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B2B Connected Commerce, which is the process of integrating supplier eCommerce systems with buyer eProcurement solutions, has become vital for companies seeking to streamline purchasing processes and boost revenue through their eCommerce channels. When implementing eProcurement integrations, businesses face a crucial decision: whether to develop connections in-house or outsource to a specialized platform. This article examines the five key factors for evaluating the return on investment (ROI) of both options.
Understanding B2B Connected Commerce
B2B Connected Commerce solutions, including PunchOut, PO Automation, and Invoice Automation, allow buyers and suppliers to transact seamlessly and automate processes, freeing up teams to focus on other value-added initiatives.
B2B transactions involve two phases: shopping and ordering/invoicing. Buyers begin the shopping experience in their internal eProcurement or spend management systems. Next, they authenticate into the supplier’s eCommerce platform, create an order/cart, and finally return the cart to the eProcurement or spend management system to create a requisition. This process is called PunchOut.
The second phase of the B2B purchasing process involves submitting the order for internal approval, creating a purchase order, and receiving an invoice for payment. Connected Commerce addresses the complexities and potential failures within this process.
Companies often assume they have the IT resources and expertise to manage eProcurement integrations in-house. However, building and maintaining these integrations can become expensive, overwhelming, and challenging to scale. In-house teams may not fully understand the technical burden and maintenance required for efficient transactions and future scalability. Further, delays and errors can have a significant impact on the bottom line.
5 Key Considerations for Evaluating ROI
- Resource Availability: With already full plates, in-house teams may lack the bandwidth to handle the additional workload of integration development and testing. Assuming the team can develop the initial integration in a timely manner, ongoing management and maintenance of integrations also requires expertise – especially when trading partners update or switch systems. Considering there are 150+ eProcurement solutions and 75+ eCommerce systems, proactively evaluating and testing compatibility on vendor updates to prevent integration disruption is a hefty undertaking.
- Expertise: In-house teams must have a deep understanding of B2B data protocols and business processes. There are very few standards in the B2B integration world, and buyer and supplier systems often don’t natively speak the same languages. Companies must be able to transform and translate all key data formats (cXML, JSON, CSV and more) to break down the language barrier between these often disparate systems.
- Functionality: Larger B2B businesses often require a platform approach with tools for testing integrations, monitoring trading partner performance, and adapting to complex business processes such as 3-way matching or data enrichment. This is a key feature that teams won’t get if they decide to build integrations in-house.
- Cost: Managing integrations effectively requires dedicated full-time employees with a specialty skillset. Hiring and retaining specialized talent can be quite costly when salaries, recruiting costs, bonuses, benefits and more are factored in. Turnover rates and business continuity must also be considered when relying on in-house resources, as this creates a single point of failure when those resources leave that can result in expensive delays or interruptions in the purchasing process.
- Security: Managing security for in-house B2B commerce integrations can be challenging, as it requires continuous monitoring, updating, and compliance with industry standards to protect sensitive data and prevent breaches.
Pros and Cons of In-House vs. Outsourced Builds
In-house builds offer full control but require time, resources, and technical expertise. Scaling can be difficult, and effective maintenance requires careful attention to the ever-evolving B2B landscape. Outsourcing to specialized software companies provides expertise, saves resources, ensures scalability, and keeps up with market and technology changes. However, concerns about control, visibility, data security, and vendor lock-in must be evaluated.
Evaluating True ROI
Partnering with a Connected Commerce provider offers significant short and long-term benefits. Working with a provider reallocates resources to more strategic initiatives, ensures robust and scalable integrations, and keeps companies updated on market and technology changes. Third-party providers offer a dedicated team focused on building integrations quickly, allowing companies to scale without investing in additional resources or technology.
For most companies, outsourced B2B Connected Commerce provides higher ROI compared to in-house development. Hobson & Company, a leading independent research firm, surveyed a dozen TradeCentric supplier customers and found significant benefits, including:
- 60% reduction in time spent setting up and managing integrations themselves
- 80% reduction in time spent on purchase order management
- 75% reduction in time spent automating and resolving errors with invoicing
- 20% increase in revenue from both new and existing customers
On average, businesses reported paying back the cost of their Connected Commerce investment in just 3.3 months and achieving a 5-7X ROI over three years.
Companies should carefully evaluate their resources, expertise, technology requirements, and costs when deciding between in-house and outsourced B2B commerce integration. Outsourcing to specialized software providers offers the potential for higher ROI, freeing up resources for core operations and enabling long-term scalability and competitiveness.
Curious to know what ROI you could achieve with TradeCentric’s B2B Connected Commerce solutions? Try our complimentary ROI calculator to customize your personal ROI.
