10 Best Practices to Build Deeper Business Connections

These 10 best practices examine key business integration tasks that are critical to building deeper connections with customers and trading partners.

By Margaret Dawson, Vice President of Product Management, Hubspan

In a down economy, keeping your customers and partners happy and protecting your revenue base is critical to every organization’s survival and future growth. Like any buyers’ market, customers are in a position of power and if their needs and expectations aren’t met, they’ll quickly take their business elsewhere. In this climate, businesses need to build deeper connections with their customers and partners and maximize those relationships.

It’s easy to look the other way when faced with challenges pertaining to customer and partner integration. However, times have changed. It is no longer an option for any company to miss revenue opportunities or cost savings because integrating with customers or suppliers has been “too difficult.”

When exceptions, errors, and manual workarounds slow the ability to process orders, get status updates, or realize new revenue, it is time for IT departments to commit to improving existing operations. By better aligning business processes and systems through better integration with business partners and customers, companies can recover lost revenue and create true connections to unlock the real potential of business integration.

The following ten best practices outline key business integration tasks that are critical to building deeper connections with customers and trading partners. The results: a competitive advantage, improved customer satisfaction and retention, increased operational efficiency, and decreased operational costs. The steps also help clear sales revenue previously stuck in the pipeline, and help sales teams realize new lead opportunities, reduce delayed revenue streams, and minimize manual exceptions.

Best Practice #1: Say “yes” to customer requirements

Effective integration enables enterprises to get closer to customers and clients, creating the “stickiness” needed to build loyalty. It is imperative for businesses to make it easier for customers to conduct business; otherwise, enterprises risk losing sales opportunities to competitors. Integration makes yes the only answer when customers request support for business processes and requirements.

Make it easier for customers to continue to do their business. For example, integrating directly into customer back-end ordering systems facilitates purchase orders and leads to more transactions at less cost for longer periods.

Best Practice #2. Remove manual workarounds to increase revenue and reduce associated costs

IT departments can have a direct impact on the corporate bottom line by taking action to remove errors that occur within a company’s value chain. Operational departments can become crippled dealing with manual exceptions from inter-company processes. On average, 10 to 25 percent of orders received require some form of manual intervention. This drives personnel costs higher, delays the ability to book new revenue, and results in poor customer service.

Taken in context, a 10 percent average failure rate significantly delays important documents such as incoming orders and outgoing invoices. This delay directly impacts revenue, increases costs, and reduces profits due to the effort required to address the exceptions. For example, a $250 million company experiencing a 14 percent failure rate could experience $25 million in delayed order revenue or invoice payments, not to mention the resource costs incurred to address them.

Best Practice #3. Link incompatible business processes

Companies operate differently by definition. This includes business processes, data formats, and transaction languages. True integration links infrastructures to ensure seamless information exchange despite disparate processes and IT systems, and aligning IT with sales initiatives for an immediate impact.

Best Practice #4. Know when EDI is not enough

A challenging business environment is the perfect time to shed the “good enough” mentality rampant in enterprise IT departments. When IT departments are no longer investing in their infrastructure, it is time to streamline and get more out of existing systems. EDI is a perfect example.

Do business users need real-time, or near-real-time, information exchange? Do batch transactions deliver the flexibility needed? If so, Then it is time to look beyond EDI for a platform that better aligns business processes with integration. By constructing complete transactions that flow through back-end order management systems and customer back-end procurement systems, it is possible to achieve a streamlined flow of information for real-time transaction processing.

Best Practice #5. Make e-business a priority

Everyone is responsible for e-business. It is not the sole responsibility of IT. Making e-business a priority means connecting and sharing information with customers and suppliers regardless of data format or infrastructure. Managed integration services ensure seamless e-business compatibility and processing, showing customers and trading partners that e-business integration is a priority.

Best Practice #6. Extend your ERP system to business partners

If plans call for ERP upgrades, increase the return on existing infrastructure investments by extending the system outside of corporate firewalls to include business partners. The result delivers true integration and tighter relationships. Enabling secure and efficient delivery of communications across the entire value chain defines a business as an invaluable partner.

Best Practice #7. Stop dwelling on cost reduction and start thinking about increased sales and margins

Difficult economic conditions mean going the extra mile to keep existing customers happy and retaining them. To improve customer service metrics, ask what customers truly want. The answer usually includes faster responses to such things as pricing, order status, ship date, and availability. To implement deeper integration with customers for faster access and delivery of information, think about what customers want up front so you can create tighter back-end integration to improve the entire process.

Begin to think strategically by augmenting cost takeout initiatives with revenue and projects focused on profitability. Deeper integration with customers and sales partners delivers top-line and bottom-line results, which increases margins and profits.

Best Practice #8. Reduce "days sales outstanding" by integrating invoice delivery and receipt

Leveraging best-practice approaches to integration deployment and management improves operational and financial results. Electronic invoicing simplifies the sourcing reconciliation process and allows customers to pay for goods and services up to 30 days faster than manual means. Consequently, accounts receivable reconciliation becomes easier and cash inflow materially improves.

This positions the IT department to help improve quarterly financial results by accelerating the delivery, receipt, and payment of invoices -- something CFOs always appreciate. Direct integration to customer accounts payable systems reduces the time needed to process an invoice, and provides true visibility within the revenue stream.

Best Practice #9. Stabilize budget unpredictability by blending managed and self-service offerings

Another approach to making a meaningful impact on financial results is to support budget stability during tough times. Eliminate variable transaction/volume costs by taking a managed service approach with fixed pricing. A fixed-price cost structure is predictable and introduces less risk during uncertain times.

Best Practice #10. Future-proof systems to ensure they meet growing business needs

Successful companies grow despite difficult economic conditions. Obtain insurance against unpredictable budget cuts by ensuring benefits from system upgrades and new integration practices. Legacy systems such as EDI and flat-file transfer are no longer enough in today’s ultra-competitive environment. Smart networks that incorporate diverse integration functionality (including real-time or near-real-time communication and translations) provide companies with closer connections to streamline business processes and deliver tangible benefits to the enterprise.

Putting It All Together These ten best practices serve as a road map to help your enterprise navigate tough waters during these difficult, budget-cutting times. As IT departments weigh priorities as they develop and revise budgets, consider these actions when charting a successful path to the future. At a minimum, adopting practices and services that streamline business processes, improve information flow, and make it easier for customers to do business results in more revenue and greater profits.

Margaret Dawson is vice president of product management for Hubspan. She's responsible for the overall product vision and road map and delivering innovative solutions to the market. She has over 20 years' experience in the IT industry, working with leading companies in the network security, semiconductor, personal computer, software, and e-commerce markets, including Microsoft and Amazon.com. Dawson spent ten years working in the Greater China region, consulting with many of the area's leading IT companies and serving as a BusinessWeek foreign correspondent. You can contact the author at margaret.dawson@hubspan.com.