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Build an Effective Business Case for B2B Integration: Assess TCO and Benefits
Yankee Group, The, June 2004, Pages: 16
Today’s market leaders are defining their corporate success by technology strategies that are new and differentiated. Wal-Mart, Intel, Lucent, HP, and their peers are leading the charge in changing how companies interact with suppliers and customers. Now, others in their supply chains are following suit. As integration costs fall and new technologies mature, companies that make, move, or sell products need to consider alternative supply-chain integration approaches.
B2B XML-industry standards like UCCnet and RosettaNet and AS2 direct-connect technology are enabling more flexible electronic relationships and real-time data exchange. Companies understand investments in XML and the Internet are critical for continuing to do business with market leaders. Such investments also have big payback potential.
However, these new technology approaches are untested and contain hidden costs that are difficult to assess. Therefore, companies have a difficult time quantifying total cost of ownership (TCO) and developing a clear business case.
In fact, enterprises identified TCO as the single greatest inhibitor of standards adoption in a survey of 300 IT and B2B decision-makers. Twenty-nine percent of respondents indicated that software and services are too costly. Companies must proceed with their new B2B technology strategies by first conducting a rigorous TCO assessment and second, clarifying business benefits to justify or refute technology options.
In response to market demand for accurate TCO data, B2B TCO tools have been created to calculate the total investment required to add additional partners to a B2B network. An example is the RosettaNet TCO tool, which calculates actual 3-year TCO. These TCO tools help companies to clarify the costs, benefits and potential pitfalls that come with moving to a new integration and application infrastructure. In this report, these shifting supply-chain integration concerns are examined as well as where some of the hidden costs lie for XML and Internet-based technology initiatives.
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