This week, global commerce platform provider Tradeshift announced an agreement to acquire Cap Gemini’s IBX Business Network for an undisclosed sum. The announcement touts that the end result will be the creation of the world’s largest business commerce platform. Beyond the marketing speak, Supply Chain Matters views this announcement as yet another reinforcement that the dynamics and support of B2B Business Networks are changing rather rapidly, and that scale and depth of functionality are the evolving table stakes.
The IBX Business Network is a Cloud-based eProcurement business process support platform, positioned to be an ERP backbone system alternative for large scale enterprises needing indirect procurement material process support needs. Its system design principle is that 60 to 80 percent of eProcurement users are casual, and do not necessarily require the functionality of a full-blown purchasing management environment. Instead, the platform provides an online shopping type of user experience to make the procurement process intuitive and seamless as possible. A further design principle is fostering a “compliance-oriented culture” of procurement vs. one that is policing in nature. There are three product application suites provided which are IBX Source to Contract, IBX Purchase-to-Pay, and IBX Supplier Network, each targeting support for strategic, operational procurement and supplier catalog and engagement needs. All three process support areas are linked to a set of consultant-driven Capgemini managed services offerings addressing technology implementation, change management or supplier on-boarding process needs.
Tradeshift, founded in 2010, positions its technology as a business commerce company supporting an open B2B business network, with a Cloud-based platform that can be adopted to specific business needs. The three Dane co-founders initially designed and built EasyTrade, designed and deployed to be the first open source trade platform across Europe. They then pitched to Silicon Valley’s investors the vision of a global open trade platform which was the creation of Tradeshift. This firm’s mission is to connect customers with their suppliers digitally, to remove paper and manual processes across P2P processes, and to buy what is needed faster while managing supplier risk. Applications support focus on Procure-to-Pay, E-Invoicing, Supplier Management and Engagement and Financial Management business process support needs.
According to the announcement, this acquisition will immediately bolster the combined marketplace with the addition of over a half-million suppliers and 27 million SKU’s. A subsequent blog posting from Tadeshift’s founder and CEO reiterated a mission to build the world’s largest business commerce platform. Such a platform would include everything that happens between buyers and sellers, consisting of core enterprise applications, a global supplier marketplace, and a rich ecosystem of apps that enable any type of business process.
Make no mistake, this latest announcement surrounding B2B Business Network platforms is indeed about establishing market dominance and supplier network scale. It involves an existing competitive battle among ERP and enterprise technology vendors pitted against termed best-of-breed or specialist vendors.
From this industry analyst’s lens, the real determinants for the winners, from a customer and market perspective will be from two determinants.
The first is the ability to provide customers who adopt such technology, the ability to have the broadest options in flexible and ever changing supply chain management business process and decision-making needs in a Cloud-based environment, providing the most attractive overall cost to deploy and annualized operationally managed manner. Business process support should not be limited to just sourcing and procurement since a B2B network involves extended supply chain planning, execution and joint-decision making needs for direct procurement support needs as-well. If a B2B platform coexists with other behind the firewall or Cloud-based applications and/or platforms, there must be seamless Cloud based integration utilizing open based standards.
The second, and equally important determinant is overall supplier acceptance of the platform itself, that the platform provides added value for suppliers without meaningful incremental operational and user support costs. Supply chain and procurement professionals know all too well that different business drives indirect and direct procurement processes, planning and supplier management requirements. Teams have looked to ERP and enterprise vendors for technology and applications that can support either process in a cost efficient and continuous manner.
Both determinants are what are driving a wave of market consolidation that will likely continue. Prospective customers and respective technology selection teams must therefore make their adoption decisions from a broader, cross-functional, and cross-business support lens.
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