As manufacturers embrace SaaS applications for externally focused processes, such as supply chain, warehouse, and logistics management, on-demand B2B integration needs rise.
A couple of years ago, when energy drink and chewing gum maker Mad Croc was just getting started, top executives, like those at a growing number of small, young manufacturing companies, opted to effectively outsource the tasks of deploying and operating enterprise applications by selecting a software-as-a-service (SaaS) alternative.
But officials knew their largest customers wouldn't cut them any slack just because Mad Croc was a young, small company relying on SaaS applications. Retailers, such as Target, CVS, and Costco, that carry Mad Croc's line of energy drinks and snacks would expect Mad Croc to be able to exchange order, advance ship notice, and other information via an electronic data interchange (EDI) system integrated directly with Mad Croc's back-end systems.
"The big-box retailers have their own, very specific requirements for EDI," says Chuck Andrews, an IS consultant who works with Mad Croc. "If you want to run with them, you have no choice but to comply."
There was just one problem: Mad Croc's SaaS ERP supplier, NetSuite, didn't directly support business-to-business integration via EDI. So Andrews set out to find a third-party provider that, he hoped, could integrate with NetSuite and offer EDI as an on-demand service. Fortunately, Andrews found SPS Commerce, a provider of SaaS-based B2B integration services that was just completing an integration between its platform and NetSuite. Mad Croc became the first production user of the EDI integration, which supports basic documents, such as invoices and purchase orders.
Now, Andrews says, Mad Croc is anxious for SPS to add support for a wider range of EDI documents, including those supporting drop shipments and advance shipment notification.
Andrews isn't the only one likely to be pushing vendors for better B2B integration links to SaaS applications. Unfortunately, SaaS application vendors and providers of B2B gateways are just beginning to address the requirements of manufacturers such as Mad Croc for the kind of advanced EDI and other B2B integration capabilities that have long been standard features of on-premise enterprise applications.
"Initially, when the whole software-as-a-service model came out, it was seen as a way for small and mid-sized companies to get applications on the cheap," says Richard Douglass, global manufacturing executive at B2B integration software vendor Sterling Commerce. "B2B integration wasn't a chief concern."
Indeed, experts say, because most of the early SaaS focus was on internal business processes, such as sales force automation and human resources management, there wasn't a big requirement for B2B integration in connection with SaaS applications. Most SaaS vendors tended to focus first on enterprise application integration rather than B2B integration.
But that's beginning to change because manufacturers such as Mad Croc are increasingly, considering using SaaS applications to automate functions such as material management, supply chain management, and warehouse management, all of which typically require significant B2B integration.
"We're seeing more companies say they're willing to buy into SaaS to cover a wide range of business processes, even manufacturing," says Ian Finley, an analyst at AMR Research. "Of course, saying you're willing to do it and doing it are two different things. But more companies are definitely open to the idea."
