Does B2B integration have to hurt?
“Everything should be made as simple as possible, but not simpler.”
–Albert Einstein
Einstein knew a little something about solving complex problems. It’s fascinating to apply his perspective to B2B Integration. Self-service tools like iPaaS (integration Platform as a Service) are great enablers, but ultimately, they oversimplify the problem. This is because B2B data integration is not only a software issue, but rather a people, process, and technology problem.
On the other hand, while self-service fails the “but not simpler” test, B2B managed services have not made things “as simple as possible” with their complex pricing and out-of-scope service boundaries. Overall, the current approaches overlook big, important challenges that many midmarket companies are facing in an increasingly complex and connected world.
We all want the “easy button” to solve hard problems like B2B integration. Of course, service providers like the “easy money” they can make selling us an easy answer to all our B2B integration problems. Unfortunately, that offer is usually too good to be true. B2B integration is getting more complex. The current solutions have made our lives incrementally easier, but they tend to miss the mark—particularly for middle and upper-middle market businesses.
Are there any answers here?
Absolutely. We’ll explore the future of B2B integration—but first, let’s get the lay of the land.
1. What is B2B integration?
“B2B (business to business) integration” is a catch-all term that covers many types of process automation and data exchange between two or more businesses. B2B integration frequently supports critical processes like O2C (order to cash) or P2P (procure to pay). It’s often handled through technologies like EDI (electronic data interchange).
Through data field mapping, automated data exchange, and automated interaction with backend systems, B2B data integration takes out the errors and confusion that result from manually processing business documents in a complex environment. It’s a no-brainer—but you have to do it right.
Overall market dynamics
How does the direction of the B2B integration market impact your business? You may be running a growing manufacturing business, and your suppliers and customers want to engage with you digitally.
Or you are in the retail business, and your systems—and more importantly sales—are increasingly moving online. You know that digital channels and therefore B2B integration are becoming more and more important for your business, but that is probably where your curiosity stops.
Specifically, why would you care about the direction of the global B2B technology market?
Just like you care about interest rates and the macro-economic outlook, the direction of the technology market is a leading indicator of how your suppliers, customers, partners, and affiliates will expect you to engage with them in the future. So, buckle up—here are some statistics and observations that you might want to pay attention to.
A) B2B integration is mission-critical
Data and data exchange increasingly power every critical business-to-business process in nearly all industries—from ecommerce to supply chain logistics and procure-to-pay processes. Without timely, accurate data, business simply stops.
B) B2B integration creates significant impact and value
From an economic perspective, making better use of data could lead to a “data dividend” of $1.6 trillion in the next four years alone. Economists estimate data-enabled efficiency gains could add almost $15 trillion to global GDP by 2030.
C) There’s a growing need (and growing adoption) of B2B integration
To provide a general sense of how pervasive digital connectivity has become and how much it is still growing, you need only to look at the magnitude and momentum of the enabling software and solution markets. The global EDI (electronic data interchange) software market alone was $1.5B in 2021 and is projected to reach $3.5B by 2028, whereas iPaaS (the modern equivalent of EDI) is one of the fastest growing segments in B2B integration. The iPaaS market is expected to grow from $3.7B in 2021 to $13.9B by 2026, at a CAGR of 30.3%.
D) B2B integration requirements are increasing in complexity
Solutions are getting more complex as companies maintain legacy B2B integration tools while also modernizing through cloud-based API integration.
Source(s): Harvard Business Review, Markets and Markets, The Software Alliance.
2. Benefits of B2B integration
Why build and maintain B2B data integrations?
Because these endeavors help businesses solve complex problems and create real results. Consider these examples.
Challenges solved by B2B integration
A) Baseline compliance
Middle market businesses are increasingly burdened by mandates for compliance and security as a requirement to exchange, use and store business critical data. This comes from their business partners—customers, suppliers, channel partners, etc.—as well as regulations and standards such as GDPR, HIPAA, and PCI-DSS.
