinct in that can drive operational efficiency and increase top line revenues simultaneously. For companies considering a B2B e-commerce project, Intershop provides thought leadership, extensive experience and robust solutions based on a long and rich history in the space. 17

18 Corporate Headquarters: Intershop Communications AG Intershop Tower Jena Germany Phone: +49 (3641) 50-0 Fax: +49 (3641) Americas Headquarters: Intershop Communications, Inc nd Street, Suite 303 San Francisco, CA USA Phone: +1 (415) Fax: +1 (415) SoQuero GmbH Ludwigstraße Frankfurt am Main Germany Phone: +49 (69) Fax: +49 (69) TheBakery GmbH Monbijouplatz Berlin Germany Phone: +49 (30) Fax: +49 (30) info@theberlinbakery.com