Enterprises are stuck in the EDI mud, hanging onto old B2B integration technologies. Legacy EDI methods such as Value-added networks (VANs) are costing many companies huge amounts of money in service subscriptions when cheaper, cloud- and API-based alternatives are readily available.
That’s the finding of Ovum’s new study, titled “Developing an Agile and holistic B2B integration strategy for digital business success,” which indicated that over half of enterprises interviewed are using in-house or legacy EDI solutions. And more than a third of respondents are using more than three separate solutions for EDI management.
The costs of B2B integration
As I’ve discussed before in a February 2016 article talking about the use of APIs versus traditional B2B integration solutions, many companies find themselves locked in with expensive VAN services — a service whose inefficient data management practices drive up the costs of the service, according to Eric Rempel, CIO at the integrated logistics provider Redwood Logistics. He pointed out that sometimes the EDI VAN service providers that their clients use will translate data into EDI format only to have it translated back to the original XML format once it arrives in Redwood Logistics’ hands. Rempel said that only after showing the company how much this practice was running up costs, they finally abandoned the EDI VAN and began securely sending XML data to Redwood Logistics directly via API-based methods.
The study, which was sponsored by the digital business platform provider Axway, also revealed that even companies that attempt to manage all their B2B integration in-house, using legacy hardware and systems, may not be doing themselves any favors. Ovum points out that “resource-related costs can account for up to 60% of the total cost of ownership for a legacy EDI solution,” and that turning to cloud- and API-based solutions could potentially save these companies immense amounts of money by eliminating certain resource requirements.
Reading the statistics
The study also found some other interesting facts:
- Today’s enterprise takes an average of 23 days to onboard a new trading partner.
- Over 25% of respondent enterprises admitted that onboarding can often take more than 36 days.
- About 10% of respondent enterprises currently utilize cloud-based B2B integration methods.
- About 18% of respondent enterprises are inclined to use cloud-based B2B integration services under a managed services model.
- A little less than half of enterprises surveyed currently have a digital business initiative that requires use of APIs, and another 6% plan to implement an API program within the next year.
Two of those points I find particularly striking. If so many enterprises are willing to admit that their B2B integration efforts are severely inefficient, why is it that so many companies still cling to these legacy services and only 10% have moved to the cloud? Furthermore, if so many companies are already pursuing cloud- and API-based business initiatives, why would they not apply those initiatives to such a critical — and expensive — aspect of their business processes?
Where is this going?
“People are testing the waters,” Ken Yagen, vice president of products at the API provider MuleSoft, said. “I think you’ll see the growth. You won’t see the EDI transactions diminish, but you’ll see a growth in API transactions rather than traditional B2B EDI transactions.”
As is often the case in the enterprise world, I’m sure this will simply take time to catch hold. But hopefully cloud- and API-based B2B integration solution providers — and us tech journalists — can make the effort to show these companies exactly how much money they are potentially throwing out the window for these legacy services and methods.