4 Reasons Suppliers Don’t Love eProcurement Integration
Punchout2Go’s CSO Brady Behrman explores the challenges suppliers face, and how buyers can prove eProcurement integration is worth the investment.
eProcurement systems help large buying organisations manage spending, control procurement workflows, and analyse procurement data. But supplier integration is essential if buyers are to take full advantage of eProcurement. eProcurement integration opens the door to a host of exciting automation opportunities, from PunchOut catalogs to electronic purchase orders and invoicing.
It can, therefore, be a surprise to find (some) suppliers aren’t quite so enthusiastic.
Forward-looking suppliers have embraced integrated digital procurement, but many suppliers are less than thrilled when a buyer requests – or demands – integration with their eProcurement software in order to do business with them.
Why is eProcurement integration and procurement automation unappealing? Let’s put ourselves in the shoes of an average B2B supplier:
What is eProcurement integration?
The fact is, the average B2B manufacturer, supplier, or distributor doesn’t know much about eProcurement. It’s simply not an area of strategic focus for them. Large corporate suppliers pioneered integrated procurement, but for tens of thousands of smaller suppliers, eProcurement isn’t on their radar.
Their IT departments aren’t set up for building B2B integrations. Their eCommerce team or third-party vendor doesn’t have the expertise to equip their storefront with the necessary product data and pricing —assuming they have an ecommerce store in the first place. They don’t know how to develop PunchOut catalogs, how they work, and sometimes don’t even know what a PunchOut catalog is.
If a supplier does have experience with eProcurement integration, it was probably a custom integration built for a large buyer. Custom integrations are technically complex. They’re expensive, they take a long time, and they often need to be outsourced. Worst of all, they don’t scale, so the work has to be redone for each new buyer.
So, it’s not difficult to see why suppliers approach eProcurement integration with trepidation.
However, in 2021, the situation is a little different. A cloud Integration Platform as a Service (iPaaS) makes integration much more straightforward. Buyers should be prepared to educate suppliers about how much easier, cheaper, and more scalable modern eProcurement integration technology is.
The technology is super complex!
The technology supporting procurement automation is complex and fragmented. There are different types of electronic catalog formats that suppliers can use to provide their product offering, a hosted catalog, and a PunchOut catalog, which each require different technology and resources to manage.
In addition, there are different protocol formats used for PunchOut, cXML or OCI, and formats for order-to-invoice automation such as EDI, xCBL, XML, JSON, REST, and so on. Given the complexity of integration, suppliers may wonder if their current back-end business system technology is compatible? Can it be made compatible?
And that’s just the technology – suppliers also have to think about the process.
How will they implement integration and what does it mean for their existing systems? Who will lead the integration project? Should it be managed in-house, or should it be outsourced? Should they work with a third-party integration provider?
A supplier may struggle to answer any of these questions without a significant investment in education, training, or recruitment.
What’s in it for us?
This is the big one. What’s the ROI for a B2B supplier investing in the technology and processes to support eProcurement integration in order to do business and transact with their buyers? Sure, it’s good for buyers, but suppliers may struggle to see the business case. After all, they have an existing sales process that works reasonably well, and selling via eProcurement is unproven.
If a supplier receives multiple demands for eProcurement integration, the case is easier to make internally. If they don’t level up their integration capabilities, they risk losing business.
But it’s not all about pleasing buyers – the advantages of eProcurement integration apply to suppliers too. Supplier benefits include:
● Reduced transaction costs.
● Fewer order and invoice errors.
● Accelerated purchase cycles.
● Increased order numbers and average order values.
● The automation of labour-intensive manual data entry.
Education is key to helping internal stakeholders make the case. Buyers who value an integrated procurement experience should be able to give suppliers information to justify their investment.
Why can’t eProcurement systems use standardised interfaces?
The eProcurement ecosystem has a problem. There are standard protocols and formats, such as cXML, OCI, and EDI for sending data between buyer and supplier order management systems. However, each eProcurement system is customised to meet buying organisation needs, so each integration requires data mapping for the technology to communicate effectively. It becomes an unstandardised project very quickly while there are ‘standard’ formats used.
You can see the issue. There are dozens of eProcurement systems, e-commerce platforms, and back-end order management ERP systems making for thousands of possible combinations with hard-to-predict integration requirements. This is one of the reasons custom integration development is necessary – every buyer’s eProcurement/supplier e-commerce combination demands a unique solution.
However, a modern iPaaS solution helps suppliers to overcome this fragmentation. The iPaaS solution is an integration layer that already supports hundreds of different eProcurement to e-commerce connections.
A supplier integrates their store with the iPaaS solution, and it handles data communication and translation for every integration. The supplier only has to integrate with one system, the iPaaS gateway solution. Once integrated, it’s straightforward to connect to any supported eProcurement platform—no more custom development projects.
It’s time suppliers embraced eProcurement integration
Suppliers don’t love eProcurement integration because they think it’s expensive, complex, and time-consuming – they can’t see the upside and find it hard to make a business case. But these eProcurement challenges are problems of the past. Modern integration technology makes PunchOut catalogs, order automation, and eInvoicing straightforward to implement.
eProcurement is the fastest-growing B2B digital sales channel. The COVID-19 pandemic accelerated buyer adoption of self-serve B2B sales channels, and there’s no going back from the new normal.
Consequently, suppliers can expect to receive many more requests for integration than in the past, and that’s not something they should be afraid of. In 2021, modern cloud integration technology makes eProcurement integration fast and inexpensive while giving suppliers a competitive advantage over their technology-resistant peers.
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