Leveraging Ecosystem Integration as a Forcing Function for Financial Growth
By Mahesh Rajasekharan, CEO, Cleo
As the pandemic gradually subsides, many CFOs will be considering and pursuing new strategies to recoup the revenue they lost during the turbulent economic shutdowns caused by COVID-19. In fact, 87% of CFOs expect their revenues to increase over the next 12 months. This reflects a 28% increase from just six months ago. This is not surprising after over 15 months of supply chain upsets and market closures. Many companies are currently turning to innovative technology solutions to serve as a financial growth booster.
For CFOs that operate in retail, manufacturing, logistics, or wholesale operations, modern cloud-based ecosystem integration strategies can serve as a powerful financial growth lever. Business-to-business ecosystem integration elevates top-line revenue while simultaneously driving operational efficiency to increase cost savings.
Reduce Revenue Leakage Caused by Poor Technology Integrations
Regardless of industry, supply chain-oriented companies are reporting lost revenue due to poor integration capabilities, and most don’t know where to turn to solve the problem. This is shown by the 74% of companies that claim to have lost more revenue due to integration issues in 2020 than in 2019. For 66% of companies surveyed, over $500,000 was lost in 2020 –18% more companies than lost that amount from poor integration prior to the pandemic. The problem is even more drastic for 10% of respondents, who reported losing up to $1,000,000 in revenue in 2020.
When organizations lose revenue due to integration issues, they are typically still relying on disparate, legacy technologies that have been patched together through piecemeal integrations. These individual integrations are built over time as organizations expand their networks and adopt new data formats and tools to integrate with new trading partners. Complex integration environments are difficult and costly to manage, and simply cobbling together various integrations and managing them without an umbrella strategy based on a single-platform solution is an outdated approach.
Ecosystem integration solutions ensure end-to-end integrations are fully functioning as needed to enable collaboration between external ecosystem entities (i.e., customers, trading partners, online marketplaces) and internal systems of record (e.g., ERP, CRM, TMS, or WMS). By monitoring and managing end-to-end integrations, organizations can avoid losing transactions between systems. In addition, key revenue-generating processes like order-to-cash or procure-to-pay become automated, orchestrated and readily maintained to ensure profitable outcomes.
Eliminate Lost Orders by Increasing End-to-end Visibility
Lost orders have a critical impact on a company’s revenue and can damage the brand’s reputation with customers. 88% of companies report lost orders in 2020, with over half (51%)of those companies reporting more lost orders than prior to the pandemic.
For manufacturers, retailers and wholesalers, a lost order means inventory, that could have been sold and moved to provide shelf space for more inventory, is just sitting on the shelf taking up space. Whether this shelf space is in a retail store or in a warehouse will impact the revenue loss differently, but it’s still a negative impact. Further, if the inventory has a short shelf life (such as with produce, certain medical supplies, or other time-sensitive products) lost orders can mean that inventory goes bad and can’t be sold later.
Lost orders have a larger impact on your business ecosystem beyond simply impacting your company’s bottom line revenue. Service level agreements (SLAs) with customers may be impacted by lost orders, which can prevent future business with those customers if they blacklist your organization. Repairing these relationships can be quite difficult, as it’s hard to repair a relationship when you can’t even communicate with your lost customer.
Modern cloud-based integrations provide real-time visibility into order processing that allows companies to track and resolve errors quickly, provide proactive status updates, and empower customer-facing teams to access pertinent data to better communicate with their ecosystem of customers and trading partners. This speeds up topline revenue velocity because errors, i.e., those that would prevent three-way matching of advance ship notices (ASNs), purchase orders (POs) and delivered products, can be identified and eliminated.
Optimize the Partner Onboarding Process to Save Time and Resources
Optimized integrations are critical to speedy partner onboarding, which enables trading partners to begin conducting business together faster. Due in part to the disruptive nature of the pandemic, in 2020, 51% of companies onboarded more trading partners than in 2019.
Supply chains of the future must be more agile to overcome similar circumstantial upsets down the line. While the pandemic may be a once-in-a-lifetime event, natural disasters occur on a near weekly basis around the globe. Anything from hurricanes, to earthquakes, to wildfires, to political unrest can cause supply chain disruptions. Modern cloud-based ecosystem integration solutions better support the onboarding of new partners, offboarding unproductive ones, and accommodating new requirements from existing partners in several ways.
Any-to-any data format transformation allows organizations to accept any trading partner requirement that might be thrown at them. This allows organizations to manage all their integrations on one platform, saving money and time by keeping technical teams from searching for new solutions or data translation tools.
While most legacy technology-dependent organizations treat EDI as the core of their B2B transactions, API is the B2B transaction format of the future as eCommerce giants (such as Amazon and Walmart) mandate their own API requirements to do business with suppliers. Most B2B integration solutions today don’t support APIs, and, on the flip side, most iPaaS platforms are not well equipped to support EDI. However, both capabilities are needed for a supply chain to be truly agile and to ensure that companies can do business with any partner at any time.
Finally, organizations that leverage intelligent and dynamic integration technology solutions to re-use previous work and expertise in the form of connectors, pre-built templates and business profiles can onboard partners both faster and cheaper than before. Ecosystem integration platforms provide these pre-built connectors and templates, enabling maximum onboarding efficiency with an expansive slate of options.
CFOs have many innovative technologies and solutions at their disposal to remedy the revenue losses incurred during the pandemic. Moving budgets around between departments or taking on debt to fund new initiatives are often less attractive options that provide slower return on investment (ROI). Upgrading legacy B2B integration systems not only provides near instantaneous returns, but also helps businesses scale rapidly, expand their ecosystems, and acquire more revenue faster through more business transactions without expanding staffing budgets or needlessly sapping resources from other departments.