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maandag, februari 10 2020

Digital Commerce in B2B ...
or not to be?

Increasingly more B2B purchases are made online. What’s more, B2B buyers indicate that they are not buying as much or as frequent as they would like, mainly because B2B companies fail to provide them with a convenient, effective and intelligent digital commerce option.

Digital commerce in B2B

So, have these companies chosen not to be digital? What is stopping them?

In discussions with business owners, I often notice great resemblance in the challenges they face. Let me therefore share the 5 most common obstacles any company is likely to encounter on the path to digital commerce and shed some light on how to overcome them.

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  1. Catalyst or Cataclysm for Change
  2. FOPO – Fear of Platform Options
  3. A Clouded Integration
  4. Automating human interactions and relations
  5. Or is it all about the money?

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1. Catalyst or Cataclysm for Change

When asked, executives will be able to describe a clear vision and strategy for their organization. But they might find it more difficult to identify the precise changes needed for that strategy to work and to make optimal use of new technologies to stay on top of rapid - and sometimes radical - change. And that is where an e-commerce project often comes in as a likely candidate to kick-off any digital transformation program aimed at developing the much desired omnichannel experience.

However, it is important for business owners to acknowledge that the introduction of a digital commerce platform brings a fundamental shift in the interface between a business and its customers. And it is equally important to convey that right mindset within the team and ensure they understand how their organization sees and values the project.

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A digital commerce project inevitably impacts and challenges some of the organizational and operating models that leaders and teams have been working with for years. It touches many, if not all, departments within an organization.

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A digital commerce project inevitably impacts and challenges some of the organizational and operating models that leaders and teams have been working with for years. It touches many, if not all, departments within an organization.

For example, sales teams are concerned with how prices are exposed or how it affects their relations with customers, the marketing colleagues see the opportunities of a new communication channel, the accounting department is asked to unlock and share credit data or process new payment options, whereas the supply chain division is expected to instantly respond to inquiries about product availability, etc.

A common misconception is when people expect the new digital platform to magically smoothen all operational processes. In my experience it is often the opposite. Any existing bottlenecks will show more clearly and risk of getting exposed to customers, which only amplifies their impact. So, when a project team is charged with overcoming the silo structures that fracture and frustrate employees and customers alike, the team should be given the explicit mandate and support to drive the necessary changes. And those efforts should be accounted for when defining the project scope.

That's also where I'm sometimes helping teams to bring up the elephant in the room, even though it might be uncomfortable. After listening to all parties and gaining their trust, I can ask the tough questions. That's the advantage of my role as consultant since I’m not aligned with any one department or function.

By asking the right questions, and directing the discussion of the problem, the chances of a successful solution drastically increase.

2. FOPO – Fear of Platform Options

The complexity of digital commerce platforms continues to increase. Due to a continually evolving market, decision makers have difficulties deciding. They are faced with seemingly endless changes in product offering, functionality, technology delivery and pricing models.

I attribute this largely to the fierce battle for market presence between the big software power houses. In this relatively young market, we all witnessed a myriad of acquisitions over the past decade, with SAP acquiring Hybris in 2013, SalesForce acquiring both Demandware in 2016 and CloudCraze in 2018 and Adobe acquiring Magento in June 2018, just to give a few examples.

These vendors need to constantly strive for market and brand recognition. And their challenge to build, meet and manage expectations, does not necessarily always contribute to a clear and consistent messaging and marketing strategy. While their customers attempt to provide a shopping cart, the platform merchants are buzzing about the omni-channel customer journey and a unified customer experience.

Let me be clear, I do not argue against the technological innovation. In fact, I much prefer software vendors that incorporate new capabilities (such as machine learning, artificial intelligence, IoT, etc.) into their product strategies. They should inevitably follow - and often also drive - the competitive strategy of their customers by moving beyond the sales transaction towards intelligent end-to-end services across the entire buying cycle. Ultimately, that will hopefully lead more B2B companies to engage in guided or even better, collaborative selling and thus customer centricity.

Yet, this explosion of new tools and technologies makes it harder to discern the core functional strengths of each solution. It can lead organisations to more questions and uncertainties about the software and services they are willing to by, such as new vs. legacy capabilities or duplicate and deprecated functionality. And that’s where customers benefit from a good software selection framework that helps them to take all elements into account and assign the proper weight to the different selection criteria.

3. A Clouded Integration

A digital commerce platform often stands at the center of an interconnected set of core technologies. It needs access to an extensive set of data sources to obtain customer, product, availability and pricing data. At the same time, it must also be able to fully process an order inclusive of product-, customer- and order-level discounts or promotions.