B) Exchanging data operationally
Exchanging data with business partners and between internal systems is now considered a baseline capability for middle market companies wishing to participate in the digital ecosystem. However, B2B integration is growing in complexity, with hybrid data sources from cloud to legacy systems all needing to participate in data exchanges.
C) Extending data across channels
To compete effectively and extend their customer reach, middle market companies must take an omnichannel approach, mastering the use of digital channels like ecommerce.
D) Leveraging data strategically
Data analytics for both optimization and innovation can help a smaller company punch above their weight class, particularly with the power of predictive analytics. This is how middle market businesses can ultimately win against their larger, better funded competition.
3. B2B integration challenges
What makes B2B integration hard?
Midmarket organizations experience unique challenges in the realm of B2B integration. Companies can overcome these roadblocks with the right integration partner, but it’s important to understand the lay of the land.
Here are the most common challenges our clients experience before they come to us.
Customer challenges in B2B data integration
Larger vendors are focused elsewhere
Increasingly, mid-market customers report poor service, higher prices, and aging B2B integration solutions from their vendors. Important mid-market businesses at the heart of the economy are often treated as a cohort to be managed and not as separate companies. These relationships suffer and tend to be undervalued by service providers.
Staffing challenges
Mid-market companies also struggle to attract and retain “hot skills” like B2B data integration. In our recent study on IT outsourcing trends, we found that 42% of companies rated IT staff availability as a top pain point. That’s not too surprising—especially when it comes to cybersecurity professionals. The US Bureau of Labor Statistics has predicted 32% job growth in the cybersecurity sector between 2022 and 2032.
Staffing availability isn’t the only challenge here. According to the Society for Human Resource Management, the cost to hire a new employee can surpass 3-4x their annual salary. The Society estimates that 30-40% of this amount is hard cost, while the remainder is soft cost. Whatever the balance, it’s bad news for companies that want to cover their technology needs with in-house hires.
Shifting priorities
Remember the pandemic? After 2020, priorities shifted and investments in various technologies accelerated. This includes B2B data integration technologies, which can underpin digital transformation while improving supply chain visibility, automation, and resilience.
Challenges facing B2B service providers (with downstream customer impact)
B2B integration customers aren’t the only ones facing challenges. Service providers are also grappling with difficult problems in this age of rapid change.
One school of thought is to simply put the blinders on and say, “You are my service provider, so why should I care about what makes your business successful?” That’s a great way to find yourself in a bad contract and an even worse vendor relationship with your B2B managed service provider. These are mission critical services that are growing in importance to your business. In most cases, these services are also growing in cost, whether directly or indirectly. It’s worth considering the benefits of making an informed decision.
The market has moved away from traditional B2B business models. So, in some ways, it is not legacy B2B service providers’ fault that their customer experience is suffering while these providers struggle to maintain growth and profitable businesses. What companies need today is simply not the offering these vendors were built to provide or the business model that drives their economic engine.
Here are the challenges that many legacy EDI and B2B integration software providers face.
Commoditized market
When service providers compete on general offerings alone, they find themselves in a tough fight. These services are fully commoditized, which means technical know-how isn’t enough to win and retain business. Customers need more—especially in terms of collaborative approaches, strategic guidance, and C-level consulting.
Aging technology infrastructure
Legacy technologies may cause service providers to struggle to perform as middle market companies are forced to adopt new technologies alongside them. Issues like compatibility, uptime, cybersecurity, and lack of knowledgeable resources make it tough for legacy service providers to support these older technologies for their customers.
Resource costs
The more specialized the technology, the more expensive it is for legacy service providers to hire and retain those experts. This translates into higher costs for customers.
Needs and demands of customers
Legacy service providers want all customers to take similar approaches so they can leverage economies of scale in service delivery. Yet middle market companies aren’t one-size-fits-all. These organizations are complex enough to have highly differentiated processes and requirements, but they lack the resources to source their needs in-house, which means they turn to service providers for bespoke treatment—and legacy service providers struggle to deliver.
Pressure from investors and Wall Street
If legacy service providers aren’t turning a profit, investors may call them to account. It’s challenging for service providers to articulate the complexities of technology environments and service delivery in a way that makes sense to investors.
Challenges faced by SaaS, VAN, and iPaaS companies
Value-added networks/iPaaS platforms
Many of these companies were built on a “low touch” economic and service delivery model. The provider’s goal is simply to count and charge for metered usage of their platform or network (via kilo-characters or transactions fees)—or to sell B2B integration software subscriptions.
Service businesses, like true MSPs (managed service providers), have a fundamentally different cost basis with different leverage points. Ultimately, they have a different expected margin profile. So, you can’t just take a legacy EDI VAN (value-added network) or an iPaaS (integration Platform as a Service) provider and count on them to provide a proper managed services offering. They will do it—but for different reasons like vendor lock in, upsell opportunities, and simply to get greater “wallet share” with their customers. These are not the reasons you are looking for a managed service provider.
Product/platform lock-in
Most data integration platform providers are product companies first and foremost, with services added on to support their customers and—cynically speaking—to extract recurring product revenue over time.
Due to this structure, most platform providers focus on selling implementations of their product. This is where they make their money—and they make a lot more with their biggest customers. When it comes to services, the big customers get the in-depth attention, in part because this is integral to the B2B solution sale that they prioritize. They are not necessarily motivated by the experience that every customer deserves, which means everyone else receives a lot of out-of-scope billing.
This is unfortunate, because B2B integration software does require ongoing support. Even iPaaS solutions need a technical eye to keep them running, though they’re marketed as “self-service.” It’s rare that IT generalists can actually support B2B integration solutions under a self-service model.
4. Common service problems
The results of this nexus of forces, from the active digitization of supply chains and other macro trends in the data economy to the plight of the B2B providers, are somewhat predictable. All but the largest enterprises are experiencing a sharp drop-off in customer service and material increases in direct and hidden costs. Industry studies reveal just how sharp the divide is.
- 99% of EDI users plan to review their current B2B integration solution in the next 5 months.
- 34% are dissatisfied with their current supplier.
- 46% are dissatisfied with their supplier’s response times.
- 30% report unacceptable service outages.
- 41% report their provider doesn’t make changes fast enough as requirements change within their trading network.
- 45% of EDI users say it takes between one week and one month to onboard a new trading partner.
- 42% say it takes longer than one month.
Sources: Studies by Transalis, Cleo.
What does this dissatisfaction look like in real life? It takes several forms.
Out of scope
Here comes the SOW (statement of work) or added fees. Most, if not all, EDI managed services offered by traditional EDI value-added networks and SaaS (Software-as-a-Service) providers are not actually managed services at all, they are support services only. Add a new trading partner, change a map or an interface, and you know what follows.
Ring no answer (or maybe you wish they didn’t answer)
Many businesses offering EDI managed services are not services companies. They actually view this part of their business as low value and a cost to be managed. Thus understaffing, offshoring customer engagement experiences, and overly impersonal automation is the norm.
The underlying service infrastructure in a true MSP (Managed Services Provider) is fundamentally different from an EDI value-added network or a software-as-a-service company. The MSP’s business is purpose-built for services, while the other is a platform or software business at its core.
Whose problem is it?
These businesses are purpose-built to keep networks and software platforms up and running and enhancing their technology. In other words, they stay in their support areas only, whereas a true MSP focuses on acting as a seamless extension of your business and IT organization. What do you hear from these platform companies? “Everything looks fine on my side, so it must be a problem on your end.”
Feeling like you’re just a number
Unfortunately, you might be just a number to your provider. It gets worse if you are a mid-sized business, as so-called B2B EDI managed services companies increasingly focus on larger enterprises and lump everyone else into a “customer cohort.” These customer segmentation techniques allow your business to be statistically managed and serviced to a profitability profile. In these cases, unfortunately, you really are just a number to them by necessity.