To replicate and synchronize these large amounts of data - often in real-time - any commerce platform obviously requires a high degree of inter-operability. Yet, organizations often find it difficult to properly connect different systems together. And the inevitable shift to cloud infrastructure only adds to the confusion about whether these new cloud solutions will work with the older legacy software in which companies have already heavily invested.

And, let’s be honest, despite what vendors were telling, their platforms were not always that cohesive either and looked more like a collection of disconnected products and features that lacked appropriate platform capabilities.

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But things have changed and although interfacing remains a challenge, it should no longer stand in the way of a successful implementation.

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But things have changed and although interfacing remains a challenge, it should no longer stand in the way of a successful implementation.

For example, SAP has shifted from the problematic DataHub middleware to the newer CPI solution as their 'strategic way forward'. And Salesforce’s 2018 acquisition of MuleSoft, a leading integration and API management platform, should also be seen as an acknowledgement that they needed to provide customers with easier access to data wherever it resides - especially since on-premises technology is still the predominant IT model for a lot of companies.

4. Automating human interactions and relations

Introducing automation to (partly) replace human interactions is challenging and that's where organizations often get stuck.

While it’s true that many organizations already automated internal processes and use the latest ERP systems, I often witnessed how there is still a fair amount of human intervention throughout the buying cycle.

Customers, for instance, are still prompted to contact their account manager for product details or to find out if a specific part is in stock. Or they’re interrupted during the order process by a mandatory check of account balances and credit limits. And in many cases, orders are still being placed via email or even fax.

Most B2B organizations will acknowledge that these inefficient manual processes are prone to errors, susceptible to delay, and negatively impact the user experience. Yet, some will counter with the adage “people buy from people” to justify their hesitance.

Don't get me wrong, I do acknowledge the value and dynamics of human interaction - above all in B2B sales.

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Establishing good relationships with customers and providing them with the right advice when they need it most, is essential to the success of every business.

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Establishing good relationships with customers and providing them with the right advice when they need it most, is essential to the success of every business. I would even advocate that thoughtless automation can end up hurting engagement and retention – so just because something can be automated, doesn’t mean you should. But organizations can no longer ignore the overwhelming evidence that the customer journey for most B2B buyers has (partly) shifted online.

Another common concern is that technology platforms fail to adequately support the needs of B2B businesses. But that argument no longer holds, since these software solutions can now be as automated as companies want them to be.

However, the real challenge for any businesses is to have complete visibility of operations and the ability to capture every process in the form of data. That requires dedication of time and resources to properly analyze and define the complete workflows and identify and unlock the necessary data sources. Because there is no room for the ambiguity that sometimes resides in human processes, where for example a sales agent will make a judgement call based on experience or contextual information. For automation to work, all possible outcomes ought to be covered and responsibilities must be pinpointed according to the user's role and the nature of the data.

And that is no simple task for any organization. But here's an extra incentive, by setting up proper reports and analytics, organizations can gain priceless insights into these processes which are often at the heart of the customer experience.

5. Is it all about the money?

This list of pain points would be incomplete without mentioning budget restrictions. A digital commerce platform represents a significant investment - especially in B2B where it is often accompanied by a sizable integration project. Any investor will therefore want to know the timing and size of the expected return before deciding.

And honestly, the ROI question often proves to be the most difficult one to answer. Why? Because it is often hard to quantify some of the more qualitative business benefits. Even if you manage to collect the data for clear and measurable factors such as reduced personnel, fewer hours spent on specific tasks, etc., it is much harder to put a figure on factors such as customer satisfaction. And what's more, even those targets that are quantified, such as increased sales volumes, are often based on (gu)estimates.

A leap of faith!

A business case for a digital commerce platform will therefore often cite qualitative research on prevailing market and industry trends to set expectations. And TCO and ROI calculations are combined with a qualitative ROI analysis to underpin the benefits of the proposed solution. In other words, management teams are asked to, at least partly, shift their mindset away from exact figures and charts. Executives might thus understandably struggle – though I wouldn’t go as far as to call it “a leap of faith” as I’ve once heard ;-)

As a final observation, you can take it from me that it is often easier to get funding when the business case for digital commerce is embedded in a larger digital transformation strategy rather than a stand-alone project.

If any of these topics sound familiar and you'd like to know more, don't hesitate to reach out.

Frederik-Claessens_small

Frederik Claessens,
E-Commerce Manager, SQLI Belgium

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