MSP vs. MSSP vs. B2B Integration Providers
MSPs (Managed IT Service Providers) are a dime a dozen. Likewise, there are many MSSPs (Managed Cybersecurity Service Providers) to choose from.
And there are many B2B integration service providers.
But it’s incredibly hard to find a company that does all three.
What’s needed to bridge the gap?
The best solution is to find a comprehensive technology service provider—one that doesn’t handle only IT or cybersecurity or B2B integration. Ideally, you want a partner who covers all three with deep expertise and also offers digital transformation services and vCIO/vCISO (virtual CIO/CISO) consulting.
This is critical—because B2B integration doesn’t exist in a vacuum. It touches the systems of your trading partners, plus other systems in your environment. It also has its own cybersecurity concerns. You really need a comprehensive approach to excel with data integration while minimizing risks.
This is why Corsica Technologies is changing the B2B integration services picture for midmarket organizations. We’re doing it by combining several things that no other provider can offer:
- The robust service delivery operations, commitments, and infrastructure of a world-class MSP.
- Great people who bring dedication, personal attention, and a “can-do” attitude to every client.
- Our own platform, Corsica Integration Cloud, which can literally connect any data source to any other.
- Career experts in B2B data integration who work alongside experts in IT and cybersecurity (as needed).
- Unmetered services that cover field updates, mapping, new trading partners, and more—all for one predictable monthly price.
5. The state of B2B integration today
What’s the state of B2B integration today for middle market companies? What tools, software solutions, and services are available?
The integration market itself is growing, indicating how essential this functionality is. Between 2021 and 2028, the EDI market will grow from $1.5B to $3.5B, while the iPaaS market will grow from $3.7B in 2021 to $13.9B in 2026.
Yet middle market companies struggle to get the service they need from integration software providers. These providers are focused on their largest customers, and services are an afterthought in their business model. Software providers are also dealing with real challenges such as commoditized markets, aging technology infrastructure, and pressure from investors.
Consequently, middle market companies often experience lackluster service from these providers. Issues like out of scope items, lack of responsiveness, passing the buck, and feeling like you’re just a number are all par for the course.
Meanwhile, middle market companies are still trying to solve specific challenges in B2B data integration. Baseline compliance, effective data exchange, and the strategic use of data are still beyond the horizon for many companies.
The great divide among technology service providers makes this challenge more complicated. On the one side, you have MSPs and MSSPs, who handle IT and cybersecurity. On the other side, you have B2B integration providers, who handle—you guessed it—B2B data integration. It’s incredibly rare to find a company like Corsica Technologies who bridges that gap and covers all three functions.
6. Solving the B2B integration challenge for good
Here’s the good news: It’s a new day in B2B data integration.
If your service provider has left you behind, it might be time to reevaluate your provider—and see what the market offers.
Corsica Technologies is a full-service MSP with specialists in data integration, IT, cybersecurity, and digital transformation. We offer unmetered technology services for one predictable monthly price, giving you the stability and responsiveness you need.
In terms of B2B integration, our platform, Corsica Integration Cloud, empowers us to keep our clients up and running 24/7/365. Ultimately, our goal is to make technology work for midmarket companies while empowering you to cut costs and serve customers better. Reach out to us today to explore your options in B2B integration.
Moving forward with B2B integration
Here at Corsica, we take a unique approach to B2B integration. You get:
- A powerful integration solution that runs on Corsica Integration Cloud.
- TRUE managed services to support it.
- The power of B2B integration expertise coupled with the robust service delivery infrastructure of a top-tier MSP.
- A team with comprehensive expertise covering IT, cybersecurity, EDI, data integration, and digital transformation.
- The service bundle you need for one predictable monthly price (i.e. no surprise billing).
Ready to take the next step? Contact us today to start running better with B2B integration.
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